How to Recession-Proof Your Franchise

Multi-Unit, Multi-Brand Owners Reflect on Lessons Learned During Challenging Times 

Inflation is rising at a historic rate, gas prices peaked at more than $5 a gallon, the Federal Reserve is raising interest rates, real estate is in high demand, a national labor shortage persists and whispers of a bear market and recession loom.

Sounds like a great time to open a franchise, right?

With the traumatic wounds of The Great Recession still fresh in the collective conscious, the headlines we are bombarded with every day are enough to raise your blood pressure and make you fret about what’s next for the franchise business market. Welcome to the world’s largest craps table we call the global economy.

While it might seem that any deviation from a booming economy might be negative, it’s actually quite the opposite in the franchise world. Businesses can thrive and grow in recessions or other economic downturns. Much like a craps table, while the global economy runs hot and cold, people and business owners still make money. The key to thriving in a challenging economy is knowing how to position yourself and your business.

For René Tirado and his business partners, Jim and Connie Weaver, they know what it’s like to operate and thrive in tough times. They are celebrating their 20th back-to-school season with Plato’s Closet and their upcoming ninth Christmas with Hand & Stone Massage and Facial Spa.

Starting a business never comes without risks but becoming an owner of multi-brand and multi-unit franchises isn’t for everyone. Each presents a number of different challenges that Tirado has had to navigate through the years. As the market fluctuates, so must business owners. But there are ways to prepare your business for more challenging times.

How to Recession-Proof Your Franchise During an Economic Downturns:

  1. Take Stock of Your Market Position
  2. Listen to your customers
  3. Focus on service
  4. Employee satisfaction is important

Take Stock of Your Market Position

When Tirado and the Weavers entered the market with their first Plato’s Closet in 2001, they couldn’t foresee the economic collapse that began in 2007. Coincidentally, it turned out to be good for business.

As the economy’s drop was felt more broadly and gas prices increased, so too did their business. It’s something they paid attention to in the years that followed, and it’s an ongoing trend. When prices go up for goods and gas, business at the gently used clothing retailer improves.

Something else that has driven some of their business decisions is that they don’t try to compete with the internet. Instead, Plato’s Closet thrives on goods that may have been internet purchases but that teens quickly outgrew. In the case of Hand & Stone, it offers in-person services a computer can’t provide.

Listen to your customers

A business’s customer base is the financial lifeblood that determines the success of any owner, regardless of brand. While business in recent years may have surged because of a booming economy regardless of what an owner did, challenging years force owners to be more strategic.

Listening to your customers can help, whether in good or bad times. Owners must focus on what is really important.

“We need to stay on top of our inventory – if it wasn’t selling, get rid of it,” Tirado says. “Turn and burn. We want to get it in today and sell it as quick as it can. Customers will tell you that if you’re listening. We want to know that. If it’s something that has been sitting for three months, discount it, sell it and make room to buy something that people like better.”

Focus on service

While business might not boom as much as it has coming down from the post-pandemic high, slower times allow you to look for process improvements in your business.

Many businesses are focused on the customer experience from beginning to end. If you aren’t able to deliver, don’t expect repeat business.

For Tirado and the Weavers, Hand & Stone’s business model relies heavily on a membership base that needs available reservations to keep continuity of service. If that doesn’t exist, it won’t be good for business.

“We remind our employees that they need to give a wow factor,” Tirado says. “We want them to remember and return time and again.”

Word travels fast in the age of Google reviews and social media. If you can’t cut it, everyone will know and choose a competitor who can deliver on a promise.

Employee satisfaction is important

Price increases, supply chain issues and changing medical guidelines have all been challenging. But keeping good employees should be a focus for any owner in a challenging market.

“It’s been challenging – since COVID, everyone has had significant price increases in supplies,” Tirado says. “Linen, equipment, gels – no matter what it is, it’s gone up in price.”

Although the increase in prices were a hit to his budget, Tirado has increased the pay for his employees in both brands and focused on the benefits offered to employees. If they didn’t have enough staff to open the doors, they weren’t going to make money anyhow, he says.

“We need to make sure to take care of our employees,” Tirado says. “That’s something COVID taught me.”

Do you wonder how the people who are always being quoted about your industry got to be where they are? The short answer is they are smart, and they work at promoting themselves into becoming a franchise thought leader.

Every industry has thought leaders and influencers. Thought leaders understand their business, and they stay on top of changes and issues. They are among the first to spot trends, and they are constantly learning. They aren’t afraid to share their perspectives with others.

And so, people listen to them.

If one of your goals this year is to become one of those people whom others follow and retweet, here’s what you need to do:

Write Opinion Lead Blog Post Regularly

Blogs are powerful platforms full of opportunities for you to be a leader in your industry. They allow you to write about topics that are important to you and your industry. By publishing on your company or personal brand blog, you can control the content marketing and the publication schedule. Share your blogs on social media to increase your circle of influence. Then introduce yourself to leaders in your industry and other industries.

Publish Relevant Articles Or a Industry Related Book

To be taken seriously as a thought leader, you will need to publish beyond your blog. Share your expertise in articles on industry trends or issues and submit them to trade or industry publications. Make friends with journalists who cover your industry. You can provide value by encouraging them to reach out to you when they need quotes on a particular topic or area of expertise. If you have a really big idea, you might consider a bigger platform such as a book. A book is a huge undertaking that requires a lot of original content, time and patience, not to mention a publisher. Remember to leverage any articles you’ve written or been quoted in on your social media and your blog.

Pursue speaking opportunities

Thought leaders are in demand at professional conferences. It’s an enormous compliment when they offer you a seat on a panel or ask you to moderate a discussion before your peers. To establish thought leadership, book speaking engagements on topics that you are very comfortable with. Comfortable to the degree you can speak about it at a regional or national conferences. Plenty of opportunities exist, but remember that there also are many people angling for those same opportunities. Apply for every reasonable opportunity that you qualify for. Be sure to arrive well-prepared so they ask you back next year.

Be a Franchise Thought Leader Podcast Guest

Taking advantage of speaking opportunities on relevant podcasts is a great way to demonstrate expertise. It allows you to reach new audiences and gain new followers. Begin by connecting on LinkedIn with the hosts of podcasts that you enjoy and that are popular among leaders in your industry or position. Remember that hosts are influencers themselves. After they see links to your blogs and information on your blogs or speaking engagements, it will be easier to start a conversation about being a guest on their podcast. When the podcast is available, leverage the opportunity. Take a moment tag the host or podcast, share the link on your own social media and including a link to your blog and social handles in the episode description.

Launch a PR Campaign

Establishing thought leadership is all about good public relations. Share links to blogs, articles and podcasts on your social media. Send news releases when you take on leadership positions in professional and industry organizations, when you lead classes or workshops and when you speak to professional groups. Target trade publications, local news contacts, alumni magazines and other media that reach audiences with whom you want to connect.

Establishing thought leadership is not an easy or quick task, but it’s both important and doable if you are a true expert and leader. If you already are publishing, speaking and working to establish your expertise and influence, take the time to properly leverage those activities. Then the cycle begins again as you watch for an increase in followers and new opportunities.