The difference between what is happening in our economy currently and what was happening in the beginning of this decade is really different.
As I mentioned in Part 1 of this story, 2002 saw some pretty low interest rates. Lots of the folks I helped get into franchised businesses of their own actually used home equity loans and lines of credit for some of their franchise funding needs. The rates were hovering around 4 percent in 2002-2004 and it was the way to go. Loans were being approved quickly, and the climate for entrepreneurial ventures was above average.
The mortgage crisis has made things pretty tough for future small business owners. Banks are paranoid about loaning money right now, and one has to really jump through hoops to get a commercial loan in most cases.
Being in an election year is making things a little tougher, too. Uncertainty brings with it different levels of fear in our minds. Uncertainty also slows decisions down. Major purchases are usually affected first, and in this case, investing $100k into one’s own new business may be put on the back burner until things start to become clearer, politics wise.
Bottom line is that my phone and e-mail accounts are not exactly humming with activity. Not too many people are currently looking into franchise/small business ownership. But that will change. It is all part of a cycle. (Just a long one!)
Like other small business owners feeling this major slowdown, I am doing some other revenue-generating activities related to my field. I choose to engage in these activities as opposed to crawling into a corner to worry about how my little consulting business is going to make it.
I am not giving up. Are you?
Joel Libava is president of Franchise Selection Specialists Inc. in Cleveland.