I was born in NE Tennessee; we love simple humor (this product has a few moving parts – LOL).
In an earlier article on CAGR, I discussed a simple franchise Success Profile for the buyer of a franchise that costs $250,000 or less to open.
The Success Profile:
- Low entry costs
- High gross margin
- Low overhead
- Few moving parts
- Diversified within a market segment
Low Entry Costs. Likely, this will be a mobile, home-based, or service business. Many can be purchased for under $100,000 some even under $25,000. With work, you can recoup your investment quickly.
High Gross Margin. Gross Margin is defined as Selling Price (SRP) – Cost of Goods (COG). The highest margins are in professional and personal services, or niche products with a greater than 100% markup.
Low Overhead. The Overhead Monster can eat all your profits. Keep the cost to do business small and agile. You want a business that can be operated with one or two employees doing the work for you.
Few Moving Parts. The stone in the picture above gets the job done with only one part. Keep your business simple, easily duplicatable, and transferrable. In this case, less is more!
Diversified. The key here is to reduce risk by having multiple concepts within one market segment. Example: Own a pet treat shop and a mobile pet grooming business. The common market segment is “pets.” What can you think of that is related but diversified? Maybe become a franchise advisor and have a business networking group.
Bottomline. If one business can earn enough to replace your income from a job; then multiple businesses can start your journey toward wealth!
In our next article, we will dive deeper into some mobile, home-based, and services businesses that fit this Success Profile.
Robert A. Needham, JD, Ph.D. has over 30 years of experience in business and franchise development. He is a published author, innovator, and strategic advisor to the franchise industry.