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Start Off The New Year With A Low Cost Small Business Franchise

Written by: Candice Clem

Article Overview: 2009 is here, and one thing that nearly every economist can agree on is that it takes a different approach to business to survive in the current market. Here's a look at some low cost ways to start a business that can generate serious profit, even in a tough economy.

Start Off The New Year With A Low Cost Small Business Franchise

A yearly panel at MSNBC takes part in an economic roundtable discussion, talking about all aspects of the economy for 2008 and projections for 2009. Although predictions are never 100% accurate, and 2008 definitely surprised us with how bad the economy got, the outlook for 2009 is not quite as grim as last year. Most economists on the panel agreed that we will continue to see economic decline throughout the 1st quarter of 09, but the clouds are expected to part somewhat with GDP seeing expected growth in the 3rd and 4th quarters, despite an expected rise in unemployment. While this may not be the glowing light of hope you may have expected for 2009, it’s still a good sign. The fact that the recession hit so hard in 2008 has caused some businesses to collapse altogether, while the ones that have survived have had to learn how to change their strategies in order to succeed in a downward market. There is little doubt in anyone’s mind that the economy will eventually turn around and although we may not see the kind of growth that 2006 and 2007 saw for a while, most economists agree that the worst may be behind us.

You may ask, "Where does this leave small business owners?" While the bailouts of 2008 may have helped the larger companies like mortgage lenders and auto makers, many small businesses are still hurting, and the fact is that small businesses make up the majority of the US work force. What many small businesses that are surviving and even profiting in the current economy are learning is that if you want to survive, you have to adapt and make sure that you have a product or service that’s still worth paying for even when money is tight for the average American. If you’ve considered getting into a small business, but don’t want to risk too much, consider some of the following low cost franchises that will get you in the door with a business that can profit in good times and bad and carries much less risk than a traditional small business startup.

FiltaFry
One of the most interesting statistics to come out in the last few months was that in the midst of worldwide recession, many fast food businesses in the US have reported profits. Whether this is due to depressed investors seeking comfort food or simply because when money is tight, people want to go spend $5 on lunch instead of $15 or $20 at a sit down restaurant, the fact remains that for fast food restaurants, business is booming. FiltaFry is a niche-market business that filters the oil used in deep fryers and will put you right in the mix will fast food restaurants, bars, bowling alleys, basically any business that sells fried food. This van-based franchise requires no central office, but can be run completely mobile, thus greatly reducing operating expenses and startup costs. With a total investment of less than $65K, you can be up and running with your own FiltaFry business and making money in no time.

Vendstar
Vending is another industry that seems to be fairly unaffected by the recession. It seems that no matter if it’s someone’s last quarter or if they have a pocket full of change, candy vending in good times and bad can earn the vending machine owner an average rate of $70/hour. Vendstar is one of the best options if you’re considering a vending machine franchise. For starters, Vendstar has some of the best machines in the business, with machines that can display and vend 4 products at a time. Probably the best part about this franchise, however, is that you can start small with only one or two machines, grow the business over time and be making six figures in no time, just from selling candy.

Rotobrush
Air duct cleaning is growing in popularity as more and more Americans are seeing the value and the health benefits of having cleaner air. This van-based business can be owned and operated by one person and each air duct cleaning job takes only 3-4 hours. Rotobrush offers this unique business opportunity for only $10,000 and estimates that an average franchisee working part time performing 1-3 jobs per week can earn up to $75,000/year. Take that number and just imaging how profitable this business can be for anyone working full-time or employing a few people and starting a multi-unit operation.

Cruise Planners
Despite a lagging economy, it seems that the one thing that inevitably profits during recession is alcohol and entertainment, and what better way to combine the two than with a sunny Caribbean cruise. Cruise Planners is one of the largest cruise travel agents and has earned plenty of awards including the #1 ranking for travel franchises by Entrepreneur. This work from home business is great for anyone with a background in sales or administration, but can really work for anyone who’s passionate about owning their own business and is willing to learn the Cruise Planners system.

Each of these small businesses has developed a product or service that people want and has packaged it in a way that people have responded to. In the midst of a recession, the scariest thing in the world can be investing a bunch of money in a business that may or may not succeed, but the low risk of a low cost franchise coupled with the proven track record that each franchise carries makes a winning combination that will be all but guaranteed to succeed in good economic times as well as bad.

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Article Tags: auto makers, clouds, doubt, economic decline, economists, economy, gdp, good times, larger companies, light of hope, low cost franchises, mortgage lenders, msnbc, panel agreed that, quarters, recession, small business owners, small business startup, small businesses, unemployment



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These maybe the coldest franchises out there: - Here are the worst 15 performing franchises in regards to having the highest Small Business Administration (SBA) loan failure rates. The list is dotted with sub sandwich shops, fitness centers and car shops. WORST FRANCHISE LOAN FAILURES Failure % 1 OBEE'S SOUP SALAD SUBS 55.56% 2 LADY OF AMERICA 41.94% 3 COUNTRY CLUTTER (BED & BREAKFAST) 41.18% 4 COPY CLUB 36.36% 5 ALL TUNE AND LUBE 35.71% 6 PICKERMAN'S 35.71% 7 PHILLY CONNECTION 35.59% 8 ROLY POLY ROLLED SANDWICHES 34.78% 9 COTTMAN TRANSMISSION 34.48% 10 HAIR COLOR EXPRESS 33.33% 11 LEE MYLES AUTOMOTIVE TRANSMISSIONS 33.33% 12 GODFATHER'S PIZZA 33.33% 13 SMOOTHIE FACTORY 33.33% 14 BLIMPIE 31.39% 15 GOLF U.S.A. (RETAIL GOLF EQUIP.) 30.77% Source: Small Business Administration, SBA Loan Performance Within Franchise Code for the Period of FY 2001 - 2005
My entry - 1. The Best Business Books Ever: The 100 Most Influential Business Books You'll Never Have Time to Read - this is a fascinating book about the history of Business theory, and I'd recommend it to anybody. 2. The Big Book of Small Business: You Don't Have to Run Your Business by the Seat of Your Pants, by Tom Gegax. Ditto. 3. PADI: The Business of Diving Book Okay, so this book won't be of use to anyone who doesn't want to start a scuba store, but I did, and this book was of course invaluable to me in reaching that goal.
canada resources - I used to have a connection to a franchise consultant in Canada at "Franchise Officer" in Toronto. I wish I could remember his name ( but I can check my files at the office tomorrow). Anyway, he had a lot of connections to banks in Canada. He may know of them and may be able to offer some feedback. If you are looking for a business loan, Canada has similar business loan programs to that of the USA's Small Business Administration (SBA). I think its SLBS in Cananda, and I probably have the list of it's lenders in my office also. Do you think either can be helpful? If so, I can get back to you with this information tomorrow. Let me know!
How to valuate a business - Hi Garth - here is how we did it at Northern Crown Capital when I was helping them raise venture capital for Toronto-based entrepreneurs. Assume the start date is 2003 so 2008 projections are 5 years out: How Northern Crown Capital Valuates a Business 2008 Financial Projections Earnings Before Tax $5,865,000 Tax Rate 42% Taxes $2,463,300 Net Earnings $3,401,700 Amount Seeking to Raise Today $3,500,000 Discounted Value of Future Opportunity, 5 Years Out 2008 P/E Ratio 15 Value of Company in 2008 $51,025,500 Discount Rate Applied 30% Year 2008 $51,025,500 Year 2007 $35,717,850 Year 2006 $25,002,495 Year 2005 $17,501,747 Year 2004 $12,251,223 Value of Company at Investment in 2003 $12,251,223 Less: Investment Amount $3,500,000 Present Value $8,751,223 Discount for Risk & Private Company 40% Less: Discount for Risk & Private Company $3,500,489 Private Company Value $5,250,734 Present Value (What the Owner Keeps) $5,250,734 60.00% Financing (What the Investor Gets) $3,500,000 40.00% Total $8,750,734 100.00% I hope this helps!
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