Finding your inner economist
At IHRSA trade show in Las Vegas
As you may know, Wall Street has seen two major events occur over the
weekend, including the meltdown of Lehman Brothers, a 150+ year old
founding financial institution and the takeover of Merrill lynch, an equally large
brokerage.
This is very likely to have people talking about the instability of the
financial system, many analysts have said we are one step away from a financial
meltdown.
Of course the leaders of companies all across the country (and world) have been carefully analysing with their finance team the implications and outlook for their companies. I thought I would share our thinking on the economy with you…
How this news affects elements:
1. Franchising, or the ability to own your business as part of a proven brand, is a tremendous stabilization step for so many affected by an economic crisis. Many become disillusioned with the stock market after a market crisis. We naturally feel as if we were “doing the right thing” by investing our savings into institutions, but fast realize that we have no power over our own investments and savings. Many investors at this point seriously consider owning their own business, making an investment in themselves.
The timing is excellent at this stage, because potential ownes actually gain more confidence in themselves, and realize an important truth - no one will ever watch your money closer than you. It is common to see a surge in franchise sales for strong brands, because, as a franchisee, someone can invest their money in themselves, but have the stability and security of a proven team behind them.
Many very qualified owners are in fear of losing their jobs, or their investments, and business ownership now seems not only like a logical choice, but also as a better option.
Hard financial times are one of the most popular times for savvy buyers to invest in both real estate and businesses.
Obviously, in terms of business, the best investment is always the best brand, or category leaders who offer more market potential for their franchisees
How it affects sales in elements stock:
Private companies, such as elements, are excellent options for stronger investors when
the financial markets are faltering, because our performance is generally independant of markets, and we can offer some level of stability (and often much higher multiples) to investors. While some shy away from all but government investments in general, others will look to widen their portfolio. The idea of taking a small portion and investing into a earlier-stage business with great momentum and track record.
As is the case with elements - there are several acquisition transactions in our timeline which could dramatically increase the valuation of the company - during this “first round” the owners are able to buy at the lowest starting point. This type of exponential growth is very apprealing to some, who understand that any investment comes with its pluses, and minuses.
