(While the following narrative reflects actual facts and events, the client’s names are withheld to protect their privacy.)
This client’s new business had its Grand Opening on February 1, 2020, one day after US travel restrictions with China were announced by the White House. The first US death due to COVID-19 infection was reported on February 29, 2020, as the client’s first month in business ended. The next two months saw tens of thousands of Americans perish due to the COVID-19 virus. ‘Shelter-in-place’ orders were issued in almost every State. The National unemployment rate spiked to over 20%.
Starting your first business with a few hundred thousand dollars on the line in this kind of situation should be “as scary as a heart attack”.
The client had some familiarity with heart attacks. He had spent thirty years in the corporate world, mostly in the medical devices industry. He excelled in the sales and marketing of implantable coronary medical devices like pacemakers, stents, and angioplasty balloons. The success of these devices was literally a life-or-death situation when used in emergency heart surgeries. The medical device representative must be calm and steely confident that their products are up to the tasks. That is the only way for cardiac surgeons to have calm and steely confidence to perform their life-saving operations.
The client’s success and confident demeanor led to him being avidly recruited by venture capital and private equity firms to manage their start-up medical device companies. The client grew more than one investor-backed medical device operation that ended in very profitable divestiture. With his equity bonuses from these divestitures, he had reached a level of financial security to allow for an extremely comfortable retirement. Retirement would be well deserved as the client had spent more than 200 nights per year sleeping in hotel rooms for the past several years.
However, the client ‘itched’ to have his own start-up company. He had always reported to someone else who made the big calls. After all, it was their money on the line, not the client’s. Now he wanted an opportunity to put his own money behind his skills and to call all of the shots himself. He had no way of knowing the economic circumstances that would greet his first day in the business backed by his own money.
He was introduced to his local FranNet consultant by a simple message on LinkedIn. He had spent enough nights away from home. He wanted a local business opportunity that let him sleep in his own bed. FranNet consultants are local, trusted, franchise experts. His local consultant recognized the client’s passion for building businesses and their brands. She thought that the client may enjoy a business that helped other businesses to build their brands in a tangible way. This describes the graphics and sign industry. Every day brings a new project to help a customer to visually communicate their brand proposition and value add in innovative and memorable ways. The creative opportunities are limitless.
Due to the client’s previous level of achievement, she elevated his communication level within the opportunity’s development team directly to the Founder. After a phone call or two and an informative webinar, the client said to himself, “This sounds like fun”. He started his investment in motion that brought him to February 1, 2020.
Mostly due to the parent company’s pre-opening business development program, the client’s new business had $20,000 of bookings in its first month, just shy of the $25,000 needed for the business to break even before the owner’s compensation. That is a nice start. March 2020 saw bookings of $23,000.
Then it happened!
During his third month orders reached $90,000 with expected net profit to the owner of 25%. As it turns out, the graphics and signage industry is not very susceptible to economic cycles. Some may say that it is recession resistant and in what we now call an essential industry. FranNet clients opening businesses in these types of industries is not by chance. The experts at FranNet carefully evaluate the nature and macroeconomic history of the industries in which our portfolio opportunities do business.
FranNet experts look for industries that show recession resistance. How can you make that determination? By doing your homework. Research can show how the industry, as a whole, performed during the Great Recession and previous recessions or immediately after a past National tragedy or natural disaster. Historical results do not guarantee future results, but they can provide important insights. FranNet experts also look for industries not susceptible to being moved offshore or taken over by the internet. Within those industries, FranNet experts uncover the top-performing chains to add to their portfolio of opportunities.
Some of these industries may seem dull and boring like budget haircuts, pet care, tree trimming, or any number of different types of cleaning services. Many of these industries provide an essential service. As the chart shows, almost 80% of FranNet clients open a business in the service industry. While these industries may lack panache or elan, they are also not as scary as a heart attack when the economy sours.
The client explains that “When crisis hits there is always opportunity.” Do your research, make a plan, keep your head on straight. When turmoil and disruptions scare others away, you will be the one ready to take advantage of the opportunity that comes from chaos.