If you’ve listened to any news outlet lately, you’ve probably heard some troubling talk about a recession in the near future. I know this is something on many people’s minds.
Although a recession is a possibility, consuming news that overstates the dangers of a recession is not good for your mental health. You shouldn’t worry about things you can’t control (like the economy).
Instead, focus on what you can control, like making smart decisions. For business owners who make smart decisions, there is no need to worry about a recession.
What Is a Recession?
A recession is a significant, widespread decline in economic activity that lasts for more than a few months. During a recession:
- Unemployment rises.
- There is less consumer spending.
- Businesses make fewer sales.
On average, recessions last about 11 months. They are an unavoidable aspect of the economic cycle and happen with some regularity.
Why You Don’t Need to Worry
Recessions don’t last forever. If you navigate a recession wisely, you can even take advantage of the situation to set yourself up for success when the economy returns to normal.
Most people believe that small business owners tend to struggle the most during difficult economic times. However, as I discussed in a previous blog (“What Did We Learn About Franchises in a Recession”), the franchise industry is huge! It’s not small business.
What does that mean for franchise investors?
It means that there is a network of support already established to help business owners. This benefits everyone. It reduces risks for franchise investors, and it is in the best interest of the parent company to help its franchisees be successful.
When considering a franchise as an investment, focus on companies that have experienced recessions before and have strong support systems for franchise owners.
Turn to Past Experiences
Our experience with the recessions in 2007 and 2020 has shown what businesses thrive during difficult economic times. Here are a few recession-resistant businesses:
- Home services
- Maintenance companies
- Education services
- Health and wellness
- Work from home businesses
- Health care and wellness
No matter what industry you’re interested in, there are benefits to opening a business during a recession that many people don’t consider:
- Lower real-estate and commercial costs: Commercial real estate values drop during this time. You may even get a steal on a prime location!
- Less competition: Many businesses close in a recession, meaning less competition for you.
- Available workforce: An unstable economy means people are looking for work. Franchises provide excellent entry-level opportunities for workers, managers, and business owners.
- Timing: If you set up your business and have your soft opening during the slow phase, you will be ready for business when the recession ends.
Set Yourself Up for Success
If you’re considering franchise investment, one of the best things you can do is to research potential franchises. Look for brands that prioritize innovation and can pivot during an economic downturn. Find out what support systems are available for business owners.
At the Franchisologist, we work with only the best franchises. Research and thoughtful consultation are key in our process for finding the perfect franchise opportunity for you.
Rest assured, you can be a successful business owner even during a recession.
