The franchise industry is famous for its many B2C businesses: McDonalds, Subway and KFC, to name a few. But you could be missing out on a huge opportunity if you don’t consider joining a B2B franchise. In this guide, we’ll cover the top advantages of a B2B franchise investment.
Business-to-business companies may not immediately spring to mind when you think about investment opportunities, but they can be incredibly lucrative, as they offer a unique set of benefits to franchisees.
The B2B sector covers a huge range of different areas, from research and manufacturing to construction and professional services. Across the industry, there are franchise opportunities to suit a large proportion of different investors. Here’s why you should consider running your own business with a B2B franchise.
7 advantages of a B2B franchise
1. It may sell more expensive or advanced products
Clients use the products and services offered by B2B businesses in their own companies; they may be interested in bulk-buying stock, investing in new technologies or accessing top-quality advice. The products they buy will shape their business, so B2B clients are likely to spend more per purchase.
The upshot? You can get away with having fewer clients, which saves you time when it comes to marketing and lead nurturing.
2. It can develop long-term client loyalty
B2B buyers can’t afford to switch from one supplier to another like an individual consumer would do; it’s expensive and time-consuming. So, after a B2B franchise establishes a connection with a client and demonstrates its dependability as a supplier, the buyer is likely to commit to continuing the relationship.
Whereas customer trends are constantly changing, B2B sectors tend to evolve at a much slower pace. A franchise may need longer to secure a sale, but once it’s established a relationship, it can benefit from ongoing client loyalty.
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3. Franchisees can generate accurate financial projections
In the B2B sector, some clients agree to long-term contracts to obtain preferential rates. Securing these ongoing deals helps create revenue estimates, as business owners know how much income to expect in the future.
These projections can also help would-be investors decide whether to join the franchise. Often, franchisors provide estimates of the amount of revenue would-be franchisees could make, but they can be exaggerated or inaccurate. If many partners are able to secure long-term deals, the franchisor can instil confidence in prospective investors.
4. It may be able to benefit from fewer product returns or complications
While individual consumers might make impulsive decisions or interact with businesses in a rude or inconsiderate way, corporate entities are likely to behave pragmatically and professionally. Clients will make careful decisions for the good of their businesses, doing due diligence to consider criteria like product quality, longevity and price.
Plus, while B2C stores usually generate a lot of product returns, B2B retailers can largely avoid this issue, which saves a lot of time, money and effort.
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5. It could sell made-to-order products
Often, businesses need stock made to certain specifications. Although creating products to specific requirements might seem more hassle than selling standard items, the process can have its benefits.
Firstly, B2B franchises creating these tailor-made products can increase their pricing to reflect the time and effort of making them, which helps boost profits. Secondly, companies can develop a reputation for excellence, delivering customised items to fully satisfy client requirements.
Finally, making these products practically guarantees a purchase at the end of the process and - if the client is happy - a long-term customer relationship.
6. It may be able to maximise efficiency through e-commerce
B2B retailers can boost their working efficiency by selling products online. Rather than operating huge warehouses or taking endless phone orders, wholesalers and other B2B companies can ease the selling process by managing an e-commerce space.
Having a website makes it easy to market products and demonstrate how they work with tutorial videos and client testimonials. Customers can bulk-buy orders in a flash and instantly receive a confirmation email. This process saves time for B2B retailers and a lot of money and hassle, as they no longer have to finance physical premises and staff to run them.
7. It can establish mutually beneficial client relationships
Depending on the business buying from a B2B company, the two organisations may be able to establish a mutually beneficial relationship. If the client is also a B2B enterprise, the other business may be able to use their services and even strike up a deal to save money. Securing this type of relationship is a win-win for both parties.
The current state of the B2B industry
In the UK, B2B companies belong to several key sectors: science and technology, professional services, communication and construction. Production and manufacturing is another major area for B2B firms; although there are relatively few businesses operating in this sector, many have an international presence, with sprawling global networks.
We are no longer a nation of shopkeepers, we are a nation driving the success of other corporations around the world.
—James Farmer, B2B Marketing co-founder
Over 80 percent of UK businesses sell to other commercial entities in some way, and almost 40 percent get most or all of their income from B2B activity. In fact, over half of FTSE 350 companies are solely B2B businesses. Overall, the sector generates £1.7 trillion annually for the UK economy, and £21.7 billion in corporation tax (B2B Marketing).
Running your own business with a B2B franchise
Hopefully, this article has demonstrated just how many opportunities lie in the B2B franchise sector. If it has persuaded you to launch your own B2B business, you may be pleased to know there are plenty of franchisors offering the chance to join an established organisation. Just take a look at our list of profitable and fulfilling B2B franchise investment opportunities on offer to get started.
Alice Tuffery, Point Franchise ©