Business Services Industry – Franchises and Businesses
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Business Services Franchise & Business Opportunities
Business Services Industry
General Business Services Industry
The Business Services industry provides a variety of services such as photocopying, printing, mailbox rental and support, blueprinting, parcel and mail delivery, office administration, hiring and placing of personnel, consulting, security services, travel arrangement, cleaning, and waste disposal.Â
The Business Services industry has over 400,000 open businesses and combined annual salesThe total amount in dollars made in the business before expenses are deducted. See also Gross Revenue. of $917 billion.
Business Services Industry Trends
Companies in the business services industry will continue to invest in the integration of digital transformation into the overall strategic road map, not only to connect sellers and buyers directly but also to keep competitive within the industry. In addition, the demand for cybersecurity has been increasing as cybercriminals have been attacking businesses and threatening their data and confidential information. Firms that are victims of cyberattacks face great cost as clients tend to search for a more secure service provider.Â
Key Business Services Industry Numbers
The Paid-in-Full RateReferring to the SBA 7(a) Loan Program, how many businesses in a particular industry paid their SBA loans in full including interest relative to all the businesses in that industry. Note that many businesses are exempt from sharing their loan statuses as part of the… is when the SBA loan is fully paid off by the small business owner including interestA payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum, at a particular rate. In Vetted Biz, it is typically the additional rate of a loan a business buyer would pay off…, indicating financial strength.
The Charged Off RateAlso can be referred to as the SBA Loan Default Rate, the charged off rate is percentage of businesses in set field (e.g. industry) that defaulted their loan, are unable to pay their loan in full, and/or there is no confidence that they will be… is the SBA loan default rate where loans have no confidence in being paid off by the small business owner.
For every 11 SBA franchise loans fully paid including interestA payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum, at a particular rate. In Vetted Biz, it is typically the additional rate of a loan a business buyer would pay off…, 1 SBA loan was unable to be paid back, or defaulted.
*SBA Franchise Loan Data from 2010-2019
*Non-Franchise Businesses taken into account: 55,045
Franchises in the Business Services Industry
These types of businesses focus on service other businesses grow in particular through their business operations. This can be through accounting, tax planning, marketing, office supplies, and more. These businesses focus on business-to-business, commonly known as B2B. They do not provide products or services that are direct to consumer, like businesses in the retail industry.
In 2019, the business services industry had a total revenue of $10 billion, and has had an annual 1% growth since 2014. With 27.9 million small businesses in the U.S., almost every business no matter the size will need at least one business service company to support in their efforts.
Outsourcing other services to professionals will allow the business itself to focus on its main services. Franchises in the business services space must show other companies they will provide more value relative to these companies having staff in-house.
These franchises are a popular option because they are a low investment amount and secure.If you had past experience in the corporate world, but want to run your own business, you may find familiarity in running a franchise in the business services industry space.
Furthermore, new companies can enter into the business services market as there is no dominant competitor within this industry.
Business Services Industry Franchising Trends
There has been growth in the personal staffing industry, as technology advances business can create systems and programs for telephone operators and guest services outside of the physical office.Â
As small businesses continue to grow, so will the demand for business services. More businesses also prefer to outsource business services because it is more cost effective than hiring full-time staff.Â
How much can a Business Services franchise cost?
Through our online platform Vetted Biz, we have reviewed over 1,600 businesses and franchises. Of the concepts in the business services space we have reviewed, total investment amounts can start as low as $925 all the way up to $26,690,000. Out of all Vetted Biz’s specific industries, the business services industry has the smallest range and the lowest maximum investment amount. In our research, the average royalty fee takes up to 10.4% of gross revenueThe total amount in dollars made in the business before expenses are deducted. See also Sales., and the average marketing fee is 2.2% of the gross revenue. Many business services industries have a higher royalty fee relative to other industries but they make up for it with less or even no marketing fee. In the SBA analysis for the 7(a) loans from 1991 to 2019 adjusted with loan disbursed, franchises in business services had a paid in full rate of 61.4% and a charged off rateAlso can be referred to as the SBA Loan Default Rate, the charged off rate is percentage of businesses in set field (e.g. industry) that defaulted their loan, are unable to pay their loan in full, and/or there is no confidence that they will be… of 12.1%Â
Average Business Services Franchise Industry Percentage Fees
Standard Business Services Franchise Industry Investment
This metric is the standard industry investment amount for a single unit franchise investment in this industry. Our research and analytics team analyzed over 160 franchise concept investment breakdowns in order to calculate this figure.
The Paid-in-Full RateReferring to the SBA 7(a) Loan Program, how many businesses in a particular industry paid their SBA loans in full including interest relative to all the businesses in that industry. Note that many businesses are exempt from sharing their loan statuses as part of the… is when the SBA loan is fully paid off by the franchisee including interestA payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum, at a particular rate. In Vetted Biz, it is typically the additional rate of a loan a business buyer would pay off…, indicating financial strength.
The Charged Off RateAlso can be referred to as the SBA Loan Default Rate, the charged off rate is percentage of businesses in set field (e.g. industry) that defaulted their loan, are unable to pay their loan in full, and/or there is no confidence that they will be… is the SBA loan default rate where loans have no confidence in being paid off by the franchisee.
For every 10 SBA franchise loans fully paid including interestA payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum, at a particular rate. In Vetted Biz, it is typically the additional rate of a loan a business buyer would pay off…, 1 SBA loan was unable to be paid back, or defaulted.Â
*SBA Franchise Loan Data from 2010-2019
*Franchise Businesses taken into account: 2,390
Sample Business Services Franchise Income Statement
| Year 1 | ||||
|---|---|---|---|---|
| Base | % of Gross ProfitThe profit a business makes after deducting the costs involved in making, providing, and selling the goods and services. In an income statement, it is the sales minus the cost of goods sold.Gross profit = Revenue – Cost of Goods Sold | High | % of Gross Profit | |
| SalesThe total amount in dollars made in the business before expenses are deducted. See also Gross Revenue. | $ 1,181,100 | 100% | $ 2,333,300 | 100% |
| Cost of Goods SoldAlso known as Cost of Sales, Cost of Goods Sold includes the direct costs associated with generating revenue. Depending on the business, it can be physical products, supplies, and/or payroll. More | $ 1,049,000 | 89% | $ 2,072,400 | 89% |
| Gross Profit | $ 132,100 | 11% | $ 260,900 | 11% |
| Expenses | Â | Â | Â | Â |
| Rent | $ 30,000 | 23% | $ 42,000 | 16% |
| Utilities | $ 300 | 0% | $ 300 | 0% |
| Marketing / Advertising | $ 36,000 | 27% | $ 60,000 | 23% |
| Insurance | $ 4,000 | 3% | $ 4,000 | 2% |
| RoyaltiesFees paid by a franchisee to their franchisor in order to operate a franchise location. They are usually on a weekly or monthly basis. More | $ 22,500 | 17% | $ 44,400 | 17% |
| Salaries / Wages | $ 33,300 | 25% | $ 49,900 | 19% |
| Repairs and Maintenance | $ 1,000 | 1% | $ 1,000 | 0% |
| All other expenses | $ 1,000 | 1% | $ 1,000 | 0% |
| Total Expenses | $ 128,100 | 97% | $ 202,600 | 78% |
| Â | Â | Â | Â | Â |
| Owner BenefitThe amount of money a business owner receives before taxes from a business’s operations over the course of a year. More | $ 4,000 | 3% | $ 58,300 | 22% |
| Net Profit MarginThe net profit margin shows how much a business is generating profit for every dollar of cost, expenses, interest, and taxes involved. It is displayed as the percentage of how much of each dollar collected by a company as revenue translates to net profit. The… | 3% | Â | 22% | Â |
| Â | Â | Â | Â | Â |
| Year 3 | ||||
| Base | % of Gross Profit | High | % of Gross Profit | |
| Sales | $ 3,543,300 | 100% | $ 7,000,000 | 100% |
| Cost of Goods Sold | $ 3,147,100 | 89% | $ 6,217,200 | 89% |
| Gross Profit | $ 396,200 | 11% | $ 782,800 | 11% |
| Expenses | Â | Â | Â | Â |
| Rent | $ 30,000 | 8% | $ 42,000 | 5% |
| Utilities | $ 300 | 0% | $ 300 | 0% |
| Marketing / Advertising | $ 36,000 | 9% | $ 60,000 | 8% |
| Insurance | $ 4,000 | 1% | $ 4,000 | 1% |
| Royalties | $ 67,400 | 17% | $ 133,100 | 17% |
| Salaries / Wages | $ 83,200 | 21% | $ 116,500 | 15% |
| Repairs and Maintenance | $ 1,000 | 0% | $ 1,000 | 0% |
| All other expenses | $ 1,000 | 0% | $ 1,000 | 0% |
| Total Expenses | $ 222,900 | 56% | $ 357,900 | 46% |
| Â | Â | Â | Â | Â |
| Owner Benefit | $ 222,900 | 44% | $ 424,900 | 54% |
| Net ProfitAlso known as net income or net margin, the net profit is the net income on an income statement. It is the revenue minus the cost of goods sold, expenses, interest, and taxes.Net Profit = Revenue – Cost of Goods Sold – Expenses – Interest – Taxes Margin | 44% |  | 54% |  |
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