Home Based Businesses – Virtual is “In”
In today’s increasingly digital-dependent community, the business world has transitioned to one of an increasingly virtual work setting. According to the United States Bureau of Labor Statistics, the number increased from 19% of the workforce in 2003 to 24% in 2015, and this number is expected to continue rising. The truth is that with technology, comes the ability to almost work from anywhere as effectively as we once did it all sitting together in an office at one time. So how does this transition affect the franchise community?
There has been an incredible rise in the volume of home based businesses throughout the world. Some of the early adopters to home based businesses were concepts that were oriented towards home services, such as painting, landscaping and other services, but today the range of home-based franchises is so broad there is very little one couldn’t find as a home-based business. Financial Services, Fitness, Education, Senior Care, Food Service, Event Planning and others all fall into this home-based franchise category and in most cases have performed exceedingly well.
What are some of the key drivers to the home-based business model’s success and why has this paradigm shift occurred at such a rapid rate? First, the element of not needing to invest in real estate and fixed costs such as equipment or heavy labor expenses allow for someone to open a home-based business at a much lower cost of entry. Many home based franchises quote investment ranges under $100,000 including working capital. This lower financial requirement makes the investment appealing for obvious reasons and if the model produces strong financials, the return on investment can be significant and achieved in a much shorter time period. Home-based businesses also allow for a solid work-life balance and allow the business owner the freedom and flexibility to make choices about what time is allocated to family vs. work in any given day. In addition, I have found that home-based businesses allow for the business owner to maximize their work schedule and avoid time-wasting activities like a commute into work.
The downsides to home-based franchise models are that the business owner needs to be extremely diligent and self-motivated in order to be effective without oversight or someone to hold them accountable; if someone has trouble waking up in the morning, a home-based business probably isn’t the best route. One of the downsides to a home based franchise is also the lack of personal interaction that a business owner has with other people increasing the feeling of isolation and loneliness. Home-based business requires intense focus and a love for the work being performed.
Some of the models we have come across recently we like a great deal are TIP – a home based franchise opportunity that helps businesses find Transportation Excise tax savings. The business model is simple, well-defined, the franchisor provides the processing work and all the franchisee needs to focus on is driving results and marketing the services. The TIP Franchisee is paid a percentage of what they save the client offering great service on a performance based model. Another brand we’ve seen amazing results from in a home-based business model is a brand called EventPrep, which provides event planning services to businesses and groups holding mid to large scale events or group functions. The franchisee runs the business entirely from a home office location and is paid a fee for delivering event planning services to clients. Both opportunities present significant financial opportunities and require a fraction of the investment required to start a traditional franchise business.
What has become clear to me in working with a variety of home-based franchise models is the need for a strong franchise marketing system to be in place. Home-based businesses don’t have the organic traffic that might come from a retail business with foot traffic and street exposure, so they are reliant on a strong marketing and sales model to be in place. Good home-based franchises have a marketing mechanism in place that will drive leads and opportunities to the franchisee and good metrics to base the sales model on. Strong home-based franchise owners then have the opportunity to step into these franchise systems and execute consistently.
I am a proponent for home-based businesses and believe in them to a large extent, and recommend investigating a home based business if the right opportunity arises. Before taking the leap, just make sure that you have the personality that fits a home-based business lifestyle.
Christopher Conner is the President of Franchise Marketing Systems and has spent the last decade in the franchise industry working with several hundred different franchise systems in management, franchise sales and franchise development work. His experience ranges across all fields of franchise expertise with a focus in franchise marketing and franchise sales but includes work in franchise strategic planning, franchise research and franchise operations consulting.