Any investment broker or financial planner who advises clients usually has one primary directive, no matter the situation. And that directive is for investors to diversify their portfolios. It’s a fundamental and sound practice because it mitigates your overall wealth strategy, regardless of the current economic climate. Some assets in your portfolio that are earning a good return are thus balanced against any other assets that are underperforming. It’s quite common to hear the term “hedging your bets”, but that’s exactly what a balanced portfolio does.
When most investors think about diversified assets, they tend to think in terms of mutual funds, stocks, bonds and even commodities. To the established and savvy investor, diversified assets may include real estate holdings and small business ownership. And that’s where franchising comes in, leading us to investigate the advantages and benefits of owning a franchise—or a multi-unit franchise for diversification of their asset portfolio.
What makes franchising an ideal asset for diversification?
Revenue Control
When investors play the stock market or buy several hundred ounces of gold, they’re typically at the mercy of market volatilities. One bad quarterly earnings report for a publicly traded company could wipe out your stock shares. And federally regulated interest rate changes can evaporate any precious metals gains. With a franchise, you have more control over how your investment vehicle performs.
Time Saved
While franchising gives you control over your earnings potential—it also gives you more control over your time and commitment to the business. Even operations are designed for either a hand-on approach—or a semi-absentee model, giving you more control over your time. All done using a proven business model which by nature has created efficiencies in operations to maximize earnings. Most would agree that there’s no substitute for time saved—and spent—doing more of the things you want to do.
Portability
With a franchise operation as part of your investment portfolio, it’s also as portable as financial investments. If the timing is right for a profitable sale of the business, it’s your right to sell off—the same as stocks or bonds. Many franchise owners have opened one or more units, driven the sales and recurring revenue into ideal territory, then executed a flawless exit strategy. Now that’s a real return on investment opportunity.
As the country begins to recover from the disastrous market crashes of 2020, it’s time to review new areas of opportunity. With untold amounts of turnover of shuttered small businesses across multiple industries, it’s likely that many franchise concepts will have an opportunity to enter new markets and compete for market share with less competition. This could be the exact time to investigate how a franchise could impact your business and financial portfolio.
A new year is the perfect time to embark on a personal journey of empowerment and improvement. But you have to be willing to take action. This year can be what you make of it. The power to change is an admirable thing. We see it in all of the budding entrepreneurs who have made the decision to use franchising as a vehicle to business ownership. And what they can do, you can do.
Drop us a line if you’d like to know more about how franchising can diversify your personal and business portfolio!