..a special breed of entrepreneur
Running a business during a recession requires a special breed of entrepreneur: one who can adapt to a changing market, find creative solutions to problems, take risks cautiously, and demonstrate the courage to move forward.
Long-term economic pressures such as those that this country has weathered for the past 18 months can spell disaster for even the most tenacious business owners.
Nonetheless, amid the endless stories of corporate downsizing and business bankruptcies, many franchised businesses are thriving and growing.
“Franchising is one bright spot in a lagging economy,” says Gregg Reynolds, chairman of the International Franchise Association, more than 18,500 new businesses were created, adding approximately 108,000 new jobs to the economy.”
It is no surprise that franchising continues to ride out the economic turmoil that has caused many less resilient types of businesses to fail. Traditionally, franchising’s success over the past 30 years has been tied to its ability to identify and respond to rapid consumer and market changes, no matter how subtle or small.
Look what everyone else is doing and go the other way
I am as fascinated with the current global recession as the next guy, and ok yes I admit it. In my opinion to beat the 2008 Recession: look what everyone else is doing and go the other way…
Although the current economic downturn is taking its toll on businesses large and small, there are many entrepreneurs who remain optimistic and, indeed, who believe that their business will flourish during these difficult times.
Recent experience demonstrates that a downturn in the economy actually encourages people to seriously consider their options and franchising is, for many franchisors, considered the safest route for business expansion. However, there are a number of controls that need to be in place, especially for franchisors, to ensure that existing franchise businesses survive and thrive during a recession. What about these… go the other way and find people new careers!
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Franchising in recession
Rightly or wrongly recent history shows that franchise systems can grow strongly in recession. This is because as job losses and redundancies kick in many workers decide not to return to the workplace as employees. After many years of dedicated services many hardworking employees that loose this jobs decide to take their destiny into their own hands. Even in shrinking or slowing market conditions franchising offers a more secure way into business for once employed individuals.
Prepare to grow
For franchisors that are recruiting now more than ever should be planning their network growth strategy. Franchisee recruitment is a slow process. As job losses kick in more and more people look to franchising to move their futures forward. It is vital therefore that both recruiting franchisors and prospective franchisees can find each other easily and quickly.
Visibility
Les Armitage - lesarmitage.com explains that the web offers a 24/7 option for both franchisors and franchisees to start their due diligence and meeting process. It takes time to do the due diligence required on both sides. Franchisors should start their concerted marketing and advertising now to ensure that they are available and ready to deal with the influx of new enquiries and franchisee members to their systems.
Finance
Banks are still keen to lend to new and expanding franchisees. Credit ratings are now more important than ever with the banks. Franchisors should be working closely with the leading banks to ensure they can effectively support their potential new recruits in their approach to the banks for funding.
A special breed of entrepreneur
Running a business during a recession requires a special breed of entrepreneur: one who can adapt to a changing market, find creative solutions to problems, take risks cautiously, and demonstrate the courage to move forward.
Long-term economic pressures such as those that this country has weathered for the past 18 months can spell disaster for even the most tenacious business owners.
Nonetheless, amid the endless stories of corporate downsizing and business bankruptcies, many franchised businesses are thriving and growing.
“Franchising is one bright spot in a lagging economy,” says Gregg Reynolds, chairman of the International Franchise Association, more than 18,500 new businesses were created, adding approximately 108,000 new jobs to the economy.”
It is no surprise that franchising continues to ride out the economic turmoil that has caused many less resilient types of businesses to fail. Traditionally, franchising’s success over the past 30 years has been tied to its ability to identify and respond to rapid consumer and market changes, no matter how subtle or small.
UK Jobs are being affected by the Recession
The issues with the UK economy are to blame for the decline in the number of jobs in the UK. According to research by KPMG and the Recruitment and Employment Confederation, it is the fifth consecutive month of falls. The number of vacancies has decreased with a record demand for temp workers. The effects have also meant only marginal salary increases this year and an increase in those being made redundant as employers are forced to cut costs. Hotel and catering type jobs are suffering hugely. On the up side nursing and the medical profession have seen an increase in demand for workers. If you are worried about the state of the economy and the effects make sure you are prepared - get insurance, tighten up your spending and save more, keep your CV up to date, register with an agency and keep your eye on Jobs in the UK. Register with 247staff to receive the latest jobs in the UK direct to your inbox and to find the job of your dreams! 247staff currently offers 620,247 jobs from job boards, recruitment agencies and corporate websites, 24 hours a day, 7 days a week.
The business of surviving a recession
A recession can be like a volcano: to survive you have to move fast. As the economy becomes increasingly volatile,
Many of us have sat out recessions before - or tried to. For others, sustained turmoil in world markets and a threatened recession are prospects as new as they are unwelcome.
With a global credit crisis underway, plus a barrage of negative headlines, the sense of unease among the UK’s business leaders looks set to increase. The world’s leading financial policymakers are warning that the global credit crisis will get worse before it gets better, while the UK’s mortgage lenders are expecting commercial repossessions to rise. In Wednesday’s Budget, Chancellor Alistair Darling revised his 2008 growth forecast for the UK downwards to 1.75 to 2.25 per cent.
Despite this doom and gloom, your company’s future does not have to be bleak. I have seven ground rules that apply to any MD, CEO or owner-manager entering a volatile economic climate. I know from personal experience that those who are suitably prepared can pass through the storm - and even prosper and grow in uncertain times.
1. Keep your nerve
Those of us who made it through the recession in the early 1990s, or the dot-com tailspin in 2001, are old hands at this wearisome drill. However, if you belong to the new generation of entrepreneurs, and have made your mark during a period of prolonged economic boom, you may now be exposed to an unstable climate for the first time. If a recession strikes, view it as a new opportunity rather than a death knell. This is easier said than done, but a positive mindset is essential.
2. Polish the customer’s pedestal
During periods of unrest, it is all too tempting for MDs to become insular, ignoring customers to focus on internal operational challenges. This is a terrible mistake to make: those who do so will promptly disconnect themselves from their best source of current revenue and future success. Instead, do your utmost to retain your customers. Keep them informed and reassured and involve them in your plans. Remember that your customers will be braving the difficult climate too, so demonstrate your company’s value and stability at every opportunity. Get in front of them as this will enable you to identify what your customers value and make this the key building block of your competitive strategy.
3. ‘What would Mr Burns do?’
The money-grabbing tycoon from The Simpsons is an unlikely paragon of business virtue, but his calculated ruthlessness should be your guide here. Tough times call for tough action. This isn’t the moment for touchy-feely platitudes: even the late Dame Anita Roddick, renowned for her unequivocal business conscience, did not shy away from cutting her workforce when she had to. If your business is to survive a global liquidity crisis, you must be prepared to press ahead with difficult and unpleasant decisions. If your company is losing money, don’t vacillate.
4. Hire slowly and fire quickly
When operating conditions become difficult, it is more important than ever to have made the right recruitment choices and to be surrounded by a committed, trustworthy team. If you have yet to achieve this, you are on the back foot. Jettison the underperformers as soon as you can, and align the right collection of talent to help you face the challenges that lie ahead.
5. Cut costs…
Evaluate every part of your business. The rule is simple: if it doesn’t yield a profit, get rid of it or scale it down. If the economy continues to worsen, you don’t want to mire your company in areas that aren’t going to grow. Anything that doesn’t add value or is not capable of a profit should not be there. Ask yourself: ‘Would my customer pay for processes in my company that do not add value?’ I don’t think so.
6. …but not corners
At the same time, don’t get carried away. Cutting costs should increase your chances for survival and growth, and enable you to trump your competition. If your cuts are ill conceived they can sink your business, so don’t axe your most valuable team members. If you are going to jettison an underperforming team, be sure to examine the recent, wide-ranging changes to employment law. Don’t slash your prices while failing to strengthen relationships with your long-standing customers. These may be obvious mistakes but I have seen them all made - by MDs who should have known better.
7. Batten down the hatches
If your business is watertight, you can dig in your heels and prepare to sit out the challenges ahead. Recession causes the intrinsic value of a business to fall, so your core business needs to be strong to begin with, and your profit margins must be established and robust. However, your business plan needs to be flexible. Last time around, the companies that emerged from the recession with flying colours were those able to adapt their business models swiftly to changed circumstances within their respective sectors. The companies with rigid, restricted business models were more likely to fail because if their established customers fell away, they had nowhere else to go.
Those confronted with the worst-case scenario - the prospect of business failure - would do well to remember that all is not lost. In the US, where attitudes to business and success remain years ahead of our own, failure is viewed as a valuable learning experience that can bring out the best in entrepreneurs.
