Lets really look at this economy.....

The economy. Needless to state the obvious- we are in a recession. With the constant negative news and the public’s general misunderstanding of economics, people are scared. But let’s look at some facts and compare the recession in the 1980’s to our current recession.

•In the 1980’s unemployment reached its high of 10.82 in December 1982.
•The federal funds rate, which was about 11% in 1979, rose to 20% by June 1981.
•The prime interest rate, at the time a highly important economic measure, eventually reached 21.5% in June 1982.

Comparing unemployment, interest and inflation rates, the U.S. economy was in a much worse condition then we are now. But even in the recession, by 1980 there were more than 356,000 franchised businesses and by 1985, retail sales of franchises exceeded $474 billion.

In 1986, the U.S. Department of Commerce estimated that retail sales by franchised establishments represented 34% of all retail sales. Last but not least the sales of products and services by all franchises grew by $198 billion during the period of 1980-1986.

How did those businesses endure? Per the United States Chamber of Commerce, franchised businesses have had a 97% success rate within 5 years of opening compared to non-franchised businesses which only have only 48% success rate with in their first 6 years.

Surprisingly enough there tends to be growth during recessions. Not only do people loose their faith in corporate America and are laid off by “safe corporate giants” but the recession provides unique benefits to new businesses. Below are just a few of your benefits for opening your business now:

•There are more retail locations available now then two years ago and you are able to negotiate lower rents and higher tenant improvements than during a recovery period.
•You have a greater selection of high quality people to work for you with less competition from larger companies.
•Recovery periods follow recessions. Businesses tend to gain a greater clientele base when the economy starts to improve while enjoying the cheaper rents they negotiated during the recession.

I believe the success in business is based off three main aspects.
1.The concept and business structure
2.Your location/ marketing plan
3.You and your abilities

We are starting to ask ourselves, "What is safe?"
Do you trust big corporate companies for stability or do you trust in you?
Honestly- It is all risky out in the real world. As some business that do not provide a perceived value service disappear, others grow. What makes a business strong.... stay tuned for my next post.

I'll end with one of my favorite quotes, "If you're not a
risk taker, you should get the hell out of business."
Ray Kroc, founder of McDonald's Corp.