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Business Services Industry Analysis 2016 - Cost & Trends

Business Services Industry Analysis 2016 - Cost & Trends

Business Services in 2016 at a Glance

The Business Services industry encompasses a wide range of services. Many of these services can be purchased cheaper and/or with higher quality through outsourcing. Some examples of these services include staffing, direct mail, shipping and printing.

Staffing

The staffing, recruiting and workforce solutions segment is one of the largest of the business services industry. In 2014 there were 17,000 companies in the United States with annual revenue totaling $130 billion, an increase of more than 5% over the previous year.

Temporary services connect workers with companies for generally short-term assignments during peak business periods or to replace missing permanent workers. These jobs are often in clerical, technical or industrial positions. Placement agencies recruit employees for permanent positions. These positions can be for any role, including managers, technical workers and even executives.

Staffing companies identify potential employees through advertising. Candidates are often tested and interviewed and then sent to the customer company for approval. Some staffing companies provide basic data entry and computer training. Tests run on applicants by the staffing agencies include background checks, skills tests, and more recently psychological tests.

It’s important to recognize the immense impact of websites such as Indeed, Monster and Jobs.com have had on the staffing industry. The companies (and many others) list jobs and process applications. Some staffing companies are even posting their own jobs on these sites! These website job portals are  in direct competition with staffing agencies and have the potential to drive them out of business.

Other competitive concerns for staffing agencies include:

  • Larger companies that maintain their own internal staffing arm.

  • Seasonality - the best quarters tend to be the first and fourth.

  • Dependance on a few large clients - a frequent problem for smaller staffing firms.

  • Increasing regulation around the employee-employer relationship

In order for staffing companies to grow, the job market must grow, which means that slowdowns in the economy are bad for staffing. Staffing franchises include the @Work Personnel franchise, the Express Employment franchise, and the Link Staffing Services franchise.

Direct Mail

Direct mail advertising is a popular franchise business service. Direct mail is, simply put, the delivery of advertising material through the mail. The direct mail business grew in the post-war 1950s, and by the 1980s, companies in the United States were spending more than $7.6 billion per year on direct mail, accounting for fifteen percent of all advertising. By 1990, that number was $23 billion. The average American receives about 290 pieces of direct mail per year.

One concern in this industry is a perceived bad reputation due to fraudulent practices pushed by companies such as Publishers Clearing House, leading to most Americans tossing their direct mail, or “junk mail,” directly into the trash.

Other concerns include:

  • The possibility of companies moving their direct mail operations in-house

  • Tying their direct mail in with other advertising, and thus taking their business to a firm that is less specialized.

  • Raises in postal rates

  • Increasing clamor about the amount of waste that this mail generates.

But some recent reports refute these dangers and mention that a reported 92% of young shoppers surveyed prefer real mail, and the majority of consumers believe it to be more trustworthy than email or internet advertising. Direct mail franchises include SuperCoups  and United Marketing Solutions.

Shipping

Businesses often need products to be shipped, and a large industry has evolved to do that. This includes full service carriers such as UPS, FedEx and DHL. Commercial airlines also rent space aboard their planes for shipping.

However, there is room for smaller companies and franchises in the industry providing retail and specialized services. The Sunshine Pack & Ship franchise operates retail locations which offer packing services and access to FedEx, UPS, and the USPS at one location. The Craters and Freighters franchise offers specialty shipping for the arts and antique industries.

Printing

Commercial printing is another essential business service. Quick printing, in particular, is a common and popular franchise. Quick printers took off in the 1960s after the development and spread of the photocopier, and offer photocopying and printing services. Last year there were an estimated 8,589 quick print shops in the United States, employing 25,980 people and generating $4 billion in annual revenue. Technology has helped increase the range of services quick print shops can provide, including the ability to print commercial photos and graphics. Quick printers have used the internet to allow customers to print and take advantage of other services through their web sites.

Print franchises include the Minuteman Press, the Allegra Network, and the PostNet Neighborhood Business Centers.

The business services field is wide and varied and provides many different opportunities. The industry as a whole is predicted to grow at an annual rate of 1.8% out to 2022.


Matt Sena is a writer and researcher, a co-founder, a former portfolio manager, a rider and a dad. He earned his MBA in Finance from Kellstadt Graduate School of Business while working at Goldman, Sachs & Co.

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