Record Business Start-ups Fuel Franchising
The migration of employees to business owners began in mid 2020 and continues to be strong. In the final US Census Bureau tally, 2020 was the best year on record for new business start-ups. We expect 2021 could likely exceed the previous year as the applications month by month have been robust.
What drove this massive shift? When Covid set in there were three big contributing trends.
The first was moving from office to home based work. Employees got used to working outside an office with a boss present, and they liked it. They got to avoid traffic to and from work. They could spend more time with their family and still get their work done by shifting work to hours after the kids leave for school or to weekends. In some cases, people even changed where they work renting a home at the beach for a month or more to work from their dream home. Employees learned that work did not have to be an office based 9 to 5 Monday through Friday box.
Secondly, as we entered this phase in our economy the types of services and how people sourced products shifted. This opened opportunities in a myriad of segments that did not exist in the same way previously. While sales in full-service restaurants and office cleaners may have fallen, sales in home renovations, online sales and other categories may have grown substantially.
And finally, there were layoffs. Anytime we see employers shrinking their labor force we see a corresponding growth in entrepreneurship and, in our case, franchise brands. This has been true for my 30 years in franchising, every down economy or downsizing has seemed to lead to franchise growth. The one exception to that seemed to be the great recession when the housing market fell as people did not have as much in savings and borrowing was challenging.
This time around we have the layoffs and downsizings while savings rates are very high and borrowing is very approachable.
These trends are layered on top of a shift in housing overall from cities to suburbs. This shift has driven the home sale and renovation market, along with home prices and home equity. As homeowners are getting ready to sell they renovate key parts of their home to maximize sale price. When buyers move into a new home they continue the renovations to make the space they will live and work more perfectly suited to their needs.
And all of that money consumers saved up is hitting the market with huge demand for products, services and experiences like restaurants and gyms. While this increased demand has raised prices, many of those increases will retreat as demand wanes after the spending flurry and as sully chains catch up.
I believe the net effect of all of this is that how, where and why we work is changing for much of the workforce. Consumers are also shifting how they spend their money, focusing more on experiences and their daily environment.
As companies call their employees back to the office, many will go but their will be a sizable contingent that has found a sense of freedom that they don’t want to give up.
Entrepreneurship and franchising are an outstanding option for those employees that don’t want to go back to the way they used to work. They can strike out, tap into strong trends and use proven systems from National brands that will train and support them as they build their family empire.
Franchise brands are often settled into relatively stable or very stable markets that tend to have some form of ongoing regular demand. Franchises are somewhat less common in highly cyclical markets or those that don’t have some form of longevity because the franchisor needs a long runway for their game plan and for overall success.
The growth we have seen over the past year resulted in franchisees that are ramping up now. As we talk to franchisors they relate good feedback from their franchise owners on getting open and established. Beyond building their own business, the work of these franchisees will entrench these brands in the economy and provide opportunities for years or decades to come.
What should you do if you are one of those workers that wants to control your destiny and build your family empire?
Start with finding your perfect franchise. While you may be able to figure that out on your own, you may also find value in getting free coaching from someone like me that can advise you on the industry and how to approach it from a base of decades of experience. Your perfect franchise may not be your favorite place to spend money as a consumer today, though it could be tomorrow!
What is your success story? Let’s go find it!
George Knauf is a highly sought after, trusted advisor to many of the top franchise ownership groups in the world. With over 25 years of experience in both start-up and mature business franchise operations he is uniquely qualified to advise individuals that have dreamed of Building their own empires. Whether you have an existing portfolio or searching for your first franchise, he can help you to pursue your dreams. www.MyPerfectFranchise.com