Retail vs. Service: Which Opportunity Suits You?

If you’re like most people, you’ll be surprised to read that more than 75 primary industries use franchising as a method of distribution, and consequently those diverse industries provide franchise opportunities in just about every type of business you can imagine.

It’s not just fast food

So many people think franchising means “McDonald’s” or “fast food,” and there’s nothing wrong with those opportunities, except they may not be a good fit for you operationally or financially. That’s why it’s important to realize there are several thousand different franchise businesses and there’s a good chance you’ll find one that’s right for you.

All franchise opportunities can be divided into one of two master industries: retail and service. Retail defines the sales of tangible goods to customers, not for resale, but for use and consumption by the customer. Service, also called the Service Sector, defines the sales of intangible products, such as consulting, bookkeeping, cleaning, maintenance and repair, etc.

Pros & Cons to consider

Which industry works for you? Some thoughts about the pros and cons of both industries may help you decide.

The advantages of a retail business include:

And here are some retail business disadvantages:

The advantages of a service business include:

Finally, some disadvantages of a service business:

As you read those pros and cons (keeping in mind those are only short lists), were you pulled in one direction or the other? Many people, including franchisees, jump into a business without clearly thinking through the pros and cons of retail vs. service. It makes a huge difference.

Do you like people?

If you don’t consider yourself a people person, and you don’t like serving multiples of customers at a time, you may want to shy away from retail. Of course, if you’re the manager and you can park yourself in the back office, then retail may work out for you. But ask some retail managers how often they can hide out in an office!

On the other hand, if you’re entrepreneurial, and you like the idea of generating substantial sales for yourself, you may be most comfortable in a service business. You may not have to pay rent, you won’t need inventory, and as long as you’re okay with getting out into the community and selling, you can create a thriving business.

It’s better to love what you sell

But if you’re not interested in selling a service because it just doesn’t excite you, but you love food or clothing or shoes or signage or household goods, etc. then pursue a retail opportunity. Of course, if you’re opposed to renting a retail store at the mall, and you don’t think you have the temperament for hiring and motivating a sales staff, then pursue a service opportunity.

You may go back and forth with the pros and cons before you ultimately decide which industry is best for you. Keep this in mind: You won’t be alone in either industry. Franchisors want their franchisees to succeed, and they’ll help you make a good choice.