their workforce needs with temporary workers instead of hiring full-time employees.”
Shinda Starr’s Décor & You franchise in Woodbridge, Virginia, has yet to be affected by the downturn. “The clients I have now are people who have been in homes for three to five years and just haven’t had time to decorate,” she says. “They’re staying home more, starting to look around their environment. They want to make home a sanctuary.” She won the 2007 Décor & You Business Development Award for pushing her business beyond $100,000 in sales—more than double the previous year’s sales. Starr’s startup investment was just $14,000 in 2005 and provided Starr with the tools she needed such as the company’s customized accounting, inventory, and design software; 200 plus hours of training; as well as Web, marketing, and public relations.
Darrell Johnson, president of FRANdata, a franchise research firm, also says residential, personal, and business service providers show strength despite the economic recession. Financial, legal, accounting, and computer support services for small businesses are promising as are youth-oriented franchises such as sports leagues, art programs, childcare, and tutoring.
All of this is good news for people interested in home-based franchises, which are predominantly service businesses. Still, not all services are created equal, and Johnson adds that a key consideration in a down economy is: “To what extent is this brand’s product or service deemed to be necessary versus discretionary?” People may still need haircuts when interviewing for jobs in a recession but do they need a $50 cut or $15 cut, he asks.
Health and Wealth
Entrepreneurs hoping to weather economic storms should also consider the healthcare industry. “When the economy is booming people don’t consume more healthcare than they would on average and when the economy is in a recessionary period, people do not necessarily cut on healthcare spending,” says Paul Larson, an equities strategist for Morningstar, a Chicago-based investment research firm. “If you’re looking for an industry that has no economic sensitivity, healthcare has got to be at the top of the list.” A recent FRANdata report found that in-home health concepts are positioned for “excellent sales and revenue growth.”
Al and Adair Voorhees, owners of a Home Helpers franchise in Virginia Beach, Virginia, saw their 2008 revenues jump roughly 20% into the “low six-figures” despite the economy. The 47-year-olds were attracted to the franchise five years ago because of its favorable reviews from current and former franchisees, low startup costs (then about $14,900) and multiple revenue streams. The home healthcare business serves the elderly, those recovering from injury and illness, and new and expectant mothers.
“The impact of the recession in healthcare is far less than it is in other industries,” Voorhees says. “What we see is that when people need care, they are going to pay for it in good times and in bad times.”
Once you’ve found the right franchise, there’s still the question of how to fund it. Increasingly, the answer is a Small Business Administration-backed loan. Despite the downturn, black entrepreneurs received $83 million in