Laid-Off Employees Are Buying Franchises
Bigger Booms – Deeper Busts
The U.S. economy has always been in flux, vacillating between boom and bust times ever since the country was founded. Just in the last 120 years there was the Silver Crisis of the 1890s, the great stock market crash of 1929, and the dot-com bust in the first few years of the current century. Shaky financial times generally go hand-in-hand with job loss. Companies disappear due to bad business decisions, lack of capital, insufficient sales, plus other reasons far too numerous to mention here, and end up pitching their employees out on the street. Companies that manage to keep their doors open often cut staff, sometimes severely, in order to wait things out until the economy improves – which it has always done, so far. But the current downturn, for the first time since the Great Depression, is touching the working lives of a layer of citizens not used to this sort of economic strife – the solidly middle class.
Out of Work and Anxious
Pick up any newspaper – one still in business, that is – and you will read stories about how this IT executive, or that construction supervisor, or the assistant bank manager over there, was laid off and is out of a job, sometimes for the first time in their career! With large numbers of skilled people out of work, and not all that many new positions being created, people in this situation are finding it harder and harder to re-enter the job market. A decade or more ago, the rule of thumb was to have 90 to 120 days of personal capital on reserve to tide you over during unemployment. However, horror stories abound of people – good, decent, well-qualified and hard-working Americans – going six, ten, twelve months, or longer, before finding gainful employment. Many who do are disappointed to discover the new job they’re taking doesn’t pay as well as the one they lost. Welcome to the global economy.
From Worker Bee to Business Owner
While not everyone comes equipped with the risk-taking gene, more and more people are turning their backs on a paycheck and electing instead to start their own business. Even folks who have never before struck out on their own are finding the means and motivation to be their own boss. One path to financial self-sufficiency involves starting a business from scratch. This can be a difficult thing to do, however, if competition is strong in your area for the type of company you wish to start. Well-entrenched businesses have a way of washing out the new kid on the block. Another option is to purchase an existing business, but you may not easily locate one that matches your abilities and your wallet. This is why so many laid-off employees are choosing to buy.
The Benefits of Owning a Franchise
Many of the businesses you see around town are actually franchise operations. If there is a popular brand on the door and the owner can usually be found lurking about the premises, you have probably stumbled across a franchise. Major corporations resort to the franchise model for two main reasons – it allows them to expand into underserved markets without spending huge wads of corporate cash, and it helps turn a name-brand product or service into something more reliably local. Benefits to theare even more apparent. You achieve instant name recognition, you have a clear path to follow – franchise handbooks explain exactly how to do everything, from computing payroll to ordering supplies to placing the latest set of window signs in exactly the right place – and home-office support is often amazing. You will never feel alone as the owner of a franchise, what with franchise brethren to call upon for answers, regional managers to step in and solve a pesky problem, and ongoing training at corporate headquarters to keep you apprised of all the newest products and latest promotions.
Choices Are Many – Pick Wisely
There are literally thousands ofput there for purchase. They can be loosely grouped into three distinct classes – retail product or service, mobile operation, or work-from-home business. The first category is what most people think of when the word “franchise” is bandied about. This could be a fast-food restaurant, a daycare center, an auto repair shop, a shoeshine stand, a smoothie kiosk, or any one of a zillion other concepts. Mobile operations are those where you go to the customer. Although these are oftentimes service-oriented businesses – computer repair, pet cleanup, appliance repair, maid services, and lawn care – plenty of products get sold this way as well. This could include home improvement items (window coverings, kitchen cabinets, carpeting, hardwood floors, etc.), office supplies, or pre-cooked meals for the two-income family. Work-from-home businesses are often sales-type , but this could also include such things as in-home daycare or eldercare, or various consulting-type opportunities.
is not a decision to be made lightly. Even where financing is available, whether from the franchisor or via a third-party entity – including the possibility of an SBA-guaranteed loan – you will spend anywhere from $15,000 to well into six figures to get up and running. These numbers do not include any sort of financial cushion to ease you through the start-up period. However, for anyone with an entrepreneurial streak, a job layoff now could be the motivation you need to get out there and lay a solid foundation for your personal financial future. Plenty of people have done just that in the past couple of years. It’s certainly worth doing the research.