With more people worrying about the cost-of-living crisis and pending recession, investing time and money into a franchise right now may be perceived as a significant risk for some people. However, there are some businesses that might not just survive but may even thrive during economic hardships. One sector that consistently outperforms others during a recession is the home services sector. David Truby, the Managing Director of Greensleeves, a lawn care franchise with 108 locations across the UK, firmly believes home service businesses will remain recession-proof over the next year.
With many homeowners choosing to improve rather than move in an uncertain UK housing market, entrepreneurs looking for recession-resilient business ideas should look no further than the home services sector. Starting a franchise that provides essential services and resources, such as those found in the home services industry, is an excellent opportunity to join a thriving network. Here are my top three reasons why home service franchises are set to do well in the upcoming recession.
1. The provision of essential services that homeowners cannot do themselves
Owning a home comes with a significant amount of responsibility. You must keep it in good shape not only to ensure it remains liveable but also to make sure your investment retains its value. So, whether you want to improve your house to make it more comfortable or simply enhance your home’s value, home improvements such as doing up the kitchen, adding new construction or revitalising the garden are the way to go. However, despite what every Tom, Dick and Harry may think, there are some home improvement projects that a homeowner with tools cannot do alone. This is why hiring a home service franchise that can transform parts of your home or garden into luxurious living spaces is invaluable, even during a recession.
2. Repeat business and word-of-mouth advertising
For home service franchises, repeat customers are the best customers. Not only do they use your services repeatedly, but they also offer you the best form of advertisement: word-of-mouth advertisement. And the best part is, it’s free!
Of course, you can never rely solely on word-of-mouth advertising as a business. However, initiatives like referral schemes that incentivise existing customers to introduce their family, friends and other contacts to become new customers will help expand a home service’s customer base. In turn, this often results in an impressive return on investment due to the low initial outlay. At Greensleeves, for example, word of mouth was the highest single method of new customer acquisition during the pandemic. And during the pandemic, we experienced two consecutive record-breaking years of income – proving that home service franchises can thrive during a crisis.
This form of free marketing is effective because, according to Nielsen, 84% of people trust recommendations from people they know, making them the most influential form of advertising. They also offer a 37% higher retention rate of customers than other marketing forms, which means if you are a home service franchise, your business will have a constant stream of business despite economic hardships.
3. Rising mortgages means people are focused on home improvements and renovations
The home buying company’s latest data revealed that 40% of property sales fell through during Q3. This figure marks a 9% increase in failed sales over the last three months. Of the deals that collapsed, 41% failed due to buyers changing their minds about the purchase, and a further 24% failed when the buyer could not get a mortgage. This suggests growing caution from both buyers and lenders amidst the cost-of-living crisis.
With the majority of the public looking to stay put, many people will focus on home improvements in the coming months. At the beginning of the year, UK homeowners were set to spend £40.2 billion on improving their properties. When asked how much they planned to spend on home improvements, homeowners said they were looking to spend, on average, £6,727, with one in six (17%) saying they plan to spend over £9,000. These figures are now only set to increase with people looking to stay where they are instead of moving.
The home service sector consistently weathers hard economic times, and in some cases, like Greensleeves, home improvement businesses do not just survive, they prosper. Investing in a home service franchise during a recession can be an excellent time to start because the costs can be much lower than starting one during a boom period. For more information, please visit www.greensleevesfranchise.co.uk