Unemployment rates haven’t been this gruesome since 1974. What have we learned in 35 years? America needs solutions, not statistics. Here’s a solution on how the U.S. can create and put 400,000 people to work by February 2009.
The United States Department of Labor reported on December 1, 2008, America has lost 1.9 million jobs to date. That’s a lot of empty cubicles, but worse that that, it’s a lot of gifted people sitting in atrophy.
President Elect Obama, as well as most economists, acknowledge that small businesses are the backbone of the American economy. If corporate America can not create jobs for these talented individuals, perhaps some former employees will entertain free enterprise, the last great personal frontier. But how does a former suit turn on a dime and start a business? Perhaps a franchise is the answer. It allows new business owners to be in business for themselves but not by themselves. For the first time entrepreneur, having a safety net is smart – and comforting.
In the world of franchising there are 75 industries that a new entrepreneur could be involved in. Many of these are recession resistant, low-start up, service based businesses. These characteristics are what are needed in this ever-changing, constricting economy. But, how does a former finance guy, for example, fit into a repair business? Easily! Good franchise companies are searching for former corporate types to run a business and be the CEO, not the technician.
A principal benefit of small franchise operations is that they create local jobs. According to a study released by the International Franchise Association in 2007, franchised businesses generate more than 11 million jobs with an annual payroll of 278.6 billion dollars.
Many corporate refugees don’t consider franchising chiefly because they are not educated about business ownership, the help to get started that’s available to them and the industry options that exist. The second and largest obstacle is obtaining start up and working capital, especially in the current financial market.
Banks and the Small Business Administration have always held that lending money to a start-up franchise operation is safer than lending to an individual small business. The good news is there’s money out there. It’s not as easy to come by, but it’s there, if you know where to look. In addition, perhaps the government could think about providing a program to aid franchise start ups through special, low cost, SBA loans.
Attaining financing for future entrepreneurs could be aided by forward thinking lenders who understand why franchises are successful. The facts are 95% of all franchise units stay in business more than five years which is about 4 years longer than a typical mom & pop start up. Why? The systems are in place. In a great franchise company, the training is extensive and on-going. The marketing plan is tried and true. The mentoring, coaching and support is never-ending.
Advice to a new franchise buyer today is they should vet the business concept against common sense. Make sure the product or service is a necessity and not a luxury. In addition, the concept should have a nice long track record and proof of its success. All of its battle scars and growing pains should be healed. One may want to confide in a professional franchise consultant as well. A good business plan and a great credit score are a must.
Fair enough, perhaps franchising may not save the entire economy but can you imagine if just one percent of the almost two million laid off refugees started a new, small franchise business that is a needed service in their community? It would amount to 20,000 little engines pumping life blood into the economy. Moreover, statistically, service-based franchises employ 10 staff members per unit and provide 10 additional jobs indirectly that help start and then supply the franchise. Today franchising causes almost 21 million jobs to its industry via supply companies. Also consider that individual franchise units across America account for 4.4 percent, or more than $880 billion, of the United States’ economic output.
As a real solution, we can boost the Countries’ economy and employee 400,000 Americans by Presidents Day in February. I think you’d agree this would be better than having two million people watching the TV news, being depressed and unproductive, wondering if they will ever see their cubical again.