Every entrepreneur knows that business expenses are unavoidable. However, clever and imaginative businesspeople look for ways to minimize their expenses or even find ways to profit from them. As a director of franchise development, I’ve seen some of the tactics that small-business owners have employed to reduce their costs, and for those with space in their portfolios, there’s a way to grow their businesses through their expenses.
Doing Business with Yourself
Some franchisees with multiple franchises in their business portfolios have discovered diversification of their business holdings can help save on their business expenses. Every business needs services of some kind, and they often outsource to third-party providers for these services. But rather than paying someone else for the services, these multi-unit franchisees instead add business-to-business franchises to their portfolios that their other businesses require.
Ajay Saini of Pleasanton, California, and his partner Vinny Saini are a prime example of franchisees that have put portfolio diversification to good use. They own a ComForCare Home Care franchise. When looking to expand their business interests a few years ago, they bought a Payroll Vault franchise that could offer payroll services, 401K plan, HR support, and workers’ compensation insurance, all services their healthcare franchise needed.
Through the arrangement, Saini and Vinny experienced several benefits. Not only is a ComForCare expense part of their Payroll Vault franchise’s revenue, Saini said it also gives them confidence that whatever they offer their clients is also being used in-house.
“It allows us to be in the shoes of our clients and helps us improve the support we provide to our clients,” Saini said. “Another benefit is it helps us in local networking. The two franchises have exposed us to different types of businesses. We’re able to help businesses in the healthcare domain with payroll or related services. Similarly, when any contact from Payroll Vault is looking for a resource in the healthcare space, it’s easier for us to make the right connections.”
Finding the Right Fit
For entrepreneurs who want to try this method of expense reduction by diversifying their portfolios, finding appropriate franchises to add is important. They should consider which services their existing franchises need to operate, as well as services that would enhance their business. The good thing about many B2Bs is they don’t require a lot of staff; their space needs are often minimal and can be staffed so the franchisee doesn’t need to work six or seven days a week.
It’s important for franchisees to evaluate how a franchise will complement, support, and augment what they already have in their portfolios. Some other common expenses that could be business opportunities are for things like accounting services or signage. Any franchise with a physical location has upkeep expenses, especially ones that serve customers on location. Commercial cleaning services like Enviro-Master can keep facilities clean and sanitized, an especially important service for franchises in the food and medical industries. A lawncare service like GrassRoots Turf will maintain any landscape needs other businesses in a portfolio might have.
When looking for new business opportunities don’t shy away from casting a wide net. Diversification opportunities also exist when thinking outside the box. Creative Colors International, a leather and vinyl repair service, can provide repairs for restaurants or offices with leather or vinyl seats or vehicle rental services, so franchisees don’t have to keep replacing items that get worn or damaged. Plus, it’s a mobile B2B that doesn’t require a storefront. A recruiting service franchise like AtWork can help franchisees staff their other franchises as they grow. And franchises that deal in physical products or require supplies/materials could benefit from a franchise that adds a logistics service like Nexterus to their portfolios, which could manage their other franchises’ supply chains.
Adding B2B franchises like these to a portfolio gives franchisees the ability to keep their money within businesses in which they have a vested interest, getting the services and products they need while providing loyal clients for their B2Bs. Working together to take advantage of the values each provides, they reduce expenses, operate more efficiently, and provide more opportunity for expansion.
Marilyn Manning is Director of Franchise Development for Payroll Vault.