On the New Year eve I wish all franchise and non-franchise companies, their employers and employees, their families, relatives and friends all the best!
Let everything be OK in upcoming year. Let it bring a lot of profits and happiness, success and luck!
And thank everybody for reading and commenting my franchise thoughts!
The proverb says: “Tell me who your friend is, and I’ll tell you who you are”. I can say: “Tell me who your team members are, and I’ll tell you who you are”.
Think over the following questions:
Who are the team members?
Do you, the project manager, get to pick the team?
Or are you given a list of team members and expected to include them?
The next step in the Project Management process is to identify the people who will participate in the project.
Even if you have a rock-solid goal with clearly defined steps, you have little chance of succeeding without a group of people who possess the ability and perseverance to complete the steps; failure is imminent. Ensure that the project team can work together well and has the necessary skills to get the job done. Here’s a simple analogy to illustrate the point.
Suppose that you want to buy a franchise company that specializes in building bridges in remote locations. On the day of a new site survey for a bridge across a small canyon, every one of your engineers calls in sick. So, in a panic, you call the temp agency and ask to send over six of great engineers — pronto. To your delight, they arrive on time, and you fly them to the first potential site of the new bridge. When you point the engineers to the first possible bridge site, one of them pipes up, “You do realize that we drive trains, don’t you?”
Your company may have many talented people. Your job as a project manager is to identify the people who can finish tasks in the manner required and in the time allotted. Don’t consider including a technical wizard who returns from vacation the day the project is due. Don’t consider any potential team member who does not have the time to devote to the project. A great asset who can’t put the time and focus into a project is really not a great asset at all. Always consider all factors when determining whether a person can contribute to the team.
Ask questions! Remember: you don’t have all the answers. In fact, it’s extremely difficult to even know all the questions. (If you really do have all the answers, please e-mail me. I have some work for you.) Include proposed team member “interviews” as part of the selection process. You don’t have to hold a formal meeting. Sending an e-mail message or talking on the telephone works just as well. You just need to ask a few questions. Here are some questions you need to answer as you talk with prospective team members.
1. Are they available?
No one can do an adequate job if there is no time to work on a task. Overbooked, talented individuals are just as ineffective as available people with no skills. Be sure to explain what you need for your project and what the performance expectations are. Add at least 20 percent to any estimate you give. After setting proper expectations, ask for the person’s interest and availability. Make sure that each prospect’s supervisor agrees with this availability status before you make your final team selections.
2. Are they able?
Because you’ve outlined the whole project and listed all the individual tasks (don’t worry; we’ll go over how to do this later), you have a pretty good idea about what needs to get done. You know what you need from this prospect. Ask this person about her experience with similar tasks. If Stacey’s part of the project requires her to use a Dutch oven, it makes sense to find out if Stacey has ever used a Dutch oven. Ask earnest questions: “Stacey, your part in this project would be working with a Dutch oven. Tell me about your experience with Dutch ovens. What kind of dishes have you prepared with a Dutch oven? What kind of problems have you had cooking with a Dutch oven? If I asked you to cook a peach cobbler in a Dutch oven right now, could you do it? If not, what would you need to get the job done?”
3. Are they willing, eager, and optimistic?
The last thing your project team needs is a naysayer. There’s incredible momentum generated in a project when all the team members have good morale. It’s your job to keep the enthusiasm high. Don’t kill it from the start with a team member who doesn’t want to be on the team. Sometimes, you’re forced to put someone on the team, regardless of qualifications. In those cases, spend a little extra effort encouraging good morale and ensuring that any bad vibes don’t spread to other members. Simple positive reinforcement and recognition go a long way in such cases.
4. Do they have any questions?
Always remember to be quiet and listen at some point. Ask for any questions they have about the project. You can often uncover potentially damaging things you forgot by asking for input from other people. You can also get a good feel for what each team member considers important. Make notes of your conversations. Comments and questions at this phase can be very useful later in the project.
Keep in mind during these initial interviews that your purpose is to evaluate potential team members, not to select the team on the spot. Ask for any referrals and express genuine appreciation for their cooperation. Set a deadline for announcing the team and live up to it. The goal is to form a team for this project and have a pool of resources to draw from for later projects. It’s important to avoid alienating anyone during your team selection.
5. Inheriting a team
You may not have the luxury of selecting your own team. You may have the team member list handed to you. Do not skip the interviews! Even if you inherit a team, you still need to know what each member can do. The questions just covered can give you valuable insight into some cool skills available to you. You may also find that the team is incomplete. Ask to augment the team. Fill in the missing areas. Remember that you’re on the hook. If the project fails, it’s the project manager’s fault. Go in prepared.
If you do add new team members, take the time to make sure that each member feels equally important. You don’t want the original members to feel that you added to the team because you distrusted them. They were on the original team for some reason. Whether a team member made the team due to skill or being a relative of the CEO, use the skills you find.
The success of the project reflects directly upon you, the project manager, so make every effort to assemble the best team you can.
After you’ve outlined the process and set your team, you’re ready to draw the 20,000-foot view.
Don’t overlook the importance of personality to team composition. You may be spending lots of time together. Build the team with interesting and stimulating folks (as long as they fit your selection criteria) and you’ll be more productive - and have lots more fun!
The answer is NO. I spent a lot of time reading different articles about how to write a business plan and other forms of planning. I found that many authors present the information such way that new businessmen would come to a conclusion that business plan is the only important thing for their business success. But it is not so!
Business plan is not a goal but only an instrument. This instrument helps to summarize the business, marketing, technological and financial information. It is a document. Or better to say it’s only a REPORT! Yes, a report!
What do I mean? Before starting your new business (doesn’t matter franchise or not) you have to carry out some preliminary studies. At first you check the idea itself. I wrote about evaluating the business idea in my previous posts:
Even in franchise business you HAVE to think over the idea
Declining an idea
Declining a business idea: last three reasons
Are you ready?..
If you come to conclusion that idea is good it doesn’t mean that you can start immediately. Certainly, you can but it can lead to big problems in future and even to failure of the prospective company. What you need to do is to continue to study the internal and external factors that will influence your business in future. These factors usually include marketing, production, and organizational, legal and financial spheres. And after you finish with the study you a ready to create a document that contains all your conclusions. This document is called… yes, you a write, a BUSINESS PLAN!
So, the goal is not to write a large business plan with colorful graphs and long tables. The goal is to collect the correct information about you prospective business and to make correct decisions based on this information.
I’m going to write more about different surveys that you prospective businessmen need to carry out and about how to choose the best strategy. Also I plan to show the examples of good and bad business plans and to explain the mistakes. Come back to my blog 
.
I have made a kind of short research in order to define the first business of different entrepreneurs. And you know I found a lot of franchise examples there.
First of all there are guys who had franchised there business from others. They were selling lemonade somewhere near their places. And that usually was an example of franchise using.
But I also have found a guy who had managed to build a franchise system by himself when he was just a teenager.
When Devon Rifkin was 10 years old, he bought lollipops from a nearby drugstore and sold them to other kids in his class at school. When business picked up, he got his parents to help by contacting the company that made the lollipops so he could buy even more and sell them to students and people in his neighborhood. Later, after he left eighth grade, he began selling entire boxes of lollipops to other kids so they could sell them, too. Soon, Devon was selling lollipops to four of five schools throughout his hometown. “It was great action, profitable, and of course made me very popular with my fellow classmates,” Devon says.
That was a real franchise company. And I bet that any guy with that system-oriented mind like Devon has should become a great entrepreneur. Do you think he is begging now?
That early success gives him extra confidence today running The Great American Hanger Co., a multi-million dollar business that makes clothes hangers for big companies like Bloomingdale’s and Nike.
His company three-year growth is estimated as 838.2% with revenue of $5.1 million.
Karl Marx is dead. The inventor of communism is lying in a grave at London Highgate cemetery. But the ideas he has presented to the society are still alive and prosperous. Moreover they are taking their place today. We are turning to them today. If it is hard to you to believe me you have to read Funky Business by Kjel A. Nordstrem and Jonas Ridderstrale. You will know a lot about modern economic trends and Karl Marx. They are speaking about the value of workers and especially about the value of their brains and ideas.
They were clever guys – Karl Marx, Friedrich Engels, Vladimir Lenin, Mao, Che Gevara and all other communist leaders. They were nations’ leaders. And they knew the clue idea that people not the capital are the most important production resource.
And they knew the power of unions. It seems to me that even today we are not realizing the importance and power of united people. But those guys knew.
El pueblo unido jamas sera vencido! That is the Spanish expression that means “United people will never be defeated”. It became famous during the Cuba revolution. It’s the beginning of revolution hymn. And it had become very popular in sixties. Comandante Che was definitely right. Synergetic effect is the key.
2 + 2 = 7.
The system is much more than the sum of its elements.
And united people can reach unbelievable achievements. That is the thing that brings success to revolutions.
And that is the thing that brings success to franchises. That is an American way to unite people.
Do you need examples? I have them.
Let’s examine Holiday Inn. Good franchise system I think. Holiday Inn was recognized in 2001 by Franchise Times as a Top 100 Franchise Chain. So the system is good enough.
This chain of hotels was organized in 1952 by homebuilder Kemmons Wilson to provide inexpensive family accommodation for travelers within the USA. Its franchise system allowed Holiday Inn to grow up dramatically. By 1958 there were 50 Inns across the USA, 100 by 1959, 500 by 1964, and the 1000th Holiday Inn opened in San Antonio, Texas in 1968. The chain dominated the motel market, leveraged its innovative Holidex reservation system, put considerable financial pressure on traditional hotels, and set the standard for its competitors like Ramada Inns, Travelodge, Howard Johnson’s, and Days Inn. By 1972, when Wilson was featured on the cover of Time Magazine, there were over 1,400 Holiday Inn hotels worldwide.
Many think that the main reason of that irrepressible raise of Holiday Inn is its original creed that the properties should be standardized, clean, predictable, family-friendly, and readily accessible to road travelers. But I know one more important reason. It is the unity of the chain.
In 1955 just in three year from setting up that business Kemmons Wilson created an organization of Holiday Inn franchisees, which were charged with reviewing issues important to the Holiday Inn Hotel system. One year later it had been transformed into National Association of Holiday Inns. In 1959, it changed its name to the International Association of Holiday Inns to reflect the geographic expansion of our membership. Today, it is known as International Association of Holiday Inns Owners’ Association (IAHI).
The creation of that organization has driven Holiday Inn to its tremendous spurt.
Today the IAHI represents the interests of nearly 3,000 owners and operators of InterContinental Hotels Group (IHG) hotel brands, including:
The mission of the IAHI, as it stated on their site, is to operate an association of hotel owners and operators that create a multi-level forum for exchange of information, ideas and best practices between franchisees and IHG company executives. As a result of this process owners and operators will enhance the value of their license agreement and IHG executives will gain insight to better achieve company goals.
The International Association of Holiday Inns Owners’ Association is focused on 3 main objectives to help promote members’ long-term interests:
The International Association of Holiday Inns Owners’ Association also effectively represents members’ interests to the broader hotel industry on legislative issues, along with vendors and other resources, helping to achieve the objectives outlined above.
The organization that shares the experience, promotes franchisees, teaches them is the key factor of Holiday Inn’s success. It makes entrepreneurs feel comfortable within the franchise system. It provides a kind of support to franchisees even if it has to lobby their interests through franchisor. As a result people are willing to invest large amounts of money (Holiday Inn franchisee’s total investment differs from 1 to 10 million dollars) in this business providing it by an extremely quick development.
Welcome to Wonderland! It can absolutely change your point of view and I hope make world better
OK, let’s imagine ourselves in Australia. Koala bears, platypuses and local circumstances cohabit with the lifestyle of United Kingdom and United States… And in 1946 two guys have decided to start a business there. They were going to produce and sell rubber strip matting and mats from transmission belt edges sourced from Dunlop Salvage. Nice idea, don’t you think so?
Anyway they did it and they called their company Clark Matting & Rubber.
They had been working for about 40 years. Nothing special… They earned some money I think.
But the business wasn’t too profitable as in 1982 the company was sold to The Adsteam Group.
The Adsteam Group tried to change the business but failed. So in 1990 they faced more difficulties and they decided to close the Clark Rubber retail operation.
Look, they couldn’t even find a buyer for that business. It was so nice business niche!
And now welcome to Wonderland.
In 1994 Chris Malcolm had taken a license of the Clark Rubber brands and decided to try franchise model to this business. The franchise system has absolutely changed the long-winded history of the company. No more time to think over. The pace of company development has increased drastically. In just 1 year there were 25 franchised stores. Five years later, Chris Malcolm purchased the Clark Rubber brands from its owner.
Let’s evaluate the achievements of the company highlighted at their internet site:
1998
Clark Rubber Franchising opens its 50th franchised store
1999
Winner of the Franchise Council of Australia’s Franchise System of the Year Award, Category Entry Capital over $200,000
2002
Highly Commended - ACA Australian Catalogue Award, Home Repairs and Outdoor Catalogue
2003
Chris Malcolm became one of the inaugural inductees in the FCA Hall of Fame
2003
Finalist in the FCA Franchisor Retail and Business Category. (21 - 100 Outlets)
2003
Certificate of Merit - Australian Catalogue Award, Amazing Christmas Catalogue
Today, Clark Rubber Franchising has 70 stores throughout Australia and is growing. Retail sales growth percentages have surpassed national averages year after year. Our high quality support services from our Franchise Support Office are constantly being refined and improved, with an intranet system making access to up to date information a breeze.
Clark Rubber recognizes that the success of any franchise system very much depends on the success of its franchisees and is full of praise for the enthusiasm, commitment and contribution made by the Clark Rubber Franchisees that have helped make this great Australian brand the success that it is.
Is there anybody going to argue my idea that franchise system could resurrect dead business?
Just a few days ago one of the most famous German business magazines – Impulse have conducted a survey. The main idea of this survey was to make an analysis of franchises in Germany and to rank them.
The survey was based on the information of the magazine and according to some experts. The experts are working in franchise sphere as consultants and/or as researchers. The experts were suggested to rank the companies by twelve criteria that were organized in three directions.
They were:
The first direction described general characteristics of the franchiser. It was connected with the age of the franchiser organization, the number of business partners of the franchiser, and overall franchiser’s profit and sales.
Under the terms of the second direction the expert were supposed to look the same business from franchisees’ position. Those criteria covered the market position of franchise system, market competition density, the benefits of the idea to potential franchisee and the potential revenue of the franchisee.
And the criteria of the third direction had to estimate the growth of the franchise system in the past and its future plans. The criteria were the past growth of the system, the planned growth to 2008 and the expansion potential for partners.
I bet you know who is the winner. McDonald’s for sure. Who could doubt about it? They really have fantastic system that is almost perfect for the moment…
But the most interesting question is whose system is the second?
You might think it’s Burger King, Tchibo or Obi… But you will be wrong. The second rank has
Fressnapf.
Have you ever heard about this company? No? There’s nothing unusual in it. The company is not widely known outside European Union. It’s not even mentioned in Wikipedia (at least in it English part. Of course there’s an article about it in German ).
But still it’s the largest European specialized retail chain for petfood and pet accessories.
Its founder and managing partner Torsten Toeller had used the idea of pets supermarkets that were rather common in the USA and Canada. The mission and the vision of the company was to sell specialized pet products on a large scale, while keeping prices low. The economy on scale principle has contributed to his tremendous growth in this niche. Fressnapf had become the right company in the right place.
The rapid development of the company should be given company franchisees the credit. They really managed to uphold Torsten Toeller initiatives.
“We’re like a pack of hungry wolves with one pack leader - that’s the idea behind Fressnapf. We all fight it out and everyone gets their fill!” says Torsten Toeller. The market couldn’t defend itself against that troop…
For the moment the system includes almost 270 franchise partners, and the 4000 or so staff employed at over 750 sites not only in Germany but in Austria, Denmark, France, Luxemburg, Belgium, Switzerland, the Netherlands and Italy. The company is working to start in Ireland and Spain.
The main principles that were originally used by Torsten Toeller are the main incentive for company’s success. They are fast growth, standardized processes, effective value added chains,
and the development of own brands.
These principles allowed the company to proceed from a store in Erkelenz, selling petfood and pet accessories to Europe’s leading supplier of pet food and accessories and number 2 German franchise system in just 15 years.
I wish every franchise company could boast of its development that way.
I hope to finish commenting franchise survey carried out by Franchise Recruiters Ltd. (FRL) today. If you read till the end you’ll know if I manage to do it. Check my previous article to know the beginning.
The next idea expressed by top franchise leaders was dedicated to old and branded franchise systems. In order to remain in a good position they have to prove that they are worth of it. Nothing can guarantee them a success in today’s fast-changing world. To hold their loyal customers they need to revamp, rehabilitate and regenerate their business systems. The respondents pay attention to the fact that most of the franchisors are concentrated on their first ideas rather than looking ahead an opening new products and technologies. It’s clear that they will face a rigorous competition.
As it’s mentioned it’s very important to adopt franchise business to demographic trends. Changes in today’s lifestyle and demographics help the development of the following business spheres:
-adult and senior day care,
-health care,
-home care,
-beauty, skin, aging treatments, and spas,
-different forms of entertainment.
My comments:
The survey shows the contradiction between main strategies of consumers’ behavior. These strategies are widely used in marketing while speaking about market segmentation. It’s evident that there are different types of people buying the same product. Each group of buyers has different reasons for purchase. The ones are driven by fad, fashion, and mood. They usually want to try something new. The others are very traditional and don’t change their tastes so fast. So if franchisor wants to develop his business he needs either choose the one group or to satisfy both.
The industries mentioned by respondents are rather predictable. There can be a lot of reasons why people become more self-oriented (exactly “self” not family- or community-oriented). Maybe this happens because of decreased role of Christianity and other constructive religions in the society in general. The advertising also influences the modern mentality saying that YOU are worth of this or that. Anyway the picture is very clear. People don’t want to take care of their parents and children themselves. Career plays the biggest role in dreams and aspirations. So the winning strategy is to provide people with more free time and with additional career opportunities (like better education on the one hand and better appearance on the other).
All the previous statements were dedicated to franchisors. But what about franchisees? The survey respondents decided not to avoid them. In the answers they pay attention to the fact that today prospective franchisees are “better capitalized, have better management experience, better education, and are increasingly diverse investors”. Also it was noticed that more and more seniors are coming into franchise business. They do not want rely only on government and social security. But most of them are not so aware in their talents to invent good and enough modern business idea themselves. The survey provides the following statistical information about older Americans: “the number of workers age 55 and above rose to nearly 24 million in 2004, up from 22 million in 2003, and from 20.7 million the year before. At the same time, the government is forecasting a significant labor shortage nearing the end of this decade. Franchisors tell us they want and need seniors as a reliable work force for years to come”.
In the same survey we found interesting information about so-called third party, not a franchisor and not a franchisee… For example, respondents notice that investors are considering franchise sphere to become rather interesting deal. They even called this a “new golden goose”. Why? Because of very short start-up period in many spheres. Think of it! Franchisor provides with a training program that lasts for 2 weeks. During the same time it’s possible for a franchisee to make all other necessary arrangements and he is ready to start! The only thing that can slow him down is money. So for both of them – investor and prospective franchisee – the goals are coinciding. They can start earning money very soon. TIME! It explains the investors’ interest toward franchise sphere, as I think.
Another third party is employees. Both franchisors and franchisees understand that employees contribute the biggest part to the company’s costs (directly and indirectly) and as a result to the company’s profit. When I say direct impact I certainly mean salary and corresponding expenses. As an example of indirect impact I will mention training expenses for every new employee.
At the same time for many businesses employees’ productivity influences the results most of all. That is why survey respondents expressed the opinion that franchisors of the next years will pay a lot of attention to different forms of health care insurance to their chain’s hourly employees. Also they will help to establish relations with banks opening accounts and contacting with financial institutions.
My comments:
I like this. When I’ve read this information I was thinking about inventing a high school program (or even senior school) to help franchisors and franchises to provide teenagers with the necessary information and to prepare them to their future jobs in that sphere… It can be based on “learning by doing” ideas and include a lot of practice…
And finally the last tendency was related to management. The top US franchise leaders believe that the previous years’ tendency will continue and more managers will be motivated not by strict annual bonus payments but by some reward programs depending on the results. As I understand that tendency is not a franchising innovation but overall trend in business.
Ok… I’m done with this survey. Will I get any comments on my comments?..
It seems for me that I spent enough time to express my opinion that it’s necessary to evaluate an idea before investing money. This statement completely refers to franchise business. Success of other franchisees doesn’t guarantee your success because as I mentioned before it depends on a particular region and particular conditions of that region.
Now I think it’s time to say a few words about conditions that make business idea practically acceptable.
1. Technological practicability. If to speak about business ideas in general there can be a lot of reasons for inability to realize them. Sometimes it’s too expensive, sometimes there is not enough space to build the plant and locate all the necessary equipment and so on. Even one of the most outstanding producers George Lucas faced the technological problem while realizing his creative ideas. He had to start his Star Wars from Episode IV and only after many years he found a good technological decision to shoot Episodes I, II and III.
Going back to franchise ideas I think that this problem is not so important as franchisor has already created the technological system and tested it. But still potential franchisee has to check the local situation. There can be some legal restrictions for particular region or ecological situation can influence technological practicability or inability to hire personnel of proper qualification can create barriers for the success.
2. Long-run future viability of new business. Starting your business you need to be aware that it will exist for some period of time. It’s important to see the difference between a project and a business. Project can last for several days (like organizing a show or a party) or for several years (like house construction). But when you plan your business it’s a good idea to create it for years and to foresee the conditions for its growth. Maybe one day you’ll sell it and get more money than invested or hand down to your kids.
3. Acceptable economic efficiency and payback period. One survey said that only 30% of all the small businesses were started in order to earn money. The other 70% of new-born entrepreneurs presented the following reasons:
-want to be “my own boss”;
-want to realize my personal ideas;
-want to achieve something in my life and to make a business career, and to help other people… and many other “bombastic” reasons.
As I think it’s possible that people really think that way and do not consider money and profit as important factors of small business. But my experience (not so big but enough to have an opinion) says that most of them will change their minds during the first year of business operations. As the owner of a small company you’ll deal with money everywhere – paying salary, rent, public utilities, and interest for the credit, administrative costs and Internet, advertising and promotion expenditures and many others. You’ll charge prices, calculate revenue and taxes, and so on. Of course, it’ll take some time. I even insist that it takes a lot of time. And every reasonable person wants to get something for the time spent. His family also wants to see the pecuniary results not only self-realization or happiness of other people.
That’s why I suggest everybody to think about economic part of any idea even if you really believe that money is the last thing in the world you want to speak about.
4. Acceptable idea from public or community point of view. Take it seriously! Today people as never before feel very lonely. As a result they try to solve this problem participating in different public organization and community projects. I do not recommend you to start any business that may conflict with public interests. You will loose in 99% of cases…
My conclusion:
Some of these factors are limitations; the others (like economic efficiency) can be used as the main criteria for a franchise idea evaluation. Want to add something? If so, I will highly appreciate your comments.
So, in the previous post I expressed my opinion about necessity to evaluate the idea before starting a business even if you were buying a franchise. Many people forget about it. They think that if the franchise chain has many franchisees and they operate with profit the new business also will be a success. But as there no identical children there are no identical markets and businesses. Information from other franchisees is useful but not sufficient to make such an important decision.
Last post was dedicated to market demand as a factor influencing franchise idea. Now I want to speak about the others.
The second thing to evaluate is competitiveness of goods and services your business is going to sell. You need to study the market competition as serious as possible. Visit the shops or restaurants of competitors – both franchise and non-franchise. Listen to what people are saying about their products. As a result of your survey you need to become sure that you product has real advantages over theirs. If not - I suggest you not to buy this franchise for this market. Think about other idea or maybe other region.
What advantages can be considered as real and competitive? Certainly, there are a lot of them. Here I’ve listed the main:
-price;
-discounts and possibility to get them;
-quality;
-technical and economic operation factors;
-prestige of a trademark;
-convenience of packing;
-guarantee period and conditions;
-post-sale support and services;
-reliability;
-payment terms;
-credit conditions;
-advertising and other promotion activities;
-delivery services and so on.
The next factors require some economic calculations. I mean that you need to decline an idea if capital investment is too high and/or economic efficiency is too low. I plan to dedicate a special article to economic efficiency in future. Here I’ll only say that you need to be sure that future profit will cover initial investment in not more than 5 years (in general) and your personal income has to be greater than interest you could get for your personal savings.
Also the idea must be considered as unfavorable because of high risk factors. Thinking about risks you need to take all of them together and consider their probability.
Ooh! Only three more factors remained… I need to have a break… and will continue in the next post.
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