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On a morning last month, my financial advisor explained his bearish stance on investment growth. Until we have herd immunity (from a combo of exposure and vaccines), the market may not perform as it has in the last few years. But don’t let that stop you from considering a franchise purchase.
The market hesitation means that your overall price of opening a franchise today is lower than it has been recently. And there are franchise areas that are doing well despite, or maybe because of, the pandemic.
Many franchises, like home upgrades specialists and home service providers, are booming as more people are at home, building home offices or expanding their living space. Others, like home health care, are also seeing large gains.
But even if your dream franchise business isn’t in a covid-boom-based market, don’t despair.
The pandemic and its related economic effects make opening any franchise less expensive right now, and the timing could be just right.
Franchisors might not have changed their initial fees, but there are solid reasons to consider buying a franchise today—all of which can save money for new franchisees or for those who want to expand.
- Interest Rates are Down. If you need a loan to expand or buy into a franchise, this is a good time to work with lenders. Interest rates are low for entrepreneurs, and those lower rates will save thousands over the term of a loan. Right now, money is cheap, and that is always a fundamental help for a franchisee.
- Some Prices are Lower. The price of some supplies (like food and equipment for a restaurant franchise) is lower. If your cost of goods is lower, then profit margins will be higher than normal, at least for a while. Gas prices are also steady and lower than they were a couple of years ago. If your franchise entails deliveries, transportation, or on-site services, every penny you don’t pay for fuel is a penny of profit. Prices change, of course, but in the early stages of a new franchise, every bit helps. Your future customers feel the extra change in their pockets, too, which means they have more money to spend on your franchise product or service.
- Commercial Rental Rates are Down. Retail and industrial properties have taken a huge hit and now have many empty spaces to rent. Location matters for many franchises, and today, you have more choices for your territory site. There are better places available, and most property managers are very willing to negotiate rental rates and terms. Whether it’s for a new franchise or an expanded location, now is a renter’s (and buyer’s) market. As with other lowered prices, the lower the cost of your business space becomes a direct benefit to your bottom line.
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It may seem like a scary time to hold your nose and jump into any kind of business venture, but now is an excellent time to reap the benefits of lower start-up costs. Even when these prices go up (they always seem to), you will be further ahead in your new franchise site.
With lower start-up costs, you’ll see 2021 growth that is more significant than last year. Today is the day to get started on your new franchise.
Anne Daniells is a co-owner of Enterprising Solutions, a professional services firm specializing in corporate communication and financial improvement for businesses where she shares decades of corporate and entrepreneurial experience—including franchise ownership—in her writings on business culture. She has authored hundreds of articles for publications including AllBusiness.com, TweakYourBiz.com, and MSN.com. Reach out via her website for more on where corporate culture, communication, and human architecture collide.