{This is a re-post from October of last year, before the U.S. economy worsened. I feel it is worth another read}
You may find this hard to believe, but there is still business being done everyday, in the US. Franchise owners, independent business owners, and yes, even big corporations like Microsoft, and IBM are still selling their wares. {Update: Microsoft Just fired 5,000 employees!}
One of the world's top franchise expert's answers some tough questions concerning investing in a franchise during a recession…
Consumers are still out there buying appliances, big screen
televisions, and even a few automobiles. Small business owners are
still purchasing computers, servers, and printing products. Some transactions are taking place right down the street from you, while others are taking place, online.
Businesses are still being bought and sold, and some people are looking at franchise opportunities. There are even some motivated entrepreneurs who are converting their concepts into franchises.
What does this all mean? It means that the sun still comes up every day. Every day. The stock market may win some days, and may lose some days. Businesses may open some days, and businesses may be forced to close some days.
I asked a couple of really important questions of my colleague, Michael Seid, The President of MSA And Associates. Michael is considered one of the top franchise experts in the world. Look at what he has to say about franchising, and our current economic troubles:
Q: What would you suggest to anyone that is torn between waiting for the economy to stabilize before they start looking at opportunities in franchising?
Michael: "While the economic difficulties are serious, for potential franchisees this opens up major advantages. Franchisors anticipate that their flow of quality candidates will slow as will the availability of capital and loans for some prospective franchisees. I would certainly take a heightened look at the financial condition of any franchisor today (a good idea even in the best of times). But established brands with good track records are still solid opportunities to look at. Well funded new concepts may actually have an advantage as they can more readily deal with market changes and opportunities at the consumer level which larger brands cannot. Money is made in a down economy by those who are smart enough to do their homework and understand the possibilities. Looking at existing franchises to purchase in addition to expanding from that base with solid franchisors is something to consider now."
Q: Are there any �types� of franchise categories that may do better than others during tough economic times?
Michael: You don�t invest in franchises simply to avoid current economic problems. Franchise investment is a long term investment and you should look to how brands have done in up markets and down markets. No industry is recession proof but some are recession resistant. I always look at what people must buy when times are tough. Alternatives to high prices vacations or entertainment for families and education for children should do fine. Second jobs will require day care for children and seniors that have been assisted by the family. I would look at the solid brands in those areas. Hair care is essential especially if you are looking for a new job or a second job. Those have always been recession resistant industries.
Great insights. Thank you so much, Michael….
It has always been like this. Sometimes credit has been hard to get, and sometimes, believe it or not, credit has been too easy to get.
So, what should you do? If you are prospective new franchise/small business owners like the dynamic couple that met with me earlier this week, you start doing your research on opportunities that are a nice fit for what you want in a business. You gather the facts, talk to other franchise owners of the opportunities you are interested in, and you take a step back, and decide whether or not to move forward, or not. It is no different now than it has been for the last 8 years that I have been in this segment of franchising. Except for one little thing. The financing picture. But….
I have a solution! There are actually some interesting alternatives that are available. As a matter of fact, in my role as a franchise consultant, I have been able to help some of my franchise candidates get into businesses of their own using these options, way before the banks decided to not be your friends.
If you are serious about becoming a small business/franchise owner, this could be a great time to prove to yourself and others, that nothing is going to stop you from gaining some freedom and control back in your life. Because if you can find an opportunity now, and do the due diligence required to make a safe and fact based decision, and get the financing needed, you may well prove to be an unstoppable small business owner, who can grow your business into something substantial, and gain some real equity. Of course you always have another choice.
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