This article is based on the video featured above, originally recorded for Visa Franchise Youtube Channel
We’ve been getting a lot of inquiries at Visa Franchise about the pending recession in 2022. Are we in a recession? What’s it like doing business in the United States right now? And depending on the industry, you’re doing really well, or you might be a little afraid.
If I was to open up a small business in the United States right now, I would be especially mindful that the next few months or even the next couple of years, might be tough for some specific industries.
Now, in terms of what industries you might want to avoid, think about different businesses that the middle class or upper middle class mainly goes to, to indulge and it’s not really a necessity, or that they can reduce the frequency that they go to use that product or use that service. So, one example that comes to mind is nail salons.
So, they were hit super hard during the pandemic, as people were not comfortable getting their nails done in salons, and they will get hit hard as they have been in prior recessions, as people, when they don’t have as much money, they’re gonna forego that $50 or $100 manicure or pedicure, depending on the region where you are, the city where you are, the costs are gonna vary quite a lot.
So, if you’re going for the ultra-high-end, you’re probably fine, but if you’re selling to consumers that make 50k, 100k a year, you’re probably going to be hit hard if you’re looking to operate a nail salon in the next couple of years.
Beauty in general, you’ve got to be careful. Understand what segments of the population you’re going after. And if it’s a necessity, or it’s something that’s a nice to have, and it’s not as important, so they might reduce the frequency, or the customer might take a hiatus of 6 months, 12 months from the service or product you’re offering.
Another thing that might be hit is barber shops, where you could expect to go, you know, every six weeks when times are good, you might push that out to every eight weeks. And if you’re operating a barber shop, that’s a significant reduction in terms of revenue, and that gets amplified by the time it goes to you in terms of profitability.
So if the revenue dips 25% because your customers aren’t going to the barbershop as much, oftentimes in that scenario, the profit is going to go down even further, 30%, 40%.
So, in the beauty industry, you’ve got to be careful. And when you’re having these calls or franchisors, ask how they did financially in 2008, how they did in 2020, and how they’re currently doing right now as of July 2022. Talk to at least five franchisees of the different concepts that you’re looking to investigate for your E-2 Visa business in the United States.
For the E-2 Visa, you could go with buying an existing business, you can start a franchise, you can buy an existing franchise, or you can set up your own business. There are plenty of opportunities in the United States. There are many successful business owners in the United States that are doing very well and have the best month they’ve ever had in the history of their business.
But that doesn’t mean that you shouldn’t do your research and you shouldn’t learn from the past and what happened in the prior recessions, in particular, if it’s a franchise business, it’s nice because you have the historics going back a few economic cycles.
I hope you found this video informative. If there’s other ideas for information you’d like us to share on small businesses, the E-2 Visa, other investor visas, let us know.
