The New Year is fully underway and many rookie and veteran entrepreneurs are ready to start something new now that the holiday hangover is over. The question many will ask themselves is, "do I start a brand new business, or buy into an existing one?"
If you know you have a million-dollar or billion-dollar idea, starting something new is incredibly appealing, and it just might work. One of Shark Tank's greatest successes was Scrub Daddy, a non-scratch sponge. But, as every entrepreneur should understand, new products are a gamble, and the failure rate is high.
I have always felt there are two types of entrepreneurs: innovators and operators.
Innovators are those who exist to put a dent in the universe or die broke trying (i.e. those who really want to change the world). These are the people that change the way we do things like Steve Jobs, Elon Musk, Jeff Bezos.
Operators are those who want to use business ownership as a vehicle to change their world and be one less person/family that the world has to worry about financially.
If you lean more towards the latter of those two (95 percent of people will and do in my anecdotal experience) then you may want to take a look at franchises. Franchises have a higher rate of success than startups, since they have generated a scalable business model and proven operational plan that you can plug your energy, capital, and motivation into and generate a cash flow systematically with a formulaic model for wealth creation.
The value of starting a blue-collar franchise business is often overlooked. While starting a plumbing business or a maid service might not sound as sexy as the possibility of a shiny new digital unicorn, the risk of failure is far lower and the rewards are more easily calculated.
And let's be clear. What is most sexy are profits and a strong stable cash flow to the owners for years and decades to come.
Here are six reasons you should seriously consider investing in an established franchise operation in a blue-collar service industry.
1. Recurring customers
Far from being a one-time purchase, most franchises are built on a solid customer base with recurring purchases that solve everyday needs. For example, dirt doesn't stop accumulating in the house or office. The need never ends. One advantage of a solid franchise operation is that typically there is a brand support level from the corporate team that has established a brand loyalty or interest nationally and allows you to operate within a region and capture that demand.
2. Business model
Most businesses require a big investment and some require a measure of speculation. When you start a brand new business, it's hard to estimate exactly what you'll need in terms of real estate, equipment, supplies, and help. Established brands already know what you need to start, and how much it will cost. When you buy in, you get the benefit of their research and their experience. Franchises can reduce the cost of failure and reduce the risk.
3. Work/life balance
The amount of time you have to spend depends on the type of franchise you buy. If work/life business is a top priority, you can choose a business with little chance of weekend commitments.
For example, cleaning emergencies are pretty rare, so choosing a janitorial or cleaning service means you'll be able to take nights and weekends off. Customers won't expect you to answer at all hours and you certainly won't be running out to deal with emergency dust bunnies.
4. Customer service
To dominate the services field, all you really need in most areas is a reputation for great service. The key is to set standards and train your workers to meet them. Any conscientious franchise owner willing to provide better service can easily build a reputation as the best industry service provider in town.
5. Good help isn't hard to find
Working for many blue-collar businesses require basic, entry-level skills. As a business owner, you can work around your employees' needs and offer the kind of schedule they need to manage their own lives. With a service-based business you can also scale your unit-ownership and provide longtime workers a path to future ownership that you override, while you expand in the region.
6. Brand power
Franchises like Maid-Pro, for example, offers cutting-edge technology, established brand equity, marketing, personal business coaches, top of the line training systems, and a National Sales Center. A turnkey solution to plug and play into revenue and profits if you will bring the muscle and determination to win new accounts.
As the world compounds in complexity and market and technology risks expand for startup viability, a boring and stable franchise business in a fragmented market that can be consolidated with your efforts is a smart bet in 2018 for the financially conservative and pragmatic operator entrepreneur.