How to Create a Million-Dollar Company without Owning a Million-Dollar Facility

If a franchise concept can eliminate the need for a dedicated brick-and-mortar facility, it’s a viable, cost-saving solution to consider.

By Bonnie Alcid 

A couple of years ago, you would never stop to consider that a business could succeed without a core product or a key workspace. Yet, here we are in 2016 and Uber, the No. 1 taxi service, owns no cars, and Facebook — the world’s biggest social media company — creates no content. With the way the businesses have begun to evolve, it’s not unheard of for a taxi service to outsource its cars or for a content provider to not create its own content. 

Numerous factors account for the high number of home-based, mobile, or outsourced businesses. In the franchise industry, the absence of a brick-and-mortar location provides the obvious benefit of a lower initial investment for franchisees. Regardless of which vertical industry a business pertains to, there are multiple benefits of being a mobile or outsourced company. For example, British Swim School, a multi-million-dollar water safety and survival program for children that operates out of 15 locations, does not own a single building or pool.

Jump Starting a Business

When opening a new business concept, owners want to hit the ground running and draw customers as soon as possible. While this is the obvious goal, factors that commonly slow down the initial grand opening process are tied to delays with building permits, construction limitations and other complications financing the build. These variables can be frustrating, not to mention time-consuming. Therefore, turning to an alternative option such as opting to rent a facility is worth a shot. 

The immediate benefit of not buying or building a standalone facility is the ability to get a business started right away. Without the high start-up costs and the necessity of being granted a large loan, business owners are able to focus their energy and cash more toward initial marketing, hiring and training. This process helps ensure that the concept is built on a solid operational foundation prior to offering its services to the public. 

It’s important for owners to note that by eliminating the burden of building and managing a facility, core standard operations can start to generate revenue within 30 days or less of signing final agreement papers. This is a huge advantage against other operators in markets that are caught up in the building process. The initial financial outlay will make it difficult for that operator to catch up to a business that works out of a rented facility and is able to open its doors and grab market share quicker. 

Adding Operational Flexibility

By renting a pre-existing facility, business owners aren’t constrained to just one location and the high overhead costs that come along with it. Having multiple leased locations creates fluidity and flexibility in a day-to-day schedule. Businesses of this nature are able to open, close or move at any given time with only minimal costs. Owners can take into consideration market demand, sales spikes and drops, off-seasons, and in turn, choose to operate their businesses when they want. With this amount of flexibility, owners are able to cater to the ebb and flow of the business. 

Not owning a brick-and-mortar location gives franchise owners the power to strategically target multiple facilities. It is vital to be discerning when selecting where to run your business. Do site visits, observe the staff and walk around as if you were the customer to answer the question, “Does it all add up to a positive client experience?” If there is anything that seems askew, that issue should be addressed before signing a temporary lease.

Shifting the Focus

Maintaining a quality facility is not a task that many are prepared for or know how to do efficiently, therefore it becomes an afterthought. Entrepreneurs invest in a business opportunity to become involved in a particular service, not knowing how much work goes into up keeping up the space. Similar to my experience, those who wish to open their own businesses are typically focused on the passion that led them to the endeavor. In other words, the desire to create the perfect local pizza shop, provide the highest quality pet grooming service or, in my case, deliver safe and valuable swim lessons for infants and toddlers, is what comes first. 

Without a facility to build or constantly maintain, owners are able to focus on what originally got them into the business and do it really well. Even though many people see a location or storefront as an integral part of achieving brand awareness, the same objectives can be met through stellar customer relations and superior services. This particular model allows business owners to redirect the brand focus to excellence and value of offerings. In the end, these aspects create a greater chance of survival in the marketplace as opposed to a fancy facility without the quality of service behind it. 

Local Marketing without a Storefront 

When a new business enters the marketplace, there are other competitors in the region that may offer similar services at a cheaper cost or may have a million dollar, attractive facility. That can be intimidating, but don’t fret. Even though a storefront may not be available for owners who rent a facility, in today’s increasingly digital-screen-based world, it’s more possible than ever to effectively market a brand to the public and target a desired demographic. 

First, it’s absolutely necessary to go out into the community and spread the word of the new business opening in town. Without a shiny new window, this is a crucial aspect of this operational model that must not be forgotten. Community outreach can include involvement in local parades, city festivals, silent auctions, camps and activity fairs, volunteering and sponsorships of charitable races. 

If the business is mobile, company vehicles can be physical advertisements and draw customers. It’s also beneficial to take advantage of local resources such as Living Social, magazine listings and ads in local newspapers. Don’t underestimate their value. Once the business is established and rooted in the community, all that’s left for the owner to do is provide exceptional services that will keep the customer coming back and increase the likelihood of endorsements via word of mouth. 

Each business owner has different needs and offerings that require a certain foundation; however, if the concept can eliminate the need for a dedicated brick-and-mortar facility, it’s a viable, cost-saving solution to consider. If someone who runs a swim school can create a million-dollar business without owning a single pool, it might be time to jump in. 

Bonnie Alcid is the owner of the largest British Swim School franchise in the United States. Find her at fransocial.franchise.org.