Change is the One Thing You Can Count On

Overhauling or refining a business model should be an ongoing part of running any company; even owners of successful models often think about making adjustments. But any crisis, like the current pandemic-recession, forces owners to reassess their business model in much bigger ways.

Business models are likely to undergo significant changes in the coming months given the damage to the economy. A great deal of uncertainty remains about how much consumers will be willing to spend, travel, dine out and go to entertainment events. And, when will social distancing measures that limit business activity be lifted.

Before the coronavirus, anecdotal insider information indicated that approximately 25% of all franchise brands offered a good return-on-investment. Obviously, after all the damage to the economy, even fewer franchise brands offer a good return-on-investment.

What does that mean to a potential investor? Be very careful and do your homework. The business models that did well before the pandemic-recession may not do well for many years. However, there are still many franchise brands (~10-15%) where investors can make great money and achieve lifestyle goals. Unfortunately, there are even more brands today that you need to avoid.

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What is the “new normal”?

The coronavirus has put change on fast-forward and has left serious scars that will remain for a long time. Be careful with the cozy sounding “narratives” being cast across various media. Do not jump to conclusions on what these narratives may mean for a business or industry. Most are imaginary and often self-serving.

-Vaccine for everyone by November of this year.

-The coronavirus is the same as the flu.

-The economy will be back by the 3rd quarter of 2020.

These narratives try to make sense of a complicated situation. They are a part of our bi-polar political system during an election year. Afterall, Presidents need to get re-elected and businesses need to make money. But we shouldn’t fool ourselves into confusing narratives with reality.

Below are links to two articles that synthesize many complicated topics well.

A vaccine may not be enough to end the pandemic

This article highlights well the four factors that will influence the outcome of the coronavirus.

1. Efficacy: Will the vaccine grant lifelong immunity, or will immunity weaken in a few years? Many believe the vaccine will likely offer protection that lasts 1-2 years rather than lifetime immunity granted by some virus vaccines.

2. Timing: How soon until scientists find a vaccine that works? The work on a vaccine is as accelerated and aggressive as it gets. But the history of vaccine development shows that it can be a long, frustrating process. For instance, the mumps vaccine holds the record for fastest development time, which was four years.

3. Distribution: Will countries compete or collaborate on a global vaccination campaign? At the outset, there won’t be enough vaccines for everyone, which means making difficult decisions about whom to prioritize for immunization. Billions of doses will be needed, which demands a robust supply chain and manufacturing capacity. Very little of this infrastructure exists now.

4. Public health responses: Can we keep up pandemic control measures until, and after, a vaccine arrives? Since a Covid-19 vaccination campaign will likely take a long time, many of the current tactics to slow the pandemic will still be needed to an extent after a vaccine is available. Testing, tracing, and isolating coupled with social distancing and mask-wearing.

Read the full article on

U.S. economy faces projected 10-year recovery

The U.S. economy could take the better part of a decade to fully recover from the coronavirus pandemic and related shutdowns. The number of businesses and government entities that are cutting back or folding is just getting started. The unprecedented monetary and fiscal stimulus programs has bought 6-12 of relief.

Read the full article on the Wall Street Journal Website
Great video is available for those without WSJ subscription.

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