People say – Practice what you Preach. Well, earlier this month I invested in a franchise. This is not the first time I have been a franchisee. Over the years, while continuing with my coaching practice, I have joined several franchise systems so you think the decision process would be easy, but it’s not. It’s never easy.
At first, it’s all excitement. We do our research and imagine what it could become. We ask the questions, build our spreadsheets, dot our I’s, and cross our T’s. That’s the easy part, the fun part.
It’s the end of the process that slows us down. Self-doubt and fear set in. We begin to question all our assumptions. There are two voices in our head screaming at each other. One voice says ‘We’ve done our research; we know it works and we have the abilities. Stop being a wimp, put on your big boy pants and let’s make this happen!’ The other voice says ‘Are you out of your mind? We don’t need this, we’re safe where we are. No risk is good risk. Don’t walk, run!’
So, how do we decide? Over the years I’ve worked with thousands of people who have faced this challenge. Each person does it differently. For me a few things come into play –
However, even if all these are pointing in the right direction, there is still fear and doubt. That is simply part of being human. So, how do I make my decision?
For me, there is one last question that must be asked. This is the question that unlocks my personal ability to make hard decisions and move forward.
‘How would I feel if I didn’t do this?’
Life occasionally presents us with the opportunity to move the ball forward. I decided many years ago to try my best to say ‘Yes’ when opportunities present themselves. I hate to think back on things and wonder, ‘What if…?’ Personally, avoiding a life of regret is a powerful motivator for me. Assuming all the above-mentioned criteria are in place, it’s this last, powerful, question that helps me personally get over the hump and say ‘Yes’ to a new adventure.
Helen Keller once said ‘Life is either a daring adventure or nothing at all’. I am very excited about my new adventure and will provide periodic updates. Of course, I will also continue in my full time franchise coaching role because I so love it!
When it comes to investing in a franchise, many people will tell you it’s a numbers game. How much will you invest? What is the return on investment (ROI)? Cash flow? Break-even? These questions make sense because the numbers are important. It’s only natural that potential franchisees want to ensure they are joining a sustainable business model and will receive a respectable return on their investment if they have what it takes to be a franchise owner.
Having sound financial data to support your investment is critical, but there’s so much more to consider. Becoming a franchise owner is an endeavor that can have a profound effect on you, your life and your family. You need to know more than just the numbers before you make your investment.
In addition to knowing the financial information, it is important to understand the cultural, lifestyle, skill set and emotional requirements before investing in a franchise. This is why it is important to take a step back and conduct the proper due diligence before making a decision. With the proper guidance, you can know everything you need to make a fully informed choice with your franchise investment.
The prospect of opening a franchise is a thrilling time in the life of an entrepreneur. You are finally stepping out on your own on the road toward business ownership. It’s an exciting time, but it can also cloud your judgment. Consider how often you may have overlooked certain shortcomings in a major purchase because of your excitement.
Maybe you didn’t consider the poor mileage on the purchase of a new-to-you car. It could have been ignoring that leak in the roof or other minor defects when buying a home. The point is that when we want something to happen, it becomes easy for our brains to do the mental gymnastics to justify just about anything. There’s a saying that when you are looking at the world through rose-colored glasses, all the red flags just look like flags. That’s why you need someone in your corner to help you make an objective business and career decision.
Choosing to join a franchise is not the same as buying a house, car or corporate stock. As a franchisee, you’re choosing to become part of a franchise system. This means you must be comfortable with the corporate culture and the people who come with it. The culture of a business is just as important as the numbers. In fact, some would argue that it’s even more important. When you sign a franchise agreement, you’re making a long-term commitment to be part of the franchisee community, follow the business operating system, and play nice with your fellow franchisees and the franchisor. If you are going to set down roots like this, it’s crucial that you fit into the franchisor community and will be happy.
Prior to looking at specific franchise systems, it’s important to define why you want to get into a franchise business. Are you hoping to improve your work-life balance? Do you want to spend more time with your family? Perhaps you want to make a shift toward a more positive company culture.
One important practice I often recommend to people wanting to learn more about a franchise system is to speak to one of the current franchisees. Who would have better insight into the company’s culture than someone who is already in the system? I believe it is important to speak to several different types of owners to get a complete view of the franchise. For obvious reasons, you will want to talk to successful owners to learn how they have thrived. Speaking to other franchisees who may be looking to sell can also reveal potential red flags. Having conversations with longtime franchisees is helpful to understand the historical perspective on the system, while speaking to new franchisees can give insight on the training and support they have recently received.
The numbers are what they are. You can discover the estimated ROI, year-over-year profit margins and startup costs. What might be more difficult is to know if the franchise is the right fit.
A franchise is as much an emotional investment as it is a financial one. When you are laser-focused on the numbers, it can be easy to overlook the emotional wherewithal necessary to make the business a success.
Have you ever been on a date with someone who looked good on paper, but you turned out to be incompatible in person? The same rationale applies to franchising, only this involves a much bigger commitment on your part than a dinner date. This is why you need to perform your emotional due diligence with any franchise investment. When you navigate the process with someone who understands the journey, you will be in a better position to determine if your own skill set and attitude align with those of the company.
The path to franchise ownership can quickly become overwhelming. It is a major investment that will impact much of your life. The least you can do is make sure that you’ve been as thorough as possible in your research. That means looking at the numbers as well as the people and culture behind them. When you walk the path of business ownership with a proven franchise coach or someone else who can provide an external perspective, you can be confident that you’re armed with everything you need to know to make the right choice for yourself and your family.
A couple weeks ago I was speaking with an old friend of mine, Peter. During the conversation he reminded me of a blog that I wrote almost 10 years ago. A blog that was relevant at the time, and even more relevant today for anyone investigating business ownership.
I have a couple of friends that like to share their opinion. They generally do this by forwarding emails that show the opposing side (the side they do not agree with) in a compromising position. However, when I do my due diligence, I often find the ‘facts’ they are sharing to be false. Occasionally I bring this issue to their attention. They are almost always disinterested, preferring instead to cling on to the false information because it molds to their own set of beliefs.
As I contemplated this, I realized that the same thing is happening all around us as we try to make decisions. Should I use sugar or sweetener? Or – Should I start a business or get a job? Ask your friends and they will have an opinion. Some might say, ‘I once had a friend that started a business and people say it did not go very well.’ Another might say, ‘My uncle is an entrepreneur and I think he is really wealthy.’ So, what do these statements have in common with the false junk mail that is constantly being passed around? Well the most obvious similarity is that they are both completely devoid of fact. Neither one should have any value in regard to establishing your own opinion.
Now, more than ever, the world is full of opinions. False information is not created by accident. It is purposefully created by people who want to sway your thinking. It is your job to determine the difference between opinion and fact. Successful people do not cling to false information because it fits their preconceived ideas. The only way to make great decisions is to be open to learning. The only way to be open to learning is to accept the fact that you might be wrong.
Learning is not accomplished by talking to your friends, family and neighbors and asking them, ‘What do you think?’ Learning occurs by putting in the hard work that is required to separate fact from fiction. It is not easy. It requires a game plan. It requires stick-with-it-ness. It requires vigilance. It is called due diligence. Once you have the facts, then you will know what the right course of action is. By doing this you will separate yourself from the average person and stack the deck in your favor.
The great waterfall of Lu Canyon is thousands of feet high, with a halo of mist that can be seen for many miles. Nothing survives the violent waters at its foot. Yet once K’ung Fu-tzu saw an old man swim the tempest. K’ung Fu-tzu and his retainers ran with ropes to rescue him, but when they descended to the floor of the canyon, they found the man sitting on a large boulder, quietly singing.
K’ung Fu-tzu exclaimed, “You cannot be alive! What are your powers to allow you to do what you have done?” The old mand turned and smiled, “I am just a man, but I began to learn as a boy, and I continue to practice. I flow with the water, going up, down and around with it. I forget myself and do not struggle against forces far beyond my control. Then I use my meager abilities in the moments when the water and I share the same path.”
This story is based on the Daoist concept of Wu Wei. Often Wu-Wei is described as ‘nothingness’ but that is not entirely correct. Wu-Wei is ‘perfect action’ or being ‘in the zone’. Being able to act with calmness and without thinking. Great actors and musicians improvise by feel, without thinking. This is Wu-Wei.
Becoming great at something is not easy. Wu-Wei is a result of time, effort, focus and repetition. If you want to become a great parent, mentor, friend, or, yes, entrepreneur, start early and continue to practice throughout your life.
Maybe, one day, you will be able to sit on the same rock as the old man.
My first job out after graduating from Washington University in Saint Louis was with Monsanto. Gene Krajack hired me, placed me in the Agricultural Division, and promptly relocated me to eastern Washington state for training. At that time, I literally did not know the difference between a tractor and a combine. Their job was to teach me what I needed to know about agriculture and eventually become a productive member of the team. Wow, did they have their work cut out for them.
I remember my first meeting. It was a cold, rainy November afternoon at a non-descript hotel meeting room. I entered the room dressed professionally and was staring at a room full of folks in jeans and flannel. They smiled and asked me a few questions about myself. I took the bait and told them about my schooling, and degree and background and a bunch of other things that they had no interest in hearing. Within 30 minutes the entire room was ready to see my back side. Of course, in my arrogance, I had no idea. I got to talk about myself, was proud of my accomplishments, and had absolutely zero perception of self.
Unbeknownst to me, by the end of the afternoon, NOBODY in that room wanted to be my trainer. Short straw was drawn by Fred Muse. Fred was in his 60’s, born and raised on a farm, and was a Monsanto lifer. He was the picture of the grizzled old farmer. He did not speak much but when he spoke, folks listened.
Our first meeting was in his living room in a tiny town. It was over 30 years ago but I remember it like it was yesterday. He said – “Rick, do you mind if I share something with you in the ‘for what it’s worth department’?” I said ‘No, I don’t mind’. He then said – “Rick, in 30 minutes you managed to get everyone to hate you.’ Fred then paused and said, ‘I don’t know if this is recoverable but if you would like to try, I will try and help”. Fred proceeded to share with me what I said and how it was received. Up to that point in my life, I had never thought about how my actions and words were received. My head was spinning. My world literally flipped upside down. Fred then explained that I would need to develop a concept called ‘humility’ if I wanted to survive in the role. He then set me on a course that I am still working on today.
We pulled out an old piece of loose-leaf paper and wrote the following words –
‘Ask a Question,
Shut Up & Listen To The Answer,
Ask a Related Question,
Shut Up & Listen To The Answer,
I am still working on this today. In many ways, What Fred taught me was the core of real learning. When you talk, you are not listening. If you are not listening, you are not learning. Everyone has something to teach you. It is your job to respect the person enough to listen and learn.
Finally, humility is not weakness. It is possible to be both humble and strong; humble and confident. Thirty-five years year, I am still working on it… not perfect, but better.
Fred has long since passed but I want to say ‘Thank You’.
Most people find change difficult. Change involves doing things differently. It necessitates moving from a known, familiar pattern to an unknown, unfamiliar pattern. For those of you who have read my blog or my book, The Educated Franchisee, you know that the ‘Unknown’ is the primary driver of fear and anxiety. So, if change is uncomfortable, creates fear and risk, why would we ever change? Change is driven by two things. The first is Desire, but the most common is Dislocation.
Let’s discuss dislocation. A dislocation is defined as a ‘disturbance from the proper, original or usual place or state’. Dislocations are change and change creates instability. Unstable environments create a degree of pain and pain drives people to consider change. Examples. When a governmental system is stable, nothing changes. However, create instability within a governmental system and new futures become possible. Same with relationships. If everyone is getting along, nothing changes. If there is discord in the relationship, there is a higher likelihood of change. Same with jobs. So long as you are content going to the same job every day and do the same thing, very little will change. If your job becomes unstable and you think you will be ‘downsized’ or ‘relocated’ or ‘reassigned’, you will begin looking for a new job or start a business.
Today, the temporary dislocation we are all dealing with is Covid. Covid has given us a wonderful opportunity to make a change. This dislocation has affected every part of our life and nobody is sure where everything will settle. There will be a ‘new normal’, but nobody knows what this ‘new normal’ will look like. This is your chance to create the future you want. If you currently own a business and you want to change the thinking of your employees, now is the time to create a new normal for customer service. If you are working every weekend and want more time to attend kids’ events, now is the time to talk to your boss. If you want to start a business on the side, now is the time to lobby for more flexibility. Covid has opened a door for us to create a better future. Are you ready?
In closing, a couple of my favorite sayings for you –
“The person who risks nothing, does nothing, has nothing, is nothing, and becomes nothing. He may avoid suffering and sorrow, but he simply cannot learn and feel and change and grow and love and live.”
Leo Buscaglia (1924 – 1998) American Author & Professor.
“Avoiding danger is no safer in the long run than outright exposure. The fearful are caught as often as the bold.”
“Security is mostly a superstition. It does not exist in nature, nor do the children of men as a whole experience it. Avoiding danger is no safer in the long run than outright exposure. Life is either a daring adventure, or nothing.”
Helen Keller (1880 – 1968) Deaf and Blind American Author, Activist and Lecturer
With consumer confidence shooting straight up and business growth all around us, everyone seems to be focused on opening a business. But what about selling a business? Every person who starts a business will, one day, want to sell their business. Anecdotally, we know that franchised businesses are easier to sell and sell at a higher value. There are many reasons for this, and it seems to be consistent over time and across industry. However, we have never had a comprehensive, scholarly study of the topic – until now.
Last week I was attending the Advisory Board Meeting for the Titus Center of Franchising (Palm Beach Atlantic University) and Dr. John Hayes shared with us an abstract of his latest study on franchising. This study is focused on resale valuation of franchised vs non franchised businesses. The study has completed peer review and is scheduled to be published in the Journal of Economic and Business Studies, Spring 2022. The study is titled Determinants Impacting Resale Premium Disparity when Selling a Small Business: A predictive Non-Linear Approach. By Dr John Hayes, Dr. David Smith and Dr. Mary Kay Copeland.
Using a dataset of 2,159 resales over a 10 year period, ‘findings confirm that franchise firms receive a higher resale premium when compared with non-franchise firms’. At this point we do not have access to the entire study, however, we do know that the study confirms what many of us have always known. Owning a franchise not only allows you to open a business with fewer bumps, it also allows you to sell your business more readily and at a higher value.
When the study is formally published, I will forward a link.
Wishing you an exceptional summer as we move out of our Covid mindset and into a brighter future.
Everyone who has read The Educated Franchisee knows how I feel about keeping things positive, aggressively dealing with negatives, taking ownership and learning. Well, two weeks ago I was tested.
On March 19th, a hacker accessed our system and sent out a malicious email to everyone in our database. I learned about this within 15 minutes and actually felt a hot flash of anger and indignation flow through my body. It was like waking up to find an intruder standing in your living room. Within 30 minutes we kicked out the intruder, secured the system and sent out an email letting everyone know what was going on.
However, I was still worried. How bad was the hacker’s email? Would my friends be damaged? Would everyone be angry with me for letting this happen? In the end, there were no reports of damage but more amazingly were the emails of support and understanding. I received hundreds of emails from folks thanking my team for addressing the issue so quickly. Not one email was angry or abusive. Amazing.
So, where do we go from here? What did we learn? Not sure if I have all the lessons figured out yet but here are a few thoughts –
It always takes time to fully understand the lessons and I am sure there are many I am missing. Over time they will come to light and I will grow as a result.
As you face challenges in your life and business, remember to keep things positive, aggressively deal with the negatives, take ownership, and dig to find the lessons.
Many years ago, I lived in Montana and became friends with a body builder named Jim. Jim spent many hours in the gym each day building the type of body that wins competitions. As I got to know Jim, I learned a little bit about body building.
As Jim explained it, early on it is all about mass. The goal is to get as big as possible. You work hard in the gym and a eat a lot. Jim was not concerned about fat at this stage. The goal is simply growth. At a certain point, a few months before a competition, Jim would begin working on definition. He would still work hard in the gym but would change to an exceptionally low-fat diet. This change allows his body to begin shedding fat and improving definition. By the time the competition arrived, Jim’s body looked like it was carved out of stone.
Why do I tell you this? Because building a business is very similar. During the early stage of business development, it is all about building mass. You spend money on advertising, hire people and add infrastructure before needed, and grow mass. Your business may not have the best ROI in the first year but if you are building mass, then you are building the foundation to be competitive. Once the business has a strong base, then you can begin working on definition. Melt away the fat and drive profitability. Reinvesting for growth in the early stages gives you the foundation to create amazing definition later.
I know everyone wants to open a business and be profitable ASAP, but it is good to remember that successful businesses focus on mass before definition.
As many of you know, I am a reader. I love a good book. My primary goal is to get one good idea from each book. Learn something new or discover a different way to think about a problem. One good idea is enough. However, occasionally I run into a book that is so full of useful ideas and wisdom that it becomes a permanent part of my library. This is one of those books.
The book I am talking about is Many Miles To Go by Brian Tracy. Not only is this a wonderfully readable parable of the many challenges doers face during their pursuits, it is also personally powerful to me as I embark on building another business – FranchiseResales.com. Every adventure worth pursuing takes a significant amount of tenancy and bullheadedness. This book puts it all in perspective in a readable format that makes you want to turn the page.
The 7 Principles for Lifelong Success from Many Miles to Go.
As you embark on this New Year, buy a copy of Many Miles to Go by Brian Tracy. It will become a part of your permanent library also.