Business Ownership - Expectations and Reality

Three weeks ago, I had the chance to be a guest speaker on Gravity Free Radio, where the topic was ‘everything franchising’. Stan Friedman, President of RetroTax, and I discussed the many ways that franchisors should be connecting with potential franchisees that are qualified and match their brand. After the show, intrigued by our topic of discussion we continued talking for quite some time in the radio studio. After getting deep into conversation about securing the right franchisee member to your brand, a new topic came up. How, as a franchisor, do you understand your franchisees expectations and as a franchisor, how do you communicate with your franchisees to make sure their expectations match up with reality?

Managing expectations begins with communication. As a franchisor, we spend time with the newest members of the franchise family to understand what they are expecting out of their business. People who enter business ownership have expectations on many fronts. In a franchise company, this can be financial, support, training, marketing, advertising, freedom, opportunity, just to name a few. Even before someone becomes a franchisee, we have them fill out our request for consideration form so that we can start understanding their expectations including profitability for years 1 to 5 even before we meet face to face.

In order to understand what their realistic first year revenues may be, it is important for potential franchisees to do some research. If you are looking into a franchise, you can start with looking at Item 19 in the Franchise Disclosure Document. This section, provided by approximately 20% of franchise companies is where a franchisor can put important financial information regarding their business that may assist a potential franchisee in constructing a business plan. Most seasoned entrepreneurs will tell you that independent start-up businesses do not typically break even during their first 18 to 24 months of operation. While franchise companies generally do much better than their traditional independent counterparts, as franchisees do have the advantage of a proven system complimented by brand awareness and ongoing training and support (Franchise Systems), it still takes a lot of work. It is important to remember that the success in the first year of any business is very much tied to the efforts and acumen of the business owner.

If a new owner puts in the hours to promote their business and gets deeply entrenched in the community, they have a much higher probability of success and reaching break-even faster than those who are inactive and leave the business to run its course on its own. These are considerations that should be taken into consideration when forming financial expectations for your business. Being a successful business owner takes a lot of hard work, drive, devotion, passion and frankly pigheaded persistence. I understand the obstacles and work hours it takes to develop a successful business as I council people on a daily basis regarding this topic. You have to know yourself and what you are willing to put into a business as a first step and secondly and equally as important set realistic expectations for your businesses including; time, effort and financial.

As a franchisee, (or as a potential franchisee) I encourage your to share your expectations with your franchisor. This open communication from the beginning will ensure that your franchisor understands where you are coming from and can give you better information regarding how meeting your expectations and goals. On the flip side, franchisors should also make sure you are having an open conversation with the newest members to your brand, it is a great way to start your relationship and helps you understand their dreams and goals and how you can best contribute towards their achievement.

Please visit my new blog:  http://www.davidasarnow.com/

Passion, Determination, Drive and Persistence

Last week, I had the privilege of being a guest speaker on Gravity Free Radio, where the topic was ‘Franchising’. I was accompanied by a friend and fellow franchisor, Stan Friedman who is the President of RetroTax. During the show we discussed the importance of choosing the best fit franchise as a franchisee, as well as selecting the most qualified and driven franchisee, as a franchisor. To hear the recorded show please visit: http://gravityfreeradio.com/archives/100

There are many factors that go into selecting the “right” franchise. This is a long term investment, which is going to be a large part of your life. I personally feel that the most important thing to look for in a franchised business is something that you are passionate about. You will be living the brand you select and need to promote it and its values continuously every day. Having passion towards whatever you ultimately choose is an important factor leading to satisfaction and overall happiness.

As franchisor, it is equally as important to be passionate about your brand because as your brand ambassador, you need to speak to others with conviction about your franchise family. How can you do this if you yourself are not passionate and do not believe in the system? When speaking with potential franchisees, your conversations need to have full transparency. Without this, you may sell a few franchises, but ultimately, people will see right through the facade. I get excited whenever I speak about my company. It is my hope that this passion is something my franchisees share.

On top of being passionate for the brand; persistence and drive are equally important. As I tell potential franchisees, you do not need to have prior experience in their new chosen industry, but what you do need is the motivation, persistence and determination to succeed. Getting out in your community and promoting yourself and your company is an extremely important part of being a successful business owner. With hard work, following the system, persistence and a good team by your side, success will follow.

While my company and RetroTax are completely different franchises, Stan and I agreed that these factors weigh into the success of any franchisee and franchisor, in any system. Although the show focused on franchising, Passion, determination, hard work, and persistence are universal for success in any brand, company and system. These characteristics lead to the successful growth of a brand and the happiness of the people who are part of it.

Please visit my new blog:  http://www.davidasarnow.com/

Franchise Finance and Development Conference: Strategies to Adapt to Your Environment and Ultimately Succeed

Next week I am looking forward to being one of the keynote speakers at the Franchise Finance and Development Conference, which will take place May 4th to 6th at the Palms Hotel in Las Vegas. The conference will focus on some key differentiators and winning strategies that successful franchisees use in order to promote their businesses especially in this economy. This will be a great place for franchisors and franchisees to share strategies and tactics that are working for them as well as a great place to network with some great brains in the franchising industry.

I was invited to share the strategies that have been successful at my franchise company that other companies can use in order to keep sales up for franchisees on the local level. After working with different businesses over the course of 17 years, I have a great understanding about the importance of adapting business strategies to fit with the current environment and climate of the time. This will be the main focus of my discussion at the conference in order to share as much helpful advice and strategies as possible.

I admit that 2009 has been one of the toughest years for franchisees with stock market investments slashed in half and the ability to get financing seemingly impossible, but I realize that the success of any business relies on strategies that are progressive, out-of-the-box and forward-thinking. The only way to succeed is to adapt and change with the times, especially in a stormy economy. Companies unwilling to become progressive and find new and unique ways to reach potential franchisees and customers, will inevitably be left in the dust.

One adaptation we made to our franchise system is we designed a program to open up new innovative opportunities for our franchisees so that they can be successful during this rough time. We created an On-Location Franchise as a lower cost avenue for people to enter our model of business. This has opened up an entire new channel for entrepreneurs who can feel confident that even in with this economic instability, starting your own business can be affordable and afford someone the opportunity to spring board to our retail model should they choose to. With the Events Franchise, potential franchisees can have entrepreneurship for lesser cost and unlimited opportunity.

Many of our recent franchisees have opened first with a On-Location Events Franchise, which allows  franchisees to work from their own home in the beginning. This model has proven extremely successful and sets our franchisees up for success all while helping them become familiar with our company so that one day they could move easily into opening their own retail location. This is exactly what the Event Franchise concept has done for some of our franchisees.

Another issue I will be speaking about is how we are using social media as one of our main strategies to make a connection which leads to a strong ROI. While it does take time to develop your social networking sites and make sure you are actively participating in the conversation with consumers and potential franchisees, this method does pay off. We have made sure to become a part of the conversation and while franchise expo’s and other traditional franchisee finding methods are a starting to be a way of the past, this is the way of the future.

These adaptations have helped us become one of the innovators of our industry and be relevant and exciting for consumers. I hope that attendees at the conference that hear my story take away that evolving and progressing forward is key for any company’s survival. Will you be progressive or be left in the dust?

Please visit my new blog:  http://www.davidasarnow.com/