The big question about our current economy strikes fear in the hearts of investors of every kind: Is a recession coming? The answer, when you get down to it, is always. Economies have seasons—summers and winters, springs and falls—times when everything is thriving and times when it seems like the cold will never end. We call these hopeful and dreadful seasons the economic cycle for a reason: it continues to be fluid, with ups and downs occurring repeatedly.
But let’s talk about where we seem to be right now. What does a period that most believe is moving into a cooler economy mean for the potential franchise investor? Leadership guru and best-selling author Robin Sharma perfectly summed up the experience and outlook on the situation when he said, “Recession is opportunity in sheep’s clothing.” Moments of economic challenge inspire people to look inward, ask hard questions about what’s important, and seek ways to achieve their goals of financial and career independence. For those who choose to take matters into their own hands and become owners instead of employees, a contracting economy can help shape smart choices—forcing us to analyze what characteristics make a business recession-resistant.
Six Qualities of Recession-Resistant Franchises
Need vs. Want Products and Services
Some goods and services are consistently resilient. When a home suffers water or smoke damage, roof leaks, or plumbing fails, these are non-negotiables. Those things must be fixed.
Services that Say “I Love You”
Look at companies that provide senior care, in-home support for parents, tutoring for kids, and coaching for students. Any business offering valuable support services for families is built to survive and thrive during a recession. If your franchise provides a service that uniquely boosts kids or seniors, there will always be families willing to pay for those services and products.
Body and Beauty
The so-called lipstick index suggests that as luxury spending goes down, lipstick sales go up. Even in troubled times, services that boost health, looks, and self-esteem—gym memberships, workout classes, salons, manicures, massages—remain among the last things people give up. Even during tough economic times, people will spend their money to look and feel good.
Money Matters
Tax services, budget analysis, investment management, and retirement planning become exceptionally necessary in times of economic uncertainty. When money is a concern, people work harder to utilize their resources wisely.
Third-Party Pay Recipients
Providing a product or service like home or medical insurance, adds an extra layer of protection in a down economy.Body and Beauty
The so-called lipstick index suggests that as luxury spending goes down, lipstick sales go up. Even in troubled times, services that boost health, looks, and self-esteem—gym memberships, workout classes, salons, manicures, massages—remain among the last things people give up. Even during tough economic times, people will spend their money to look and feel good.
Good, Better, and Best Companies
Companies like Netflix, Airbnb, Trader Joe’s, Microsoft, Disney, and Warby Parker were started during recessions. What do they have in common? Great ideas and great systems. Excellence is always a good bet, whether you’re an early adopter of a new concept or an investor in a proven company. With over 4,000 franchising concepts today, there’s a business out there built to last and remain profitable—even through an economic downturn.
Embracing Opportunity in Uncertain Time
Many are “turtling” right now—tucking their heads in and worrying about the future. But inaction is not the only option. Many have started businesses during uncertain times and have generated wealth. For those willing to look at the potential rewards of moving forward, opportunities abound.
Want to learn more? Browse my free resources and subscribe to my blog at www.hireyourself.com. Contact me at pgilfillan@hireyourself.com, 630-904-7900 (call), or 630-345-4400 (text) to schedule a consultation.
