Fox News host asks why franchisees are heroes
Greta Van Susteren interviewed me Monday on her Fox News show and asked a question entrepreneurs have been asking for the last few years: Why has support for small businesses seemingly dried up and why has there been so much shrill rhetoric, finger pointing, and blame casting coming out of Washington towards business in general?
The recession was a shattering experience for many in the business community, forcing layoffs and closures and stalling plans for growth. December 2007 through June 2009 was a terrible time for the economy, but the recession has officially been over for three years now. So why aren’t small businesses driving the recovery as has been the case in every other post-recessionary cycle in our history?
As I told Greta, I think small business owners — and franchisees in particular — are heroes because they take risks by tapping into their life savings and assets to start businesses. The franchise industry has a $2.1 trillion economic impact which makes the franchise industry larger than any other two economic sectors combined and accounts for nearly 10% of the private economy. By betting on themselves, franchisees create prosperity for themselves, their families and their communities.
The problem, however, is that it appears our nation’s leaders seem unwilling to bet on them.
It’s still too hard to get a small business loan. Over the last three years, tightened lending standards have prevented half of loan seekers from opening franchise businesses. Historically, entrepreneurs have used cash to cover 10 to 20 percent of a franchise purchase’s initial cost and used home equity and business loans to finance the rest. Now, banks are often asking for 40 to 60 percent cash upfront, and the housing market collapse ensured that few people can tap home equity to finance the difference.
Yet the real problem isn’t with the banks. During a small business summit last year, I had a chance to speak with Obama administration officials and banking executives about the billions banks are sitting on.
Privately, bankers complain that risk-averse regulators have created policies that discourage lending. Since 2008, banks that issue commercial or business loans have faced the threat of credit downgrades from the same “smartest people in the world” who oversaw the housing bubble, financial crisis and economic collapse.
So the problem goes beyond the lending gap. It includes information and philosophical gaps that swallow the kinds of loans small business owners need to rescue the economy. As Greg Shrerill stated, the political cacophony has to stop and business needs to restate the moral and ethical case for free enterprise, free markets and free people, the system that has lifted more people out of poverty and created more wealth than any other economic construct in history.
Tasti D-Lite and Planet Smoothie CEO Jim Amos has more than 30 years of experience guiding successful franchise companies such as Mail Boxes Etc. He is the co-author of The Tasti D-Lite Way: Social Media Marketing Lessons for Building Loyalty and a Brand Customers Crave (McGraw-Hill), and was inducted into the International Franchise Association’s Hall of Fame in February.