While the experience of job loss is far less tragic than death, the recently unemployed go through similar stages when dealing with that loss, which will occasionally lead them to franchising.
In her seminal work titled "On Death and Dying," Dr. Elisabeth Kubler-Ross pioneered a support-based wisdom that has bridged a test of time. Her five stages of dealing with tragedy have been widely referenced over the years.
In today’s economy, this same process can help us understand what many of the newly unemployed are going through. And while the experience of job loss is far less tragic than the experiences tracked by Kubler-Ross, the recently unemployed go through similar stages when dealing with that loss, which will occasionally lead them to franchising.
For those who eventually replace their job with business ownership, we categorize the stages most experience in this process as follows:
Anger
Action
Fear
Capitulation
We have seen this pattern on a number of occasions. When the pink slip arrives, the first response tends to be one of anger. "How can this be happening to me? I work twice as hard and twice as smart as Jones, and he makes more than I do!"
Once the reality has finally set in, the candidate typically goes through an action stage in which they try to look at job loss as an opportunity for needed change. "Maybe now is the time for me to get a job in sales! It is about time I find a job where I am really appreciated!"
The action stage is when resumes get drafted and mailed. And, if they are lucky, they go on some job interviews. Some of the recently unemployed—especially those who have been thinking of business ownership for a while—may begin their franchise search at this point, while others will need to go through the final two stages before making that move.
For those who do not immediately look at business ownership, action is followed by fear. As resumes are unanswered and infrequent interviews lead to rejections at jobs that pay far less than the ones they left, their situation hits them right between the eyes. Standing in line for unemployment, they think: "There is no way I can make it on what unemployment pays! I could lose my home. I could lose my retirement savings. My children won’t be able to attend college."
At some point, these candidates realize how limited their choices are. After they have been "on the market" for several months, they will get to the end of their rope. At this point, they will be thinking, "Either I take a job for which I am grossly overqualified or I can go into business for myself. I can hold onto my savings and probably burn through it in five years—or I can invest it all in a business and hope to regain or surpass the standard of living I had last year."
Once they reach this capitulation stage, some will decide to reduce their standard of living and begin life anew. But for those who are bolder, the choice is whether to strike out on their own or to enlist the support of a franchise system.
This stage can be a very exciting time. They are once again taking charge of their lives and can see a light at the end of the tunnel. They see it as a chance to alter their lives for the better. At the same time, they recognize that one wrong move and they are set back even further with limited chance for recovery.
Am I the next to go?
With between 400,000 and 750,000 individuals losing their jobs each month, it is important for franchise development teams to understand life from a buyer’s perspective. Historically, we’ve typically seen that between 10 and 15 percent of prospective franchisees explore business ownership as a result of job loss. Today, job loss can be the driver of a much greater number of franchise sales. In fact, some of our clients have estimated that between 40 and 60 percent of their recent franchise prospects are among these ranks. And with fewer companies hiring and the perceived security of working for someone else at its lowest point in many decades, this number is likely to continue to grow.
But it is not just the unemployed who are knocking on franchise doors. Statistics show that 13.1 percent of the U.S. economy is functionally under-employed—in essence, making less money than they earned just a few short years ago or holding a job for which they are overqualified. Many of these job holders are looking for a way to improve their situation—but are experiencing the same lack of upward mobility that their unemployed brethren have found. Today’s marketplace is not affording many opportunities for advancement, leaving these candidates with little in the way of alternatives. They can wait it out or they can make a move that will allow them to grab destiny by the throat. Still, as people who have already been battered down by job searches, they are in much the same situation as the recently unemployed—fearful their next move could set them back decades.
Then there are those who remain well-employed. While most are thankful they still have a job, many cannot help but wonder if they are the next to go. Some are already exploring business ownership—and franchising in particular—as a safety net. Yet they remain fearful to risk leaving a "secure" job than to start a new business in the midst of a recession.
Mark Siebert
One of the most important aspects of the franchise sales process is to recognize where the candidate feels "the pain," or what is motivating them to call you.
Knowing the pain is not about understanding the candidate is unemployed. It is about understanding why, after three months of unemployment, they decided to call today. Did a tuition bill just come due? Did the recruiter tell them no one is hiring? The best place to gain that understanding is when the pain first motivates action—making it important to talk with the candidate while the pain is still fresh.
Understanding what motivates prospective buyers and identifying their level of pain will do more than simply tell you where they are at in the process—it will help you tailor your approach to the candidate. If, for example, the candidate calls while they are early in the action stage, it is probably worthwhile to explore whether they are continuing to explore their job options, and, if they are, to focus on franchising as a vehicle to control one’s own destiny. If, however, they have abandoned their job search, you may be better served focusing on the security of the franchise investment to assuage the fear that is likely to be their primary barrier to action.
For years, franchise salespeople have looked at buyer motives and concluded that the primary motivators were fear and greed. Buyers bought a business to make more money and have greater independence. They chose franchising for the security. Today, more so than at any time in recent memory, the singular motivator is fear. And while today’s buyer still hopes franchising can deliver on its promise of greater prosperity, in difficult times franchise buyers regress down Maslow’s hierarchy and focus on safety and security.
Your franchise buyer is likely in crisis. Many have lived their lives believing business ownership was for risk-takers and wild-eyed entrepreneurs, and are only now taking this step because they see no safer alternative. The best franchisors will recognize this, and understand that for many candidates, they will need to start by transforming beliefs in institutional omnipotence into beliefs in systems and self. In this process, the franchise sales professional can serve as a guide—showing the prospect a safer bridge to the future.
