For example, if you want to get involved in a franchise business that’s focused on renewable energy and maybe even sustainability, no problem; do a Google search of “green franchises.” Maybe you’re comfortable calling on customers and giving sales presentations; there are several opportunities (such as Sandler Training) available for you. Do you like food? (Silly question!) If you’ve always wanted to own your own restaurant, there are hundreds of unique food franchises, such as these gathered by Franchise Direct, to choose from.

Not all franchises require a commercial space; Pillar to Post and Mosquito Squad offer ways to be your own boss without having to negotiate a lease for the business. Another advantage of investing in a home-based franchise is that you can be up and running pretty fast. One more thing: Remember that your customers aren’t going to find you if you’re sitting at home. You’re going to have to do some serious networking. Your networking should always include being on the lookout for strategic referral partners, as John Jantsch suggests.

Some Things Haven’t Changed

In last year’s post on the top franchise trends, I wrote about the fact that small business lenders weren’t all that excited to lend money for franchise startups. As much as I don’t want to start going all negative here, it’s still true today; lenders aren’t lending enough, The New York Times reports, especially to small businesses.

I also wrote about the fact that homes had gone down in value: “Real estate is usually a major part of a franchise candidate’s net worth statement, and that’s now a problem. Home values are low, and in some cases, homes are underwater.”  According to Carole Cohen, a Cleveland Realtor who’s really dialed into the market, “Home prices in our area are down 26 to 28 percent.” (Her income took a hit because of the low prices.) Carole works for a family-owned real estate company, but there are real estate franchises, too, as this Red Carpet report points out.

What Has Changed?

The franchise industry’s focus has changed. By “industry,” I really mean only one part of the industry, but it’s a big one: The International Franchise Association, which is an association that promotes franchising.

I’m still trying to decide whether the combination of social media, and the business transparency that tends to be associated with it, has turned the IFA into a more powerful industry force, or not. On one hand, some of the higher-ups from the IFA, like Matt Haller, the Sr. Director of Communications, are starting to get a bit more active on Twitter, and have started to write some blog posts. However, the growth of social media has evened the playing field in the franchise industry; now voices outside of the IFA–independent ones–can be heard loud and clear, too. The industry is changing, and anyone with an Internet connection can watch some of the changes that are happening in real time.

For 2012, the IFA has decided to focus on two areas in 2012; one is nothing new, but the other one…

1. Military Veterans 

Veterans who are interested in possibly becoming franchise owners will undoubtedly run across the VetFran program. This program, founded in 1991, features 400-plus IFA member franchisors that offer training, mentoring and financial incentives to veterans interested in small business ownership and/or a career path in franchising. To date, approximately 2,000 veterans have become franchise business owners through this popular program.

I’ve personally assisted with our veterans, and have even been able to help a few of them become franchise owners. Today’s veterans have three things going for them when it comes to operating a franchise business. They are:

• Finely-honed leadership skills
• Personal discipline
• Comfort with technology

I’m all for helping the men and women who’ve made major sacrifices to help us keep our freedom. Thousands of veterans are returning home from our wars, and need jobs and opportunities. For veterans who want to become business owners, franchising is certainly one path that they should look into.

Of course, they’re going to need small business loans in order to start these franchises, and that’s the part that worries me. That’s because a large number of veterans have had several tours of duty. It’s not like they’ve had a chance to build up their nest eggs. Hopefully, banks will come up with some creative loan programs to help veterans get into business for themselves.

2. Pro Athletes 

There’s really only one reason that the IFA is courting professional athletes, and it’s pretty obvious; the athletes don’t need small business loans. Can you think of any other reason?

According to the Bureau of Labor Statistics, there were about 16,500 professional athletes and sports competitors who held jobs as of 2008. This includes every sport, including all of the athletes who aren’t ready for prime time yet (that is, the minor leagues).

The thought of having 16,000 wealthy prospective franchise owners eventually searching for business opportunities in the world of franchising is a nice one. After all, what franchise development director wouldn’t want to have a slew of highly qualified candidates like Magic Johnson requesting information about a particular franchise concept?

While I don’t see hundreds of former professional athletes clamoring to become franchisees, if enough of them do, it could be terrific publicity for the franchise industry. I just don’t see it as a game-changer. (That sporting reference was unintentional!)

2012 will be a very important year in franchising. If the U.S. economy continues to struggle, growth will continue to be sparse in the franchise industry. But if things finally do start to turn around, there’s a lot of pent-up demand for the great products and services that franchises provide to both consumers and businesses.

If lenders start making more loans available for people who want to start businesses, there’s a large pool of prospective franchisees sitting in the wings, waiting to take their shot at The American Dream.

The franchise community is ready and waiting to help them do just that.

Franchise Photo via Shutterstock

From Small Business Trends

The Top Franchise Trends for 2012

There are 3,000 different franchises available in the US, and they fall under five general categories.  Cost-wise, they range from $50,000 to over $1,000,000.

Food Service

This category includes everything from:

• ice cream shops like Dairy Queen, ($382,000-$1,828,000 total investment);
• to fast food franchises like Buffalo Wild Wings, ($1,389,200 – $3,148,200 total investment);
• to sandwich shops like Subway ($84,300 – $258,300)

Since food-related franchises are the most visible of all franchise types, (as well as being the highest percentage of franchises) it’s a common starting point for would-be franchise owners, who like the idea of associating with a popular type of business.

Retail

This category of franchising is a highly visible one. Retail franchises are for people that want customers to come to them, as opposed to having to go out to find them. For instance, The UPS Store ($150,984 – $337,946) has thousands of locations. Other retail franchise businesses include:

• Batteries Plus, ($159,300 – $313,900)
• EmbroidMe, ($85,460 – $232,465)
• Supercuts, ($112,550 – $243,200)

It’s common for retail franchise owners to own more than one store; they’re called multi-unit franchisees.

Personal Services

This sector of franchising tends to cater to busy families, and more recently, seniors. Service Brands International is a great example of a franchisor that focuses solely on this busy segment. Their brands include:

• Mr. Handyman, ($91,500 – $132,600)
• Molly Maid, ($71,525 – $116,200)
• 1-800-DryClean, ($59,800 – $78,950)
• Protect Painters ($78,850 – $97,950)

Franchisors like US Lawns, ($48,500, $56,000) and 1-800-Got-Junk, ($107,400 – $140,400) also provide much-needed services.

When it comes to keeping our senior citizens in their homes, (as opposed to a nursing home):

• BrightStar Care, ($90,895 – $155,723)
• Synergy Homecare, ($53,300 – $115,300)
• Visiting Angels, ($52,285 – $84,035)

Those are just three of the over 30 different senior care-related franchises being offered. Read about the senior care franchise numbers.

Business to Business

This category of franchising attracts sales and marketing minded folks. These types of franchises are outbound franchises; franchisees go out to find their clients and customers:

• Servepro ($127,300 – $174,700) is a company that specializes in water and fire damage clean-up and restoration.
• Jani-King ($13,150 – $93,150) is in the commercial cleaning business, servicing office buildings, restaurants, and stadiums/arenas.
• TeamLogic IT ($91,850 – $148,850) is a franchise that provides IT consulting services to small businesses.

Several types of home-based franchises fall into the B2B category, too. OneCoach ($40,100 – $318,800) franchisees offer consulting/coaching services to small businesses. Cost-cutting is an important part of running a business, so franchisees of Expense Reduction Analysts Inc., ($66,100 – $81,750) consult with business owners and executives on how to do just that.

Children’s Services

When it comes to children, consumers generally spend their money, freely. Opportunities in this sector abound, and for people that love children, this is a popular sector. In January of 2002, President Bush signed the No Child Left Behind bill, which increased funding for school systems. Since then, the school systems have reached out to the franchisees of Sylvan Learning, ($179,069 – $305,090) and Huntington Learning Centers, ($197,450 – $382,450) to help them with students who may be struggling in school.

Parents that need a place to hold their children’s birthday parties can go to Pump It Up, which offers an indoor arena featuring giant inflatables. Child safety is an important topic these days, and the 250 locations of Ident-A-Kid,($34,005 – $44,205) work with schools and community centers to provide identification cards for children.

Next we’ll cover how to find and research franchises.  Click on page 2 below to continue . . .

From Small Business Trends

Types of Franchises And How To Find Them

Pros

Operating system:  

This is the system developed by the franchisor that enables the business to be easily replicated by franchisees.  This includes standard operating procedures and methods. By getting an already-established operating system, it means you don’t have to start from a blank sheet of paper creating everything yourself for your business. When I think of “systems” I think of McDonald’s. They’re the franchise industry standard.

Formal training program:  

Good franchisors provide good training to franchisees.  This usually includes classroom-style training at corporate headquarters. Franchisees are taught things like pre-opening procedures, daily operations, marketing techniques, hiring practices, software use, and more. There’s usually on-site training also, right at the new franchisee’s location.

Read more about franchisee training at Entrepreneur.com.

Specific marketing and advertising plan:  

Part of the general business plan, the franchisor will have a proven, detailed plan that allows its franchisees to rapidly get to market with their products or services. Here’s what a franchise marketing plan looks like, courtesy of the folks at Palo Alto Software.

One new trend in franchise marketing involves automated solutions that are designed to help franchisees at the local level. Companies like Balihoo are leading the way with this new technology.

Product supply line / purchasing power:  

When the franchisor buys products that the franchisees will use or sell, there’s a discount involved, because the franchisor is really purchasing these goods on behalf of  a large number of franchisees.  The franchisor has bulk buying power.  This makes it tough for an independent business to compete on price with the franchisee. 7-Eleven (over 36,000 stores worldwide) is one franchisor that does this quite well.

Support staff:  

Usually based at the franchisor’s corporate headquarters, the support staff can help franchisees with whatever problems they are experiencing. These support areas include, marketing, technology, sales, real estate, and operations. Some franchisors have field reps that go out to visit and assist franchisees at their locations.

Cons

Rules:  

Part of the attraction of the franchise business model is of course, the system. For a system to work properly and effectively, the users of the system must follow it closely. The franchise operations manual contains pages and pages of rules that franchisee’s must follow.

For instance, if you’re a franchisee of Ace Hardware, there will be certain items that you must carry in your inventory. If you invest in a Seattle’s Best Coffee franchise, you’re going to have to be open certain days and times. You’ll also have to purchase and use the technology that the franchisor has chosen. Everything that you’ll need will be disclosed to you, before you sign the franchise contract.

Complex legal documents:  

All franchisors that are registered in the United States must have a Franchise Disclosure Document (FDD).  All franchise buyers must be presented with the FDD before they are permitted to purchase a franchise business. There are 23 items listed in this document, including specific information about the executives of the franchise, litigation, start-up costs, franchisee obligations, franchisor assistance, and information about site selection, territory restrictions, and more. The actual franchise contract is included in the document, and it’s written in fairly complicated legalese.

Reputation management:  

Your local reputation is only as good as your franchisor’s. If the franchise brand runs into trouble, you will probably suffer at the local level. Case in point:  a pretty distasteful video that two employees of a local Domino’s Pizza franchise filmed, was posted on YouTube in 2009. Things got so bad that the president of Domino’s decided to film an apology and put it up on YouTube, himself. Dominos franchisees were definitely affected by this negative publicity.

Limitations on product/service offerings:  

If a franchisee owns a franchise like SignsNow, he or she is only allowed to sell signs, banners, and related sign materials. If the franchisee wants to add window cleaning services to the business, if it’s not in the franchise agreement, then it’s not going to be permitted.

* * * * *

When it comes time to decide on buying a franchise — or not buying a franchise — you will have to weigh these pros and cons.  You know your tolerance level for things such as needing to follow rules … versus making your own rules.  You also know whether you are the type of person who can create something from scratch, or whether you are more successful when systems and processes are already set up for you.  You will need to think long and hard about what is right for YOU.

From Small Business Trends

Pros and Cons of Buying A Franchise

It used to be that folks would graduate from college, land a well-paying corporate job, and move up the ranks in the company until it was time to retire. Those were the days…. Today, people are graduating and landing corporate jobs, but they’re finding themselves out of that job 4 years later.    (According to the Bureau of Labor Statistics, the median number of years that wage and salary workers had been with their current employer was 4.4 as of January 2010.) Is it any wonder that we’re seeing more and more people take a serious look at other career alternatives, including franchise ownership?

What is a franchise?

A franchise typically involves the granting by one party (a franchisor) to another party (a franchisee) the right to carry on a particular name or trade mark, according to an identified system, usually within a territory or at a location, for an agreed upon term. The franchisee is granted a franchise license to use the franchise company’s trademarks, systems, signage, software, and other proprietary tools and systems in accordance with the guidelines in the franchise contract.

Not only must you run the business according to the operations manual and the franchise contract, but you must pay them an upfront franchise fee (license fee), and ongoing royalties. The average franchisee fee ranges from $25,000 -$35,000, although some franchise fees can go well over $100,000, as in the case of what’s called a Master Franchise. In a Master Franchise, like Jan-Pro Cleaning Systems, one buys the rights to an entire area, and it’s usually based on population.

The royalties are usually based on a % of gross sales. Royalties range anywhere from 4%, like over at Batteries Plus, a retail storefront type of franchise, all the way up to 9% as in the case of MRINetwork, an executive recruiting franchise. Some franchisors like Fantastic Sam’s, a hair salon franchise, charge a flat monthly royalty fee.

In addition to royalties, franchisees usually pay into a national monthly advertising/marketing fund, which amounts to 1-2% of gross sales.

How big is franchising, as an industry?

According to a report put out by the IFA (International Franchise Association), franchising is huge. As of 2005;

• There were 909,253 franchised business establishments in the United States.
• Franchised businesses provided more than 11 million jobs, or 8.1 percent of the national private-sector workforce.
• Franchised businesses supplied an annual payroll of $278.6 billion, or 5.3 percent of all private-sector payrolls in the United States.
• Franchised businesses produce goods and services worth $880.9 billion per year, or 4.4 percent of private-sector output in the United States.

(Go to the IFA website to see the full report.)

Differences Between a Franchise Opportunity And a Business Opportunity

They’re both really “business opportunities.”

• A franchise business provides a detailed, step-by-step, business “blueprint.” There are very specific rules that must be followed, including the use of approved signage, and marketing materials, hours of operation, etc. Franchisors also provide ongoing support to their franchisees. Franchising is also highly regulated, and there are a lot of things that a franchisor must do to legally set it up.
• A non-franchise business opportunity also provides a “blueprint,” but it’s usually not as detailed.  There just aren’t as many rules, when compared to a franchise. The actual contract that you’re given to review prior to signing a business opportunity type of business may be one to two pages in length. Franchise contracts are 20 to 40 pages long. A good example of a business opportunity would be a mall kiosk type of business. The kiosk owner is provides with a pre-packaged set-up including the actual kiosk, the inventory, and preferred methods to make sales. In addition, there are no ongoing royalties, as with a franchise. Most of the time, pure business opportunities have a much lower investment than a franchise business. One reason for this is that once someone buys a business opportunity, the support provided by the business opportunity seller is very limited in most cases, as opposed to a franchisor, who must invest in an infrastructure that can handle the ongoing needs and contractual obligations of its franchisees.

From Small Business Trends

Introduction To Franchising

Back in the “Beaver Cleaver” days, if you wanted to be a white collar worker, you would go to a decent college and study hard. During your summers off, you would grab an internship with one of the local corporations you were interested in working for. Hopefully, you’d impress them enough to warrant a formal job offer after you graduated.

Then you’d start climbing the ladder.

If you were a fairly decent ladder-climber, every few years you’d get promoted, which meant more money and some added perks. Expense accounts, more vacation time and maybe even a nicer office were some of the more common perks back in the day. As strange as it sounds, you may have even been able to pick out your own company car.

Those were the days.

Fast-forward to 2011. I remember attending a conference in which Steven Little was the keynote speaker, several years ago. What he said in that speech still kind of freaks me out.

He said that today’s college graduates will have seven different careers. That’s not a misprint. Little didn’t say, “seven different jobs,” he said, “careers.” If he’s right, I’m wondering how college students go about preparing for a life of career changes, as opposed to job changes.

Some of the changes that are taking place in people’s careers are speed-related; business changes so fast these days. Technology has certainly played a huge role in these changes. The Internet has opened doors that were once impossible to open. Small businesses can be big businesses online. It’s a lot easier to do business globally.

Companies are doing more with less. Amazing computer software systems have eliminated the need for huge accounting and human resources departments. Automation systems in the manufacturing sector have enabled companies to scale back on the amount of employees needed to run shifts.

The downward trends in employer loyalty are also contributing to the death of the traditional career.

Milan Moravec, a management consultant, recently wrote:

“Until recently, loyalty was the cornerstone of that relationship. Employers promised job security and a steady progress up the hierarchy in return for employees fitting in, performing in prescribed ways and sticking around. Longevity was a sign of employer-employee relations; turnover was a sign of dysfunction. None of these assumptions apply today.”

Read his comment on The Performance Improvement blog.

So, how can you adapt to the huge career shifts that are taking place?

1. Mentally become a “free agent.” It’s absurd to think that your current job will last more than five years or so. (Obviously, lots of factors can affect this, but I’m using a broad brush here.) One-page resumes need to always be at the ready. Employees need to anticipate when things at their companies are about to change. Take calls from recruiters, and be nice to them. Pay it forward. They’ll remember you.

2. Find ways to generate extra income. Check out online income opportunities. I’m not talking about those lame “make money online” infomercials that are on television during the wee hours of the night. If you look hard enough, you’ll find that there are ways to generate some income via the Internet. My friend (and Small Business Trends contributor) Jim Kukral has a fantastic Internet marketing resource page set up. There’s bound to be something there to explore.

3. Take a class. A plethora of classes are offered day and night. Brush up on some skills. Learn something new. Learn a new career. Online classes are affordable and convenient. Community colleges can be great places to take a course, too. Here’s a list of community colleges, state by state.

4. Buy into a company. I know that lots of people have been left holding useless stock options from the companies that they’ve worked for and that have gone under, but it’s still worth looking into employee equity opportunities. Maybe there’s a small company that’s super-entrepreneurial in their thinking, and they only want to hire people who will buy in. Some people actually love their jobs; having real equity can be pretty exciting, too.

5. Become the owner of a franchise business. Franchise ownership provides a corporate structure (which can be good for those used to working within one) and real ownership. It’s true that the franchise business model is a rigid one (which means that there are rules to follow), but it’s still your own business. You are the one opening the door to your  business, every day. It can be quite empowering. Here’s what’s trending in franchising.

Traditional career tracks are becoming extinct. Working at the same company for 30 years is a thing of the past. Don’t be frightened by this change. Instead, feel a sense of ownership. That’s because you’re really in charge of your own career–like never before.

From Small Business Trends

What Happened to Your Career?

In addition to lowering the U.S. credit rating, Standard & Poor’s stated, “We have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy.” Sounds like all the bickering that took place in Washington contributed to the downgrade, and there’s probably more of that to come.

Predicting the effects of an economic downturn on new franchise sales used to be a lot easier. If the downturn involved lots of unemployment, especially in middle management and executive areas, franchise interest increased. In addition, there was lots of interest (no pun intended) from lenders; they wanted to loan money to qualified franchise candidates.

Obviously, things are quite different this time around because of the small business lending situation, especially with startups. Although there’s been a little light at the end of the tunnel, lenders still aren’t that anxious to approve franchise startup loans, and that’s impacted new franchise sales. But franchisors aren’t giving up; some of them have taken matters into their own hands, and are intimately involved in the loan process from day one.

One such franchisor is Shelley Sun, one of most dynamic franchise professionals I’ve ever met. Shelley is CEO of Brightstar Franchising  LLC, a Chicago-based senior services franchise. According to a recent article in the Wall Street Journal, fewer than 10 percent of BrightStar’s 177 franchisees were able to secure loans. This prompted Shelley to hire a financing specialist to assist franchisees with the loan process, and it’s worked; 75 percent of her franchisees are getting their small business loans approved. Other franchisors are starting to follow her lead, so if you know someone who’s been downsized who specializes in small business loans, there could be some opportunities for them in the franchise industry.

Franchisors are a pretty entrepreneurial bunch; I’m confident that they’ll continue to come up with innovative ways to sell new franchises, as long as there’s a captive audience. But it’s the “captive audience” part that concerns me.

The uncertainty that’s been created by Standard & Poor’s downgrade could make it a lot more difficult for the current crop of franchise candidates to pull the trigger and become franchise owners. They may actually decide to skip franchise business ownership altogether, and make the fear-based decision of jumping back into the job market.

In a scenario like that, not only will franchisors lose new franchise sales, but the franchise candidates who decided to re-enter the job market could find themselves in an incredibly competitive arena with people who have been out of work for months….even years.

Here are some suggestions for those interested in exploring franchise ownership options in uncertain times:

1. Put together a detailed net worth statement. You need to know exactly where you stand financially before you start looking at any franchises.

2. Involve your spouse, significant other or anyone else that will be affected by your decision to become a business owner; their insights will prove to be valuable.

3. Align your top skills with franchise opportunities that will allow you to use them for maximum benefit. For example, don’t invest in a franchise that requires the owner to make cold calls all day, fivve days a week, in order to get customers, if you’ve never been in sales.

4. Go slow. Explore the franchises you’re interested in at a slow but steady pace.

5. Become an expert at fact-gathering. Ignore anything you hear during your research that’s hearsay.

6. Engage the services of a competent franchise attorney when you get close to decision time; don’t hire a general practitioner

7. Try to work with an SBA Preferred Lender located in your community. They can help streamline the loan process

8. Be prepared. Investing in a startup franchise business is a long-term play; you’ll need to forego a paycheck for awhile, so make sure you’re in a position to do that. One more thing: In volatile times like these, you’ll want to make sure that you have some extra working capital available to weather any more economic storms, so make sure  you figure that into your business plan.

9. Find a mentor. Focus on finding a very successful franchisee who is willing to be one phone call (or one email) away during your first few months as a franchise owner. You’ll save yourself a lot of aggravation. This should be in addition to any support that you’ll be receiving from your franchisor.

10.  Go back. If you decide to move forward, one way to work through the nervousness  you’re going to be feeling is by going back to the moment you made the decision to become a business owner, and try to re-live that moment. Something compelled you to do what you’re about to do. Is that “something” still there? If it is, you know what to do. If it isn’t, it may be time to move on to something else.

Even in volatile times, becoming a franchise owner is a viable option for those seeking change. If you’re thinking of exploring your options, doing so carefully and methodically will go a long way.

From Small Business Trends

Will The Standard & Poor’s Downgrade Impact New Franchise Sales?

The fact that I’ve been chosen more than once has been a source of amazement for my family members, considering the fact that a simple Google search of my background reveals that I’ve never even attended law school. So much for vetting.

My first appointment as Judge involved email marketing, and the 2^nd one involved a franchise.  Both times, I felt completely confident with the decisions I rendered. I even received several letters complimenting me on my judiciary expertise. Go figure.

So, unless the Judiciary Police catch up with me before I judge the Small Business Influencers Award, I’ll get to render yet another decision. Hopefully, no one will tip them off.

I’m thinking that one of the reasons that I was chosen to Judge this Small Business initiative is because Anita Campbell and Ramon Ray, (the folks who came up with this cool idea) know about my unbridled passion for all things related to small business. I love discussing its many variants, (like franchising). I love the fact that small business is a serious job creator. The other judges are just as passionate.

The other possible reason is one that sometimes causes friction … at work, and at home; my straightforwardness. I’m blunt. I speak my mind, stick to my guns, and let the chips fall where they may. You’ll never have to guess what my position is on something, and I consider that to be not only a time-saving tool for people that want to get to know me, but also an important prerequisite to become a judge.

In all seriousness, I really consider this to be an honor to get to be involved in a small business initiative of this caliber. I get to see this unfold from my judge’s chair. I happen to know lots of people that are really, really influential in small business, and it’s going to be great to see some of them get the recognition they deserve. But, I don’t know who all the small business influencers are, and being a judge will allow me to learn about some of the ones that I’m not familiar with.

The timing of this initiative couldn’t be better; the role of small business as it relates to our nation’s economy has really been front and center of late. For example, to start out National Small Business Week this year, President Obama made the following proclamation:

“From the family businesses that anchor Main Street to the high-tech startups that keep America on the cutting edge, small businesses are the backbone of our economy and the cornerstones of America’s promise.”

Other Presidents have realized the important role that small business plays in our economy, too. In a 1988 speech to students at Moscow University, President Ronald Reagan said that, “Entrepreneurs and their small enterprises are responsible for almost all the economic growth in the United States.”

Hearing speeches about the importance of small business is one thing; it’s quite another to read actual data that supports them . Allow me to share the following, courtesy of the *U.S Small Business Administration:

Small firms:

•    Represent 99.7 percent of all employer firms.

•    Employ half of all private sector employees.

•    Pay 44 percent of total U.S. private payroll.

•    Generated 65 percent of net new jobs over the past 17 years.

•    Create more than half of the nonfarm private GDP.

•    Hire 43 percent of high tech workers (scientists, engineers, computer programmers, and others).

•    Are 52 percent home-based and 2 percent franchises.

•    Made up 97.5 percent of all identified exporters and produced 31 percent of export value in FY 2008.

•    Produce 13 times more patents per employee than large patenting firms.

*Source: U.S. Dept. of Commerce, Census Bureau and Intl. Trade Admin.; Advocacy-funded research by Kathryn Kobe, 2007  and CHI Research, 2003; U.S. Dept. of Labor, Bureau of Labor Statistics.

As you can plainly see, small business greatly impacts our economy. It’s just that not everyone knows  how important it is for us to have a thriving small business community,  and we could always use a few more advocates to help get the message out, especially during down cycles in the economy.

One way to get the message out is to participate in this initiative by helping recognize the Small Business Influencers who you feel have made meaningful and lasting impacts on the North American small business market. All you have to do is nominate them by July 8th, at 11:59 pm Los Angeles time. Voting will commence shortly afterwards. Find out all the details over at http://influencers.smallbiztrends.com/how-it-works.

To date, there have been 287 nominations published; and thousands of tweets on Twitter.

If you believe in the power of small business, please join Small Business Trends and SmallBizTechnology.com who have teamed up, with the generous sponsorship of Blackberry, to create the Small Business Influencer Awards. Help pick the Top 100 Small Business Influencers.

From Small Business Trends

Judging The Small Business Influencers

Confused?

The answer to the question “Are banks finally starting to lend again?” also varies based on what’s being written and where. Even Small Business Trends’ own Scott Shane weighed in.

For example, according to a recent survey given to members of the International Franchise Association, 39 percent of franchisors report that more than half of their franchisees and franchise prospects are unable to obtain needed financing – up from 33 percent in a similar survey last November. Only 5 percent report their franchisees and prospects have had no difficulty with credit access, compared to 8 percent in the November survey.

Compare that negative news with a story I just read in the Dayton Daily News about Chase Bank:

“Chase said Thursday it loaned $505 million to small businesses in Ohio last year, marking a 30 percent increase over 2009.”

The article also stated that according to bank executives, Chase made loans to 9,800 small businesses with annual revenues of less than $20 million.

Even more positive was the fact that Chase (according to the article) added more than 500 business bankers and created what it calls a “second-look” program to look for ways to extend credit to companies whose initial loan requests were rejected.” (Read The Dayton Daily News article.)

An increase in small business lending in Ohio, which is a state absolutely ravaged by the economy, is certainly great news. But let’s go back to the IFA survey again:

“60 percent of franchisors say they have seen no improvement in credit access in recent months, compared to 65 percent who reported the same conditions in the November survey.  Only 3 percent report they have seen a significant improvement in credit access compared to 1 percent in the November survey.”

You can read the IFA survey for more information.

Do you see what I mean?

Now, it’s not like The White House and the Small Business Administration aren’t trying to help improve small business access to capital.

There’s Startup America, which is the White House initiative to “celebrate, inspire and accelerate high-growth entrepreneurship throughout the nation.” As was explained in a recent private conference call with the Small Business Administration (several Small Business Trends writers were invited), the SBA’s Reducing Barriers website was created so that anyone can submit their answer to this really important question, posted right on the website: “What concrete ideas could reduce federal barriers for entrepreneurs trying to start and scale companies?”

One look at the ideas submitted to the site so far shows that most of the ideas have to do with improving access to capital.

Recently, the Business.gov website was merged with the SBA.gov website and totally revamped. The focus of the new site is easy access. The Small Business Administration is really trying to make the process of getting capital a lot more streamlined. The new site is a lot friendlier to people who are looking for information about getting small business loans (or any kind of small business information). All they have to do to get started is go to the section of the site named SBA Direct and type in their ZIP code. Go ahead and try it.

Not only is the SBA trying to make things easier for current and future small business owners, they’re trying to make things a lot simpler and more streamlined for banks, too. They recently rolled out a section of their website devoted solely to lenders – The SBA Lender Toolkit. Look at what it includes:

• Find a Loan Package, which allows users to select a loan type and download all the associated forms so they can prepare more accurate loan applications

• Find a Service Center, which enables the lender to search for service centers based on loan processing parameters, loan type and stage

• Lender FAQs, which helps lenders get answers about the SBA’s approach to financing and underwriting loans

• Weekly Lending Report, which provides updates on interest rates and important lending news

The SBA is certainly going out of its way to cut out some of the bureaucracy that has existed for years and get things moving in the right direction.

The credit crunch has been going on for a solid two years now. It feels like the entire small business community has been mobilized to get the lenders lending again. Let’s hope that they start doing what they’re paid to do — lend.

From Small Business Trends

State of Small Business Lending: Better or Worse Than Last Year?

Steve Millard, COSE President and Executive Director, said that event was being put on to help “redefine” the future of the local small business community.

Hundreds of small business owners and managers were in attendance, and it was obvious that they were there to not only voice their concerns, but also contribute actionable ideas to help shape this region’s future.  The timing for the Summit was good; signs of optimism are starting to appear.

The Summit, facilitated by CWRU Professor of Organizational Development Ron Fry, was an “AI” (Appreciative Inquiry) Organizational Summit. The Professor billed it as “not your typical planning meeting.” He was right on the mark with that statement.

This was not a PowerPoint event. Professional speakers were nowhere to be found. This event was all about what this 300-person-strong group could bring to the table. It was about ideas.

If you’ve never heard of AI, the folks at Wikipedia define it as:

“A particular way of asking questions and envisioning the future that fosters positive relationships and builds on the basic goodness in a person, a situation or an organization. In so doing, it enhances a system’s capacity for collaboration and change.”

The handouts that each attendee received stated that, “the whole system participates—a cross-section of as many interested parties as is practical. That means more diversity and less hierarchy than is usual in a working meeting, and a chance for each person to be heard and to learn other ways of looking at the task at hand.”

The room was filled to the brim with round tables, and our table had a group of six attendees, along with a COSE employee to help keep us moving through the AI process. We were asked to choose partners; my partner was part owner of a local Sandler Sales Training franchise.

The first part of the process involved us both sharing a recent time when we were really proud to be a small business owner/leader. We were told to take notes when our partner was sharing, and that we would be using them later in the session.

Then we dug a little deeper and discussed what past collaborations, networks and learning experiences helped shape the outcomes of the stories we had presented to each other.

Another part of the process included sharing instances when we were able to leverage community alliances and networks to overcome a small business hurdle or barrier to achieve a greater result.

We then went on to discuss ways in which our local community currently supports and fosters small business success. All those at our table were able to name several organizations and institutions that were doing a good job supporting the small business community, and that would be worth preserving, or even amplifying, as we move towards the future.

Speaking of the future, the next part of the process involved our vision for the future, as it pertained to our small business success as a community. Of all the things we did, this was probably the most enlightening.

We were told to imagine what things would be like for our community in February 2015, as if a miracle had happened. We imagined our businesses and our community experiencing success like never before. We were told to share specific images that came to mind.

Most of the images that were shared came in the form of newspaper headlines:

“Cleveland Becomes a Portal for International Business Success”

“Ohio Unemployment Is Lowest in the Country”

“Major Shortage of Residential Housing in Metropolitan Cleveland Reported”

“8 Out of 10 Local College Grads Are Choosing to Remain in Cleveland”

“Browns Win Super Bowl!”

You get the picture.

Finally, a member of each table presented their ideas for change to all of the attendees. Some of the ideas included:

• The creation of a small business lending hub (credit union style)
• A one-stop concierge-style online resource destination for current/future small business owners
• A small business incubator located right at COSE headquarters
• More small-business-focused grass-roots involvement in local communities

There were lots of other great ideas presented, and COSE will be providing a summary of the event (including results of the voting on the ideas) in the near future.

I found the format of the COSE Small Business Summit to be really powerful. It was a real chance for real small business owners to get together and propose real ideas for a region that needs them.

From Small Business Trends

A Small Business Summit With No Small Business Experts

As of this writing, there’s been a serious reversal to the statement above about how franchising affects our economy. Now, the economy is affecting the franchise industry, and that in itself is a major trend worth discussing.

First off, there’s the continuing lack of traditional small business startup funding. This makes it a lot harder for would-be franchise owners to become franchise owners. Some of the more resourceful prospective franchise owners are looking at alternative lending, and are succeeding at launching their franchises in this way.

Secondly, unemployment still remains high, and in 2011, no major gains in job creation are being forecast.

Traditionally, downsized middle managers and executive-level employees have been a popular target of most franchisors. This target group usually has a decent severance package that they’re able to survive on for a bit, and they’ve also typically been able to accumulate a decent amount of savings, adding to their net worth. (Franchisors always look at net worth statements, as they’re a major qualifier.)

Real estate is usually a major part of a franchise candidate’s net worth statement, and that’s now a problem. Home values are low, and in some cases, homes are “underwater.” (For instance, the housing market in Las Vegas is currently 80 percent underwater.)

So, what does this all mean?

This means that there are still going to be a good amount of downsized workers looking into franchise ownership, but there will be fewer who have the financial qualifications to get approved by the franchisor and the banks.

It’s too soon to tell if the franchisors will be adjusting their qualification criteria.

As for the banks, I have no reason to think that they will become more flexible in the short term, either.

The credit crunch has had a major impact on franchising, and even with several pushes by lobbying groups like the International Franchise Association to loosen credit up, the credit market is still not very loose.

Intrepid souls who are serious about becoming their own bosses will still find ways to buy franchises in 2011. But patience will be a needed virtue, as the process itself will continue to be a slow one.

The trend that I’m about to share with you is one that’s happening as a direct result of the credit crunch: the conversion franchise.

In a conversion franchise, an independent business, like a local convenience store, pays a franchise fee to become part of a franchise system, like 7-Eleven. Both parties benefit in this transaction:

• The independent store owner gets instant brand recognition and buying power.
• The franchisor gets an instant royalty stream.

Here are five popular conversion franchises courtesy of MSNBC’s Your Business and OPEN Forum by American Express.

In general, conversion franchises are easier to get financed because of the existing revenue stream of the independent store and the brand recognition/proven model of the franchisor. I expect this franchise trend to continue to increase in popularity.

There’s an upward trend in franchising that continues to surprise people both in and out of the industry.

In most cases, in a down economy (like we’ve been experiencing for the past two years), consumers tighten their belts and mostly avoid products and services that are considered luxuries. People tend to focus on their needs…not their wants.

Massage Envy is one franchise business in a fast-growing segment that’s really bucking the odds in a serious way. These membership-based facilities, located in high-traffic areas, offer everything from deep-tissue massage to massages that focus on pressure points. (There’s even something called “migraine therapy massage.”)

Not only are consumers opening their wallets to experience these spa-like services, but people who are looking to become their own bosses are buying franchises like Massage Envy, Massage Heights and others at a pretty rapid pace. (Even with an investment of $290k-$470k.)

Food-related franchises are very popular, and every year, new concepts and ideas are tried. 2011 will see the continued growth of a newer type of food franchises: mobile restaurant franchises.

Mobile restaurants are quite the trend in certain areas of the country, and from an investment perspective, it’s a way for passionate foodies to get into business for themselves inexpensively (compared to opening up a 5,000-square-foot restaurant.)

One mobile restaurant concept, Sauca Foods, out of Washington DC, recently won the 1^st place prize in The Great Emerging Franchise Challenge. Vermont’s ZooHoos Eatery is another young mobile restaurant franchise, but with a “green” twist. I expect to see several new mobile food concepts entering the fray in 2011.

Speaking of “green,” 2011 will be a year in which more and more existing franchise concepts will start transforming some of their products and services into more environmentally friendly ones.

Subway, the world’s largest submarine sandwich franchisor, has started some green initiatives. They’ve begun serving salads in bowls made partly from recycled soda bottles and water bottles. They’ve even set up redistribution centers, which bundle all the things that franchisees use more efficiently, so that full truckloads (instead of partially full ones) can deliver those products. One truck, making one trip out of the redistribution center, equals less fuel being used.

Solar panel franchises have been around for a few years now, and they’ll continue to grow, albeit slowly. As more and more people start learning about the potential of solar power and how it can save them money (in the long run), franchises like Solar Universe and Lighthouse Solar will continue to be worth watching in 2011.

The biggest challenge for franchisors continues to be quality lead gathering. There’s certainly no shortage of franchise websites around, and they all have “request more information” forms pasted underneath the listings of franchises that are advertisers on their websites. It’s just that the sheer number of “leads” that franchise sales executives have to contact, vs. how many end up buying their franchises, is too wide of a gap.

More and more franchisors are using social media marketing than ever before, and this lead gathering technique should help the gap that I mentioned close a little more. Franchisors are quickly finding out that it takes time to build a successful social media campaign.

Franchisors are also learning that to be successful in the social media space, the use of specific social media tools that help manage campaigns are a must. Read what Jason Falls says about the importance of social media management tools for franchisors. We’ll continue to see the adoption of social media marketing in franchising for 2011.

If lenders actually start lending, and prospective franchise owners start to see their net worth increase, 2011 could be a better year than 2010 was. Here’s hoping!

From Small Business Trends

The Top Franchise Trends for 2011