When times are tough, buying into a franchise may be a good option. While many businesses are suffering from the economic downturn, some franchises are performing well during these tough economic times.
There is a huge number and wide variety of franchises available, many of which offer interesting businesses and some can even be operated from home. Of course, no business is truly recession-proof but some franchises are weathering the downturn much better than others. The key is to find the right franchise for you.
Here are some reasons why buying a franchise during a recession may be a good move:
- Go for necessity. Look for franchises that offer products or services that are considered as necessity with consistent demand. Avoid franchises offering luxury products. When budgets are tight, consumers may not be willing to spend on items they consider frivolous and non-essential. Choose a business that buyers consider to be essential in their daily lives and in running their households. Examples of franchises that perform well during a recession include tax preparation services, childcare, automotive services, hair care, senior care, and even disaster recovery.
- Value for the Money. As part of a franchise, you will have national buying power, allowing you to assure your customers that they are getting the best values anywhere. When money is tight, customers appreciate that you can offer them good value for their money.
- Low cost to entry. Home-based franchises offer lower cost to entry compared to traditional franchises. This will allow you to start a business with a well-known or established brand name and a strong operating system. Plus, a lower startup cost can help boost your profitability.
- Consider service franchises. Service franchises are typically low cost, provide good margins and have high demands. Examples include those types of businesses that people don’t want to do themselves.
- Cost of borrowing money is lower. If you have great credit and banks view you as a good candidate for a business loan, borrowing money to jumpstart your business may cost you less.
- Huge employee pool. With unemployment remaining high, it is easier to find good talent during a recession.
- Consider home-based franchises. Home-based franchises typically have lower franchise fees as well as lower startup costs. These types of franchises also allow you to save on the overhead costs of running a storefront, which can save you’re a huge bundle of money.