The shutdowns and rollbacks of businesses due to the COVID-19 pandemic continue to play havoc with the U.S. economy. But the least-affected businesses during the crisis, for the most part, have been those deemed “essential” by state and local governments, allowing those companies to remain fully operational or close to it.
Meanwhile, with the idea that essential businesses can be recession-proof and even boom during a public crisis, buying one is becoming a more attractive prospect for some people.
Our current economic challenges as a nation are showing that owning an essential business can be a solid financial strategy for an individual. They are practical purchases. They are not often glamorous businesses, but essential businesses make sense largely because they offer services that are currently in demand, and as such, they can weather economic downturns.
Some essential businesses are busier than ever as people are trying to maintain social distance by staying home and not taking many vacations.
And at the same time, all kinds of essential businesses provide ownership opportunities while millions of unemployed people are looking for new opportunities or new career tracks. Perhaps they are looking to be their own boss and to have more control over their financial future.
I suggest considering the following when weighing whether to buy an essential business:
• Focus on successful types of essential businesses. Among the essential businesses that have the potential to succeed even during difficult economic times are: delivery services, grocery stores, convenience stores, e-commerce, gas stations, cleaning services, liquor stores, auto repair, lawn care, pest control, mailing/shipping services, and contracting. The pandemic may be with us for a while. People will be home more often, and businesses that can service their needs while home will gain customers.
• Consider franchises as ownership opportunities. While some franchises are struggling during the pandemic, others are in a better position. For franchises in general, much of the industry will be entering a buyer’s market, and those with the means will find some good opportunities. People need jobs, and franchises annually employ 9 million people in the U.S. One benefit of buying a franchise is having an organizational and management team already in place to train you and help guide you. Reach out to other franchise owners to get a sense of the company’s commitment and support.
• Know a bargain vs. a bad investment. A relatively low sale price tempts some people into making a poor buying decision on a business. It’s important to pore over the business’ financial numbers that it recorded before the pandemic and do all the research possible — especially of the market where the business is located — to determine if it was on a growth track and what the competition is like. Two questions you need to ask yourself as a potential buyer of an essential business are: What can you bring new to the business to make it more successful, and why was or wasn’t it profitable?
• Be sure you’re up to owning a business. There are no guarantees with owning an essential business. The pandemic has put a spotlight on their importance, but they take lots of work and organizational skills to run. If you are someone who cannot deal well with uncertainty, buying a business any time, let alone during the most uncertain time in our history, isn’t the right choice. Buying a business and committing to it requires thorough research, a passion for the business, a solid financial foundation, and a leap of faith.
Owning an essential business brings with it the satisfaction of providing necessary services for people. In these times especially, that is a noble pursuit.
Chris Buitron is president of Mosquito Authority (www.mosquito-authority.com), a national mosquito-control firm with franchises serving communities across the U.S. and Canada.