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Popular Business Industry Opportunities
Written by: Patrick Findaro
Last Updated by
Marina Longo: August 18, 2022
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Download NowThe following is an excerpt from the E-2 Startup, Buy, or Franchise Webinar with Joorney Business Plans and Visa Franchise
Explore Business Industry Opportunities
So some industries with compelling business opportunities, fast food, especially for takeout and delivery. So this would be principally businesses that are operating in ghost kitchens. So you might have 10 different restaurant concepts. You could open it up for as little as $100,000 and with that you’re just doing takeout and delivery. So it could be as low as 20% of the initial startup costs of a similar restaurant concept serving that type of food, but you’re just doing delivery and takeout with a lot less employees. So that’s been a popular option recently as sales on the delivery apps have gone up over 100% for many of the delivery apps. Real estate property management, depending on the vertical, it’s been affected more or less. If you look at property management firms that work with commercial homeowner associations, residential, both long-term and vacation rentals, they’ve been affected differently. And then you have health care, cleaning. I see that we a question from Mishu, “How is window cleaning business for E-2 and as a whole viability?” I would expand out from just doing window cleaning to doing commercial cleaning overall. So also janitorial services, it’s a great option where you have renewable revenue and you can expand your book of business. There’s also some opportunities to combine both the franchise and existing business option where you buy an existing book of business and then you roll that into a franchise system so you have the initial and ongoing support with the franchise, but you’re also not starting from zero. And there’s some synergies and cost reduction if you do decide to go on the franchise route. Pet care is a great option. Adoption rates have gone up 30% during COVID. So a lot of people are getting pets. We’ve had quite a few clients invest over the years in animal hospitals, doggy daycare, and other pet-related services. Business services, insurance, tax, not the sexiest area, but necessary services where, again, you have that renewable revenue. Beauty, hairdressers, barbershops, traditionally are pretty high margin businesses.
COVID's Impact on Industries
And then education, school reinforcement, and childcare, especially in certain areas that have been impacted less or more by a COVID and depending on how the restrictions are, if kids are doing online learning and you’re an area and you have a child that’s seven years old, probably has online learning fatigue but the school’s not open. So you might bring your child into a tutoring center or even have in-home tutor to come to your house. So there’s great opportunities right now in education and across all these different industries, but you got to really look at it on a business by business aspect. And we recently did a study where we looked at the default rate for SBA loans right around the great recession, so 2006, 2009, and we did find that food had a very high default rate, well over 20% of the SBA loans defaulted in the food space and for food-approved to be better to not be a franchise. The default rate for non-franchise food businesses during the last recession was better than the franchises as a whole. So that tells you a few things that there can be false promises when a franchisor were saying that it does better in a recession, you know, ask them for the stats, talk to franchisees, talk to franchisees that have left the system. No two businesses are created equal and you can’t generalize that franchising’s better than an existing business or vice versa. It’s really going to come down to an industry-specific question where we publish those results on Vetted Biz as well as an opportunity by opportunity. And you have all that information related, comparing franchises on our website, Vetted Biz.
Best Way to Review Business Profitability
I went through some of these key factors, but right now, looking to buy an existing small business, you got to look at the profitability. How has it been 2018, 2019? Ask for the financials from the business broker or a business seller, if it’s a franchise it’s a little trickier, especially if they don’t disclose the numbers and then item 19, the financial information is disclosed there for many franchisors, item 19 on the franchise disclosure document, but not all are required. So you’re going to have to have conversations with the franchisees to understand the profitability of the business. Recurring revenue, so we like those businesses where you have recurring revenue, where it’s a book of business, whether it’s a barbershop, commercial cleaning, landscaping, property management, insurance, accounting, where you’re growing that book of business month over month. High margin business, so this could be anything like insurance. It could be an ice cream shop, management team in place, very important, and especially to see how they weathered the last crisis. Industry and brand and growth. You don’t want to be investing in industry like big box gyms, gyms that used to have 200 people where now the trend is more boutique fitness and even online fitness. Same goes for retail products and services. Those are not the top businesses to be investing in. And we’ve got a lot of inquiries about gas stations, people aren’t driving as much. So you’re not going to have those retail product sales at the gas station, which traditionally has been the bulk of the profit from gas station operators, not necessarily in the gas being sold.
Other Important Financial Keys to Review
And then strong liquidity, making sure that there is enough money on the balance sheet and you’re well capitalized to stand any potential double dips with the Coronavirus. We’re now seeing industries all have been impacted in the same way and you have some industries like, again, delivery and takeout which has done better during this current environment. We’ve seen also some healthcare-related businesses do significantly better business services with insurance that have even done better during this downturn. There’s a lot of good opportunities to the buying. An existing insurance it’s business and then rebrand it as a franchise or keep it as that agency if you don’t want to have the system and support of the franchisor and you prefer to have more flexibility. So we’re here with you to empower your business’s vision in terms of what business you buy or what franchise you invest in. When you combine that with moving to the U.S. it’s a little scary. You’re moving your family, you’re investing in a new market. We want to power you with the tools to make sure that the chances of success are as high as possible for you and your family in both adapting to the U.S. and from a business standpoint. So we pre-screen all the businesses. We’ve gone through thousands of franchise disclosure documents. We review the past three years’ financials. So this includes the income statement, the balance sheet as well as the cashflow I’m on the franchise or a parent company level, we review litigation and bankruptcy as well. In terms of the management team, the owners of the franchise, or the franchisor themselves, we review the litigation, consumer franchisee satisfaction survey. So we see how the consumers as well. So basically someone going into a barbershop, how satisfied they are with the service of that franchise, we review that, as well as seeing how satisfied the franchisees, the existing franchisees in that system are before we present any business to you.
