Business franchise: B2B or not to be?


Business franchise: B2B or not to be?

Business-to-business franchises account for a huge proportion – more than a third – of franchise systems in the marketplace.

Defined as enterprises that sell goods or services to other businesses rather than consumers, B2B franchises, as they’re more commonly known, also offer the prospective franchisee some compelling advantages over retail, leisure and other business-to-consumer (B2C) franchise fields.

A business-to-business franchise will suit a range of people, depending on the specific sector of course. But generally speaking, if you’ve come from the corporate world and been involved in allocating or managing resources between departments or with other organisations, then you’ll probably have many relevant skills.

The advantages of a business franchise broadly relate to working hours, operating costs and demand.

Working hours

Many B2B franchises need to mirror their clients’ opening hours because their services could be needed at any point – for example, IT support businesses. While this might sound quite constraining, in reality it’s seen as a boon by anyone who likes regular, daytime working hours and their weekends free.

There are business franchises which serve retailers too, but a sign-making, commercial cleaning or accountancy franchise would be able to carry out its work Monday to Friday. Thus, the vast majority of B2B franchises follow the traditional Monday to Friday, 9am-5.30pm timetable, of the office world.

B2B franchises tend not to require high street premises, and can even be operated from home

Operating costs

B2B franchises tend not to require high street premises, and can even be operated from home. Many are van-based franchises, such as courier or delivery services, which require a vehicle but no office or retail premises, while others, such as consultancy firms, spend their working days in the offices of clients, so don’t require one of their own.

Even if you do need space outside of your home, office space is invariably cheaper to buy or lease than retail space. Apart from financial savings, being able to operate without premises affords business franchises much greater scalability.

Another factor keeping costs down is that marketing to businesses is more highly targeted than to the general public.

Demand

B2B franchises often offer services essential to their clients – for example bookkeeping, tax, insurance, IT or legal services. Admittedly, there’s always the spectre of regular clients going out of business – but you do at least get regular clients, certainly more so than with B2C franchises.

Much of your custom will be repeat business, with businesses often settling on a trusted IT support service or marketing agency and sticking with them. In a sense this suggests stable revenues, although because B2B franchises tend to have a small pool of large customers, the sudden loss of one customer can be keenly felt on the bottom line.

It’s better for continuity if you have a regular accountant who is well familiarised with your books or a recruitment agency accustomed to your staffing needs. That said, you cannot afford to be complacent; corporate customers will switch suppliers if your service standards drop, just as readily as high-street consumers.

Outsourcing

In fact, you may be providing a service your client can provide in-house. If you’re a marketing agency, for instance, you need to give them a compelling reason to pay you to do the job rather than recruiting their own marketers.

Businesses are increasingly seeing the benefits of outsourcing core functions to specialists. Take recruitment: the industry continues to burgeon as companies value an agency’s expertise in sourcing talent, their ready-made database of candidates and the flexibility hiring through agencies allows.

Many B2B franchises are fairly recession proof. Ink cartridge refill franchises are a prime example: successful companies increasingly see the dual merits of burnishing their environmental credentials while also cutting costs – a no-brainer, especially in a challenging economic climate.

There is another appeal, one which a prospective franchisee wouldn’t confess to in his or her application: you don’t have to deal with the general public. Anyone who has worked in retail will know how difficult customers can be.

That’s not to say everyone in the business world behaves impeccably – they certainly don’t – but in a sense they’re obliged, in theory at least, to conduct themselves professionally or jeopardise their job, which a complaining customer needn’t worry about.

However, you could also credibly argue that business people are harder to sell to. Busy with their own jobs and deadlines they might not take kindly to being bothered by salespeople – and unfortunately the B2B market does demand a proactive sales approach.

Unlike a retailer, where you can sit passively as customers come into your shop voluntarily, there’s a much greater onus on you to get out there and find business. A B2B franchise is therefore best suited to people who are patient, persistent and optimistic, and those with a flair for and experience of sales work.

 

About The Author

Adam Bannister Writer
Adam Bannister writes for all titles in the Dynamis stable including BusinessesForSale.com, FranchiseSales.com and PropertySales.com as well as other industry publications.

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