Home Based Industry at a Glance
No longer must you put in hours and hours outside of the house to run a successful franchise. In 2009, 18.4 million Americans worked at home, an increase from 16.5 million the previous year, and over 12% of the households in the country currently operate a home-based business. The number of home based franchises increased as well, from 97,405 to 98,905. The benefits of home based franchises are twofold – not only do you get the convenience of working out of your own home, but because there is no need for outside real estate, home based franchises tend to be less expensive than non-home based – few cost more than $50,000 to start and many cost as little as $20,000.
The home-based business market is growing – about 350,000 more businesses are expected to start up each year over the next few years. Although difficult to track, home based businesses are expected to succeed for a three year period at a rate far higher than non home based businesses – 70% of home based businesses survive for at least three years versus a mere 29% for outside the home businesses. Twenty thousand people grossed over one million dollars in revenue operating out of their homes!
What Types of Home Based Franchises are There?
Home based business often involve managing people who work in others’ homes, commercial buildings, or other locations in a number of different areas. The variety in this growing field is endless, featuring areas as diverse and disparate as organic gardens and advertising, but a few of the more common franchise types include cleaning, senior care, tutoring, and computer repair.
Cleaning
There are a host of different types of cleaning franchises available, from the most common, commercial cleaning and carpet and upholstery cleaning, to specialized types of cleaning, like environmentally friendly green cleaning and disaster cleaning. The industry is large and growing; labor statistics suggest the fastest growing occupation of the next decade will be that of the professional cleaning specialist.
Commercial cleaning is a recession resistant industry – as long as commercial buildings exist, they need to be cleaned. Commercial cleaning is the fastest growing sector of the cleaning market – the industry brought in $80 billion of revenue in 2008 and is projected to double that number within five years. Ten percent of all commercial cleaning is done by franchises, with the remaining 90 percent done by private companies. Annual account turnover for private companies is a whopping 55 percent, leaving room for plenty of new accounts for franchisees, who experience a far lower turnover rate of less than 12 percent. Office facilities are the biggest user of commercial cleaning services, but health care and education facilities are growing at a rapid rate.
Carpet and upholstery cleaning is another large section of the cleaning franchise market. There are 20,441 operations in the US that do this type of cleaning, and the industry employs 69,408 people and brings in $3.1 billion in revenue, a significant increase from the $1.7 billion which it brought in 1990. Small companies dominate the industry, and although residential customers are still the biggest segment of the market, the number of commercial customers are increasing quickly.
Senior Care
With baby boomers getting older, the number of senior citizens in the US is dramatically on the rise. With that increased number of senior citizens will be an increased need for in-home services to assist them. In 2011, 8,000 people will turn 65 everyday and the population of senior citizens in the US will reach 49 million. In just 15 years, that population is predicted to reach 72 million, a dramatic 47% increase.
There are two basic types of senior care franchises which are home based, with some overlap – in-home health care and in-home non health care related services. In-home health care involves medical related services for seniors, such as nursing, therapy and rehabilitation. As of 2009, there were 26,300 home health agencies operating in the US, employing about 900,000 people. In-home health care is one of the fastest growing franchise sectors, growing at a rate of 28.3%. The non health care related services field encompasses a wide range of services, including providing personal companionship, helping seniors with a variety of tasks, such as shopping, housekeeping and cleaning, and preparing seniors’ meals and helping them bathe. Revenue in this field is expected to exceed $72 billion by the end of 2011.
For both in-home health care and non health care related services, experience with the industry is not necessarily required – the franchises may pre-screen caregivers, taking care of the specialized senior care knowledge for the franchisee.
Tutoring
The home based tutoring market is a rapidly growing area for franchisees working out of their homes. Starting in the mid to late 2000s, tutoring services have increasingly been used by both schools and parents – in fact, 22% percent of parents with children between the ages of 11 and 16 have hired tutors. Tutoring is currently a $4 billion industry, and the industry is growing at a rate of 15% per year since 2001. More money is spent on the entire education industry, which includes tutoring, than on national defense!
With a franchise in this industry you do not need tutoring skills yourself; the franchisee will manage tutors who work inside the students’ homes or at other locations – becoming a intermediary or broker between teachers and educators on one side and students requiring tutoring on the other. Tutoring franchises are a great way to make money while positively influencing young people.
Computer Repair
On-call computer repair is another great opportunity for home-based franchisees. Technology is accelerating and changing all the time, and as it becomes more prevalent in our culture, there are many people who need it but don’t know how to use it. The computer repair industry is expected to grow by 18% through 2016 and more than six million computers will require upgrading or replacing in the next five years, providing lots of opportunity and room for growth.
The franchisee will manage a team of technicians that repairs computers for both individuals and businesses where they reside. It is not necessary for the franchisee to have these skills him or herself – he or she will not be doing the repairing – but it may be helpful to be somewhat tech savvy.
On the whole, home based franchises provide a variety of different opportunities for potential franchisees, while allowing the franchisee to both spend time at home, and make a relatively low outlay of money to start. These are just a few examples of industries that prominently employ home based models. Because of the desirability of this home based model for franchisees, more and more types of franchises are looking to get involved in this expanding field.
Andrew Weber is an Analyst for FranchiseHelp.com and is a graduate of New York University and New York University School of Law.