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Franchising Success
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Overview Transcript Case Study Video
There are great urban opportunities
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Key Ideas of this episode
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1. Small Business School Make The Old New
2. Put Systems In Place
3. Create A New Breed Of Owners
4. Seek Out Mentors
5. Buy An Unexploited Idea
6. Stop Doing And Start Leading
7. Look For Neglected Customers
8. Tap Into Experts
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Key Idea #1: Make The Old New Gary said the sign industry will do 5.5 billion in sales annually. The temporary sign business is a niche that big companies weren't interested in. The old fashioned, hand-done methods were too expensive for people who just want to stick a sign in their yard announcing, "The Last Garage Sale."

Topic for discussion: What was new when Gary launched FastSigns?

Answer: The application of technology to create small sign orders. Gary noticed that franchises like Sir Speedy were enjoying strong sales and profits so he took their idea and applied it to sign making. Gary started on the path of what is now called digital workflow when he bought the technique he uses today to make signs.

Topic for discussion: What does this really mean and can any business do this?

Answer: Digital workflow means all information is inside a computer in some format somewhere. And, all of the computers talk to each other in some way. There is no paper needed to take an order, make and ship the order or collect for the order. Any business can do this but each of us has to weigh the cost/benefit and we have to understand where our customers are in their efforts to go digital. Many small businesses are not digital because their customers aren't yet and the wise position is to be only slightly ahead of customers. As we send this episode to television this week, we can report that most customers work online with FASTSIGNS. FASTSIGNS has nearly eliminated paper by providing what they call, "proof by email." Before this step was put into email, customers would either come in person to proof a sign or they would receive a fax from FASTSIGNS.

Topic for discussion: How did Gary know he would be able to cash in on his investment?

Answer: He didn't so he tested the idea in one location first. Like we all must do, he took a calculated risk. He decided if his one location generated $15,000 per month in sales within the first year, he would go forward with the idea. Gary's commitment to digital workflow is key to the success of each store and gives him an enormous advantage over tiny shops. Computering is cheaper than ever but it can still be costly. By providing the turn-key technology to franchisees, they have less to worry about and more time to make sales.

You think about it: What action can you take to anticipate the marketplace? Describe how you found your newest product/service. How are you going to find your next product/service? What would it take for you to go digital? Who in your organization would be the best person to be in charge of the effort? How will you discover how digital your customers are or want to be? Which of Deming's rules do you most need to embrace to see more improvement in your organization? Can you re-write each of these points in your own words so that you can fully own the ideas?

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Key Idea #2: Put Systems In Place Systems are what any franchise offers a franchisee. However, even if you don't want to franchise, you still need systems if you plan to hire even one employee.

Topic for Discussion: What keeps business owners from installing systems?

Answer: First of all, this is not exciting work. It is grunt work. Second, there are many small businesses that exist because there are no systems. For example, a cabinet builder who advertises that his work is all custom and that each project is unique may not think he can put systems in place. If there are no repeatable steps then systems can't be installed. And third, we prefer to fly by the seat of our pants because it seems to be more fun. We might think that no system could replace the force of our fabulous personality. Therefore, we suggest that if you are leading your business with your personality, it may be time to put tiny steps in place and manage the accomplishment of those tiny steps. This is the only way for you to grow.

Topic for Discussion: Where does one even begin?

Answer: We suggest this mantra: If it repeats, teach. And to teach you must put a step-by-step process in writing. Pretend you are going to hire a sales person to take over your sales efforts. While there are dozens of book on how to sell, our favorite being, Integrity Selling, by Ron Willingham, you must write a job manual for how you want sales done in your company. Describe the ideal prospect drawn from a profile of your most profitable customers. Create a place, preferably online, where any sales person would enter the name and all contact information of any prospect they discover. Write a script for the sales person to use when he or she calls the prospect for the first time. Write a follow-up script. Write a script to be used on in-person calls. Write product and service descriptions and the benefits your current customers derive from doing business with you. Put an order proccess in place. Are you getting the picture here?

As we said, it is grunt work. Not long after you start this work, you will be tempted to throw up your hands and say to yourself, "I'll never be able to teach another person to do what I do." We know about a company that does $15 million in annual sales that has almost no processes in place of any kind. The problem is that people are hired and paid well but the owner is constantly dealing with turnover because employee frustrations are so high.

You think about it: What does it take for you to land a customer, deliver to that customer and get that customer to buy from you again? Have you written down all the steps? Why not?

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FastSigns franchisee owners Key Idea #3: Create A New Breed of Owners The fact that entrepreneurship is enjoying great PR today works in Gary's favor. This country was founded by entrepreneurs but most of this past century has been dominated by the "organization man." The rise of the professional manager has been documented by every business writer everywhere. Hundreds of books have been written about how to be a manager. These books are written for the person who is managing a group of people and all work in a huge company like Ford, Exxon or American Airlines. Gary had the idea that these highly trained, bright people might love to take a stab at owning their own business.

Topic for Discussion: Where does Gary go to find franchisees?

Answer: Inside big business. He looks for the highly trained managers such as the banker you saw on the tape. These men and women have years of leadership training and experience working for big companies and they're perfect for Gary.

What do you think? Why are they perfect as owners of their own FASTSIGNS?

Answer: Big business runs best when people follow the systems put in place, ususally by someone else. A "pure" entrepreneur is the man or woman who thinks of an idea and starts a busines form scratch not knowing if it will turn into a profitable business. A franchise owner is a hybrid of an entrepreneur and a manager. When a person buys a franchise, the idea has already been proven. Remember the banker said he has looked at the financials of many businesses through the years and when he looked at the financials of some of the FASTSIGNS operations, he could see that FASTSIGNS is a good idea. There is no risk involved in evaluating the basic idea.

The professional manager then does have to put down his or her own money to buy into the business and there is some risk that the location or the leadership will fail. But, there is great comfort for the "organization man" in systems.

Gary has worked hard from day one to put the systems in place that will insure success. He's a systems man himself. You can tell when you hear him talk about opening the first store that it was very frustrating for him trying to get things done for customers before the systems were streamlined.

Today it's cool to be able to say you own a business. Tapping into that trend and giving the professional managers a business that looks more like big business than small busienss, Gary has grown quickly. Because, once you have the product and the processes in place, all you need to grow a business is people.

You think about it: With the fight for the best employees in full swing, what non-traditional places can you go to find great people for your organization?

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Key Idea #4: Seek Out Mentors For this program we invited Don DeBolt to come to FASTSIGNS as we wanted to hear from the chief franchise expert. As the executive director of the International Franchise Association, Don works to provide a constant flow of training and mentoring to all of his members.

Topic for Discussion: Who did Gary meet at one of the regular meetings of the IFA?

Answer: Some of his heros! He met men he had admired from afar. He sought them out and asked them if they would answer some of his questions about growing FASTSIGNS. It turned out that they were very helpful and at that one meeting Gary established a connection he could depend upon for years to come.

Most business owners do too much alone. We do it because we think we have to or that no one has ever faced this particular problem before or because we are embarrassed to admit what we don't know. The founder of The CEO Clubs, Joseph Mancuso, says that strong business owners seek advice from attorneys, cpas, other professionals and other business owners. This makes sense. It is the weak or insecure owner who doesn't seek help while the strong get stronger by seeking advice.

You think about it: Who do you admire? Have you sought them out and asked them for advice? If not, why not?

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Key Idea #5: Buy An Unexploited Idea Most inventors are not business people and most business people are not inventors. Gary saw the technology he now uses while he was making a sales call for the first company he owned. He struck a deal with the inventor and with vision and sweat equity, he now dominates the marketplace. There are two ways to look at the word, "owns." You can own something in the legal sense meaning you have the patent or copyright to a product or idea which entitles you to use the courts to stop others from profiting from your invention. Another way to look at this word is in the light of the marketplace. If the marketplace thinks of you when they think of a product or service, you "own" it.

Topic for Discussion: What steps did Gary take to "own" what we now see happening at FASTSIGNS?

Answer: FASTSIGNS started out with the legal right to use the technology because the inventor only wanted to use it in his one location. Gary wanted to take the idea international. If you see a good idea that is not being fully exploited by the inventor, you can do a deal to get access. There are mutiple ways to do this. You could end up paying a fee for usage, you could make the inventor a part owner of the company or you could buy out the inventor at the outset. Inventors can be difficult because they think that the idea is everything and they are so wrong. Veteran entrepreneur, Bill Tobin, told us that the idea is 2% of the success of a business.

Sure you need the right idea at the right time but to exploit the idea, to deliver it to customers who are happy to pay for it, you have to have what Gary brought to FASTSIGNS. You have to have vision, money and the drive to do sales and marketing. When we studied UroCor, we discovered that the inventor of a prostate detection process had failed to make his company profitable. When the venture capitalists who had invested millions in the business demanded improvement, a new CEO was brought in and the inventor stepped aside.

When the inventor of a technology which allows computers to "talk to" a screen and mouse remotely finally perfected his invention, he hired a banker to be president of his company. Our point here is that there are probably inventors who need a business person to exploit their inventions and if you need a new idea to grow your business, there are probably inventors right now working on the perfect idea.

Gary not only "owns" the technology he uses, he also "owns" the mindshare of consumers. When you think of buying a temporary, high quality sign, you think of FASTSIGNS. You have to own an idea legally to grow a business. Even better if you can own the business from the marketplace point of view, as does Gary.

You think about it: Is someone developing a product you could grow your business with if you owned it? Are there inventors out there you should know about?

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Key Idea #6: Stop Doing And Start Leading When we interviewed Dr. Keith Grint, we kept thinking about Gary Salomon because Gary is the type of leader Dr. Grint believes can be the most successful at running a modern organization. Dr. Grint has published seven books and over 40 articles on topics ranging from business process, reengineering to appraisal schemes, organizational theory and sociology of work. He is the Director of Research at the Saïd Business School, Templeton College, Oxford, England. Dr. Grint helped us understand how to identify a leader and he talked with us about power, charisma, communication and motivation.

Gary admitted it was a struggle for him to stop doing and start leading. He realized that he could not keep everything in his head as his company grew and that he had to depend upon others to not only do the work but to make decisions. Dr. Grint would call Gary a process leader because Gary wants everyone to participate in the decision-making and most of all he wants every working to improve the processes.

Topic for Discussion: How does a small business foster an environment where everyone speaks up and everyone is heard?

Answer: As always, actions speak louder than words. As important as it is to engage in dialogue with your employees as part of your interaction with them, it is just as important to have a formal process for soliciting their input. Remember the “suggestion box” that was so common years ago? The concept of the suggestion box coupled with the exchange form of communication is a powerful combination. There are a number of ways to engage in this dialogue, brainstorming sessions certainly are an effective means. Collaboration is popular now that the Internet allows people to engage from multiple locations. Whatever the process, the important thing is that you have a way to engage every employee in the task of improving the systems.

You think about it: What formal opportunity do you provide for your employees to offer ideas, constructive dissent and challenges to the way you are doing business? What part of your operation needs better processes?

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Big idea #7: Look For Neglected Customers Blair Taylor is making money by going where others don't think of going.

Urban opportunities

Topic for Discussion: Why don't we consider starting a business or adding a location in an urban area?

Answer: Blair, in a very nice way, says it's simply a blind spot for most entrepreneurs. He reminds us to use our analytical powers and not to react emotionally to the media's idea that urban areas are dangerous.

Yes, urban areas are different from the suburbs. But, people live in urban areas and we all need people to both be customers and employees. Blair says that urban areas are undervalued. This is another way to say if you invest $1 in an urban area, you'll get a faster and higher return on your money than if you invest in the more obvious.

Consider this: Young African-American men spend more on athletic shoes than any other market segment. So, it makes sense for Blair to have an Athlete's Foot franchise in Watts where there are plenty of young men with money to buy shoes. It's that simple.

Drop the old thinking. Harvard professor, Michael Porter, is writing about this very topic right now.

You think about it: Is there an opportunity for your business in a urban area? If yes, what action can you take to create jobs in an urban area?

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Big idea #8: Tap Into Experts. Dr. John Hayes is just one of the country's franchise experts. Gary and the leadership team at FASTSIGNS have had the benefit of many experts like Dr. John and Don DeBolt. They are also forever reading books and articles and attending classes at the various trade association meetings.

Dr. John Hayes, a leading expert on franchising

Topic for Discussion: What can every business owner learn by studying the franchise model?

Answer: There is a big emphasis on continuous learning. Every growing company is a learning company; so we say if you want to build a company, you must be a teacher at heart or find someone to work for you who is.

If you buy a franchise, you will receive your initial training by the franchisor, just as we have seen in this episode. However, John says that you must commit to on-going training. Our motto here at Small Business School is Learn Today, Earn Tomorrow because we know learning pays. You and your employees need consistent exposure to fresh ideas. The web is great but also sign up for seminars, send your employees off to different classes then have them come back and share what they learned with everyone. A weekly or monthly lunch and learn works.

Albert Black is the greatest teacher we have ever met. The company he started from scratch will do $16 million in sales this year and he says it is because he takes time to teach. Every Friday morning he has a hot breakfast and an "all employee school session." If you study Tom Gegax, Ron Olsen and Anne Beiler you'll see their school in action. The progam about Tom's company opens with him teaching at his own Tires Plus University. It has its own location separate from the corporate headquarters and there's even a neon sign in the front window that says, "Tires Plus University." Tom is serious about creating a learning environment.

You think about it: Are you willing to stop being the boss and start being the teacher? If yes, make a list of the three or four employees who have the most potential for leadership in your company. Write out your mentoring schedule. What do they need to learn from you and how and when will you teach them? What experts can you read or engage to assist you?

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