20. Conference CEFEC

Linz, 10.-13.10.2007

Working Group Facility Management

Anton Senner – Petra Müller

AGENDA

I. Social Firms in Germany - Overview and Key Data

II. Support of the Formation of New Social Firms

• Step 1: Choice of Business Concept

• Step 2: Choice of Business Line

• Step 3: Achieved Results

III: Questions for Discussion

10100

230

340

600

0

100

200

300

400

500

600

700

An

zah

l

1980 1990 2000 2002 2005Jahr

Steady increase of social firms since 1980

Reduplication up to 700 social enterprises only during the last 3 years

I. Social Firms in Germany – Overview an Key Data1. Annual Increment

Workplaces in 2006

for handicaped people 10.550 ~ 51 %

for non-handicaped people + 9.640 ~ 49 %

in total 20.190

Trainingplaces in 2006

for handicaped people 1.220 ~ 67 %

for non-handicaped people + _610 ~ 33 %

in total 1.830

Social firms create and ensure work- and trainingplaces.

•22.000 work- and trainingplaces offered in 2005

•53% of them for handicaped people

I. Social Firms in Germany – Overview an Key Data2. Work- and Trainingplaces

The majority of social firms show a growth of turnover and profit

In 2005 about 75% achieved positiv or neutral turnover and profit results in comparison to 2004

35,6%

23,7%

16,9%

8,5%

15,3%

0,0%

5,0%

10,0%

15,0%

20,0%

25,0%

30,0%

35,0%

40,0%

Ante

il von a

llen Inte

gra

tionspro

jekte

> 10% 0 - 10% +/- 0% -10% - 0% < -10%

turnover 2005

45,3%

28,1% 29,2%

0,0%

10,0%

20,0%

30,0%

40,0%

50,0%

% v

on a

llen

I-Firm

en

Positiv Neutral Negativ

profit 2005

I. Social Firms in Germany – Overview an Key Data3. Turnover and Profit

206; 24%

111; 13%

111; 12%109; 12%

108; 12%

92; 10%

90; 10%66; 7%

industrial services hotel- and catering services

craft retail trade

house services office- and it-services

garden- / landscape gardening personal services

Social Firms are active in numerous business lines

I. Social Firms in Germany – Overview an Key Data4. Business Lines

The expectations are very different in the various business lines

Business lines and their development trends (I)

Industrial Services

metal processing, assemblies, packaging, print processing, recycling Industrial Services

Electrical engineering, electric assemblies

Hotel and Catering ServicesHotel, Restaurant, Canteen, Catering, Bistros, Snack, Tourism

Craft Construction, painting,, repair workshops, bicycle workshop, weaving mills

Retail Trade furniture, dispatch, second-hand goods, filling station, bicycles(bikes)

I. Social Firms in Germany – Overview an Key Data5. Expectations of Business Lines

Business lines and their development trends (II)

House Services Cleaning, Facility Management

Office- and IT-Services Accountancy, character shop, dispatch, data banks, graphic arts, design, layout, publishing companies, Call centre

Garden / Landscape Gardening Horticulture, scenery construction, Forestry, nature conservation

Personal Services Service, seniors help, textile cleaning, needlework

Retail Trade Food Supermarkets

I. Social Firms in Germany – Overview an Key Data5. Expectations of Business Lines

Today following grants are available in Germany

by the state

unique up to 5,000 € for economic consultation / certificate production

unique 20,000 € per workplace for investments

monthly 210 € per employee for care

monthly 30% of the labour costs (Employer-gross) per employee as a balance for reduced outputs / labour costs grant

by foundations

unique up to 250,000 € for building and workplace equipment

during the first 5 years up to 250,000 € for management and material costs

I. Social Firms in Germany – Overview an Key Data6. Available Grants

II. Support of the Formation of New Social

Firms

Step 1: Choice of Business Concept

Hypothesis:

Formations can become faster, easier and safer by using standard concepts

Overview about promising standard concepts (I)

Replication

analysis and documentation of successful business concepts knowhow-transfer to entrepreneurs, support during formation phase individual, unsupported business after formation phase

Acquisition- and Working Unions

Order related union of enterprises bound for acquisition and fulfillment no contractual obligations, no uniform standards individual fulfillment of part-orders

II. Support of the Formation of New Social Firms Step 1: Selection of Business Concept - Overview

Overview about promising standard concepts (II) Licencing

durable, uniform market appearance of legally independent enterprises contractual obligation to defined standards regarding e.g. culture,

market appearance, assortment politics and quality standards individual, unsupported business after formation phase central development, transfer and quality control of the licence package unique licence fee

Franchising Durable arrangement of legally independant enterprises

contractual obligations to e.g. culture, market appearance, assortment politics and uniform quality standards

Durable services by the franchisor in e.g. central order acquisition, marketing, quality control and ongoing system development

durable franchise fee

II. Support of the Formation of New Social Firms Step 1: Selection of Business Concept - Overview

Acquisition- and Working

UnionsReplication Licencing Franchising

Order-acquisition

joint joint individual central a./o individual

Orderfulfillment individual individual standardisedstandardised with central

assistance

Contractual Obligation

little, temporary none medium, durable close, durable

Independance high high medium eingeschränkt

Dependance little little medium high

Chances individual individual medium high

Risks high high medium little

II. Support of the Formation of New Social Firms Step 1: Selection of Business Concept - Overview

Franchising meets the needs of social firms particulary well

Franchising supports the strenghts of social firms by decentral staff management, staff motivation personal responsibility for the business

Franchising minimizes lacks of strength of social firms by central definition of

service and quality standards sales support controlling structures

Experts expect franchising as promising and safe concept Franchising is expected to be the most frequent business concept in

2020 According to a USA study 85% of individual entrepreneurs fail before the

5. year after formation, while 92% of the franchisees are durably successful

II. Support of the Formation of New Social Firms Step 1: Selected Concept: Franchising – Why?

Business lines have to fulfill several criteria to match with franchising

• Availability of a special system characteristic, like e.g.

• Specific product, patents, registered trade mark• Specific service system• Specific sales or marketing concept

• System concept must be ready to be standardized as basis for transmission

• Expansion potential as basis for the setting up of new franchisees

Simple know-how transfer to the Franchisee

II. Support of the Formation of New Social Firms Step 2: Selection of Business Line - Definition of Criteria

Business lines have also to fulfill specific criteria to match with social firms

small capital requirement, low investments in the founding phase

high personnel intensity of the work

working processes on various requirement levels, thereby a lot of simple working processes

possibility for expansion into additional business lines

good chances at the market to ensure the long-term entrepreneurial success and thus the working places

II. Support of the Formation of New Social Firms Step 2: Selection of Business Line - Definition of Criteria

Following business lines have been identified as potentially interesting:

Hotel and catering services

Industrial Services

House Services

Garden and landscape gardening

Facility Management

For the final selection the most successful social firms of the named business lines have been visited and analysed

II. Support of the Formation of New Social Firms Step 2: Selection of Business Line – Matching with Criteria

Existing social firms have been analysed regarding: (I):

business lines / business field structure

Mix of business lines Yes / No

Activities in only one / several business fields

economical characteristic numbers

• Turnover / profit of the recent years

• Tendences of turnover / profit – future expectations

• relevant factors for

• business success

• business failure

II. Support of the Formation of New Social Firms Step 2: Selection of Business Line – Matching with Criteria

Existing social firms have been analysed regarding: (II):

• Customer Structure

• public administration

• non-profit range

• business customers

• private customers

• Structure of Employees

• total number of employees

• number of employees with handicap

• number of employees in relation to turnover and profit

II. Support of the Formation of New Social Firms Step 2: Selection of Business Line – Matching with Criteria

Facility management was selected by following reasons

business line with high confirmity to the relevant criteria

business line with meaning increase for social firms

business line with several successful social firms

business line with one successful operating private- economical franchise system

business line with competent partners for the setting up of a concrete franchise system

II. Support of the Formation of New Social Firms Step 2: Selected Business Line: Facility Management - Why?

A concrete franchise system was aimed to be implemented up to the end of 2007.

Following results have been achieved: Cooperation of two social firms which will act as franchisor

Franchise Contracts as legal basis for business partnerships

System Concept documented in a franchise manual, incl.:

Aims, Structure and Philosophy of the System

Informations, Examples and Checklists, regarding:

Formation of Social Firms (financial/ and legal aspects)

Offers, Orders, Service Contracts

Qualitiy Management

Customer Relationships

Staff Development

Controlling Structures

Working Instructions Building Cleaning and Gardening

II. Support of the Formation of New Social Firms Step 3: Achieved Results

A concrete franchise system was aimed to be implemented up to

the end of 2007.

Steps to be done:

Finding Franchise Partners

Systemtest with two Pilots

Certification by the German Franchise Association

Acquisition of over-regional orders for the network

Ongoing Development of concept and system

II. Support of the Formation of New Social Firms Step 4: Steps to be done

Experiances in the business line facility management?

Experiances in the replication of business concepts especially, franchising?

Experiances with external support(e.g. consultation, cooperation )?

Interest in transnational exchange(e.g. exchange of employees, trainings)?

III. Questions for Discussion