My company looks for small businesses that have the potential to become franchises. Where would I find an information source I could use to discover unique small businesses? —B.D., Austin, Tex.
Like a talent scout or professional sports scout, you’re looking for small-time players who have the potential to hit it big. This is something of a needle-in-a-haystack proposition. There are millions of solid, profitable small businesses, but it takes some special attributes to turn them into franchises—and it isn’t always clear which ones will make the cut.“It is a judgment call, based on the type of product or service a small company has and its ability to duplicate itself in other locations,” says Daniel Burrus, chief executive officer of Burrus Research Associates in Hartland, Wis. Because many small, privately owned companies are leery of disclosing their financials, it may be tough to figure out which ones could sustain rapid expansion. And even the owner may not be sure whether his or her concept is a candidate for franchising, Burrus says.It’s likely you have developed a formula that small businesses must meet in order to be potential franchisors. For instance, the product or service theoretically must be marketable around the country and even the world. The operations must be organized enough to be broken down into replicable processes that can be taught to new employers and employees. And, most important, profits must be sufficient to scale the concept up onto a larger playing field, with multiple locations supplied by a central headquarters.
Where do you find companies that fit the bill? Here are some ideas:
• Make a habit of reading local and regional business publications, which often profile unique and successful small businesses. A company that is doing extremely well, particularly if it is employing something new and different to succeed, is likely to generate some publicity.
• Look for promising new ideas posted on crowdfunding platforms, such as Kickstarter andIndieGoGo. Those sites and others list inventions and entrepreneurial ventures looking for financial backing. To be sure, most of them will be startup ideas, not proven business concepts, but you just might find the next big thing lurking online.
• Business groups like local chambers of commerce and the Small Business Administration give annual awards to innovative and savvy entrepreneurs around the country. The winners may fit your parameters: Not only are they doing something right but it’s likely they’ve been vetted by the award committees.
• Seena Sharp, principal of Sharp Market Intelligence and author of Competitive Intelligence Advantage, recommends Springwise.com, a website that lists smart new business ideas nominated by a network of 15,000 “spotters” around the globe. The site identifies companies around the world that are filling unique niches and responding to emerging consumer trends. “I think it’s a great resource for ideas,” Sharp says. “They write about hundreds each year and provide excitement about many concepts. Almost all seem viable—some more than others—but this should provide lots of ideas.”
• Hae Lee, publishing relations associate at MarketResearch.com, recommends you search his company’s database for reports that might be useful. The site, which you can access with free registration, is an aggregator of market research by hundreds of different publishers, including FranchiseHelp.com, Lee says. “Browse through our reports to see if there is one that would fit your needs and then purchase that report,” he says.
Karen E. Klein is a Los Angeles-based writer who covers entrepreneurship and small-business issues.