A new year brings new opportunities, but due to economic uncertainty fuelled by the recent cost-of-living crisis, it is understandable how this may hamper your sense of optimism. With the UK economy predicted to continue to shrink throughout the year1, if your New Year’s Resolution is to take the leap into business ownership this year, then you may feel discouraged. But are these worries unwarranted? In fact, franchising as a business model has shown itself to be resilient through times of past economic crisis. Here, Justin Nihiser, CEO of the kids coding franchise, Code Ninjas, discusses how franchising is the low-risk route to business ownership in 2023.
As the UK begins the year on the brink of recession, and whilst it is being reported that the prospect of heavy economic decline may still be avoided, employees are still feeling the effects of the financial turmoil the world is facing. With the threat of unemployment and redundancy, this sense of uncertainty will inevitably fuel a desire in employees to take back control. As much as business ownership is a clear route to restore control of your earnings, many will be fearful of the impacts that the unstable economy will have on their new venture.
Of course, starting a business during an economic downturn will feel nerve-wracking; unfortunately, no business is entirely recession-proof. However, taking the route of business ownership through franchising allows you to go into business for yourself rather than by yourself. As a franchisee, you have the advantage of a robust support system to offer you a helping hand in all aspects of your business, not only when the going gets tough. Whatever the market conditions, franchises often have a higher success rate than independently run businesses because of the assistance that a franchisee receives from the franchisor and larger franchisee network during trying times.
An independent business owner may feel alone in their predicament. In contrast, a franchisee can openly discuss their issues with other franchisees in the network, many of whom will be experiencing similar things. This, as well as the power and support of the franchise brand, will help franchisees weather the storm.
Finding funding during a recession is unavoidably more difficult for anyone wanting to start a business. However, rather than an independent initiative viewed as a higher risk, lenders consider more favourably applications for funding to finance a franchise with a successful track record. Franchisees also gain from an already proven business model that works because all of the costly and time-consuming mistakes and diversions have already been made, allowing them to start on the road to success right away.
While franchising as a whole has proven to be pretty resilient, considering the best business sector and the right franchise to invest in is paramount. Finding a franchise that is not only in your desired industry but is also established within it will ensure you have the best support whilst making a living by doing what you love. Established franchises will have dealt with a range of economic conditions over the course of their existence and will have the expertise and knowledge to react quickly to evolving consumer purchasing trends, giving its franchisees a likely advantage over competitors in the market.
There are some goods and services that people simply cannot live without, despite the fact that a sizeable proportion of the population today has less disposable income. This means that there will be a definite market for you to tap into as long as you research and choose a franchise that works in a sector that consumers view as essential. Due to the pandemic, when parents witnessed first-hand how screen time can provide their kids with a rewarding and contemporary education, the demand for reputable and well-established coding education services for kids has also significantly increased. Code Ninjas franchisees are successful because even when parents feel the pinch, they do not skimp on providing their children with opportunities that focus on their professional and personal development.
There are no guarantees in business, but with the support of an established network and brand and with a tried-and-tested business model, a franchise can provide a low-risk path to business ownership during difficult times. Though no route to business ownership can be said to be recession-proof, there are many reasons to be optimistic that a well-managed franchise brand can weather the storm of potential impending recessions. When done correctly, franchising can be a great solution for any economy!
1 CBI, 2022