Archive for the ‘Entrepreneurship’ Category

It’s an exciting moment when you’re ready to enterprise your way into the business world. People often look into business ownership to increase their financial security and to be their own boss. With these motivators, why would anybody choose to buy a franchise rather than start a business from scratch? Purchasing a franchise means paying someone $30,000 and royalty fees– money which could go into your pocket.

People choose to franchise for many reasons. First and foremost, starting a business from scratch is risky and there are statistics to back this up. In the Emyth: Revisited, Michael Gerber states that 80% of start up businesses fail within the first five years. That’s 29% higher than the number of Americans who get divorced. However, when you buy a franchise, that risk of failure drops to 20 percent.

There are many factors that contribute to this latter statistic. I’m only going to discuss four:

  • We’re on the same team. At first blush, royalty fees seem like a one-way street where the franchisor makes their profit off your hard work. It’s important to understand that royalties increase as your sales increase. So, yes, the franchisor does profit in the long run from you buying a franchise. However, his success is contingent upon your success, making him personally invested in giving you the support to help you succeed.
  • Technology. The majority of small businesses can’t afford the tech support they need to help their business grow and compete with big businesses. In my business experience, we’ve spent hundreds of thousands of dollars developing cutting edge software to run our company. Not only did this cost a lot of money, but it also shifted our focus and resources on tinkering and outsourcing in order to get the software right. Start-up businesses can’t afford to divert their attention from the sales and customer service that will keep their business running.
  • Network. While it’s true that anyone can expand their network to learn from other industry professionals (especially with access to Google+, Twitter, and Facebook), being part of a franchise network includes you in a community of other franchisees whose mistakes and successes you can learn from.
  • Branding. When you buy a franchise, you receive a piece of a very large pie. For instance, this year, Coca-Cola is estimated to be worth $68 billion. McDonald’s is estimated at $32 billion. Check out this article, “2012 Best Retail Brands” to see the value of the world’s top brands. Brand power is made by a symbiotic relationship between franchisor and franchisee as they work together to build that brand and increase the size of their pie.

Having turned a start-up business into a franchise, I have watched our franchisees avoid many of the hurdles my partners and I have had to overcome simply because they are part of an established system.

Scott Abbott
CEO, Five Star Franchising
www.fivestarfranchising.com

I have five kids. That should say it all for this blog post shouldn’t it. Every single one of my kids went through a phase of asking me why to just about everything in life. Some people may find that annoying, but I always enjoyed giving as intelligent a response as possible, only to hear why? again. Eventually I would give in and simply respond with – why not?

Its the cop out answer isn’t it, but one thing I have learned is that people can get stuck in asking the why questions for so long that there is no decisive action, and they are left in inaction, forever analyzing but never progressing. I was never too fond of those philosophical course I had to take at college, I have always been interested in action.

A number of years ago we had a board meeting to discuss methods of expanding our franchise concept, and we discussed many of the traditional as well as nontraditional channels we could use to get in front of the kinds of candidates we seek to award franchises to. We had the good fortune of a board that was stacked with intelligent and very experienced and successful entrepreneurs. During this discussion one of these respected board members, in response to asking if we should risk a lot of money on a unproven advertising channel, asked – Why Not? – we are all a bunch of entrepreneurs, what are we afraid of? I loved that response, and as well as the challenge that it presented.

Sometimes you have to do things you don’t know will work, you have to venture out into the unknown because if you don’t then you will never know what you could have had if you hadn’t simply asked the question -Why not? that’s what entrepreneurs do.

Just do it!

One of the life bloods of franchising is lead flow. Not much different than another of our franchisees business, or any sales and marketing company; you need to be bringing in new blood all the time. At Five Star we are constantly measuring lead flow, sales cycles, velocity, close ratios, and other various metrics to make sure we are on track. Recently, in a sales meeting we discussed two things that we could do to increase our franchise sales.

1) Volume. This can mean so many things, but it can start at the very beginning of the sales cycle – impressions, or in the middle – leads, or in the end – contracts signed. The reality is that you need to be constantly reviewing ways to increase the volume of people looking at your concept, so, that they can express interest and enter into the journey of learning if your franchise concept if the right fit for them. Here are a few ideas on ways you could amp up the volume:

a. Cast a wider net. For example, if you are advertising for the word painting franchise, why not consider something like home based business, or service industry franchises in your online advertising. Some people know what they want, and others have an idea.
b. Use different channels. Online advertising is a fantastic tool that can be approached through SEO, Pay-Per-Click, affiliates, directories, and on and on. However, what about trying something different like Career Builder, or Monster.com? Business brokers is a channel that many franchisors use to get in front of candidates, and many of them use these techniques themselves. Why not try your hand at marketing to the right candidates directly?
c. PR. Public Relations is a tricky tool that few are able to wield effectively. I have approached this different ways for different concepts. The key is that if you aren’t using PR in your marketing mix you should think about doing it now. Have no money to hire and expert you say? Well then pick up the phone and pitch your cool concept yourself until someone gives you the time of day. You need some independently written articles by a quality publication saying your cool instead of that testimonial from your grandma.
d. Social Media – yes, believe it or not I have had people contact me through my blog, Facebook page, and twitter account to request information about one of our brands. So how do you find the time? Well its 12am right now, so, now you know.

2) Efficiency. Getting more eyeballs on your web page is your first mission. Your second mission is to get them to click that submit button. Marketing is scientific, so, please, don’t make this about guy checks. Yes, you can start there, but measure, tweak, measure, tweak, measure, tweak until finally you can tell me you are at 25% conversion rates. 5 years ago I would have told you it wasn’t possible, but, today our team has moved the virtual mountains and now enjoy the results. This is something you can never stop thinking about. Here is a quick example of what we have done over the years.
Go to www.fivestarpaintingfranchise.net this site is our old franchise site. We have tweaked this site dozens of times, and it runs at about a 10% conversion rate. If you go to www.5starfranchising.com you will find very cool information and well-designed research site. This site is below 1%. Now if you go to www.fivestarpaintingfranchise.com you will see our main franchise site for Five Star Painting. I have many times shared these sites with people and have asked the question of which one they prefer, and which one they though would do best. Please remember, that the goal of your franchise site is to generate enough interest to get someone to click the submit button and begin the dialogue.

Of course there is more to franchise lead generation than this. So, with that being said: what do you do that works?

Sometimes the best way to learn something is to either do it wrong yourself or learn from someone else’s mistakes. I have had the pleasure of doing both. If you are thinking of franchising your business you have probably read, or been told about the pot at the end of the rainbow. Well like anything in life, if it is worth having, it’s going to be a lot of work. Here are three tips to avoid some disasters and maybe help you catch the leprechaun:

1) Mess of pottage. Why trade your franchisor birthright for a few dollars? In franchising, someone looking to buy your franchise will pay you a handsome franchise fee, some concepts as high as $50,000 at signing. The franchise fee is there to do a few things, like get skin in the game, cover the costs of attracting top talent to your franchise system, pay the tuition for all of you’ve learned, fund development of systems, etc. The challenge with such large franchise fees is that it’s often more money than you will get in royalties for a few years. Because of this, franchisors are more excited about closing that big deal than all the hard work to earn the royalties that come from years of business building; they trade their birthright to a share in a successful business for a short term boost to the bottom line. Some franchisors take all this money, go on a nice vacation, buy a new car, and don’t follow through with support. Not only is this not ethical, in my opinion, but it is extremely short sighted. Don’t fall into that trap, stay the course, support your franchisees, and make sure each and every golden goose is well fed and cared for.

2) Dictatorship. So, you’ve convinced a few people to buy your concept and on top of all that you have your 90 page franchise agreement signed, that some high priced lawyers put together for you. All the bases are covered- and the sweet talk stops, honeymoon is over and it’s down to business. Yikes. Nobody like being told what to do; if someone was smart enough to buy your franchise, they are probably smart enough to learn from your team, as well as your fellow franchisees. People like to be influenced, led, and shown your vision. Help them buy into not just your business model but, you and your team by demonstrating why your next big idea is one that they should adopt. I recently read a book called The Science of Influence; definitely one worth reviewing for those of you looking to see who prefer to use the carrot over the stick.

3) Partnership. I have often heard that a partnership is a sinking ship. In saying this, I will say that I have been fortunate to have some amazing partners, and that I have experienced the dark side of partnerships as well. When you consider growing your business, it is critical you get your business structure right, and if you have partners, roles and responsibilities are going to be critical to your success. Whether you form a partnership or not, there needs to be one President, CEO, Chief Pooh-Bah, or whatever title you make up. Every company needs a leader, so don’t make the mistake of approaching your business like a marriage, unless, you are into divorce.

There are plenty more things you could do to mess things up, but, I believe, if you watch for these land mines you are well on your way. Feel free to share your views on ones I missed.

Entrepreneurship

Posted by admin under Entrepreneurship

I have been teaching a class on entrepreneurial business planning now and have just finished up the course at the local University. As part of this course we brought in guest speakers from various backgrounds – entrepreneurs, managers, venture capitalists. Each of them had a great story to tell in the classroom about business philosophy, bootstrapping, big hairy audacious goals (I learned the BHAG concept in this class) and how to raise money. Probably the biggest take away from this class had nothing to do with business and everything do to with lifestyle.

For a short few years I put my time in a big office tower wearing suits all day and keeping busy with regular meetings with executives and people way smarter than me. As my father would say, the modern day coal mine. I punched in and punched out every day, missed a few holidays to get that report out on time and work hard to bring honor and glory to my employer and maybe even get a raise or bonus at the end of the year. The paycheck would arrive like clockwork and I felt warm in the corporate security blanket. During these years I learned that I was not made for Corporate America, but rather made to make corporations. This is what I believe drives franchising today and what has brought into an industry that I have come to love.

Say good bye to regular paychecks and say hello to a new life. As risk increases so does reward. You make your future, you make your schedule, you create the opportunities, you feel fulfilled. That is the foundation to entrepreneurship. What franchising does for the foundation of entrepreneurship is provide a few recipes for success, and improved probabilities for success.

I have regular calls with our owners and the most rewarding aspect of what I do is to hear people talk about what their business means to them, how it has helped them achieve their goals and in many cases those goals are not always monetary but time, freedom, sense of control.

There has been some debate over whether franchising is in fact entrepreneurial, and I have read a few articles and blogs on this subject. A quick read on the words definition should shed some light on the subject:

“Entrepreneurship is the act of being an entrepreneur which is a French word meaning “one who undertakes innovations, finance and business acumen in an effort to transform innovations into economic goods”. This may result in new organizations or may be part of revitalizing mature organizations in response to a perceived opportunity. The most obvious form of entrepreneurship is that of starting new businesses.”

entrepreneurship

We have had a lot of different buyers in our business from Kung Fu teachers, to Police Officers, to Actuaries and MBA students, all of them have started a business and many of them have brought to our business innovation, finance and business acumen. In my opinion, the title “Entrepreneur” belongs to our franchisees and fortunately the title is gaining the attention it deserves to be among the more noble professions in America.

If you have considered opening up a franchise, please feel free to learn more about Five Star Painting Franchise or give us a call at 1-866-965-STAR.

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