Tweet

Recession Effects on Small Business and What that Means for Franchises

Written by: Candice Clem

Article Overview: With recession in full swing, many are wondering how small businesses are expected to hold up. Things are tense, but franchises aren’t down for the count yet.

Recession Effects on Small Business and What that Means for Franchises

The United States, along with much of the world, is in a state of economic decline, and that thought is scaring everyone at least a little. And why shouldn’t it? Prices are rising, the value of the dollar is dwindling, businesses are closing, stock market investors are backing out, and banks are going bankrupt. From the look of things, it seems that no one is immune to these frightening changes in our national economy. So what does recession mean for small businesses in specific?

Small Business and Recession
Though small business makes up 99% of American business and employs half of the country’s working population, even some small business owners are getting nervous amidst declining financial conditions. In light of the nation’s general response to our economic circumstance, some organizations have stepped out to investigate exactly what kind of toll it has taken on America’s small business leaders.

One of those investigations is a survey of small business owners that was conducted by the National Small Business Association, and their findings, if nothing else, solidly confirm that small businesses, like everyone else, are very anxious about recession, and have been for some time. The same survey has been conducted annually for numerous years, and the most recent findings were complied in April of this year, when recession was still a looming threat instead of a present reality. Even then, small business anxiety was rampant. When surveyed in 2007, the majority of small business entrepreneurs were optimistic about the economic outlook for the coming year of business, but when the same pool of business owners was surveyed in 2008, an overwhelming 71% expected a negative economic trend for the year.

With analysts only giving more and more reasons to believe that the economy was coming to the crunch that we now, in retrospect, know was true, entrepreneurs became more pessimistic even in regard to their own business forecasts. Nearly 25% claimed they had no growth strategy for the 2008 fiscal year; 55% reported having a hard time securing credit last year; and, according to Inc Magazine, the number of business owners citing inflation as their #1 concern rose to its highest level since 1982. Simple morale even decreased. In 2007, 81% of surveyed owners voiced confidence in their businesses, but in 2008, with recession pressed firmly into their minds, that number dropped to 70%, leaving the other 30% with a dwindling sense of hope not just for the market but also for themselves.

Without a doubt, recession was anticipated in early 2008, and has now struck toward the tail end of the year. And that has negatively impacted both the success and morale of the small business sector. However, the question to follow, which must be asked, is how that shockwave has more specifically rattled the world of franchised small businesses.

Recession and Small Business Franchises
To propose that no franchise anywhere has taken a hit because of recession would be a half-cocked presupposition, because there have undoubtedly been all kinds of businesses to suffer in recent months. Still, in spite of the downturned economy and how it’s begun to eat away at businesses in the larger scheme of things, franchises have proven to be very resilient in the face of economic adversity.

This is mostly due to the essential nature of franchise business. During recession, one of the hardest things for a business owner to do is adapt the business plan to account for the shifting economy while successfully operating the business. Franchisees don’t have to worry about that, because as they continue to perform daily operations, central staff takes responsibility for adapting business plans to the changing market, and with the long history most franchise operations have, those adaptations are made with a wealth of knowledge and experience behind them that most non-franchised businesses simply do not have.

Another huge benefit that a franchise opportunity brings to the table that no ordinary small business can compete with is a comprehensive marketing plan that uses the best strategies for local and national advertising. Because marketing is something that the average self-starting entrepreneur is not well versed in but is one of the most important tools for maintaining a business despite recession, having that professional staff of marketers doing the work on your behalf is a huge plus for any business owner.

Some Ideas
With that in mind, here are a few franchise business opportunities for the interested entrepreneur.

Pillar to Post
This home inspection home based business has been recognized by Entrepreneur Magazine as the #1 in its class for the last 6 straight years. With a central staff of dedicated professionals behind each franchisee to develop the best training systems, business practices, and marketing plans in the home inspection market, recession is not enough to stop this business.

DES Staffing
As unemployment rises, businesses become increasingly choosy about whom they select for open positions, and hiring a staffing agency to help make that perfect selection becomes a very wise decision. Specializing in the manufacturing and light industrial markets, DES Staffing franchisees provide temporary and long-term staffing solutions for their clients.

Club Z Tutoring
The education industry is one of the few markets commonly known to be recession-proof, and this is the perfect work from home franchise opportunity to take advantage of that fact. Unlike many tutoring businesses that cost large amounts of money for franchisee and client alike, because they have full storefronts, this business cuts costs for everyone and puts students in their most comfortable learning environments by sending the tutor straight to the tutee’s home. With this franchise, be your own boss, save overhead expenses, and get through the recession.

There is no surefire way to walk through a recession unscathed, but purchasing a franchise is certainly a wise idea. Among all the other benefits, franchisees receive personal attention and encouragement from their franchisors, something that is a bigger help than many recognize.

Related Articles
  Recession Resistant Franchises
  Fight Recession For Yourself And Others With A Management Franchise Business
  Franchising FAQs
  What is a Recession Proof Franchise Opportunity
  SME's - why is franchising not more popular in Africa

Article Tags: american business, business entrepreneurs, business forecasts, business leaders, closing stock market, crunch, economic circumstance, economic decline, economic outlook, economic trend, growth strategy, national economy, national small business, own business, recession, retrospect, small business association, small business owners, stock market investors, true entrepreneurs



Related Forum Posts
New Small Business Topic - Hello everyone, I'm on the lookout for new topics to add to my site. We just launched a Franchising section and are planning Human Resources section. Do you have any thoughts for a new section? Here's a list of what we currently have: Angel Investors Branding Bank Loans Business Coaching Business Plan Franchises (New) Insurance Legal Marketing Public Relations Sales Small Biz Loans Venture Capital
My entry - 1. The Best Business Books Ever: The 100 Most Influential Business Books You'll Never Have Time to Read - this is a fascinating book about the history of Business theory, and I'd recommend it to anybody. 2. The Big Book of Small Business: You Don't Have to Run Your Business by the Seat of Your Pants, by Tom Gegax. Ditto. 3. PADI: The Business of Diving Book Okay, so this book won't be of use to anyone who doesn't want to start a scuba store, but I did, and this book was of course invaluable to me in reaching that goal.
These maybe the coldest franchises out there: - Here are the worst 15 performing franchises in regards to having the highest Small Business Administration (SBA) loan failure rates. The list is dotted with sub sandwich shops, fitness centers and car shops. WORST FRANCHISE LOAN FAILURES Failure % 1 OBEE'S SOUP SALAD SUBS 55.56% 2 LADY OF AMERICA 41.94% 3 COUNTRY CLUTTER (BED & BREAKFAST) 41.18% 4 COPY CLUB 36.36% 5 ALL TUNE AND LUBE 35.71% 6 PICKERMAN'S 35.71% 7 PHILLY CONNECTION 35.59% 8 ROLY POLY ROLLED SANDWICHES 34.78% 9 COTTMAN TRANSMISSION 34.48% 10 HAIR COLOR EXPRESS 33.33% 11 LEE MYLES AUTOMOTIVE TRANSMISSIONS 33.33% 12 GODFATHER'S PIZZA 33.33% 13 SMOOTHIE FACTORY 33.33% 14 BLIMPIE 31.39% 15 GOLF U.S.A. (RETAIL GOLF EQUIP.) 30.77% Source: Small Business Administration, SBA Loan Performance Within Franchise Code for the Period of FY 2001 - 2005
Exclusive: Interview with Results - Hi Forum Members, I'm helping start up a Business Coaching and Consulting company here in Toronto, Ontario, Canada (a Subsidiary of RSC Business in Los Angeles). As a Research and Development Intern I am required to practice my listening and interview skills by surveying Small and Medium Businesses on thier Business. This Survey is designed by RSC Business to also assist the Business being interviewed more insight into their own business. I am looking to interview about 30 businesses across North America over the span of 3 months. At the end of these interviews I will be publishing a report of the results and they will be made available for free to the Interviewees. The Report data will include responses from a minimum of 100 interviews. I would like to extend this opportunity to members of the Forum. If you would like to have this short 20-30 minute interview conducted on your Business and you reside in North America please send me an email or PM. Please contact me at andy[at]jvprosperity[dot]com to arrange our interview and to get free access to the results when they are published.
Re: Biz Plan Competition - i just wanted to say that posting Small Business Events on CanadaOne is a great resource. Thanks Julie!


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Induction – your first management job

Civility in the Workplace---Is it Decreasing?

Business Coach Explains To You How To Add Value

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.