The Big-Ticket Sale

The Big-Ticket Sale

Martha Visser

Business-to-business franchises are booming, as companies outsource services they once performed in-house

LONG AGO, U.S. corporations used to handle their own public relations, their own accounting, their own hiring. They had work crews to address equipment failure; some even did their own printing, then downsizing swept through corporate America like an Old Testament plague. Companies grew lean and mean; outsourcing became the name of the game. And suddenly the hills were alive with the sound of pink-slipped middle managers typing their resumes.

The ’80s downsizing movement was a boon to franchising, in that thousands of corporate refugees bought retail franchises with their severance money. But some of today’s hottest franchise companies are making a killing by selling products and services to other businesses. In many cases, these so-called business-to-business franchises are picking up all sorts of work that big companies used to do in-house.

“This is an explosive growth area,” says International Franchise Association president Don DeBolt. “You used to have huge businesses with their own accounting or advertising departments. They took care of all the various needs within the company, but now they’ve outsourced a lot of this stuff.” This has triggered an outsourcing chain reaction that ultimately benefits entrepreneurs, DeBolt explains. “Many of these outsourcers are small companies that, in turn, rely on other small companies for many of their own business needs.”

The numbers bear him out. Although business-to-business franchises have been around for a while — office-cleaning systems such as ServiceMaster come to mind — their numbers have shot up dramatically in recent years. Counting professional staffing firms, about 8 percent of the 1,156 U.S. franchise companies profiled in a recent IFA study were business-to-business enterprises. (Although this was the first study to isolate business-to-business franchises as a category, IFA spokesperson Kara LaGrassa says that the number of business-to-business companies enrolled in the IFA has increased sharply in the past five years.)

To help you make the most of this extraordinary opportunity in franchising, we spoke with some of the most accomplished franchisors and experts in the field to gather inside tips on finding and running a business-to-business franchise that’s right for you.

WHY NOT FAST FOOD?

Why should you consider a business-to-business franchise rather than some traditional retail concept? Big-ticket sales, for one thing: business clients usually spend more money than retail customers. “I would rather deal with one person who’s going to place a thousand-dollar order than 10 people who are going to place 10 orders each for $100,” says franchising author and trainer John P. Hayes, Ph.D. “It’s less wear and tear on your staff, and dealing with one person is more efficient than dealing with 10.”

Also, businesses are usually repeat customers. “If you have a customer who comes in four or five times a year for a small job, you don’t really get to know him very well,” Hayes adds. “But if you’ve got a commercial account and they’re calling you every week, you have more of an opportunity to keep them satisfied over a longer period of time. You might screw up or make a mistake, but it’s easier to make that up to someone you know and deal with regularly. You might give them a percentage off their next job or take them to a ball game.”

The bottom line: You’ll get more business from business clients. Minuteman Press International is a case in point. Since 1973, company president Bob Titus has grown his commercial-printing business from one store on Long Island to a worldwide franchise of nearly 900 stores with total sales approaching $300 million. “Direct consumers have only an occasional need for printing,” Titus says. “They print invitations or birth announcements, and they need copies once in a while. But businesses are far and away the largest users of printing services.”

POUND THE PAVEMENT

Marketing a business-to-business franchise is different from running a retail franchise. “It’s not like a retail shop, where you stay in the store and pull in people through advertising,” Hayes says. “You have to network, use telemarketing, and be willing to go out and knock on doors.”

Take Minuteman’s marketing strategy. “You go out and get customers,” Titus says. “We hired a few college students, gave them samples of our work to show, and told them to go out and bring back the business. And they did.”

Likewise, in the highly fragmented hospitality industry, it’s especially vital to get face time with the bar and restaurant owners you’re trying to round up as clients. “My best franchisees stress selling,” says Barry Driedger, founder and president of Bevinco, a Toronto-based company that helps bars curb liquor theft, “because they have to go out and talk about the business and show the owners how we can save them money. But owners are difficult to get hold of, so they have to be persistent. Once they get in front of an owner, it’s not too tough to convince him.”

“Booze cops” is how Driedger describes his franchise to owners. His proprietary software package automatically compares liquor sales with actual consumption. “The biggest problem in the industry is theft because you’re dealing with cash and booze,” Driedger says. “We’re able to measure on a unit-to-unit basis how much was sold in ounces and how much was used in ounces and give them a detailed report identifying any kind of discrepancies.”

Driedger decided to start franchising when he had little success selling his software directly to bar owners: “We knew we had to market differently. When we tried to sell the system, we found that we had to go in and do the audits for them. Then we realized that maybe the business is just going in and doing the audits for them.” Driedger founded Bevinco in 1987; he now has 100 U.S. franchises and 160 franchises worldwide.

WHO NEEDS MAIN STREET?

One corollary of the business-to-business emphasis on field marketing is that you don’t have to worry about finding a prime retail location — which means that you won’t be paying prime retail rents. “These franchises don’t depend on traffic count, so they don’t have to be in a prime location,” says the IFA’s DeBolt. “Many of them can be home based or in office-park locations; typically, the client doesn’t walk in after seeing their signs or storefront. Instead, business results from intensive, targeted marketing efforts, followed up by a personal call, usually in the prospective client’s office.”

In business-to-business franchising, success comes down to fundamentals: relentless marketing backed up by blue-chip service. Today’s demanding business customers expect no less. So don’t think like a middle manager, waiting for problems to land on your desk. Don’t think like a retail-store owner, waiting for customers to walk in the door. Instead, hit the phones and pound the pavement to make the sale. “That’s where so many get stuck,” Hayes says. “They’re working in the business and not working on the business.”

COPYRIGHT 1999 Success Holdings Company, LLC

COPYRIGHT 2000 Gale Group