Assisted Living Facility Industry Analysis

Assisted living facilities are rapidly growing given that many Baby Boomers are now entering the later stages of their lives. Several market studies indicated that nearly 50% of all people over the age of 65 will require some form of ongoing living assistance as they age. One of the best aspects of operating an assisted living facility is that these businesses’ revenues are relatively immune from negative changes in the economy. These companies are able to produce revenues directly from residents (or their families) as well as from private insurance companies and publicly funded healthcare systems. The month to month charges for a resident typically ranges from $2,000 to $4,000 depending on the level of care required by the resident. Many assisted living facilities are also integrating memory care services into their operations in order to treat residents that suffer from dementia or progressive neurological disorders.

Within the United States, there are nearly 50,000 locations that provide assisted living services. Each year, these businesses generate nearly $190 billion of revenue. It should be noted that these revenues do not include services that operate within a resident’s home. The industry employs over two million people (including both medical and general facility staff). The growth of the industry remains around 2% per year, which is expected to remain stable over the next twenty years (again, as a function of the aging Baby Boomer population).

One of the common trends within this industry is to have a number of specialized medical personnel on staff in order to render specific medical services to residents of these facilities. This can drastically boost the billings of the business given that these fees are often paid by private insurance, Medicare, and Medicaid. Larger scale assisted living facilities retain a medical director (a physician) in order to provide consultation when necessary for a resident that has a specific medical issue.

Given the increasing level of competition among assisted living facilities, many of these businesses have begun to offer a broad spectrum of amenities in order to differentiate themselves from other market agents. This includes providing specialty meals as well as transportation services to local destinations (so that residents can enjoy time outside of the facility). Transportation services are important to residents that still maintain modest employment (among residents that are younger, able to work, and want to retain employment).

Overall, the industry outlook for the assisted living facility is very strong. The increasing age of the Baby Boomer population is continuing to increase demand for comprehensive in-facility services. This trend is expected to continue indefinitely especially as families have become busier, and cannot directly care for an elderly individual on an ongoing basis.

HVAC Contractor Industry Research and Analysis

Very few people can complete repairs on their own heating, ventilation, and air conditioner systems. These services generally can only be provided by a competent and licensed contracting professional. Although the bread-and-butter of HVAC contractors comes from the installation of new systems, these businesses are always able to remain profitable and cash flow positive from repair and maintenance services. Additionally, for commercial and industrial buildings – many state and municipal building codes require that these systems are inspected by a licensed professional from time to time. This lends to a great degree of economic stability for these businesses. Additionally, HVAC contractors enjoy readily available access to capital given that they can always generate profits from repair and maintenance services. Most financial institutions are willing to provide nearly all of the necessary capital in order to get these businesses often the ground (or for expansion purposes).

As it relates to the size of this industry, there are approximately 110,000 companies that are actively involved with HVAC services. The industry employs more than half a million people. Each year, the industry generates nearly $100 billion of revenue.

The growth of this industry has remained strong over the past five years given the strong demand for new housing (as interest rates have remained low). In each of the last five years, industry growth has remained above 2%. It should again be noted that even in times of economic recession – the industry remains profitable (although with flat revenue growth).

One of the common trends within the HVAC industry is to aggressively use online platforms in order to market these services to the general public. Almost all contractors maintain a proprietary website coupled with a moderate scale presence on social media platforms. As it relates to social media (with a focus on FaceBook), these businesses are able to develop profile pages that can feature reviews from prior clients. This is important given that many people will seek honest reviews on these pages. One of the other trends is to join independent review platforms such as Angie’s list in order to further boost the visibility of the business. Over time, positive reviews from these platforms can be an invaluable source of revenue for HVAC contractors. Many HVAC contractors will also engage in a regional search engine optimization (or “SEO”) campaign in order to ensure that their proprietary websites are frequently found in search results. Although this type of marketing has high upfront costs, the results can last for several years if this is carried out properly. Most companies outsource this type of work to a qualified digital marketing agency or web development firm.

Overall, the industry outlook for the HVAC industry is strong. Interest rates remain low, and many homeowners are taking advantage of low cost borrowing in order to upgrade their systems to be more energy efficient and environmentally friendly. Many HVAC contractors maintain relationships with specialized lenders so that these systems can be financed by home and property owners. There are numerous companies that act as a financing partner for contracting businesses. Additionally, new housing demand remains strong (again, as a function of low interest rates). As such, the demand for new system installations by real estate developers is consistent.

It should be noted that one of the best features of the industry is that HVAC contractors can scale down their operations during difficult economic conditions. This allows for a core focus to be shifted to profitable maintenance services.

Coworking Space Industry Research and Analysis

As opposed to twenty years ago, many more people are making their living as a freelancer or independent entrepreneur. Given the prevalence of the internet, the ability for individuals to make a living on their own has expanded rapidly. As such, many of these people require a small amount of office space if they need to meet clients/customers and do not want to conduct these operations out of their home. Additionally, some independent entrepreneurs and freelancers prefer to work outside of their homes in order to avoid distractions while enjoying the camaraderie of people that operate in a similar capacity. This strong demand has allowed real estate firms to develop coworking styled office spaces that allow for low costs for small office space.

One of the most important aspects to this industry is that these firms generate much higher returns on investment as opposed to standard commercial leases. However, on a per square foot basis – the rental fees are generally much higher. This is primarily due to fact that most coworking spaces (or shared office spaces) do not require long term commitments. This creates a moderately higher degree of risk for the owner-operator of the coworking space. Additionally, most coworking spaces include numerous amenities as part of a flat rate program. These amenities often include high speed internet, complimentary snacks, access to conference rooms, and other benefits. This is usually done in order to create a competitive advantage over other coworking space providers.

As it relates to geographic location, these types of businesses are very popular in major metropolitan area markets where large scale commercial office space is extremely expensive. Major metropolitan areas where coworking spaces are prevalent include New York, San Francisco, Miami, Los Angeles, San Diego, and Chicago. In markets where startups are popular, coworking spaces can be found frequently.

As it relates to the industry, there are approximately 2,000 companies that provide office space in a “coworking styled” capacity. Each year, these businesses aggregately generate $3 billion per year. The year-on-year growth of this industry has remained near 6% in each of the last five years. This rate of growth is substantially higher than that of the economy as a whole as well as for the commercial real estate leasing industry. This trends is expected to continue for at least the next ten years. It should be noted that the revenues of coworking space industry is very sensitive to negative changes in the economy. During recessions, many freelancers will turn to becoming employees of established businesses. This causes demand for rentals to drop substantially. As such, coworking space companies often need to keep a substantial amount of cash on hand to deal with low occupancy rates.  

In order to remain economic stability, well capitalized firms will often seek to purchase the building that houses these operations. This allows for a mix of coworking space rental income coupled with standard long-term leases. This often alleviates the risk associated with leasing a facility with the intent to subdivide it into coworking spaces. Most financial institutions are very welling to provide the necessary capital in order to acquire a commercial building for this purchase given that real estate is excellent collateral for a debt obligation.

Overall, the industry outlook for this industry is moderately strong. The returns on investment can be substantial during times of strong economic growth. As more people become part of the “gig economy”, the demand for shared office space should remain stable. Only severe and prolonged economic recessions have a major deleterious effect on these businesses ability to generate revenues and profits.

Insurance Agency Industry Research

For all aspects of life, most people want to have some form of insurance. This includes home insurance to protect a residence against catastrophe, car insurance for the same reason, as well as ancillary insurance lines including general property & casualty, life insurance, and supplemental insurance. Given this demand, the number of underwriters and insurance agents has exploded over the past thirty years. Additionally, as many more people are now entrepreneurs – the demand among business owners to have comprehensive insurance is substantial. Almost all businesses need to carry some form of business liability insurance while concurrently having often state-mandated workman’s compensation insurance. Nearly all states require that purchases of insurance are conducted through licensed insurance agents that have production licenses.

Within the United States, there are more than one million actively engaged in the sale, marketing, and production of insurance. The aggregate revenues generated by these agencies remains around $150 billion per annum (which includes fees from the issuance of new policies as well as recurring fees). One of the strongest aspects of this business is that recurring fees are continually generated when an initial customer renews their policy on an annual basis. For established insurance agencies, this allows these businesses to remain profitable and cash flow positive in any economic market.

One of the other core trends within this market is to maintain an expansive presence online. This is due to the fact that most people now find local and regional service providers via internet searches. Most independent agencies aggressively use search engine optimization campaigns coupled with social media in order to boost traffic to their respective websites. This is a highly competitive market, and any online marketing advantage that an agent can have always provides them with a strong foothold within their respective region. Many insurance agencies often spend nearly 8% to 10% of their aggregate revenues on marketing expenditures. This includes traditional marketing costs such as sponsorships of schools and local charitable organizations. Many insurance agents maintain very strong connections with their local community.

It should be noted that the vast majority of insurance agents operate in an affiliated capacity with a major underwriter. The draw to this method of operation is that the ongoing marketing expenses are substantially reduced given that the agent can use the brand name of the underwriter in conjunction with their marketing operations. However, this does limit the types of insurance lines that can be offered given that the affiliated underwriter requires that only their products are offered to prospective and ongoing clients. By operating in an independent capacity, an insurance broker or agent can provide a much greater spectrum of choice to customers. This is one of the reasons why independent insurance agents and brokers are able to have a competitive advantage over affiliated agents. Given the complexity of insurance, the demand for agents that understand this market, how to properly insure property, and how to do this cost effectively – is substantial.

Although many people now use online based portals for specific types of general insurance (such as auto, home, and whole/term life insurance), more complex scenarios and business insurance nearly always requires the assistance of an insurance agent. This need will continue indefinitely.

Food Truck Industry Research

Food trucks have exploded in popularity over the past ten years as more people have become food enthusiasts. Unlike a traditional restaurant, a food truck is a relatively low cost way for an entrepreneur to enter the food and beverage business. Most importantly, these businesses reduce their operating risk by being able to travel to different locations on an ongoing basis. Many food trucks generate substantial revenues by attending events that showcase a broad array of cuisine to event-goers.

Currently, nearly $2 billion of revenue is generated each year among food trucks. This represents less than 1% of all revenues generated from food and beverage businesses within the United States. It should be noted that this figure only includes businesses that operate in a mobile capacity only and does not include restaurants that operate food trucks as part of an overall brick-and-mortar operation.

Over the past five years, the industry has grown by nearly 525%. This trend is expected to continue in perpetuity given the low start up costs and low barriers to entry. One of the common trends within this industry is to maintain an expansive presence on the internet via a proprietary website as well as through a number of social media platforms. Many food truck entrepreneurs update their social media pages (FaceBook, Twitter, and Instagram) with the general location of the vehicle on a daily basis. Some companies have taken to integrating GPS tracking functionality so that a potential customer can quickly drive to the food truck’s parked location for breakfast, lunch, or dinner.

One of the other major trends among food trucks is to develop applications that allow for users to receive push notifications when they are nearby a food truck that they enjoy. This type of functionality is typically reserved for food trucks that have already developed an expansive fan base. Generally, the cost of developing this application ranges from $2,500 to $5,000 depending on the level of functionality integrated into the platform.

An additional major driver of expanded functionality among food truck companies is to provide large scale onsite catering. This is method of growth is popular among food truck companies that specialize in general fare such as BBQ. Major restaurants that offer onsite catering services will frequently use a food truck styled vehicle in order to carry out these types of operations.

Competition within the food truck industry is growing substantially, and the industry grows at an average rate of 5% (which is substantially higher than general economic growth). The growth of the industry is primarily attributed to a resurgence in interest of unique foods among the general public (with many televised programs created to showcase this aspect of the food/beverage industry). Even major celebrity chefs have shown a substantial interest in food trucks.

Overall, a food truck is a strong way for an aspiring restaurateur to enter the food and beverage industry while maintaining a low overhead and low risk for their venue.