Tech Industry Profile

Demographics

Tech industry businesses succeed with products and services related to the fact that most Americans have access to the Internet via computers and other electronic devices. The Pew Research Center began tracking U.S. Internet usage in the early 2000s. At that time, about 50 percent of Americans were online. In 2017, the Center reported that the number had increased to 90 percent of American adults. Of the total U.S. population, the Center reported that 75 percent had home broadband Internet service.

In 2017, the Pew Research Center also reported that 95 percent of Americans owned some type of cellphone. Data showed that 77 percent of Americans owned a smartphone, representing a 120 percent increase from the 35 percent smartphone ownership the Center had tallied in 2011. Computer ownership also was widespread. That same year, the Pew Research Center reported that 80 percent of U.S. adults owned a laptop or desktop computer, 50 percent owned tablet computers and 20 percent owned e-reader devices.

In a survey of how U.S. adults used their time online, the U.S. Census Bureau reported that 90.9 percent of Internet users accessed email. In addition, 86 percent of Internet users accessed text and instant messaging; 71.5 percent used online location-based or on-the-go services; 70.6 percent used social networks; 68.6 percent shopped, made travel reservations and used other consumer services; and 64.6 percent used online financial services. With Internet users accessing the Internet for so many important tasks, it's obvious that device malfunctions can cause frustration and loss of productivity, creating opportunities for franchises that can help Internet users stay connected.

Growth Potential

In 2017, global spending on information technology (IT) and software services was positioned to reach $3.5 trillion, according to a report by Gartner, Inc. a worldwide IT research company. The 2017 expenditures represented a 2.9 increase from the $3.4 trillion spent on IT and software services in 2016. According to First Research, a market research firm, the U.S. information technology services industry generates combined annual revenue of about $360 billion annually.

Software and IT services represent the best opportunities for growth, according to the Gartner report. In 2016, worldwide software expenditures reached $333 billion, a 6 percent increase from 2015. In 2017, Gartner projected that software expenditures would climb an additional 7.2 percent to reach $357 trillion. In 2016, IT services increased 3.9 percent from 2015 to reach $900 billion. Analysts at Gartner predicted an additional 4.8 percent growth in IT services in 2017, bringing total expenditures in this segment to $943 billion.

The results of a 2016 survey by the Pew Research Center suggest that there may be opportunities for computer service companies to educate businesses and consumers on the value of data security and other safeguards, leading to more sales in IT management services. According to the results of a Pew Research Center survey of 1,055 U.S. adults, many Americans are unclear about cybersecurity issues and concepts. Only about 20 percent of the survey's respondents answered more than eight of 13 cybersecurity questions correctly. Less than 40 percent of respondents were able to correctly identify issues related to encrypted websites and private browsing.

Common Business Models for Tech Industries

• Computer-Based Franchises:

  • Computer Repair: Franchises including Computer Troubleshooters succeed by servicing mobile phones, computers and other devices for both residential and business customers. From there, computer repair franchises have opportunities to pursue lucrative long-tern relationships by offering warranty service and troubleshooting contracts. These franchises can create ongoing revenue streams by offering customers peace of mind with regard to maintaining uninterrupted use of their electronic devices.
  • IT Services: Franchises such as TeamLogic IT offer a wide range of services to companies who rely on their networks for daily business but don't have in-house technical support. In addition to meeting immediate critical needs or repairs, these franchises can provide long-term IT contracts for cloud services, IT management, data recovery, network security and device maintenance to ensure everyday productivity and uninterrupted communication. The market also exists for consumer IT services since data loss and security breaches can be catastrophic to home computers used for home-based businesses and personal data.
  • Computer Programming and Software: Franchises such as Eazy-Apps succeed by offering customized programming solutions. Franchisors supply an easy-to-use platform that non-technical franchisees can customize for local businesses and organizations. The process is supported by franchise-based technical support to ensure the delivery of a sound product. Franchises that provide related programming services also can be lucrative. In 2016, total annual revenue for web design services reached $26 billion, according to an IBISWorld report. The total represented an annual growth rate of 4.8 percent between 2011 and 2016.
  • Electronic Device Sales: Franchises that provide computer sales gain from the fact that every electronic device eventually requires replacement. Often, a combination of sales and service helps these franchises benefit from long-term customer relationships throughout a product's lifecycle and eventual demise. Franchises in this group can set themselves apart by specializing in a specific niche, such as Experimac's focus on the resale of pre-owned Apple devices and expertise in the repair of this popular brand.

• Internet-Based Franchises:

  • Business Consultants: Franchises such as Transworld Businesses Advisors help potential franchisees connect with the businesses that will best suit their qualifications, interests and financial positions. Transactions often are conducted exclusively via the Internet or phone. An October 2016 report by IBISWorld, a market research company, reported that annual revenue for U.S. franchise brokers and consultants was $187 million. Between 2011 and 2016, this industry segment experienced 2.7 percent annual growth.
  • Web-to-Print Services: Franchises such as Minuteman Press have reinvented traditional printing services into new opportunities using the Internet. Web-to-print service allows clients to upload content to cloud services, order those materials, ship them virtually anywhere or share them via digital content distribution. The service has gained popularity because it saves time and paper in the production process, while accommodating frequent updates and changes.
  • Mobile Marketing: Franchises such as SMS Masterminds help businesses optimize mobile marketing by designing and managing customer engagement programs. Franchisees gain access to proprietary technology and marketing plans designed to produce results on a mobile device. These franchises are positioned to acquire sales as mobile devices become more important to Internet use. Current trends show they account for up to 75 percent of worldwide Internet use in 2017, according to Zenith, a media buying agency.
  • Social Media Management: Franchises such as Social Owl help small and medium-sized businesses access social media marketing opportunities. Proprietary, customizable software allows franchisees to offer premium services at competitive prices. With data from the Pew Research Center indicating that at least 69 percent of Americans use some type of social media, franchisees have a strong argument for their customers to use social media to remain competitive. According to Hootsuite, a social media management platform, worldwide social media advertising budgets almost doubled between 2014 and 2016, increasing from $16 billion to $31 billion.

You can find a tech industry franchise that may work for you by searching Franchise Opportunities' Computer & Internet Franchises category.

Financial Matters

Franchises in the tech industry include many business models, so initial costs and ongoing financial obligations vary significantly. Consulting firms, whose businesses are conducted exclusively over the Internet or telephone, typically have the lowest costs. When investing in an owner-operated business run from a home office, franchisees may be able to get up and running with a computer, telephone and proprietary franchise software. This arrangement involves minimal costs since it prevents the expenses associated with renting and maintaining a physical location.

At the other end of the spectrum, franchises that require a storefront, office space or specially equipped van demand a much higher level of investment. Maintaining a physical space and inventory can require investments reaching several hundred thousands of dollars. Rental fees, utilities and site maintenance can add up quickly. Mobile franchises that use a van and mobile technical equipment also require higher financial obligations, especially when units require customization.

Some of the most significant financial issues in these industries are related to the technical aspects of your franchise. The purchase of computers, software and diagnostic equipment required for programming, design and repairs can demand a significant upfront investment. Ongoing upgrades may involve additional fees. Providing portable services may include the need for insurance to protect against accidents at a customer site or damage to equipment during transportation. You also may incur additional liability or the need to be bonded if you'll have access to private data or plan to provide onsite services.

Employee location and retention also may be a consideration. If your franchise requires the provision of technical skills you can't provide, you'll need the help of experts. Expect to pay a premium rate for employees with specialized computer skills. Depending on your geographic market, you may have to compete for employees who have the skills you need to attract and retain customers.

Benefits

Tech industry franchises offer many lucrative opportunities for franchisees interested in this expanding industry. Internet-based businesses that can be managed from a home office offer maximum flexibility. These businesses have easy start ups and may be attractive to franchisees who are limited in their freedom to travel away from home. Other franchises lend themselves to supporting multiple revenue streams with opportunities to provide ongoing troubleshooting and system management as well as immediate service or one-time assistance. These franchises can support both local and remote clients with short-term solutions and long-term contract support.

Since your franchisor has a stake in the success of your investment, you can expect a wide range of support as you execute your business plan. Franchisees typically can take advantage of preferred pricing agreements between their franchisor and reliable vendors. You'll also have access to continuing education and training on new hardware and software. When originating from the franchisor, these programs can demonstrate how to optimize novel technologies within the parameters of your franchise goals and offerings. Ongoing coaching can help you stay the course during tough times, direct efforts to the most lucrative markets and overcome any franchise-specific challenges.

Your franchisor also can provide you with a professionally designed website and email address. This is important for a business in the computer or Internet industry, where your customers will expect a professional online presentation. Some franchises offer automated administrative systems that support online appointment scheduling, job tracking and customer billing. As a franchisee, you can enjoy the benefits of these systems without spending the time and money necessary to coordinate all the separate components.

While your efforts will determine the success of your business, you'll have a reduced level of risk by owning a franchise since you'll be using a proven business model refined for success. You'll have access to advice on marketing to the specialized computer and Internet markets, lead generation and follow up. In addition, your franchisor can offer opportunities to participate in telemarketing programs, email marketing and social media promotions. Corporate marketing materials, such as franchisor-supplied sales presentations, can help you present your company professionally.

Important Considerations

Some of the biggest challenges you may encounter as the owner of a computer or Internet franchise can involve conveying technical issues to non-technical clientele. While you won't necessarily need the skills required to do your own programming or repairs, you'll have to understand the pros and cons of one option versus another when recommending products or services to customers. In addition, you'll have to be able to communicate this information with a clear and convincing approach to establish customer confidence and close your sales.

As a franchisee in the computer or Internet industry, you'll also have to maintain ongoing marketing efforts to attract new customers. Most franchisees in this industry can work to establish long-term customers for whom they provide ongoing consultation, service or troubleshooting. These arrangements can support you in lean times and help you maintain critical employees. However, you'll want to be prepared to meet the needs of people seeking one-time assistance, since their satisfaction can result in long-term contracts or word-of-mouth referrals.

In the tech industry, you'll also have to make continuing education a priority for yourself and any employees. While your franchisor may provide this, you may be responsible for related costs such as travel to training sites or paid employee training. The ever-changing tech industry can offer a constant stream of new revenue opportunities. However, these innovations also can result in ongoing expenses related to equipment upgrades and replacements.

Characteristics for Success: Who Should Consider a Tech Industry Franchise?

The wide range of opportunities in the tech industry means that you're likely to find an affordable franchise that matches your business interests. Though you won't need a technical background to invest in most businesses, certain types of experience and personality traits may help you conquer the demands and challenges typical in this industry. Consider if you have these strengths and skills, since they may help you enjoy what you do and find success in one of the many computer or Internet franchise models:

• You're a savvy salesperson. You can identify business opportunities to generate ongoing sources of revenue from existing customers while also pursuing new markets.
• You understand the importance of customer relationships. Your success will depend on securing new clients and maintaining current ones in one-on-one transactions, whether in person or exclusively online.
• You're not intimidated by electronic media. While you may not need coding skills or technical knowledge, you'll have to be comfortable and confident when interacting with delicate devices or complex software.
• You can express technical concepts to non-technical customers. In addition to clear communication skills, you may need patience and perseverance to help customers understand why they need your services or how they work.
• You enjoy learning new things. No matter what your skill level, you'll have to stay on top of industry changes and innovations through continuing education and periodic retraining.
• You can identify and retain employees who know what you don't. If you don't have technical experience, you'll have to secure appropriately trained, trustworthy employees to do quality hands-on work.

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