Change… Because Failure is not an Option

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Like a ship at sea, a business should make directional changes in a long, sweeping manner. Conversely, although abrupt change in direction may create havoc, it may be deemed necessary by the captain and navigation team to avoid what may not be apparently visible on the surface to others on the ship, but is evident nonetheless through compilation of data and viewing radar. In any event, well thought-out plans, including contingency plans must be in place and acted upon to arrive safely at a specific destination within a certain time frame, and with available resources.

However, what happens when seas are rough, or when a storm is approaching, or when an engine shuts down? It’s then the captain’s responsibility to crew and passengers, and to the ship’s stakeholders to make any and all necessary changes to ensure all interests are protected. Thereafter, when the ship is safely docked, management must review the events that took place and explore options to ensure the same problems don’t reoccur. Management must identify ways to improve performance by developing strategy and executing on tactical plans to accomplish objectives at all required intervals – short, mid and long-term.

Change requires thought and planning. As does operating a successful business. As change occurs, many within the business are exposed to decisions that on the surface appear to be “drastic or severe” and are not understood and/or agreed upon. However, what is typically not realized are areas of weakness and vulnerability that must be addressed and with the utmost sense of urgency. In many cases there are common denominators across multiple areas of the business. Most will be directly attributable to reduction in sales. Some will adversely affect profitability.

Unfortunately, financial concerns are back and now even more so than during the economic downturn of 2008-2012. But, as was the case back then, deficiencies, previously overshadowed by high sales levels are standing out once again like sore thumbs. Accepting these facts while realizing limitations and shortcomings is vitally important, but knowing what and how to improve [and change] is required. Being proactive and acting now is paramount!

Change what needs to be changed. Prioritize changes that will make the most immediate impact. Grow into the changes that aren’t urgent. But, do it all within the time frame where challenges present themselves as survival may be dependent upon the same. Change, as unpopular as it might be, is necessary to recover AND to move forward. To this end, hard decisions must be made – with absolute conviction and without delay for the good of the business and ultimately, for all within the business. Yes, change is difficult. But so is failure, and failure is not an option!

Entrepreneurship: Ideas and the Courage (Nerve) to See Them Through

“I always thought you needed to be innovative, original, to be an entrepreneur. Now I have a different perception. Entrepreneurs are the ones that make things happen. (That) takes focus, diligence, discipline, flexibility and perseverance. They can take an innovative idea and make it impactful. … successful entrepreneurs are also ones who take challenges in stride, adapt and adjust plans to accommodate whatever problems do come up.”

Steve Blank launched the Lean Startup movement. His work has changed how startups are built, how entrepreneurship is taught and how existing companies and the U.S. government innovate.

Read more…

Entrepreneurs Who Create Startup Businesses Have to Be Crazy

People who start companies are, without a doubt, just a little bit crazy. And people who start more than one company? Deranged lunatics — all of them! Why? Because it’s insanely hard! You’re signing up for a ridiculous amount of work. Your startup journey will be the wildest ride of your life.

Read more…

Poker or Chess?

Do you plan your business strategy like you’re playing chess or poker? But, before you answer, consider the following…

“Industry executives and analysts often mistakenly talk about strategy as if it were some kind of chess match. But in chess, you have just two opponents, each with identical resources, and with luck playing a minimal role. The real world is much more like a poker game, with multiple players trying to make the best of whatever hand fortune has dealt them. In industry, Bill Gates owns the table until someone proves otherwise.”

– Deep thoughts by David Moschella

Is Courage a Necessary Trait for Success?

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We never really hear enough about courage. The courage to take a risk, to stretch limits, to push forward, to go beyond, to keep moving… to make things happen regardless of the challenges in front of us.

Think about the early-day pioneers crossing the Midwest when they first caught a glimpse of the Rocky Mountains and stared at them getting bigger and bigger as they approached over a few days. What unbelievable courage they must’ve had to continue not only towards the mountains, but up into them and through them, often having to go north or south for awhile to keep making progress forward, and despite the elements of weather and resulting hardships. They believed in their dreams and as a result of their relentless courage, their goals were achieved.

The Cowardly Lion’s Thoughts on Courage

In his most famous song, the Lion muses on what it would be like if he had ​any courage (not realizing he already has plenty):

Cowardly Lion: [singing]
I’m afraid there’s no denyin’
I’m just a dandy-lion
A fate I don’t deserve
I’m sure I could show my prowess
Be a lion, not a mouse
If I only had the nerve.

Clarifying Entrepreneurship

EntrepreneurshipWhy is their reluctance to say, I am an entrepreneur? I’ve been asked that question many times. Heck, I’ve asked that question of myself on more than one occasion. It seems, at times we’re more proud to call ourselves, Founder or CEO or to say, I’m a business owner. Why is that?

Are those titles more respectful than, entrepreneur? Yet, we hear of late, we’re in an entrepreneurial economy. So, is that a bad thing or a good thing, and especially if we have a hard time fully admitting to entrepreneurship? Or, should we just be entrepreneurial in how we approach our work, whatever that truly means? 

Are we claiming to be in an entrepreneurial economy to justify the disappearance of the lifelong career at one company and this is just a way to say we need to create and prove ourselves over and over again, and forget the gold watch?

Back to the reference of being an entrepreneur… Is there a stigma of being a dreamer, always looking for something better, bigger, faster as opposed to what some believe is mundane, repetitive work with the security of a paycheck? Often I hear it’s mostly due to yesterday’s immigrant mindset of being thankful to just have a job, yet it’s that same immigrant mindset that is the epitome of entrepreneurship. 

Living our fears
…we are living our fears.

Actually, I believe it’s because of fear – fear of failure, fear of what other people think, fear of the unknown, fear of the what if, fear of starting over, fear of change… But it’s when those fears are hit head-on and the adrenaline rush of success far outweighs those fears because you know, deep in your heart that you have a deeply ingrained talent that can and will make a difference.

Does that mean failures aren’t possible? Hell no, but it’s working through those failures, those blips, those aberrations that provide experience and resiliency to improve and innovate to make the next step, the next task, the next venture successful. That is entrepreneurship. And, it’s when I don’t consider what I do as entrepreneurship, is when failure mostly occurs. Conversely, it’s when I focus on what I do as an entrepreneur, complete with that thinking outside the box and failure is not an option perspective, and when focused more on results as opposed to opinion of others, THAT is when success mostly occurs.

Yes, I’m an entrepreneur. My focus will stay as such as it is not only good for me, it’s good for my family and for those that rely on me to help them achieve their wishes, hopes and dreams! Why? Because I believe in possibilities, as without them, there are none.

3 Questions to Ask Before Franchising Your Business

three questionsBetween building a larger community network, adding an additional revenue stream and the plethora of other advantages to turning your business into a franchise, it can seem like the obvious next step for business owners that are anxious to further growth.

While franchising can provide immense success, achieving better business margins is not guaranteed.

To determine if your business is ready, prompt an honest conversation with yourself with these three questions:

1. Have you seen consistent success?

While there are no rules about the required years of experience, revenue dollars, etc. before you can franchise, owners should be able to demonstrate that their concept is successful enough to take on a second location. Think about how you will pitch to potential franchisees when that day comes—you should be able to communicate the value of the business and the success they can reasonably expect from buying in.

2. Can the success be replicated?

Seeing business success is promising, but the revenue of the company doesn’t multiply just because the number of storefronts does. If your business gets boosts from a local event, one great shift lead or customers specific to your current neighborhood, attempting to replicate that might be challenging. However, if your operations don’t have many variables and you think a new region will benefit from your business, that’s a good sign that expanding will be a positive thing.

3. Are you ready to invest in your franchisees?

In large companies, the responsibility of providing training and resources doesn’t typically fall with the owner. Being a new franchisor means building that support network from scratch. Providing continuous support to franchisees is an investment in not only their success, but the success of the franchise as a whole—therefore it’s a responsibility that should not be taken lightly. The franchisor-franchisee relationship is equal parts manager and mentor, and you need to be ready to provide the guidance they will seek.

If you’d like to learn more about franchising your business, that’s our specialty! Contact Franchise Foundry today to learn more about what franchising can do for your business.

Is Owning a Franchise in Your Future?

For many individuals that explore franchising as the next step in their career, as a way to control their own destiny or as a way to create a family business understanding the process can be quite overwhelming. Below are several articles by franchise experts that will help interested parties diligently navigate the process to help create a playing field that is best for them as opposed to seeing them aimlessly tiptoe through a minefield consisting of franchising’s good, bad and ugly.

If you’re thinking of becoming a franchisee, how should you prepare yourself?

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Buying a franchise can be a great move for a would-be entrepreneur who doesn’t want to create a new business from scratch. In theory, franchisees acquire a model that already works on every level, from branding to pricing to marketing. A ready clientele eagerly spends on Dunkin’ Donuts, McDonald’s and 7-11. The market has tested the best recipes for glazed crullers, Egg McMuffins and the right combo of energy drinks to stock next to the register. But making a go as a successful franchisee can be a lot more complicated than simply finding an appealing brand and plunking down some cash. For a taste of what can go wrong, see Forbes’ piece about the problems at sandwich franchise Quiznos, which paid $206 million to settle a suit brought by franchisees who claimed the chain had oversold its markets and excessively marked up supplies.

Read more…

How to Buy A Franchise

Contrary to popular belief, the process of buying a franchise isn’t really difficult-but it is a process. I’ve found, (through working one-on-one with thousands of potential franchise owners) that it’s really important to tackle a major life decision like the purchase of a franchise business-or any type of business, in a very methodical way. (Even if you’re not a methodical person!)

But you need to realize that buying a franchise is a big deal. It could potentially be life-changing. That’s what you want, isn’t it?

After all, you probably wouldn’t be reading this if you wanted to just go out and find a new job -or keep the one you have.

With that in mind, kick off your shoes and grab your favorite beverage. In this article, Joel Libava, The Franchise King shows exactly how to buy a franchise.

Read more…

Why Owning A Franchise Business Is Good For Your Family

Many entrepreneurs choose to become small-business owners with an exit strategy of turning over the business to their children one day — a strategy that takes on more importance in an era where young people are struggling to find gainful employment. Children who begin working in the family business at a young age will typically start an ascension into management after college, with an eye on purchasing some or all of the family business as their parents head into retirement. Often, the parents will retain a percentage of the business as a revenue stream in retirement, adding an extra level of responsibility for the child as a steward of their parents’ nest egg.

Even if they don’t stay in the family business, studies show that parental entrepreneurship increases the probability of children’s entrepreneurship by about 60%. Children of entrepreneurial parents have already experienced many of the ebbs and flows of small-business ownership, which helps to mitigate their fears and raise their risk tolerance.

Read more…

Learning About Franchising

During research for Franchise Bible, 8th Edition, author, Rick Grossman found that the franchise industry had changed in many ways over the years. Technology has had the biggest impact by modifying buying behaviors. Not too many years ago, franchise buyers would find an opportunity in Entrepreneur magazine or by attending a franchise expo in-person. They would then go through the franchisor’s respective step-by-step process to qualify, purchase and launch their franchises. But today, buyers can find a plethora of information online about nearly any franchise they want to learn about. This has leveled the playing field for new innovative companies to compete favorably with the “big boys” in the marketplace.

Read more…

Are you ready to own your own franchise or expand your current franchise portfolio?

Opinion: A Case Against $15/Hour Minimum Wage

Personally, I’m of the mindset that if you’re not satisfied with the pay you’re receiving, maybe it’s time to look for another job or do what’s necessary to position yourself for a better paying job. I know, as I worked two jobs early on in my career because I had a family to feed and I just did what I had to do to provide. I cannot agree that it is the responsibility of business owners to just arbitrarily increase wages because hourly workers want or think they deserve more pay.

WageAlternatively, like business owners have done, these workers should look to small business ownership themselves if they want to make more money. Maybe join forces with others and form partnerships to take the first step.

And, a question that I haven’t seen answered is how a raise in pay to $15 per hour affects those already earning $15 per hour. So, if someone’s pay is raised from $10 to $15, does that mean the worker earning $15 should be bumped to $22.50 or higher? Where does it stop?

In the end, this movement will cost jobs and shutter once successful businesses. This is the land of freedom. In part, that means individuals are free to accept or decline job offers and on the flip side, business owners should be free to offer jobs to whomever they believe is qualified for an open position and at the wage believed to make economical sense for the business, including the owner’s return on investment provided of course, it’s above federally mandated minimum wage. Clearly, unions don’t see it this way and ultimately, they’re truly only looking to add to their own coffers. To them, it really is not for the betterment of workers as much it is to strengthen the unions and its leadership.

Paul Segreto, CEO, Franchise Foundry

What does a $15 minimum wage do to the economy? Economists are starting to find out.

Facts & Perspective on the Future of Franchising

franchise imageTwo out of three isn’t bad. In fact, in baseball that would be a phenomenal batting average never even remotely approached. A winning season percentage? Well, it has been done in several professional sports. However, what I’m referring to are leading stories last week (see below) about franchising. Two of three were positive with growth statistics for franchising shared and the power of the franchise model defined. The other presented as somewhat of a negative perspective on family-owned franchises as being less productive than non family-owned businesses.

In any event, I’d love to see more study done on family-owned franchises and how the notion of underperformance may vary from one industry segment to another. My thought on this focuses on the potential differences between multiple generations of families that own Dunkin’ Donuts franchises as opposed to families that may own a non-food brand that may be more inclined to rely on the performance of one, two or several key staff members. I’d also like to explore the difference between single-unit and multi-unit ownership by families. Any takers to start the discussion?

“Regulations have been trimmed, taxes have been cut, and, as a result, the franchise community has continued its economic momentum. As we move into 2018, we expect lawmakers will remain steadfast in their support for a strong business environment,” said Robert Cresanti, IFA President and CEO in a statement.

The franchise industry is set for another year of major growth!

Franchise establishments are set to grow by 1.9 percent to 759,000 locations after increasing 1.6 percent in 2017, while employment will increase 3.7 percent to 8.1 million workers after growing 3.1 percent in 2017. The gross domestic product of the sector is forecast to increase by 6.1 percent to $451 billion, and will contribute approximately 3 percent of U.S. GDP in nominal dollars, according to the report. Franchise business output will also increase 6.2 percent to $757 billion. The forecast follows a year of slower growth in 2017, mirroring trends seen the year prior in terms of employment and output. Read more.

Family-owned franchises underperform, study finds.

A new study that involved a Ball State University researcher found family-owned franchisees post 6.7 percent lower sales per employee than other franchise owners of restaurants and other chain businesses. “It boils down to the fact that often, family-owned franchises have different objectives as compared to their counterparts,” said Srikant Devaraj, a researcher with Ball State’s Center for Business and Economic Research. Read more.

Will franchise leaders embrace a new future state of franchising?

A relatively misunderstood business model, with a paucity of academic support, franchising is on the precipice of history.  Defined by the Federal Trade Commission as an ongoing commercial relationship that includes a license to a brand, payment of a modest fee and the existence of significant control or support, the average consumer knows it as Subway, McDonald’s or Anytime Fitness.  In layman terms, a chain of businesses that share a common brand and a consistent customer experience owned by a local consumer.  But the traditional methodology of franchising has been supplanted by an ever-growing array of hybrid formulations that increasingly are revealing the real power of this enigmatic model. Read more.

Is Franchising the Right Way to Grow Your Restaurant Business… or Any Business, for That Matter?

This past January I presented a webinar for RestaurantOwner.com about the ins and outs of franchising a restaurant business. Special attention was also placed on preparing to franchise and how doing so could significantly improve the business itself and provide a road map for multi-unit operations – even without actually proceeding into franchising.

Well, the response after the event was quite robust and led to us performing a number of franchise feasibility studies for independent restaurant owners in various markets across the country. Our recommendations were split on whether to franchise or stay the course as an independent operation. In the coming months, we’ll be able to see how our recommendations play out. In the meantime, interest remains high, not only for restaurants but also non-foodservice operations across a multitude of industries and industry segments exploring franchising as an expansion or growth strategy.

RSG_Logo_Rev3.pngLast month, in Restaurant Startup & Growth magazine, a RestaurantOwner.com publication, appeared an article by the RS&G staff, taking a deep dive into my webinar and philosophy about franchising a business. The article started out…

Some of the most successful brands – in any sector – are franchises. In the restaurant business, they are household names. For many independent operators, franchising their concept is the so-called “Big Hairy Audacious Goal”. Before you take that leap, there are a lot of small and critical steps to consider.

The rest of the article, Baby Steps – Is Franchising the Right Way to Grow Your Restaurant Business? may be read on pages 42-47 by clicking HERE.

Do Transitioning Corporate Executives [Really] Make Good Franchisees?

This question was discussed on Linkedin approximately a year and a half ago and there were some interesting responses. However, the further we drift from the onslaught of transitioning executives caused by the 2008-2012 economic downturn, maybe we should now pose a different question… How have franchisors fared since awarding focusing on transitioning executives?

We often look at franchise success as up to the franchisor, i.e. it’s the franchisor’s job to be sure franchisees succeed. But of course, we know that not all franchisees, including transitioning executives, are created equal. Some are better than others! People in transition may, in fact, not make very good decisions – maybe they may panic and jump into a franchise too quickly and they don’t do all the homework that’s necessary or possibly don’t ask all the right questions. Some actually have limited skill set to their former job.

It would be interesting for franchisors to reveal how “transitioning executives” have fared, though that’s probably asking a bit too much. Because again, even if the transitioning executives have failed, it doesn’t mean the franchise system is bad. Maybe the system is just not right for certain individuals?

It really doesn’t matter whether a candidate is a transitioning executive or an immigrant national or even a mom exploring business ownership instead of returning to the workforce. What matters is how well prepared a candidate is for franchising (and business ownership) and whether or not the candidate is a right-fit for a particular franchise, and the franchise for him or her. Because we also know that all candidates are not created equal. Nor are franchisors! It’s all the more reason to identify and develop ideal candidate profiles, and keep in mind, there may be several.

Any thoughts?

Success… It Starts and Grows with a Vision

In a recent interview, I was asked my opinion about why some Private Equity firms fail in their efforts at operating what was originally considered a successful franchise system, while others take the system to even higher levels of success… As you’ll see by my response below, I actually started at the end and worked backwards. But in the end there is a common theme and its built around relationships, or lack thereof. Certainly, systems play a big part in the success equation but losing sight of “people” is a sure way to create a disconnect, even within the most perfect systems. My response and theory may be too simple for many to agree, but I do feel it lends towards the foundation of any successful business in one way, shape, fashion or form.

“All too often you hear about founders buying out the Private Equity firm. I personally, know of two that have done so recently, and for different reasons. And, even though only one was a franchise company, there was a common denominator in the circumstances that had developed within the organizations that led to the founders deciding to buy out the PEs… the “parent” company lost sight of its relationship with its “employees & franchisees” and the end-users, “clients & customers”.

My opinion is that “true” mom & pop operations are typically built upon the foundation of relationships, and it’s the strength of those relationships that build the foundation of a strong organization complete with common beliefs, values and mission. It definitely becomes an interdependent relationship. I have rarely seen that occur when PEs get involved where it’s more numbers, numbers, numbers. Don’t get me wrong, numbers are important. But, it’s the lack of balance between driving towards making the numbers and building relationships that is often missing. Ultimately causing rifts in the organization with the customer or client feeling the lingering effect of diminishing service levels.

Let’s look at a similar situation that occurs all too often in a very typical mom and pop setting even without the inclusion of a PE in the equation. Mom and Pop have run a very successful business for 25 years. They have done quite well over the years, building the business very methodically, never taking on too much debt at any one time. But still progressive in growing to meet customer demands. Sure, their product or service stands out as excellent. But it’s the relationships they have fostered over the years that have truly made the business successful.

Looking ahead, Mom and Pop have structured a very strong succession plan. Junior has gotten his MBA and is primed to take over the business. In fact, Pop has insisted that Junior also work five or so years out in the corporate world so he can gain some hands-on experience, and mature. Mom and Pop have met with their attorney and CPA and have everything in place for Junior to take over the family business. What’s next is a situation that occurs all too often when Mom and Pop are no longer in the picture.

Junior, complete with new ideas, a wealth of education, and some successful business experience, begins operating the business. He introduces new technology, replacing the antiquated systems that had been in place since day one. Junior streamlined operations, improved inventory control, and basically tweaked here and there to the point that the business appeared to be transformed to a business that appeared bigger than it was – almost like it was a part of a national chain.

Initially, customers loved the transformation and the buzz within town was full of praise and admiration for the family. But what transpires over the next few years as things begin to change as the business becomes less personal and more structured is actually the beginning of the end.

Strict policies have been put in place for both customers and employees. Product and service lines have become more defined, but at the expense of some customer favorites being eliminated. Customer service, having become more automated has reduced the necessity of a large staff. In-store signage has taken over where courteous employees once stood. Well, the list goes on… to the point of the business losing sight of people and relationships. Employee turnover continues to increase. Customers’ faces are no longer familiar. And, when a true national chain opens on the edge of town, foot-traffic starts to diminish.

You see, with all the great succession planning that Mom and Pop painstakingly put into place, they missed a key component to the success of the business. And when Junior transformed the business he also lost sight of that key component. It basically comes down to WWPD… “What Would Pop Do?”

WWPD is basically the relationship part of the business. To put it simply, Pop knew when to put his arm around an employee. Pop knew when to come out from behind the counter. Pop knew how to make a customer feel special. Pop knew to carry certain items that some of his “regulars” loved. And, again, the list goes on… Pop knew, but Junior didn’t. It’s the classic example of the disconnect between WWPD and MBA, and it’s a similar disconnect between a founder-run business and a PE-operated business.

Now, I’m not saying that it can’t be done, or shouldn’t be done… meaning the sale of a successful business to a PE. Absolutely, it’s the American Way! Instead, along with the financial and legal succession plan needs to be a visionary succession plan that basically outlines and teaches, “What Would Pop Do?”

So, in addressing the original question, let’s just insert Mom and Pop for the franchise, the employees and customers for the franchisees, and Junior for the PE… and the scenario fittingly plays out.”