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B2B, or Business-to-Business, franchises, give you the opportunity to deal directly with other businesses, as opposed to Business-to-Consumer, or B2C, franchises where you are expected to deal directly with the end user of your product or service.
Many businesspeople prefer to work in B2B industries, as their customer’s purchase decisions are often taken based on qualitative facts and figures, meaning that their product or service has a fair chance of standing up against any bigger competition in the market. This contrasts with traditional B2C transactions, where a customer is purchasing a product or service as an individual, and emotive factors are perceived to play a larger role in the purchase decision.
Another benefit of B2B industries is that the transaction value tends to be higher; the downside of this is that the time it takes for customers to arrive at a decision to purchase can stretch out over months, and once a decision has been reached, many business customers will expect to pay you on an invoice basis with 30, 60 or 90 day payment terms. As a result, cash flow needs to be monitored closely and it’s vital that you have enough working capital to sustain the business for the first few months of trading, when cash is likely to be tight.
Are you new to franchising? Before you buy a B2B franchise, consider the following key questions to ask when buying a franchise.