Archive for November, 2009

I have been coaching soccer now for about five years. I started with our oldest boy and have continued on with the program in the spring and fall. I would have to say that I look forward to soccer more than the boys do. There is something about bringing together a team and working towards a goal. Seeing progress at practice and on the field is very rewarding. Regardless of the players, a good team will out play and win a poor team with a few superstars.

What does soccer have to do with running a painting company?

  1. Practice. Just today I spent a few hours with one of our newest franchisees as we went through the business, preparing forecasts, and committing to certain tactics that are proven to work in the field. This is an exercise every business owner should engage in regularly. It is the art of visualizing a business on a spreadsheet that gives you the foundation to go out and execute. To keep your COGS (cost of goods sold) in line. To ask for the close and keep your close ratio to projections.
  2. Teams win. In the service industry you need your team to work like a well oiled machine. Our sales center offers the backstop support for our strikers. They are confident that if they are working hard at trying to put the ball in the net. Understanding that their back is covered to make sure every call that comes in is serviced, and sent back to them to score. In today’s environment, your team is everyone on the field with you, and off the field cheering for you. Involving your significant-other or advisors in your success and failures gives you perspective and encouragement to get out there and make it happen.
  3. Don’t run around like a chicken with your head cut off. In the service industry this is especially relevant. You can waste valuable energy trying to run that ball up and down the field when the pass would have gotten it there twice as fast. In business, you need to be able to delegate, pass the buck, and involve others in your success.

One of the most rewarding parts of business is in the perfect execution of a sale from the moment the opportunity presents itself, all the way through production and payment. It takes practice working like a team and efficient use of your resources to pull it off.

What’s Wrong With Hard?

Posted by admin under Business

I love this expression. I heard it at a conference I attended with our franchisees by our keynote speaker. The speaker participates regularly in triathlons, marathons, iron man style races. I have to say that I admire anyone that can put their body through that kind of rigorous, disciplined exercise regularly once, and then keep doing it after that.

My uncle competes in these kinds of races, he was actually invited to Switzerland after finishing in the top of his class on a transrockies race. Five days of mountain biking solid. Once and a while I go for a run with him or ride through the back woods in Canada and I’m once again reminded that age has little to do with how fit your are.

In business, success comes at a price. It takes HARD work, determination, focus, and a little bit of luck. My experience has been that luck follows those who exhibit the other characteristics.

So to answer the question, what’s wrong with hard? Nothing, if it was easy it wouldn’t be any fun.

Passion or Projections?

Posted by admin under Projections

I don’t know where I heard this from, but ever since it has stuck. In fact just the other day I was in a conference call with a very wealthy angel investor and a business associate seeking to raise capital for his business. I had assisted in putting the projections together and he had the passion for the business. Guess how long it took before we got past the projections that took hours of time to create and on to the passion for the business? I think I counted 20 seconds.

It’s all about the people. People invest in people. So when you are building out that novel of a business plan that is complete with executive summary, balance sheets, cash flow statements, SWOT analysis, and on and on. Just know that the single most important piece of the puzzle is you. You are the one that is going to execute with your team on the vision that you articulate to your investors.

I had a very unique experience years ago working on one of the first deals of my young business career. A few of the most respected and wealthiest business people in Canada had decided to make a big bet (for me at the time, but not so big for them) on a business concept I was involved in. Sometime after that first round of financing I was visiting with one of these business people regarding their investment, and subsequent interest in a second round of investment. At this time, I labored with him and his team in updating the business plan and making sure everything was in order. Once completed, I brought this extensive plan to him full of pretty charts, nice pictures, and of course a five year forecast of the billions of dollars we were going to make together. He held the book in his hand, hefting it slightly and looked at me asking if the business plan was complete with no errors. I said that it was, and asked him if he had found any errors. He indicated that he didn’t know, because he had never read it. I was puzzled. This man had invested almost $1,000,000 into our business. Surely he had read the business plan prior to his investment. The answer was no. He made his investment purely on the people, not the plan.

In my opinion, passion is far more important than your projections. When you are pitching a deal you have to feel it, believe in it, dream about it, love it and live for it. Your passion will project to your audience and that will be more impressive than any numbers you put up on a powerpoint.

So the obvious question to ask after reading this post is, why bother with the projections? That would be the obvious thing to do given the projections take months (hopefully you take that kind of time) of research, study and careful thought. Projections and a business plan are the rite of passage, your ticket to play, unless of course you are talking to some friends, family or fools. A sophisticated investor wants to know that you put the time in and not flying by the seat of your pants. So for all of you who would be pitch men out there, my recommendation is to take the time to do the due diligence and let it fuel your passion.

Look Ma, No Hands

Posted by admin under Business, Franchise

As a kid, have you ever watched Yogi Bear or maybe even seen it on YouTube? How many times have you watched Yogi Bear running away from Mr. Ranger Sir on his bike with his picnic basket, and that huge grin on his face. At that moment Yogi Bear is the happiest bear on earth. He has outsmarted the local authorities and is off with the goodies, then the tree branch comes into view. I think if we could talk to Yogi Bear and warn him of the impending danger, none of us would. Why? Because we want Yogi Bear to get close lined and return the basket to the rightful owner.

What does this have to do with business or franchising? Too much.

Business can be difficult, but sometimes, every so often it can be easy. Just ask America from 2005-2007. Everyone seemed to be making loads of money without much effort, and then we got close lined. My experience has been that when the going gets easy, it’s time to get tough. Keep your eye on the horizon for those tree branches and work harder towards creating the kind of business that you can be proud of.

Show Me The Money!

Posted by admin under Franchise

I love the movie Jerry Maguire. I actually had the opportunity to meet Leigh Steinberg, the inspiration to the movie years ago in some business dealings while in Winnipeg, Manitoba Canada. When together he offered me one of his books, Winning with Integrity that has in it “may all your hopes and dreams come true.” I hope that in each of our businesses we hold on to the “dream”. Whatever that may be, and begin business opportunities with that end in mind. One of the big reasons I got into franchising, is I am a firm believer the franchising model helps people do just that, brings their dreams into reality. There is a lot of satisfaction that comes from being your own boss, owning your own business, and having the freedom that comes with entrepreneurial endeavors. It definitely isn’t all roses, but anything worth having comes with a lot of sacrifice.

This week, I have had two cool experiences with this that really highlighted to me why people buy franchises. One was at Bajio, a Mexican style restaurant franchise. They were bought by Subway a few years back. The owner had been in the system for 5 years, was one of their first franchisees, and has put 80-hour work weeks into the business for the first few years. Five years later, he has a little money tree, that is well established, with deep roots that produces a profit in all but one month in the past several years. Harvest time is here and he is looking at selling the money tree for $750,000.

$ tree

The other experience was one of those ‘A-ha’ moments that occurred during discovery day with a potential franchisee. He was a big reader, and believer in the book Emyth by Michael Gerber. It is a great read and really nails why we started franchising. We got to talking about the technician trap, getting sucked into being the painter in a painting business, instead of being a business owner in a painting business. Our franchises are setup to avoid this trap and stay focused on the franchise as a business opportunity not a painting opportunity. As we talked about the business we discussed all the areas of expertise that it takes to make a successful business in today’s business environment. Let me just hit on a few. Social Media, Search Engine Optimization, Search Engine Management, Sales, Operations Management, Technology, Finance, Advertising, and the list continues.

What would it cost you to have an expert working for you in all of these areas? One expert alone would cost at least $6k a month. What if you could have 7 experts working on your business full time for $2k a month? This is the SHOW ME THE MONEY moment. That is what a franchisee who just starts out gets. A whole bunch of experts working day in and day out on how to make your business more money. I love the franchising model because it creates the economies of scale very quickly for that small business owner so that he or she can reach their dreams.

Scott

I doubt this is good advice for all of you, but for some of you it certainly is.

When is the best time to look for money to grow your business? It is likely when you don’t need it. Why? Because that is when you are in the best position to use the money for what the venture capitalist/bank/Uncle intended it for. Growth. Sales. Profit.

I am sure there are some banks and VC’s out there who would be willing to provide capital for a turnaround, or an idea you just came up with but they are few and far between, and it will cost you a lot more.

So why would you take money when you don’t need it from a VC? The value should be well beyond the capital invested. If you are bringing in money and are in it just for the money, than you are off base and should rethink your approach.

A good VC acts as a mentor, business coach, sounding board, network resource, and helps you keep your focus. We brought a venture capitalist early on in our company, not because we needed the money, but because we wanted the accountability. I won’t lie to you, having the money definitely helped. Our franchise sales nearly tripled just after the injection of capital. We put that money to work quickly and it allowed us to strengthen our management team, and offer more to our franchisees while we were still a young company.

In my humble opinion, if you are just starting a business the first place to look to fund operations are friends, family, and fools. Please make sure that one of those fools is yourself. I have heard that Visa/Master Card finance the majority of start-ups and I don’t doubt it.After an idea begins to take shape, and you have your first customer you really have a few options to raising money but the one I recommend is organic growth.The way you put money into your bank account is from your customers writing a check not an investor. The more checks that get written from customers the more likely VC’s and Angels will be interested your business. If your business is one that could grow a lot faster and if it had marketing and sales behind it, than I would definitely advise you to start looking at an equity investment as an option to accelerate growth. Most of my experience with VC’s and Angels come from this category.

This being said, I recognize that there are some great business that start with a wicked idea, pitch investors, fund research, develop a product and then take it to market. There is no question that this is a path taken, but usually less traveled.

I was just watching a video about the 4 hour work week. You may have seen it. You know, the one where you outsource yourself. Find people in China, India, who knows, maybe even in Canada (eh!) to do your work for you.

Maybe I can start outsourcing all my responsibilities so I can sit at home and watch movies while my wife and kids are out camping with outsource ME? I could be way off base, but I actually enjoy working, interacting, and being a part of our franchisees success as well as the trials. I even enjoy writing the odd blog or two, so for now you can all rest assured that this blog was not outsourced.

Lets start this blog out with a riddle.

Water is to fish, as air is to birds, as _____ are to people.

If you hadn’t guessed it the ____ is words. My father would share this riddle and meaning with me several times as he mentored me in my first business. The explanation is that fish use water to manipulate their direction, a bird uses air to soar and people use words to determine and make their success in life. Life as it were is a conversation. He would then follow up with in business, 15% of sales is product knowledge, 85% is people knowledge.

Given how critical conversation is to our success I thought I would touch on something that has been termed crucial conversations.

When was the last time you had a crucial conversation? You know, the kind of conversation where you feel a knot in your stomach before the conversation starts. Conflict for many people is very difficult to deal with, and I have seen all kinds of reactions to a crucial conversation. Some people shut down, stop talking and just want it to end. They let this build up, and at some point just disengage from the relationship. Other people overreact, counting on the best defense in an offense strategy and hope to win the battle by attacking early.

If you have ever found yourself in a position where you know you need to have that important conversation with a business associate, friend of family member I highly recommend you consider reading a book called Crucial Conversations by a company called Vital Smarts. This book was recommended to me by a good friend from business school and it has provided some great advice on one of the most important aspects of our life, conversation.

While the book is a must read for any executive, I would like to point out that one of the most important things the book goes into is the art of listening. Covey does a great job of defining this as seeking first to understand then be understood. Listening is certainly more than just hearing what someone is saying. It is interpreting body language, posture, stance, tone to let you know what someone is saying before they even say it. I have heard it said that 80% of your conversation should be listening. If you would like to see how not to have a conversation at a dinner party, check out Brian Regan here in one of the funniest skits I have ever seen.

If any of you have some good material to help us improve our ability to communicate please feel to provide them as resources in the form of a comment.

Vision or Execution?

Posted by admin under Visionaries

I was sitting down the other day with a good friend discussing what I believe are two of the the most important attributes any leader has, vision and the ability to execute. Lately I have heard, and thought a lot about how important it is to be able to execute, and while I can’t ignore that execution is absolutely critical to the success of any enterprise, I thought I would bring the discussion around to what I feel is much more important. Vision.

In America people love Visionaries. That is what makes America so great, we love people that can see things from a distance and have the ability to articulate that vision to the rest of us. It is the dream, what could happen, and what will happen if that visionary can handle execution himself or find someone that can help him. We celebrate Men and Women who have this rare characteristic in books, business blogs, school, and entertainment. I can’t say for sure because I don’t know them all personally, but I would like to think that the greatest people in our time, and the people that have made our time were for the most part all visionaries.

Today in business the champion of Vision is the CEO. In fact,  the first line in Wikipedia under CEO says, “It is the responsibility of the chief executive officer is to align the company, internally and externally, with his or her strategic vision”. If you don’t have vision you shouldn’t be the CEO.

I like to think of it this way. The man with vision in a lumber business prepares for the future to make sure that the trees are there 20 or 30 years down the road, and he gets his organization to buy into that vision today so that the company is around tomorrow. The man with the ability to execute makes sure the company’s resources can cut down the tree AND do it efficiently and effectively.

If you know how to execute, you should be the COO. Take a look at Wikipedia’s definition on COO. “Chief operations officer is a corporate officer responsible for managing the day-to-day activities of the corporation and for operations management.” This speaks to tactics, getting in there and getting it done right.

So where do we put the emphasis in terms of compensation. Is it execution or vision that should get the lion share of the company, or salary? I will save that for a future blog, but I can say that I definitely lean towards vision.

So what do you do when you have both vision and execution? Well, you are a one man army.

In my almost 18 years in business, I would say almost two thirds of those years have been running a business with family or friends who I consider family. In my seven years of post secondary education, both in undergrad and graduate school, probably one of the most common themes I hear about in any HR class is to never hire your friends or family. In general I would say this is good advice, because if you want to keep your friends and family, then there are a lot of hazards and complications to working with people where your relationship is more than just professional. As some background to what I am about to share, I have worked with my Father, Sister, Brother, Brother-in-law, and several best friends. In fact, at Five Star Painting I currently work with several of my best friends that I have known since high school. I would not say that I am an expert in this area yet as I don’t think I have mastered the art of working with family and friends, but I have certainly learned a few things along the way.

Here are a few things to take into consideration when working with family and friends:

  1. Keep it Professional. We all love to have fun, and working with friends and family can be a lot of fun, but don’t let that get in the way of running a professional organization. A good  company culture is critical to a successful and fun business so you don’t want to screw this up with too much goofing off.
  2. Manage Expectations. I think one of the greatest contributors to employee withdraw, disengagement and finally loss is in correctly managing expectations. This starts on day one, and when you are working with friends it becomes even more important. Clear communication up front of what is expected, and regular communication on where things are at will keep the focus on results from both sides.
  3. Clear Roles. It is really easy to go outside of roles in business with your friends and cross boundaries. In any business people need to have ownership, accountability and support to really excel. This becomes all the more critical to running a family or friend run business. Gerber, in his book E-Myth Revisted, talks about the current org chart and future org chart. One of the first exercises we went through at Five Star was building the org chart today, and our goal tomorrow complete with roles and responsibilities. This was a lot of fun, and is an ongoing exercise. Making sure there are clear roles, and who fits in those roles can make all the difference in your family/friend run business.
  4. Conflict Resolution. Do you remember way back when you were in the sand box and Billy stole your shovel? Well in today’s business world Mommy isn’t around to step and and help resolve conflict, and I can assure you there will be plenty. Open communication is critical to making sure that when your best friend steals your gum out of your desk, AND on top of that didn’t close that sale this month things don’t get ugly. Regular meetings to review roles, and expectations allow people to know where they are at and head off conflict in many cases before it happens. A great resource here is a book called Crucial Conversations. Fantastic resource on dealing with conflict.
  5. Enjoy each other. Isn’t that what friends and family are all about. We spend time with each other, and likely got in business with each other because we like each other. Make sure you find moments in your business to celebrate your friendship. Semi-annual events are great, but so is Halo on the big screen. Find time to remind yourself why you got in business with each other in the first place.

In writing this blog I have reminded myself that I am far from perfect in accomplishing all the advice I give, but isn’t that what makes business so much fun? I would love to hear your views, both good and bad on this.

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