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Take Simple Steps To Make Your Franchise Business Recession-Resistant

Written by: Candice Clem

Article Overview: Recession is a very real danger to a business, so you have to know how best to handle it, and not all the methods of survival are as intuitive as you may think.

Take Simple Steps To Make Your Franchise Business Recession-Resistant

With recession the big threat these days, businessmen in most industries are afraid of looming business failure and hoping that they might just find the way to make it safely through to the other side of this economic storm. Operating a franchise business increases an entrepreneur’s chances of success, but to be utterly realistic, there is no surefire way to guarantee safe passage through this economic downturn, because there are simply too many business variables to control. A cure-all would be nice, but no such magical business potion exists.

That, however, is not to say that there aren’t practical steps a franchise owner can take to build the strength of his business, cut down on waste, maximize cash flow, and prepare for the hard times ahead. Though there is no sure-fire escape from the potential of great loss in recession, here is a list of actions you can take to help give your business a fighting chance of not only surviving, but thriving in poor economic conditions.

Keep Prices Competitive
This is a very obvious but necessary step to securing your continued place in the market. This means keeping prices on par with the competition, not dropping prices to unreasonably low levels that will win the customer but put you out of business. What this looks like as a Discount Party Store franchisee, for example, is visiting other party supply shops in a 10-20-mile radius, comparing prices on specific items like Halloween costumes, table cloths, wedding invitations, and gift wrap, and ensuring that your prices at least fall in the median range of all your competitors.

Expand Your Marketing Campaign
The vast majority of franchises come equipped with established marketing campaigns that advertise nationally and locally, wherever a franchise crops up, but there is always room for more. Whether that means putting coupons in the weekly neighborhood savings flyer, advertising before movies at the local theater, or printing your name and information on pens or business cards, come up with creative ways to get your business’ name out there and make it happen.

Give Clients Assignment Ideas
This idea works best in a consulting home business or other similar operations. Call to check in on dormant clients, and knowing their businesses, offer them business ideas custom tailored to their operations that you can perform for them. If they like what you propose, you may have found yourself a new assignment and another paycheck.

Don’t Be So Picky When Selecting Clients
Everyone is selective when they get to choose their own clients, but when the economy becomes as volatile as it is currently, it’s not time to be overly selective. The AmCorp Management franchisee, for instance, makes money when he can successfully recover his client’s finances that were lost to wrongful over-charging by vendors. Of course, the bigger the business client and the bigger their loss, the bigger the payoff to the franchisee, but in lean economic times, it’s important for him to pursue smaller business opportunities than he regularly would, just to ensure that he has some cash flowing in.

Offer Extra Services To Perk Up Sales
Since prices must be lowered, it’s tempting to believe that no great profit can be made, but that is not the case. Take a lesson from restaurant servers, who always try to up-sell their customers to increase the check total and therefore increase their tip. Make it a point to ask every client if he’d like small, additional services for a fee. You may be surprised what a business boost it can be.

Negotiate With Vendors
In the same way that you have to lower your prices to keep clients, so the business-to-business suppliers who provide your raw materials have to keep their prices competitive to keep your business. The Par-T-Perfect franchisee who refuses to negotiate for better prices on the cardboard hats, food, and table cloths that make his kids’ birthday parties a success is simply throwing money away without a fight. Don’t do that to your home business.

Cut Unnecessary Expenses And Redirect Those Funds
Whether it’s in supply costs, unnecessary technology, or too many business meals, most businesses are spending money somewhere that they don’t need to. Even if it requires bringing in a financial consultant, track down your finance leaks, plug those holes, and reallocate the previously lost funds to more vital areas of the business, like marketing or staff.

Stay On Top Of Accounts Receivable
What good is money if you don’t have it in your bank account? Imaginary money won’t help your home based business when the utility bill arrives, so it doesn’t make any sense that you should permit your clients to build up a continuously growing credit account without ever paying it off. A wise Archadeck franchisee taking care of his own billing with their custom computer finance system will always keep close tabs on clients until they pay for the backyard decks that his business has built. Not that he’s rude or pushy, but persistent.

Make Customer Service First Priority
Successful business leaders consistently agree: this is the single most important part of succeeding in spite of tough financial times. The key to a prosperous business is cash flow, and cash flow only comes with customers, so the only way to keep your business moving forward in good times or bad is by ensuring a steady stream of customers, repeat and new. Marketing brings in new clients, but only good customer service can keep them returning. Merry Maids may be one of the most well known work from home cleaning companies in the world, with a name that is recognized and trusted everywhere, but a franchisee who doesn’t ensure that his clients are as content as can be, will not see repeat business based solely on the power of the name.

Neither keeping a storefront nor a work at home business afloat through a recession is easy. But in the end, if you can hunker down and muscle through it, your franchise will come out all the stronger for your perseverance.

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  About 60% of all franchise opportunities have less than 50 units.

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