Twenty Thoughts on Creating New Business Success - For Pioneering Entrepreneurs

Several months back I had a client ask me how it was that I had come to the conclusion that I was suited for this multi-faceted profession that I have concocted for myself. I told them I wish I had created a more point-to-point process or that someone had been able to show it to me. Along the way however the ability to help others evaluate self and their life decisions has become my passion.  As a Life Purpose Coach and Small Business Consultant I get to help people understand their lives more thoroughly and hopefully bring them more peace and, well, purpose.

Their second question had to do with business. They had an idea. They wanted to explore it with me in an ordered fashion and asked me what they might ask themselves before they presented it to me. With a lot of thought and reading I came up with these things. I hope you find them useful to you as well.

1.What is your value proposition? What makes what you have useful? For Americans you must state it in an easily grasped way in 2 sentences or less. If you can’t do that it is not valuable enough to attempt to sell. Period.

2.Do you easily know what your market is and is that market viable? Seinfeld’s Kramer was convinced that the Mansierre (a bra for men) was his ticket to riches. Not that he did any research to confirm that there was a viable market, let alone one large enough to attract investment capital. Never assume you can create demand where it hasn't already been expressed. Don't hawk the next Mansierre.

3.Can you differentiate your product or service from others like or similar to it? It’s true that Starbucks made people believe they wanted $4 caffeinated concoctions, and Louis Vuitton lulled people into shelling out $1,500 for denim handbags. But marketing alone won't cut it. If you want to win in business, you need to deliver tangible value where other companies don't. Examples: rock-bottom prices (Wal-Mart); ingenious product design (Apple); extreme convenience (FedEx). Find your edge and hammer on it.

4.Does your product or service scale? At the production level, the difference between success and failure is scalability. The difference between modest wealth and obscene riches is "breath and depth of scale." Scalable propositions can produce the next widget at a fraction of the cost. Think software: Once Microsoft shelled out to develop the code for its Windows operating system, the incremental cost of printing each additional copy was next to nothing. Even more so, the cost of downloading it was even a fraction of that! What models don't scale? Think service businesses, (unless it is the business model itself that you are selling) where the need for human resources grows with revenue and the consumables all but remain flat.

5.How committed are you to the success of your proposition? You have a family and two kids. Are you ready to burn 100 hours a week for the next two years to get your start-up off the ground? Fair warning: If you want to run the show, get ready to give everything…and then some.

6.Can you drive your success through your current strengths? As companies, Google writes powerful search algorithms; Steinway works wonders with wood; Cisco sniffs out promising new technologies and buys them. Figure out what you're good at and stick to. Learn to understand, use your mind and all available tools to deeply discern your skills, talents, gifts and passions in order to create a way to develop your life success.  It is imperative that you invest as much time and more capital (I suspect) in this one component than virtually any other if you have not already done so.  There is no success without this step when you are building your life propositions.  This might be an obvious concept, perhaps, but plenty of zealous entrepreneurs lose their way…especially when the world seems so full of possibilities and all that they have and are can go off in so many directions.

7.What are the distractions and weaknesses that I possess and must overcome to drive my value proposition? Now, what you do well is imperative. The honesty to admit and the time it takes to understand what you are not suited to do is as well absolutely necessary to embrace. Example: Apple (at this point anyway) doesn't make the cameras in its iPhone; it buys them from somebody else. Countless online merchants farm out the design of their websites and back-office payment systems. Wasting resources just to be mediocre is suicide: Stick to what you know and find trusted partners to handle the rest. Remember, inasmuch as you can avoid, do not be pennywise and pound-foolish.

8.What is the value your potential market is willing to pay? Why will people pay twice as much for Clorox as they will for generic bleach? Who knows, but nailing the upper limits of what customers will pay, be it for an iPhone or a bottle of bleach, is one of the biggest levers in any business model. Consultants get paid handsomely to help companies arrive at the right price. For more affordable advice, check out. There are plenty of resources from professionals online willing to provide the help you need in order to decide not just what they will pay but how they will pay and how you might position your pricing and methods to maximize your sales/revenues.

9.What is the strength of the market you are aiming at? A better way to say this is how might you diversify your sales and improve your distribution to minimize the markets hold on you? All to often a business distribution process plays directly into the hands of the customer; allowing them to control the value proposition and pricing. Occasionally we have seen this played out in a big way such as the-.99-cent value menus at fast food restaurants where franchisees make minimal profits and often lose money on every transaction. (And no, they don’t make it up in volume!)

10.How much power does your raw materials suppliers have? While we are looking at all of the players in your stage let’s take a look at your suppliers also. Or, how much financial sway does your employee base hold over you? The fewer number of suppliers and partners in your business proposition, the more sway they have. Creating amazing teakwood backs for acoustic guitars; one of a kind pieces may sound even romantic to those of us who play find instruments but if there is only one supplier of your wood it is going to be a costly proposition. Can you charge what you pay and make it up? The true answer: You're going to pay through the proverbial nose and your margins will be reduced. (On the flipside, beware getting hooked on hungry, low-cost providers who don't keep an eye on quality.)

11.What are your best methods of product/service distribution? Dell Computer bypassed retailers and sold directly to customers. The supposed secret was the build quality. Because it was supposed to be better they could do this with limited tech support. General Motors and Coca Cola rely on distributors to move their cars and cans. Clothing companies like Hugo Boss work both internal and external distribution channels. And Apple keeps adding more of its own airy and fashionable mall spots complete with live product tutorials and a plethora of geeky customer-service agents. Whatever sales method you choose, make sure it aligns with your overall business strategy. In the case of Apple, or products that also have a sense of their own culture match the distribution experience to the company view understood by your market.

12.What are the most effective marketing methods I can use to create awareness of my value proposition? Getting the word out about your company and without going broke is no mean feat. In the mid '90s, America Online (AOL) spent so much money flooding the planet with free trial software that it tried to mask the bleeding by capitalizing those expenses on its balance sheet. (Regulators later nixed that accounting treatment, wiping out millions in accounting profits.)  Again, I say turn to the experts in your field or fields similar to yours and get a sense of their take before launching an expensive but perhaps thin or ill-positioned marketing strategy or campaign.

13.What is the threat of competition? Where will it come from? What will it look like? Is there room for two in the marketspace? In America today everyone thinks the slightest change makes a niché and therefore is justified. Every small-town retailer lived in fear of the day Wal-Mart set their sites on their little burg. Think through what you are creating. Think deeply about it as well. If not a direct competitor is a possible replacement technology possible. Construct barriers to entry. How you might do that is too expansive to list but often they are things like high quality, long term leases or raw materials agreements and other times it is patents, copyrights and registrations. You may even use the approvals of associations and organizations with which you have a symbiotic relationship. In this case think ATT and Apple in regard to the iPhone.

14.How do you protect your intellectual property? I am a franchise consultant. Franchise organizations partner with individuals and companies and right tight agreements in order to infiltrate markets and manage relationships. They also represent not only a method of distribution (Franchising is not a business model. It is a method of distribution of products and services) they also represent a method of open protection of systems, products, marks, brands and business development.

15.How much start up capital will it require? Any early-stage investor or small business consultant will tell you that most businesses fail because they were undercapitalized. Again, I think that is too thin. It has become a cliché. Often the money is thin because the marketing was sloppy. The target was not truly understood. The developers were not prepared to go to market. While there are no absolute rules here, "you probably want to double your initial estimate," says Jim Pack, chief executive of Curve Dental, an Orem, Utah, and maker of dental office software. I’m not sure why Jim says that but if you were new to market (i.e. you are not a franchisee going into business but truly an innovator; an entrepreneur) I would take old Jimbo’s advice. Having done this a few times myself it sounds about right.

16.How will you finance the Business? You have a few choices, including Aunt Sally, credit cards (dangerous), angel investors, venture capital (if you're really onto something big), bank loans (good luck finding them) and the most expensive route, equity. Beware, though: Selling shares to the public comes with a host of headaches, including dilution of ownership, loss of control and regulatory hurdles. Bottom line: Bootstrap (pay for it as you build the dream) the business if you can. Finally, always remember to match the timing of cash inflows from your assets and the outflows to cover liabilities. A mismatch can sting. Having to pay interest on money that is sitting – not good. Obviously, not having it when you need it represents its own challenges.

17.How much cash do I personally need to survive my start-up? For those who slept through the previous note (or ignored it): Again, mind your cash. This goes for your personal monies as well. Plenty of entrepreneurs boast hockey-stick-shaped financial projections (err…yes right now we are waaaaay down here but because of some act of incredible brilliance on our part tomorrow we’ll be billionaires!) but turn out their pockets before the good times have a chance to kick in. (Remember all those busted dot-com companies from the tech boom?) Hold back on the Aeron chairs and mongo Mac computers (I love mongo Macs) until more cash is flowing in than out and then add plenty of extra cushion.

18. Create Financial Projections based on the best practices for your kind of business and be conservative in your revenue production. You can't lead if you don't have a destination. Two critical milestones: 1) the point where more cash is coming into the business than going out in a given period (i.e. breakeven), and 2) the point at which you finally recuperate your cumulative initial investment (including an adjustment for the time value of money – this is Return on Investment or ROI). Financial projections should be reasonable. Paint too rosy a picture and seasoned investors will run; more to the point, you might run out of cash without the investors you need.

19. How will you keep the “Team” happy? Too often we have seen young businesses struggle because important cogs in the initial success bolt. Have a plan in place to keep the help happy. More to the point understand your help. Assess them. There are some great tools so you might understand each individual and how they view their value. You’ll be surprised though money is important, it isn’t the only thing. How they view your understanding of them is just as important. Do they get a sense of your caring and concern for them? I’m just sayin’…

20.And in the end what do you want it to look like? Looking to flip your business to the first guerrilla (big player) that comes along? MySpace did just that. While Facebook hasn't. Different end games require different strategies. Always be mindful of yours. Although on day one you don’t need to have this pinned down I would suggest you evaluate yourself as you go through your business development. It will help you save money along the way and maximize your future under any circumstance.

John is a 28-year professional in the franchise industry. He has been a franchisee, a franchise executive and an advocate/consultant to the public and to dozens of franchise companies. He is the founder and managing partner of Wilson Associates and can be reached at docfranchise@gmail.com. Or direct office 480.838.1641

Franchise Sales People Stop Being The Problem

A very well meaning Director of Franchise Sales and a counterpart on the Internet attempting to draw advertising and leads for them just wrote about their "risk resistant" business.

Rubbish (And, if you want a great recession resistant company get back to me...it has something to do with Rubbish!)

I think we are all using the same vocabulary (we all use the word "risk") but different dictionaries. (I love the concept talked about, Spring Green, for the right market and the right candidate...but not just any candidate with the hope of "risk-resistantance".)

Look, if you are employed in America today you are at risk. Period. The risk is greater in your current job situation than it is in business ownership; generally speaking.

There are factors that temper that statement however. For instance, I am a firm believer that there are business types for personality types. Further, I also am a firm believer that certain people simply need certain aptitudes and have certain personal drivers that would ignite their desire to succeed. They fall flat in one type of business and they are amazing in others. Other factors such as how much investment am I willing to risk and will my wife let me also come into play. (Or, if she will let does she really understand she SHOULD let me?)

People continually define risk when they mean ambiguity. A job provides a false sense of security because we still hold onto the notion that if we know a thing well enough it means we can maintain what we are comfortable doing that relates to the thing...as in, "I know this job inside and out and ergo I will continue to be compensated to do it."

Everything in our society screams otherwise but some misplaced sense of control of ones career appears to be written into our DNA. It's a bad script.

It has been demonstrated, more so over the last decade, that your competency may be the least significant reason you have security in your employment. Their are other forces at work and you have no control over them within your organization. The current state of the economy may be to blame or they may have been their for years and you just were not aware.

You stay employed, your increased risk is a virtual certainty.

"Frantrepreneurs" on the other hand live with a very keen sense of the fundamental risks they will face. They understand them and they realize they have greater control relating to them. They just have more ambiguity in relation to how they operate their enterprise and how they decide to handle their challenges. They know the risks (market conditions - financial conditions - human resource scenarios) but must enforce a disciplined code of creative action and a greater sense of intellectual community in order to respond to their more finite inventory of risks.

Sorry for the long diatribe. I think it's time that professionals in our arena recognize the real battles we are fighting and that potential franchise prospects and candidates realize their next job is a much more fearful place than owning a franchise.

The saddest part of this stage however is that so very few should ever move from employee to business owner...but that is another topic.

John is a 26-year professional in the franchise industry. He has been a franchisee, a franchise executive and an advocate/consultant to the public and to dozens of franchise companies. He is the founder and managing partner of Wilson Associates. If you are looking for support and a proven consultant with expertise he can be reached at docfranchise@gmail.com.

10 Small Biz Mistakes that Lead to Failure

When I started to pen this thought piece I did so in considering small business in general. I’m going to keep that theme in part but I am also going to add to each challenge point, 1 through 10, at least a simple reason why franchising can provide some level of solution and security from the aforementioned mistake.

These mistakes are not the top 10, the only 10, the best 10 the researched and validated 10 or anything else of a kind. They represent the ones I have had to deal with most in my life, with my friends whom are mostly small business men and women and my clients who are mostly small business developers called franchisers. They do represent over two thousand business owners and I would guess this is a good top 10 list (I am probably right 7 or 8 out of 10 anyway) but I am not going to “shine you on” by telling you they are the result of my “extensive research.” They do represent what I feel. I’m pretty good at this stuff though but some of you have your favorites. Feel free to add them to the mix.

I hope you find this useful… - John

1. Insufficient Working Capital

The most common reason why new businesses shut down is that the owner get his business up and running but completely misses that he will need some start-up capital (and often this is not a small amount) to fun his business until it becomes self-sufficient and can pay its own way.

Cash flow is critical to a startup business. You could be profitable and still have to close your doors because your customers are taking too long to pay you or, you are generating revenues but your bills are coming in on the front end more quickly than full payment is being generated to you. Liquidity is king in a startup venture. Know what your business needs to survive start-up.


Franchise Solution: Most franchises and certainly the top 500 in the United States, require that you have sufficient start-up capital available when you open your doors for business. You don’t have to wonder. You will have it or you will not be granted a franchise license.

2. Winners Stick-to-it Attitude

Starting a business is all about survival. How do you stay around one more day so that you can learn more about your market and close new customers?

At the beginning stages of a business this may mean doing work that might not be completely what you want to do but it helps pay the bills. You need to do whatever it takes to survive and get through until the business can fully support yourself.

Franchise Solution: A franchise company has gone through these iterations and virtually all of them have operating units that have gone through the myriad of challenges that face a new business. You have both the company and a fraternity of franchisees to rely on to help you stay the course and recognize the next action you need to take to open the door tomorrow.

3. Death of Your Vision

There is a sort of mystic fog that exists to those who make it past the anxiety of changing their work path and become business owners. They make the decision to become entrepreneurs, they start the business, they work and slave and get the permits and licenses and build whatever needs to be built (websites, walls, displays, computer networks, etc.) and even begin to make customer contact. But then something happens. The result is energy level drops, activity levels fall to dangerous levels and if they don’t completely check out they at least do so mentally.

They quit.

Building a business is all about momentum. If you had 24 hours to spend on a business they would be put to far better use by spending one hour a day than for 24 hours straight.

It takes time to develop a new company and for people to react to what you provide. Keep your momentum building. Even if your business is only a part time initiative for you at the moment, make sure that every day you are making progress of some sort to move your company forward.

Franchise Solution: A franchise company helps provide you with a business plan and marketing strategy for your first quarter, 6 months, and year and beyond. You have an activity chart. You can evaluate what you are doing against a very specific set of actions and responses.

Further, operational support is there on a regular basis to ensure you are keeping an eye on key indicators. They let you know what is lacking. Is there an area where additional training or marketing needs to be added? A franchise company has a vested interest in your success and one way they demonstrate this is to let you know you are slipping and need to pick up the pace!

4. I am a Rock – I am an Island

Business ownership is not an exercise in self-sufficiency. It is not you being “bossless” or mentorless. Nobody is perfect or has the skills to do everything themselves. You need to understand what it is that you bring to the table and what you need to surround yourself with. You need to resource against your weaknesses. If, for example, you are very strong at statistical analysis but don’t have strong customer service skills then you need to find a strong frontline employee who enjoys client contact.

I want you to understand you need to learn and be willing to do anything to keep going. However, you won’t create high levels of success by forcing yourself to do things that you don’t enjoy and in which you lack core competencies. Know where you stand and what value you can offer. Take a Meyers-Briggs or DISC evaluation if you never have. When you surround yourself with others that complement your skills, you will have more fun and demonstrate to your stakeholders you recognize what is needed to create a world-class business unit.

Franchise Solution: I won’t draw this one out because if you have studied franchising you’ve seen this in type before: Franchising is about being in business for yourself but not by yourself. People, in part typically become franchisees because they realize their inadequacies (and they want to blame someone else when they fail! – No, just kidding). You get into a franchise system to take advantage of the collective

5. Are You Sure You Want to Hire Uncle Rupert?

Never hire from convenience or nepotism. Focus on tasks the CEO should accomplish. Think of yourself that way. Think what will best serve your customer in the long run. Why are you doing work huddled in the back office when you should be out meeting clients, generating PR buzz, and increasing the reach of your networking efforts?

Franchise Solution: A franchise plan will focus on the varying skill set iterations of their successful franchisees and how they interact with the business in advance of your engaging in the business to determine if you fit that model. This may affect working capital needs as well but they will be able to provide you a more precise human resource needs assessment than you might generate as a lone entrepreneur.

6. It’s About the Big Bucks

There are many who tell you to follow a passion. Many of us to be fair do not have passions affiliated with work. You need to enjoy the work. You need to gain great satisfaction from a job well done. But creating money as a goal or as your driving force is like the tender of an apple orchard who constantly picks apples because they are what he sells in order to create a living but who never tends to the soil or the trees themselves.

Ensure you select a business where you gain personal satisfaction by the process; by servicing the client and their needs and by your ability as “CEO” in developing your people, your team.

Franchise Solution: The great franchises have a process to determine if what they do as a business matches your expectations, personal drivers, abilities and investment capabilities. Your honesty in divulging what it is you hope to accomplish and their honesty in presenting their business case ensures to a very high level, that you get into the business that meets both the companies and your criteria.

7. I think I can…er, maybe not

Goal one, yes job one is for the entrepreneur to make it to the end of their first year. Many of them do not. And, we’ve covered some of this already. Many start a business on an impulse and got excited about a perceived opportunity but didn’t do the proper research. These entrepreneurs become disillusioned. Without a backup strategy or the ability to change course or raise additional capital they fold in a matter of months.

The second year can be just as challenging and the goal is that a business really begins to come into its own and hit the stride through 36 months of continual operations. Think of year one as your freshman year in high school; it was exciting and frightening You’re high on energy and ready to take on the world. In year two, your sophomore season, you have learned the lay of the land but may or may not have had the kind of impact (especially financially) you desire. The startup excitement has faded but you are move even. If not, you are part of the second wave of failures. You’ll need to work your way through the downturn and know that the money is coming if you keep at it.

Franchise Solution: A franchise company will have continued to press you right through years one and two in areas of improvement. You will have gained mentors within the family of franchisees. In many cases you will find a colleague in another unit and you will challenge one another. In addition, ongoing or advanced training, webinar events and perhaps a national convention will be in the cards; all of which will provide you with the momentum to carry forward.

8. And Great Was The Fall…

The best way to make a lot of money quickly is to find a customer who has a problem and is willing to pay you to solve it - and then you go out and build the solution. Entrepreneurs who build a business on a customer or on a sliver market component (i.e. the lunch crowd in an industrial park that is controlled by just one company…oh, say, Motorola!) often find themselves calling the printer and instructing him what to put on the “Business Closing for Good!” signs.

Make sure you have a plan if you plan on being a niche business. But this isn’t the only challenge that fits into this category.

The companies with the highest failure rates are restaurants because they are usually built around an owner’s personal tastes. Meanwhile, the entrepreneurs with the lowest failure rates are medical professionals, lawyers and accountants because they are based around a service that we all need (whether we like it or not!) Talk to potential customers, see what they are interested in, identify who has money and what their pains are and then create your product/service.

Franchise Solution: A franchise business model, virtually by definition is replicable in significant marketplaces. They focus on a series of capabilities that fit into a general category that the general populous or the whole of a niche has need of what they provide. It’s simple enough to investigate to determine the components that lead to their success and what it is you would want to avoid. As a matter of course the franchise company will understand the pitfalls and provide navigation around the slippery slopes. That is, provided you are teachable. The key to disaster avoidance is sensitivity to those who’ve traveled the path previously.
Franchising is nothing if it does not help you pilot past the shoals and the reefs of disaster.

9. I’ll Just Read About it…

The Internet has created a generation of nimrods. Pseudo-geeks who believe that if they can just Google it they can learn the entire story; the ins and the outs, the ups and downs and all the juicy insider tidbits.

A great way to get a business going is to find out what other people have done to achieve success and implement those strategies into your own company. This has to be more than just reading about it. We all need to find mentors who have knowledge of our industry and who will give you time out of their day to provide instruction and guidance.

You could set up a formal board of advisers and compensate people for their time but if you’re a startup you can play on the fact that most entrepreneurs are willing to help out a fellow business owner as a way to give back. If you show genuine appreciation and approach the right people, the advice you get will help make or break your company.

Franchise Solution: Uh…this is self-evident. However, let me just say it. A franchise company IS a mentor. They provide the organized development of your business. They start at what you need to do on day one and take you through what you will do when you elect to exit the business. You will receive training, a business system, a marketing strategy, a back end or back office administrative system to analyze data, create reports and evaluate progress and in all sincerity that is usually just the beginning.

10. What the World Needs Now…(er…Come Together…Um, I am NOT a Rock nor an Island?)

My experience is that the person who will not seek out help will also not seek out how to create other important relationships. As it relates to your stakeholders this would mean your involvement in the community that embraces your customers and potential customers.

Connecting with other young entrepreneurs and finding out what they are up to (and how you can help generate countless opportunities) is a great tie-in to your community. Discovering and involving yourself in the areas of service that your clients have interest and passion should truly be a no-brainer. You will get new business opportunities, partners, investment, media attention, ideas for productive tools to use, advice for your company, and many other resources that otherwise would take you years of trial and error to figure out (if you ever do at all).

Franchise Solution: Most every significant franchise I have ever had the pleasure of serving (roughly most the top 200 and another 100 or so in the top 1000) has a strategy these days that recognizes the value of the community the franchisee serves as an integral part of their marketing. Even in franchises where the franchisee works on the business and not in it or is involved part-time, they are taught to focus their efforts on visibility within their service market.

Does Big Name Create Big Earnings and Security?

Most people equate franchising with those Top-of-the-Mind mega systems. We think of names like McDonald's, Burger King, Taco Bell, Subway and perhaps Dominoes Pizza. Hotel chains like Wyndham, Hampton Inns, Hilton and even Marriott have large numbers and international reach. Other business-format franchises like H&R Block, Thrifty Car Rental Curves or ServiceMaster are just big.

But what is the advantage of this and are there disadvantages?

I am sure you've guessed the answer already haven't you?

First-time franchise buyers are typically hoping to receive at least two benefits from their decision. They hope the franchise has a valuable brand and they expect it to have a proven operating system. The primary advantage of big franchise companies is that both of these are basically set in place. You can easily research consumer awareness and attitudes about the brand just by asking around. A well planned visit to operational outlets will provide you with some local subjective information about their customer service and operational execution.

There are other advantages of course. Safety and security are assumed. The risk of failure when aligning yourself with a larger franchise system should be lower. Most of these are more mature systems that have worked all the chinks out of the armor which is their business system. Success isn't guaranteed but you will feel more secure..

Is Bigger Always Better?

Of course you know the answer is no. The major downside issues are:

• Cost of entry (the value proposition) will be greater per unit
• Reduced Opportunity because of limited territory availability
• More maturity – more applications = Greater Experience Expected on the part of the franchiser
• The tendency of these systems to favor seasoned operators with current holdings
• There is less wiggle room for entrepreneurial spirit
• The older and larger the system the greater the expected compliance

The bottom line is that any large system has developed enough territory and build-out significant units that approval to open a new unit as a new franchisee can be a long drawn out process.

It is more likely a new franchisees will enter a large franchise organization by purchasing an existing franchise. While this can actually be an advantage to you, since it allows you to review the operational and financial performance of the unit or units before you decide to buy (And make sure that you do!). Buying an existing business with profitable operations has massive challenges, primarily related to relational issues with clients, employees and a fully developed culture. What appears a benefit, in terms of the record, is not nearly as good as over 50% of all re-sale franchises fail within the first 24 months. I never recommend resales unless I first and individually investigate them personally.

My Bottom Line

While I understand the mindset surrounding the issue of branding the fact of the matter is that there are 1000's of national franchise companies all of whom have highly successful business models and profitable franchisees. You and I can only name a few in comparison to the size of the market in franchising. What about the rest? Where is their branding? The truth is you and I may only remember them if our memory is jarred (Snap Fitness, Massage Envy, J. D. Byriders, Friendly's, Disaster Kleenup International and 1000's more. By the way, the ones I named are even in the top 100 in terms of operating units!) but the people who matter, their client and prospect base knows who they are...intimately.

What's the point?

The point is that virtually every franchise business that is successful in North America and Europe simply needs the right franchisee that matches their profile in order to succeed. Branding and market positioning is created at the local level; the level at which the franchise unit exists. Find the franchise that matches your goals, skillset, interests...YOUR priorities for business ownership and you will find a beautiful thing be it large or start up.

Every franchise is seeking franchisees with the talent and capital to make their business a success. Big or small, most franchise companies care deeply about the success of all their franchisees. You can find just as much heart in a small company as in a larger one; frankly usually more and more passion and more communication. My recommendation is hook up with a consumer franchise consultant. Call me if you need a recommendation. With their assistance you can take the time to look into a number of alternatives when you're contemplating franchise opportunities--big company or small--and with their expertise and previous investigation into the various systems you'll find the right one to maximize your chance for success.

John is a 26-year professional in the franchise industry. Previously he has been a franchisee, a franchise executive and an advocate/consultant to the public. He currently works with and has worked for dozens of franchise companies. He is the founder and managing partner of Wilson Associates and can be reached at dr_franchise@consultant.com

Should I Use A Franchise Consultant to Find a Business

The Value of a Consultant to a Potential Franchise Buyer

In 1980 when I first became a franchisee there were no professional intermediaries to provide guidance to someone entering the world of franchising.

How I wish there had been. Three franchise’s later I would still highly value the service! Not only value them but also recommend them to individuals virtually on a daily basis.

But Why

My work is primarily with franchise companies. Once these franchisers, these companies have developed their concept; put it into a format; created the systems and tracking devices to determine success and positioned themselves in the market their real challenge begins.

Their greatest challenge is finding qualified potential candidates; someone who makes sense for the particular needs of franchise format business. I can tell you this with near certainty if you could line up 100 founders of established and growing franchise systems, any 100 franchise Presidents and CEO’s on any given day, 90 of them would regale you with tale after tale of poorly chosen or nearly disastrous franchisee selections. Many of those choices are my franchise buddies I am sad to say.

From the standpoint of the franchise company they (most often) could only wish to have had a professional providing guidance to their franchisees prior to the person having come onboard as a new franchisee with the company. I can attest to the value personally and from experience.
But what is the value to you; the potential franchise buyer? What does such a service provide?

Settling for Almost

There are many advantages to getting help from a professional who knows the inside workings of an industry or issue. Just having someone who can help interpret the terminology associated with a topic that is new to you can be a tremendous aid. Most people wouldn’t go to court without a lawyer or purchase a home without a realtor. A franchise consultant through the use of sophisticated evaluation tools can assist you to identify franchises most closely aligned with your investment level, skillset, goals, passions and expectations. Again, from personal experience you could spend months (and I’ve known some who searched for years!) evaluating a myriad of opportunities. You could be diligent in your efforts and still miss the best opportunity.

Many make the mistake of thinking the Internet provides solution. Not true. The Internet is a valuable tool for research, but it is limited. If you do not know where to look or if you rely on search engines to produce the results, you will only find the companies that have paid to be listed high in the search rankings. High visibility on the Internet does not correspond to the relative value of a business opportunity nor does it tell you anything about how you match up. Then too there are whole sites given to the detractors of a concept. Honestly, nothing prevents them from running amuck. Due to the immense amount of data that is available on the Internet, it tends to create more questions than answers and it can be a frustrating experience.

There are over 8,000-registered franchise brands and marks (about 3200 of which have more than 5 operating units) and more than twice as many “Business Opportunities” or “Biz Ops” available in the USA. A consultant can help you understand the difference between the types of opportunities so you can determine which format is right for you. Whether it is a franchise or Biz Op, there are many terrific choices and invariably there are many that are otherwise good businesses but a poor choice for you! A competent consultant can help you focus on businesses that have met certain quality standards and help you avoid making a potentially big mistake.

Consultants are rarely limited to a certain company or companies (at least the good ones) and can obtain the sell rights at no additional expense to you. The key is if it meets your profile as well as you matching their qualifications (this is a business relationship and decisions are determined mutually). It is possible that your consultant has pre-evaluated concepts as well that cover a spectrum. The key advantage is that the agreements they do have are with solid, up and coming or established concepts that will meet the requirements of a variety of franchise buyers.

Thinking From Both Sides of the Table

As I previously mentioned, the great challenge for franchise companies is uncovering candidates who will be a good fit for their particular business model. As you can imagine, franchisers get thousands of requests yearly for their information packets, but most of these come from people who are not qualified or not particularly motivated to actually become a part of their organization or any organization. Franchises generally cannot support the amount of staff necessary to do an effective job of bringing in new franchisees. This is why the value of a consultant-referred candidate is so significant. The company is being introduced to a pre-screened individual who meets more than just the financial requirements, is informed about the opportunity and is truly interested in franchise business ownership.

The broker not only is an immense professional, educated resource for the buying public but also to franchise companies. Their professionalism saves the franchiser a great deal of time and money. This allows the consultant to minimally charge or perhaps not charge the candidate a fee at all. The franchise company pays a fee to the consultant if the candidate joins their system as a franchisee. This creates a winning scenario for all parties involved.

In the final analysis, the choice and the responsibility for researching the opportunity are the individuals; they are yours. But as you weigh up business ownership I would recommend you do not leave this stone unturned. I deeply and seriously even request you take advantage of it.
Getting help from a competent consultant is one of the best decisions you can make in your pursuit. They become a neutral, knowledgeable resource you can employ and since the seller (franchise company) pays the fee, the service is free to you.

So, the question becomes: Why would you not use a franchise consultant?

John is a 26-year professional in the franchise industry. He has been a franchisee, a franchise executive and an advocate/consultant to the public and to dozens of franchise companies. He is the founder and managing partner of Wilson Associates and can be reached at dr_franchise@consultant.com