Starting a business is not without its risks. Even franchising, a lower-risk option than starting a business from the ground up, can be impacted by shifts and changes in the economic cycle. Many people looking into purchasing franchises look for options that are “recession-proof,” but can such a thing really exist? How can a business resist a natural part of the economic cycle?
Why Are People Talking About Recession?
Recession is inevitable. But as our economy recovers from the Great Recession of the mid-2000s and we head into a new decade, many people are beginning to wonder if another recession is around the corner. Some are even turning to history to theorize about what we can expect from our economy in the next 10 or 20 years.
History tells us that the 1920s were a time of prosperity in America. The “Roaring Twenties” was a time filled with flappers and bootleggers, with the rise of artistic movements like jazz and Art Deco. World War I had ended and businesses were booming. The Women’s Suffrage movement was in full swing and automobiles were becoming commonplace. Household electricity arrived in rural areas, ushering in the widespread use of radios and telephones. Movie stars and sports heroes were featured in the media and cities built large baseball stadiums and movie palaces to celebrate them. It was a time of great prosperity around the world.
Now, 100 years later, we find ourselves in an America with some of the lowest unemployment numbers in our history. Wages are up and taxes are down. We’ve been on an economic upswing for nearly thirty years and there is no end in sight. The stock market’s DJIA has gone from 108 to above 28,000. The “Roaring Twenties” seem to be back. It’s a great time to make an investment in a business to ride this wave of success. What could possibly go wrong?
Well, as you history buffs probably remember, all of that prosperity drained away in 1929 in a time memorialized as “The Great Depression.”
Should Franchise Owners Worry About Recession?
What caused the Great Depression, and could it happen again? These are important questions to any business person, but especially those getting ready to invest in a franchised business entity with the intention of bringing long-term financial health to a circle of family and employees.
Predicting a recession is a game for economists, and even among those professionals there will always be debate. Economists have noted that 2019’s prosperity also bore some key indicators of an oncoming recession, and while some of those indicators have since receded, the economic cycle suggests that a recession will happen again—we just don’t know when or how impactful it will be.
So if we don’t choose to live in fear of what may happen in the future, how do we protect ourselves? By making an intelligent choice and investing in a franchise that is resistant to any type of recession.
Can a Franchise be Recession-Proof?
What is a recession-resistant franchise? Basically, a business that has numerous revenue streams is a business that can survive a downturn in the economy. Pizza places sell pizza, and if folks cut back on discretionary spending, pizza sales will most likely suffer. Clothing retailers will move fewer fashions as people hold off on updating their wardrobes. And hoteliers will see fewer bookings as people postpone vacations waiting for things to improve.
The common thread here is that each of these businesses, and hundreds of others like them, all have a single stream of revenue. When the economy tightens, the things they are selling are no longer appealing. When people are concerned about their financial security, they cancel trips and tighten their belts, leaving little room for indiscriminate spending.
A “recession-proof” business is a rare thing. While some industries—repossession, discount retailers, and funeral homes—are constants and may even thrive in economic downturns, most will see a dip in profits during an economic downturn. Most owners simply can’t count on continued business during recessions; to be safe, business owners should have a plan for what their company will do during periods where consumers are reluctant to spend.
That’s recession resistance. We can’t stop or thwart a recession in its entirety, but we can be prepared for the inevitable slip in profits and business. To do so, we must be resilient and nimble—two of Transblue’s core values.
Transblue has pioneered a system for generating income regardless of the business environment. As a result, the owners of a Transblue franchise are in a far more positive situation if and when the economy does slow.
The Transblue business model is based on developing multiple revenue streams, a model we refer to as “evergreen.” Regardless of the economic situation, banks still have to have their lawns mowed and their bushes trimmed. Business parks have to have their parking lots cleared of snow and ice. Homeowners associations still have to have roof and siding repairs completed in accordance with their by-laws and reserve study guidelines.
Transblue focuses on residential spaces but keeps revenue consistent by working with businesses that have fundamental service needs day-in-and-day-out, regardless of the economy. If fact, many businesses will ramp up their efforts to attract customers in slower economic times. Having parking lots that look fresh and clean and sidewalks clear of weeds and debris makes for a more inviting customer experience. When new business is tougher to come by, these details truly matter.
Government contracts will be issued regardless of consumer spending, and they are often used specifically to stimulate the economy. Transblue franchisees are uniquely positioned to take advantage of those situations. With request for proposal (RFP) support coming from the Transblue corporate office, franchisees are able to bid on and win contracts in the public sector that are simply unavailable to most area businesses.
This evergreen system means that no matter what time of year it is or the state of the economy, Transblue franchise owners have potential revenue streams. You’re not tethered to one type of business; if consumer spending slips, you’ll still have government and commercial contracts, as well as snow removal in colder areas, to fall back on throughout the year and as the economy recovers. We’re recession-resistant—no matter what’s going on in the world, you’ll have business opportunities.
If financial stability, diverse income streams, and recession resistance are concerns for you, Transblue invites you to take a closer look at our business model.