Starting a business from scratch and scaling for growth are processes all entrepreneurs encounter while building a venture. As small business owners, we want to sell more products, provide better services, and help as many people as possible. Yet, many of us don’t prepare and plan for growth with the right mindset. There are many things that need to be considered when your business grows. For example, did you realise that there are different types of insurances that you can get for your business? You might not be thinking about it now, but at some point something might go wrong and you'll want to make sure you have the right insurance. You could get something like public liabilty insurance if you have a business that might be potential dangerous. If this is something that interests you then you'll want to find an insurance company that can provide a quote (luckily websites like tradesmansaver.co.uk can provide a quote). There are a load of other things that you'll want to focus on though. We spend time as technicians in the business, constantly focusing on each project, but not on the vision and overall strategy for growing the business. The lack of vision prevents companies from finding the success they deserve, and the shortage of consistency in day-to-day processes reflects poorly on them. If only we knew about implementing the franchise mindset, things would all be different. Any business can become a franchise if the right work is put in. Even in industries such as child care, a franchise opportunity can come about if individuals with a passion for the sector present themselves.
A few days ago I had the opportunity to chat with Brian Scudamore (Podcast Episode #17), the founder of a wildly successful North American franchise named 1-800-Got-Junk?. Brian’s Vancouver based business nets over $126 million dollars a year in profit and operates in the US, Canada, and Australia. I was curious how he had grown a scalable business centered around picking up junk, in an already fragmented industry. Brian told me his secret is to start and run a business with the franchise mindset and a vision.
You can check out my interview with Brian by clicking on the play button.
[powerpress]
What I learned from Brian was the idea that you must set up a business like a franchise, even if you don’t anticipate starting one. Franchises are typically more likely to succeed than non-franchised businesses because systems and processes have been put in place. Steps for each task are documented so the process can easily be duplicated and taught to anyone. Documentation and consistency are important for all aspects of a business. A system will make sure all duties are accomplished in the most efficient and effective way. There should be a system for answering the phone, cleaning up after a job, setting utensils on a table, and wowing or impressing each customer. Systems make it easier to train employees and accomplish everyday responsibilities because the instructions are clearly known and followed.
Let me give you an example of a welcome system. Suppose you own a retail store with a couple employees and a stream of customers who flow in and out the door each day. Without a system in place, each time a customer walks in the door they never know what to expect. They might be greeted by an employee right away or completely ignored. This leaves the customer with a feeling that every visit is different which in turn degrades the overall experience. Imagine if there was a system put in place so each employee always greeted the customer by saying, “Welcome to our store, thanks so much for stopping. I’m Kate, how can I help you today?” If I was greeted like this each time, I’d be much more likely to shop because every time I walked in I’d get that same great experience.
One franchise that sticks in my mind (and I have no affiliation with them) is Jimmy Johns. At Jimmy Johns sub restaurant, you have about 8-10 enthusiastic workers welcoming you every single time, getting you in and out at record speed, and sending you on your way with a wave and goodbye. That’s an experience people learn to love because they make every customer feel special.
What to Think About When Starting a Franchise
Brian Scudamore started 1-800-Got-Junk? In 1989, and ran the business for ten full years before officially becoming a franchisor. During the first ten years Brian grew from one location to two locations. Having a second location to do business proved that he could be successful in various markets and taught him how to adapt to the needs of people in different parts of the country. Brian continued to work out the bugs and tweak processes of the business as time went on. It took several years before his methods had been refined and turned into a proven recipe for success.
In the event you decide to start a franchise down the road, here are a few things to ask yourself.
1. Is my business franchisable?
Could you teach everything you know about the business to someone else who could then duplicate the systems and have step-by-step instructions to make their business a success?
2. Do you have a vision and true picture of how you’ll grow the company? Where do you see the business in 5 or 10 years? Develop a plan and goals so you have an outline to follow. Brian recommends reading or listening to the E-Myth Revisited by Michael Gerber to learn more about structuring your business with the franchise mindset.
3. Do you have a proven recipe?
You can’t bake a cake once and expect to franchise a business after selling it to one customer. It takes years to tweak, refine, and master the art of cooking the perfect pie and providing the best possible experience for a customer. Version 1.0 is not good enough. Keep working out the bugs until your business model is proven. You will know how to answer and solve almost all the questions or problems a potential franchisee might have.
Basic requirements to franchise your business
Once each question above has been answered, you can start thinking about franchising a business. Brian explained that it is a difficult and time consuming process, but that he’d do it over and over again because the franchise business model has brought him a great deal of success. The Federal Trade Commission heavily regulates franchises, so you’ll need to prepare documentation about your plans. One of the main documents is called the Franchise Disclosure Document. In the FDD, the ownership of the company is thoroughly laid out, along with information about pending lawsuits and legal happenings. You really have to lay everything on the table, which will portray the good, the bad, and the ugly about the business. It is important to have an attorney help with the process to ensure everything is documented correctly. According to Brian, it will cost a few hundred thousand dollars to create the franchise and to do it all properly. Thus, you’ll want to make sure you have a proven business model and the money to invest in franchising the business. You can take a look at the document by heading over to LegalZoom.com.
No matter what type of business you run, implementing a franchise mindset will indefinitely set you up for continued growth and a higher chance of success. Start documenting tasks and systemizing processes in your business. Hopefully this outline gives you a basic idea of what to think about prior to setting up a franchise. I’d highly recommend reading the E-Myth Revisited or listening to the audio version to learn more about the Franchise mindset and setting a business up for success. Best of luck!
