Many people dream of owning their own business but are afraid to take the leap. There are a lot of potential pitfalls of business ownership—the oft-cited statistic that around half of businesses won’t make it past their fifth year, the struggle to find employees, and getting the word out amidst all the noise. How are small business owners thriving despite these odds? How can you enjoy the benefits of being a small business owner without much of the risk?
In this article, we’ll cover some of the facts about small business ownership—how happy small business owners are, how confident they are in their stability, and how franchising can let you join the growing field of business owners while mitigating some of the risk.
Are Small Business Owners Happy?
Happiness is a primary reason many business owners cite as why they chose to set out on their own. In fact, according to Guidant Financial, 27 percent of small business owners say that they chose to start their own business because they were dissatisfied with corporate jobs. There was also a 24 percent decrease in the number of small business owners who started their businesses because an opportunity arose. That means that increasing numbers of small business owners are starting up because they choose to—they’re seeking a change in life and making it happen rather than seizing upon an opportunity that presents itself.
And the rewards for these business owners can be great. 28 percent of owners say they are somewhat happy with their careers, while a larger 48 percent say they are very happy. Though difficult, small business ownership has a lot of rewards for those who choose to open their own business and are able to make it work.
That’s one reason that franchising is a great option for people who want the benefits of small business ownership but want to mitigate some of the risk. With franchising, you own and operate an independent piece of a larger company, giving you freedom and security. Franchises are based on successful business models with brand familiarity, giving them the initial boost new businesses lack.
For example, customers may hesitate to try a new restaurant in their neighborhood, particularly if it doesn’t have positive reviews. But if a new location for a restaurant they’re familiar with opens up, they’ll head there without hesitation—they know the product, know the quality of service, and know they’ll get what they want. Opening a franchise gives you a leg up on early business, which is crucial to gaining momentum and thriving beyond your first few months.
Franchise owners and small business owners share a similar level of overall happiness—72 percent of franchise owners ranked themselves as somewhat happy or higher, compared to 76 percent of small business owners. That addition of risk mitigation and comparable levels of happiness makes franchising an appealing alternative, but how confident are franchise owners in their ability to succeed?
Are Small Businesses Owners Confident?
With any business venture, there’s a level of risk. According to Guidant Financial’s survey, the average small business owner considers themselves “somewhat confident” in small business in today’s political climate. In 2019, there was a 44 percent increase in owners who said “very unconfident” or “somewhat unconfident,” which lines up with economist concerns about a potential recession.
As the novel coronavirus spreads through the United States and the world, small business owners may also face a downturn in service or even a closure. These times are unprecedented—there’s no guarantee of how long both health and economic recovery will take, nor how much assistance will be given to keep small businesses afloat on a short- and long-term basis.
Franchising isn’t immune to economic downturns—any industry and any business can suffer as people tighten their belts and stay indoors. Recession resistance, usually stemming from a diversified number of services and offerings, can be of great comfort to business owners in uncertain economic periods. Franchises that offer a variety of services can help bolster small business owner confidence, which can help them work through difficult times with less stress.
That is likely part of the reason that the majority of franchisees—61 percent—are somewhat or very confident. Franchisees have the support of their franchisor behind them, as well as access to brand recognition and other features that can make franchising more stable than small business ownership.
Again, no business model is entirely recession-proof. But owner confidence matters—having faith in your business model, especially with a variety of services to offer to a diverse client range, can make a difference.
What Challenges Do Small Business Owners Face?
Opening a small business is not all smooth sailing. Some of the biggest challenges small business owners face are recruiting and retaining employees—22 percent of respondents to Guidant Financial’s survey cited this as one of their biggest hurdles. Others cited lack of capital and cash, which can make opening and sustaining a business extremely difficult.
When weighing the choices to franchise or own a business outright, these are important considerations. If your business will need employees, do you have a method to find them? How will you find the right ones for your needs? Do you have the cash on hand to kickstart and sustain your business, even if initial sales are slow?
These are issues that franchising can help address. Franchisors have experience in finding quality employees and can pass that knowledge along to franchisees. In fact, the number of franchisees citing employee acquisition and retention as a struggle has decreased year over year. The largest struggle franchisees cite is administrative tasks like bookkeeping and payroll—something Transblue takes care to address in our three-week training program, along with providing third-party assistance for administration if franchisees so choose.
Franchises also have the aforementioned brand recognition to boost employee interest—an established brand like Starbucks, known for providing health insurance and stock options to employees, has an easier time recruiting employees than an unknown and unfamiliar coffee shop.
Franchise fees, while expensive, are also frequently less than the start-up cost of a business. This is especially true of Transblue, as our asset-light model requires less up-front costs for equipment than franchises in many industries. The initial investment includes the franchise fee and opening costs, but we also recommend cash to sustain you while your business gets off the ground. All of this comes from experience—we design our franchise model based on what we’ve learned as business owners, because your success is our success.
Who Should Be a Small Business Owner?
Small business ownership isn’t reserved for one particular class or type of people. Generally speaking, most business owners—85 percent of them—are 39 or older, but that likely results from the increased stability, economic flexibility, and experience that comes with time. Around 61 percent of small business owners have an associate’s degree or less education, meaning that there is no clear and necessary path toward business success. Education can be helpful, but is not the only means of becoming a small business owner.
Franchisees tend to have slightly more education—38 percent hold a bachelor’s degree and 27 percent hold a master’s degree—but that is only a trend, not a guarantee of success.
What matters more in small business are traits like tenacity, resilience, and grit. These are traits we seek in Transblue franchisees, not necessarily education or construction experience. Having the drive and flexibility to make it through the challenges of small business ownership are more important than the practical know-how—the know-how can be taught, but the fundamental understanding of ambition and resilience are traits franchisees must cultivate and embody on their own. Our training program is dedicated to providing you with the knowledge you need to succeed, no degree required.
What Small Business Industries Are Most Popular?
The most popular industry for small business is retail and business services, with 13 percent of the total share. Franchises are quite a bit different—the most popular industry is health, fitness, and beauty, with 16 percent of the share, followed by residential and commercial services, retail, and business services. Construction, one of the most popular industries for small business, isn’t among the top five franchises.
Popular industries are a bit of a mixed bag—on one hand, you know that there are resources available and the market exists, but on the other, being part of a popular industry means you have more competition.
Because Transblue’s niche of general contracting, luxury exterior design, and construction management is so flexible, our franchisees have a unique advantage over many other businesses. Our services can fill a variety of needs; even if one type of business is oversaturated in a given region, one of our other services can take prominence. Our franchisor team is also focused on finding the optimal location for our franchisees with franchise territories, helping them find the right client base for the services we provide. We know the field; it’s important to us that franchisees, as representatives of our brand and services, succeed.
Knowing the field of small business ownership and franchising can help you make an informed decision of your own. If you’re interested in owning your own business or franchise, Transblue would love to talk to you—reach out to us to learn more about how owning a Transblue franchise can let you enjoy the benefits of small business ownership while avoiding many of the pitfalls that new businesses suffer. We can’t wait to hear from you!
Melissa Brinks is part of Transblue’s marketing team. She enjoys relaxing outside with her dog and an ice-cold can of Cran-Raspberry La Croix.