There are a few difficult things in this world that we all experience, regardless of country and culture. These are wars, pandemics, and economic hardships. And though these make for tough times - throughout history, we have overcome them each time.
As the economy starts to slow - both here in the US and globally, we implore you to invest in yourself - despite the collective economic anxieties.
But before we break down what exactly it means to invest in yourself, let’s look at how buyer behavior and consumer mentality affect you.
A Different Perspective on the Economy
On an individual level, the economy influences our choices about consumption, work, travel, leisure, and savings. So, when we feel the economy is strong, our buyer behavior reflects that - often through spending more on discretionary items like taking that extra vacation or perhaps buying something special because “why not?”
However, right now in the US we are battling rising costs across all aspects of our life. From skyrocketing rent and house prices to record-breaking numbers on the pump - the costs of our day-to-day lives are so much more.
How the Mentality of the Consumer Changes with the Economy
When it comes to the psychology of the consumer in a weakening economy, it’s important to think about how their view of money and spending changes. In good times, their job is stable, their investments grow, and they feel rich. This leads to higher spending on luxury items. In harder times, that psychology shifts to focusing on keeping one’s job and spending less on those unnecessary purchases.
You may be aware of ‘sunk costs’ - these are things we don’t have a choice but to spend money on. Such as the cost of traveling to work, buying food, and paying rent. As these costs rise due to inflation, the consumer is left with less money in their pocket after essentials - so they cut costs elsewhere.
In this environment, less really is more for the consumer.
Action and Reaction
Our instincts tell us to react. When we hear of a looming threat, we stock more than we need (ironically, more than we can afford). Our anxious, primal instincts sense danger and cause us to retreat as its best defense.
Because of this, anxiety plays a role in the economy. We fear our lives will change, and additionally, we worry about losing parts of us we love.
What we love about our lives differs from person to person. It's the activities you choose on the weekends, new foods you experiment with when picking up groceries, and all the countless little choices each individual makes. And they all come with costs - costs that seemingly get the first cut because we associate their value with the other side of ourselves.
The part of each one of us that most don't embrace - is the dreamer. We let it go out of what we think is a necessity, and we choose not to act.
Franchising Amid a Recession
If you were thinking, “Now really isn’t the time for me to be running and starting a new business,” we want to show you how franchising, in fact can be one of the most resilient and rewarding career decisions - it can even bring back the dreamer in you.
Did you know that Disney, Airbnb, WhatsApp, Groupon, and Microsoft were all built in the midst of a recession? These are all now leading businesses that we experience in our daily lives.
But yes, starting your franchise career in a recession may not be that easy, and it certainly can present you with numerous challenges.
However, facing them early in your career makes you even better equipped for when times may get tough again down the road. You will feel much more confident and able about navigating your business than if you began when the economy was at its strongest.
Additionally, one of the benefits of buying a franchise in this environment is you get more support from franchisors. They are aware of the market conditions and have a vested interest in ensuring franchisees are successful.
The most successful entrepreneurs I know are optimistic. It’s part of the job description.
― Caterina Fake, founder of Flickr
So find a business opportunity that fuels you - for when you invest in one that does, you are not only investing in the business but yourself.
Let's look at the numbers
Did you know that franchising is a critical component of the United States economy?
By the end of 2022, franchise employment is forecast to grow at 3.1% to a total of 8.5 million jobs. That's an increase of nearly 257,000 jobs compared to 2021. With that prediction, we should expect the industry to generate around $826.6 billion at the end of the fourth quarter.
A large portion of businesses across the nation are franchises, and the industry has shown to come through the toughest of economic environments. Many of America’s biggest franchises continued to grow through tough times - recall our example above, with empire companies being the proof.
Also, many people don’t realize that recessions are an opportunity to gain wealth. The country is experiencing an overflow of stock, and as you know - people are spending less. When products and services take a hit, so does your money. To maintain value, you need to consider something tangible.
Real estate is sought as a form of investment, but now's not the time to buy. The next best thing, however, is buying a business. You’ll have a physical asset that will appreciate over time and give you control over hiring, hours, and lifestyle. Plus, with the extra cash you make, you can generate more wealth.
When in doubt, buy in a bear market.
Recession Proof Franchises
According to P3 Cost Analysts, "a recession-proof business can continue to succeed amidst these uncertain economic conditions.
Recession-proof businesses operate in industries that provide essential products and services that people and businesses will need regardless of the economic climate. While the overall economy may be in a decline, recession-proof businesses will survive and or thrive during a recession."
Some sectors include:
- Home services
- Property management
- Senior care
- Work From Home concepts
Earlier, we mentioned ‘sunk costs,' and actually a lot of those necessary products and services are found in the industries above.
So now you know a handful of profitable industries for any season of life and struggle - let's touch on how we’re calling you to invest in yourself.
Invest in Yourself, Two Ways
At the Franchise Brokers Association, we equip you with two ways to go after your dreams - buy a franchise or become a broker.
The route you choose depends entirely on the type of life you aspire to have - but either or, your investments in the industry are as safe as can be during the economic downfall. Because remember - history says we'll rebuild and recover, and franchises are a framework of our society.
Buy a Franchise
This article is reprinted courtesy of the Franchise Brokers Association (FBA).