Guidant Financial’s Co-founder and CEO, David Nilssen teamed up with Founder of The Entrepreneur’s Source, Terry Powell to have an in-depth discussion about the six “F Words” that lead to misconceptions and common mistakes for new franchisees. Learn about how to overcome these common blunders and get started on the path to franchising success.
Click here to watch a recorded version of the full webinar or view the presentation slides below:
Patrick Bradshaw: All right we’ll get started here. I want to thank you guys very much for joining us today for the presentation: The “6 “F Words” That Can Cause New Franchisees to Fail.” Before we get started on the session, I do want to go over a couple of housekeeping items. One, we will be doing some polling throughout this session. Real quickly, I’ll do a launch of the poll to give people a feel for how it works, as well as kind of get a feel for who we have on the line.
So, real quick you should see something that pops up on your screen asking you about, “I want to invest in my own business in this timeframe.” We have less than 2 months, 2-6 months, 6-12 months, more than 12 months and I don’t know yet. We’ll give you guys a second here to answer that question while I go through some of the other housekeeping items.
So, there will be polling questions that pop up from time to time as well as the more important one is that on the right hand side you should have a Q&A panel. So, if you do have any questions during this session, please type them into there. We’ll try to address them if they can fit in the conversation at the time. If not, we’ll hold them for the end, ask them then. If we can’t get to it at that point and time, we will then try to follow up with you afterwards.
Throughout the presentation, there will be some resources referenced. Those resources will be provided to you in a follow up email along with the recording of this session. So, this session will be recorded, so don’t be rushing to take any notes. Just kind of listen to hear a good conversation. Then you will get a recording to listen to it on demand if there is anything you felt that you missed.
All right, so to get started here are one of our presenters that I want to introduce you to are our host and co-presenter David Nilssen. He cofounded Guidant Financial in 2003. He and his team have helped more than 12,000 entrepreneurs in all 50 states and put more than $3 billion to work in small business.
A majority of David’s writing, board participation, investments and even philanthropic efforts revolve around small business and franchising. David, thanks for joining us today, I’ll turn over to you.
David Nilssen: Thanks Patrick, and I’m happy to be here. For those of you that are listening, thanks for joining us today. I’m excited to spend the next 45 minutes or so with you and talk about franchising. You know our vision at guiding is to increase the number of people that succeed in small business. We do that by leveraging technology and services to make more capital available to Main Street American small business.
Now, a primary way that we connect with people like you is by providing education that should either help people opt-in, and sometimes even opt out of buying a business. So, today we’ll hopefully help you move closer towards making a good decision around whether small business ownership is right for you. So, that sort of a background behind how the webinar came about we wanted the chance to spend some time talking about the different ways that people go into business. Now, the way that we primarily see people do this is by either starting as business from scratch, investing in a franchise or buying an existing business, and to be totally frank — that can include buying an existing franchise.
But for this webinar, we thought we’d drill down on just one opportunity, one that we thought would be helpful for a good portion of the candidates that we’ve work with: franchising. Now I’m not going to go at this alone. Not only did I want to avoid this becoming a monologue, but while Guidant is best in class in terms of financing, there are some other individuals that are best in class in terms of helping people to find the right franchise for them.
So, when we put this together, I knew exactly who I wanted to help me lead this conversation. Shortly after I started Guidant, I met a franchise thought leader Terry Powell, and 32 years ago he started The Entrepreneur’s Source, or as you may hear me reference throughout the presentation the ‘E’ Source, which is a world class franchise coaching organization. They’ve disrupted that industry in 1984 by transforming the way that people think about alternative career coaching.
Today, they have over 100 coaches across the country that use a self-discovery coaching process and then over that period of time have assisted thousands of people in buying a franchise. So, today Terry who leads The Entrepreneur Sources, the founder and visionary and continues to apply his knowledge and expertise to the entrepreneurial community just like today. So, Terry thanks for joining us.
Terry Powell: Pleasure to be here, thank you for inviting me David, looking forward to our conversation today.
David: Yeah, that should be fun, for the group, Terry and I spend some time talking about the common challenges that franchisees face as they go through their discovery process, and we have actually referred to those challenges at the top “F words.” We’re going to spend some time addressing each of those.
But we sort of thought it was important to take a step back and make sure that we’re all operating from the same set of expectations and thus decided to share the top myths that we see on franchising. So, with that introduction, Terry you’re ready to jump in?
Terry: We are ready to go, David.
David: Okay. So the first is that finding the right business will make me successful. How would you address that?
Terry: Yeah, isn’t that really what most of us have been told or have thought as we contemplate the idea of going into business or owning a franchise? Interestingly, over the past 32 years that myth has been on the top of the list for individuals that have come to us for coaching and help to kind of explore the idea of becoming self-sufficient through franchise ownership. The reality of it is if it were that simple and all it took was to find the right business to make you successful.
You don’t have to think of it from this perspective. How important would your role be in that business model, if it was just a matter of matching you up to the right business and everything from that point was going to happen? So, unfortunately that’s not the case, but in many cases it’s the most fortunate part about the myth is that you get to bring your style, you get to bring your investment, you get to bring your passion and ingenuity and direction for your business to the model and combine those into a winning formula. The business model is very important and we are talking primarily about franchising here. So, it’s not really about finding the right franchise to make yourself successful. It’s about understanding how to use the right business model, and the franchise as a vehicle to help you accomplish income lifestyle wealth and equity goals.
So, the key is to look at businesses as a vehicle to help you accomplish that. The challenge with thinking about it is you have to find the right one to make you successful as you get caught up in the idea that it’s really not up to you. The beauty of franchise is it’s a turnkey system, you get to be looking at it from a stand point of using the business as a vehicle that helps you accomplish those things. You prevent yourself from buying yourself a job, which is really crucial in the early stages that we find that many people think it’s about matching up what they’ve done in their work environment into a business ownership environment. So, those are some of the keys around that myth.
David: Well, and I want to remind the audience as Patrick introduced this when he first opened up that if you have a question for either Terry or I, relevant to the subject that we’re talking about please feel free to put that inside the questions and answers format of this webinar. But I want to continue on the point Terry that you were making there because in my experience both in franchising and even non franchise related businesses the model and product market fit are definitely important. But it’s also important that people are working in their strength, or with their strength, and helping them move towards actions and activities that give them energy rather than drain it. But strengths and love, are definitely different, that leads me to myth number 2 and that is the secret to success is doing something that I love.
Terry: If I only had a dollar for every time we’ve heard this one.
Terry: When you think about it, the rest of the world kind of promotes this idea, how many times have you seen articles and books and information online about go do what you know, love and enjoy and success will follow. It’s thought about as kind of conventional wisdom, do what you know, love and enjoy and success will follow. Well, if it were that simple people would be going into their own businesses and starting their own business would have high, very high success rate.
But interestingly from a comparison standpoint those people who follow that and start their own businesses like I did 32 years ago, typically have a much higher failure rate. They tend to be drawn in to become the technician in the business. rather than really being the driver of that business and managing marketing and promoting a successful business venture. So, the key is to not get caught up in that.
Now, comparatively speaking in franchises, about 95 to 97 percent of the franchisees don’t come from a background of experience or interest or love, or enjoying something they’ve already done when they invest in the franchise. In fact, most franchisors don’t want the franchisee to have a background.
The classic example of that is an auto mechanic is not going to make a good Meineke Muffler franchise owner because he is going to be out in the garage all the time being the technician rather than the owner of the business. Or the baker is not going to be attractive to Dunkin’ Donuts as a franchisee because he is going to be in the back baking the doughnuts.
So, the idea or that myth you go do what you know love and enjoy can be a trap, and it draws people into looking at things from the standpoint of not leveraging how the business model can really create the success that you’re looking for.
David: That’s funny I was actually yesterday having coffee with a local entrepreneur who has seen some phenomenal success, and he was talking about managing his business. He made an interesting comment that’s right in the line with what you’re talking about. He said you know it’s great because most of the people that report to me are people where I don’t have the ability, that core competency, to jump in and do their work, because of that it allows me to be more strategic about the way that I build my business.
Terry: Exactly, I mean thinking about over the last 37 years and all the tens of thousands of clients that we’ve coached I mean if I could count the number of times that people came to me and said I really like a business that involves golf in some way, because I really love and enjoy playing golf. So, I said to him, I said, “Well, how do you think that will be when you’re doing it every day as part of your business rather than having it as a distraction from that that you do as your hobby?” So, you have to be careful what you wish for sometimes.
David: So, true and then there is the third myth, so this is I would call this one of the serendipitous methods: I’ll know the right opportunity when I see it. When it just magically walks across right in front of my face I’ll know it.
Terry: Well, that’s the one that we spend the most amount of time with working with clients is to help them identify how that can kind of be their Achilles’ heel so to speak. Because they really don’t have an idea of what it is they are looking for rather than something that’s going to make them successful and we talked about that. It’s probably the most difficult myth to overcome because when we go through this process and we’re talking about putting together a possibilities profile and looking at their goals, needs and expectations, talk a bit about their income lifestyle wealth and equity goals and how to use a business as the vehicle and we start talking about business models and types of ways to accomplish that. They are very quick to identify what it is that they don’t want to do, it’s kind of like going through a smorgasbord identifying what you’re going to pass by. But it’s difficult for them to identify on what it is they actually do want to do in that business. So, the trap can be getting to that point of having a feeling like, “well I’m not sure” and we go back and we work on the possibility profile.
So, the question comes up from the coach, “So, David let me ask you this, we’ve identified a number of things that you’ve pretty much rejected and said would not be interesting to you. Can you tell us what it would be, what it would look like when you find the right business for yourself?” Needless to say there is a lot silence and not much conversation coming back. But the typical answer we get is “I’m going to know that when I see it.” So, basically I’ll know it when I see it which is the conventional kind of ‘falling in love’ thought process. If I’m out there in the right place at the right time and I meet the right person all of the violins are going to play and the music is going to come on and your heart is going to start pumping and you’re going to fall in love with it.
David: That’s right.
Terry: That’s a dangerous approach to looking at how to look for what those unique abilities are, and how you’re going to use that business as the vehicle to accomplish those. So, we really encourage and work with you to kind of look at the business from the standpoint of that vehicle and back engineer it from what it is you want the business to do for you. That’s where those income lifestyle wealth and equity goals come in.
More importantly earlier on, what are the goals, needs and expectations that you’re going to have from the business rather than taking an emotional approach to it and kind of falling in love with something only to find out after the case that it doesn’t fit the need. It doesn’t really provide for you and your family, not just short term but also long term and it’s building more than just the income, because the income is the easiest thing to get in a business. Lifestyle comes next as a little bit more difficult. But wealth and equity is really the holy grail of how you use the business as the vehicle to accomplish that income lifestyle, wealth and equity goal.
David: Yeah, that’s sort of the practical way about going about this discovery process. Most people have that storybook, movie theater, romantic kind of vision for how you find that business. But in fact, in general, that is not a recipe for success. In fact, it’s funny when I talk to people about franchising, they generally assume it’s McDonald’s, Burger King or Taco Bell. But there are literally thousands of franchise businesses that serve much more than fast food and some of them are just rock solid brick and mortar businesses with great products and services. I think what you’re talking about is being clear about what the outcome is that you want in your life and then intentional about how you build towards that. I think that’s actually the perfect segue into myth No. 4, which is I can’t be in the ‘blank’ business. I’ve already judged that book.
Terry: Yeah, I can’t be in that “_____” business — just kind of referring back to the last conversation about the falling in love type of approach. It really gets to be what we refer to as “perception criteria” and already rejecting things because you don’t see yourself relating to the business. This typically has to do with the product or service or your perception of what your role will be, which is dangerous in a franchise. Because in a franchise business you’re not working in the business, you’re working on the business, which is quite a different distinction. It takes you out of being that technician aspect of it.
So, the reality of it is when you reject things because you say, “I don’t have any interest, I don’t have any experience, I don’t have any background in that, I don’t really know what my role would be,” your perception criteria really kinds of shut down the possibility and options around discovering something that’s going to get you different results.
If we keep focusing on the same things that we’ve been doing, which is where perception criteria comes from, that we’re going to get the same or similar results. Which we know can turn into that all famous definition of insanity — doing the same thing over and over and expecting results to be different.
Terry: So, you know when you think about food, you may say to yourself well, there an awful lot of employees in the McDonald restaurant I think the average number of employees is 84 that are in the business typically 24 hours a day with cleanup crews. I just left corporate America, and I don’t really want to have employees in my business because I don’t believe I can leave the cash registers without me being there 24 hours a day to watch them.
In this scenario, we overlook the fact that the franchise organization is as interested, if not more, in what happens to the cash in the cash register. The only way the franchisor can succeed is when you succeed. So, those kinds of things about limiting your possibilities — it’s knowing what your secret perception or perception criteria is — can create limiting opportunities for you. Someone is working on the business, not in the business, is really the key to that.
Franchises have the highest success rate with the least experienced background of people coming in to them as the owners. And when people who start their own independent businesses have the highest level of that [experience], they then have a high failure rate. It seems kind of counter-intuitive, but it’s in fact the reality of it.
David: Yeah, it’s so funny. I want to drive that point home even a little bit further, because you’re right. This, I mean frankly this is something that anyone who has started a business from scratch struggles with. They can get drawn into the minutia, the details, within the business that don’t help you to continue to strategically grow. One of my favorite books tells a story of a baker who loved baking so much that she decided to open up a bakery so she could bake all day. As you know, it turns out that when you own the business, the thing that you work on is not the actual technician or technical skills that you’re talking about. So, it is important to find a model or a system that placed your strength and allows you to work on the business not in the business.
David: But franchising is an interesting one because people do have a lot of I guess misconception, for lack of a better term, around what the franchisor and franchisee relationship looks like. So, let’s talk about autonomy. I think it’s safe to say that there is a belief that the franchisor is going to dictate everything, how would you address that?
Terry: Well, yeah, most people come to us and I know you’ve heard this before, David, where they come with this perception that franchising is not something that can be trusted. They are highly skeptical about it, and they don’t believe in the franchise type of relationship from a business ownership standpoint.
Most of that [skepticism] comes from a lack of education, awareness and discovery about how it works and how it’s really a true interdependent relationship type of approach — based on a win-win type of environment. As far as the franchisor dictating everything, not everybody is well suited for a franchise.
I’m a good example of that, I’m just the type of individual that when you give me the box of paint by numbers. I am going to open it up and I’m going to change things up. It’s not going to look the same as it did on the cover of the box. There are a certain percentage of people that just aren’t like fit for it. Now from the standpoint of dictating everything to the franchisee, you have to think about it from a standpoint of why is that the case.
Why are they laying it out in a paint by number, turnkey type of an approach where there is nothing left to do necessarily to guess at or to make mistakes around? It’s because franchisors are engineered with the end-user client or customer in mind. Then they reverse engineer it up to the franchisee who is going to be the owner-operator and back to the franchisor. They create an environment where everybody wins.
So, the idea of controlling everything or dictating everything from thefranchisee perspective, you have to think in terms of what’s in the best interest of the success of the customers and clients, thefranchisee owner and of course the franchisor. To accomplish this they lay it out in
this paint by numbers. The thing you hear most often is franchising is being in business for yourself, but not by yourself. So, you’ve got that track to follow, you’ve got a success track to be able to model after.
Now, we’re going to talk a little bit about creativity in a few minutes. It’s not about dictating, it’s about creating what we call a “safe space” for success. So, if you think of a franchise and the business model and the things that they require their franchisees is to do, think about it in terms of a word called system. S-Y-S-T-E-M, and that’s what franchise is all about.
We’ve created this acronym to help our clients understand the system that the franchisor has created. The word system is Save Yourself Significant Time Energy and Money, which spells system. As long as you’re operating inside that system, which is by the way is like about an eighth lane superhighway, you receive those benefits.
So, it’s not very rigid, you’ve got eight lanes of superhighway with guard rails on either side, and some franchisees are going to operate in the slow lane, some are going to get out to the mid lanes and some are going to go into the fast lanes. But everything inside those guard rails is the proven system that’s going to save you significant time, energy and money.
So, you have an opportunity to be able to do things based on your style within that system and still be successful and not feel like it’s being dictated to you or mandated. But it has to really be those guard rails that keep you from going off the edge of the cliff and down to the abyss and never to be seen from or heard from again.
David: And the system itself is different inside of every franchise, also. So, the relationship between the franchise or in the franchise can vary slightly as well. But let’s talk quickly about creativity because you sort of hit on that, but I just want to drive that home a little bit further too. I think the idea of having a system, something that you can operate within, doesn’t necessarily mean that there is no creativity in owning a franchise, right?
Terry: No, absolutely not. In fact, the opposite is true in non-franchise businesses where those people we refer to who go do what they know, rather than enjoy, and start their own business —they have a total autonomy as it relates to creativity and whose systems they follow. But unfortunately, the have a much lower success rate than those franchise systems.
Creativity is available within any franchise system, and typically that creativity comes around marketing, managing, promoting that business. The level of success and how big of a market share you’re getting depend on things you can get creative about and what you’re going to offer to the clients.
Franchising is really so successful because it’s a proven concept and that’s very predictable, that the end user customer can go in any of the units and experience the same type of thing. The lack of creativity is really not the concern; it’s about being creative within the guardrails of the system we talked about a few minutes ago.
Think about it this way: If you go into McDonalds, and you look at the menu board today, you take a hamburger, cheese burger, fries, cokes and milk shake and you look at what’s left. Ask yourself what percentage of those menu items that make the success of the McDonalds today, came from McDonalds or came out of the creativity of the franchisees.
The irony of it is that every single item that Ray Kroc came up with didn’t make it on the menu, they all failed. All the successful items including breakfast and butter milk biscuits and the big mac (and so on) came from franchisees being creative in conjunction and collaboration with the franchisor.
I like to use the example that there have been suggestions by McDonald’s franchisees with some crazy things that never made it. One of which I find the most interesting is that they were really kind of lobbying forward the idea of having pantyhose vending machines in the lobbies at McDonald’s at one point in time. I haven’t seen those in there. That’s pretty creative, but it didn’t quite make it to list.
David: Well, that, we’ll save that for a different presentation, but I can just validate I’ve been a franchisee before, and I can tell you that we were able to be helpful to the franchisor, the entire system and redefined even smaller things like recruiting practices. So, the franchisors are very open to, and in general, will try and facilitate creativity amongst the franchisees, as long as they were operating within the brand guidelines.
The last myth that we’re going to cover, and then we’re going to move straight into the “F words,” that we talked about, is that franchising is expensive. Do you agree?
Terry: Well, in some cases, it can be thought of as expensive. Typically, when you think of something as being expensive, you’re thinking about the cost associated with it, and it really is all relevant. You could start a business from scratch without the success track of a franchise and really go through a lot more money to get that business to the same level.
So, it’s depends what you are comparing it to. You don’t want to think about it as an expense, you want to think about it as an investment. So, when you’re looking at things you want to invest in, do you really want to skimp on that or do you really want to make sure you’re investing on a sound investment that’s going to have a high return on investment?
It a matter of really looking at it from a different perspective. If you start your own business it’s going be trial by error and you know those things takes longer to get ramped up and it costs more money to get there. In our own system, we provide so many tools and resources to our franchisees that there will be no way that they individually could start the same business at a similar price. So, it really does leverage that synergy with the franchise and it takes away the trial by error and gives you the opportunity to leverage that into an investment that makes sense. Of course today is about how do you leverage that investment.
David: Right, well, that’s funny you and I both started our businesses. So, I think we can speak with real authority. The school of hard knocks is really expensive and sometimes the gestalt method of learning, or as I would I guess better put learning from other people’s mistakes, borrowing a system can be a really effective way to build a business. So, franchising has been really built on that premise.
Now I know we’ve spent a lot of time talking about myths and misconceptions, but I think it’s that we launch into what really holds us back. I want at this point sort of change the conversation and we’re going to assume now that the people that on the line here are actively considering a franchise investment.
So, it looks like we’ve got the right people on the line [based on the poll]. So, let’s start with the biggest “F” word of all, which sort of I think encapsulates the essence of each of the ones that we’ll talk about here and that is that just overall fear.
Terry: Absolutely. I know this is not something that most of you haven’t heard, but fear or the acronym for fear is false evidence appearing real. As we think of fear and what it can do to us, especially when we’re contemplating moving outside our comfort level.
Our perception criteria and what I like to refer to as our “current or past winning formula” is otherwise what got us to this point in our lives, we like to refer to it as the 1.0 version of your life. How do I get to that 2.0 version in my life? Fear is the number one thing that’s going to get in your way. When we think back of all of the things that we’ve been fearful of in life, the far majority of those things never really happen. So, fear is really the thing that steals more dreams, fear and doubt steal more dreams than anything.
But know the fear part is really something that we spend a lot of time hoping our clients will be able to manage and create a safe space where they can have the education awareness and discovery without needing to make any choices or decisions. That’s where the fear comes from; it’s not about thinking about doing something or looking at it. It’s about the fear of needing to decide on it.
When you look at your own success track record in your careers — most of you have done a very great job at making good choices in your life about your career. Making the right choices helps you manage the fear of moving along your career, taking on a new job or moving into a whole new area of your career path. The same thing applies in looking at a franchise, giving yourself the opportunity to not be paralyzed by the fear aspect of it.
We talked a little bit about perception criteria, and it’s typically what happens because we all tend to gravitate towards our comfort level. Fear only really starts to be generated when we’re thinking about or moving in a direction that takes us outside of our current comfort zone. Of course, we know in today’s society, the only constant that we can depend on is change. So, if you’re not embracing change on a temporarily basis, meaning being temporarily uncomfortable with something that you’re striving for, you’re always going to be limited by fear. That’s the danger that steals the dream.
David: Yeah, it’s funny as you were talking. I was thinking about guiding our core values, one of them is adaptability, and we defined that as embracing and driving change because we know that is the one certain, the one thing that we can depend on. As you were talking you reminded me of this great diagram that I’ve seen where it has the words comfort zones on the piece of paper with this big circle around it. Then the smudge like box outside the circle on it says “where growth happens.” So, I definitely have to embrace that.
Let’s talk about the specific fears and probably the biggest one of all which is brought in is sort of hardest, the question of “am I an entrepreneur?”
Should I have my own business or am I a better as a manager or an employee. We help thousands of people find financing each year, and this is one of the biggest question that they ask. Am I an entrepreneur or am I an operator, how would you deal with that?
Terry: Yeah, or somewhere in between. Which is the beauty of having a success track to run on and wondering whether you need to be one or the other. An interesting thing we’ve learned over 33 years of creating a science around what people are contemplating about being self-sufficient is that 75 percent of the adult population has a very strong desire to be self-sufficient. But 95 percent of that group has a fear of being self-employed.
So, they have a strong, the very strong desire to be self-sufficient and they really want to do something and take control of their lives. They want to be able to be in control of their own destinies, and that’s what really attracts people to explore options and look at possibility of business ownership. But that fear of being self-employed comes from their perception criteria is about the rate of success compared to the rate of failure.
You have the opportunity to be an entrepreneur within any business. Whether you work for an entrepreneur, or you are an employee in the business, based on the statistics we’ve seen, only about 25 percent of the adult population would prefer or have the desire to stay in that area. So, you have to measure and decide where you fit, and sometimes you’re better off not being in your own business.
Sometimes you’re better off not being the owner of that franchise or starting your own business. You’re better off collaborating in an employee type of arrangement with someone who is more entrepreneurial or who is investing in their own franchise business. Not worrying about whether you need to be that entrepreneur, or the operator or the employee. Remember the business is just a vehicle, the business isn’t the dream to be self-sufficient. The business is just the vehicle to get you there and that requires you to be entrepreneurial someday.
David: Yeah, I can see how there will be conflicting emotions around the desire for control, the desire for self-sufficiency, then the fear of openness, accountability and responsibility. There are some things that people worry about in terms of businesses and one of them is the economy and how are the kind of current economic and future financial trend is going to impact me in my business or my desire to go into business. How do you deal with that at The Entrepreneur Source?
Terry: Well, interestingly there was just some data that came out recently from the Kauffman Foundation Report, and it said the entrepreneurial growth increase in the 2016 index represents the largest year over year increase in the past decade. We’ve been seeing this taking place for years, really it started to accelerate very dramatically in 2008, and I think most of us remember what happened in 2008. When the real world, as we call it today, started to take hold and the, things changed in the financial community and then the business environment and the job environment.
So, it’s really about that trend of getting back to be self-sufficient, and the reason that 75 percent of the adult population has a strong — a very strong — desire, is because it’s hard wired into us from our ancestors. Before corporate America, a majority of people were self-sufficient and created their own economic success or failure. So, the economy has never been better. One of the things driving it is what we refer to as the “Battered Career Syndrome Ego.” What’s happened to the typical employee who has given their careers to and been very faithful to corporate America and where that’s gotten them?
It’s not because corporate America didn’t want to continue, they just haven’t done a really good job of necessarily staying relevant when it relates to employment and what people are looking for from a standpoint of security, where that escalator of employment takes them. So, it’s a good time to start based on when you’re ready to start.
The economy is not going to be the deciding factor. In fact, some of the most successful businesses in our society were launched during economic down-turns, because there is a lot of opportunity when the rest of the economy is sluggish or is going in an opposite direction for people to start a business or go into a franchise and benefit from that.
David: Yeah, I’ve been seeing and finding the economy does not typically have a major impact on whether business is open or not. And you’re right, some of the best businesses were started during trying economic times so, I couldn’t agree more. In fact, if you think about just investments in general because we’re talking about the idea of investing in a franchise, it’s been shown over and over again that trying to time a market is an effective and best strategy.
I would agree with you, we’re in a great time, the stock market is in an all-time high access to capital is strong and consumers are spending. So, right now the winds are at our back. Let’s move into the fear of finding the right franchise format and that’s a different than the franchise business.
Terry: Let’s face it — there are just a whole plethora of different types of franchised formats out there and sectors that we refer to as industries within franchise. There is this primary of about 85 to 95 completely different sectors that are being franchised today successfully. So, looking at that and it’s at the right sector, meaning either it could be the right sector within franchising or it’s franchising right for you.
Those are two completely different questions, but they are kind of tied together. What’s interesting about our 30 plus years of experience of working with tens of thousands of clients and helping them invest over a billion dollar in your futures through franchising, is that 95 percent of them can end up being in the franchise business if they admittedly would have ever looked out on their own or had looked at or thought of and dismissed it prematurely.
Today they are building their income, lifestyle, wealth and equity in those businesses. So, that really reinforces the aspect of how you go about looking at those sectors and business formats and how you embrace the opportunity to use it as the vehicle and the driver to get you in the right direction. So, it’s not as much the sector or the industry, it’s more about how did you use that vehicle. How to use that business format etcetera vehicle to drive your personal income, lifestyle, wealth and equity in that of your family.
So, that’s not too difficult to work through when we take you through the discovery process. You get to validate through more industries and sectors in a safe space without needing to make any decisions or any investments. So, when you come out of that type of an experience, you have your eyes wide open and really be empowered how to use that.
David: Yeah, it’s funny we finance thousands of businesses a year and each year we look at the business categories just in terms of financial strength, and it turns out they don’t vary as much as you can expect. We talked about fast food being one that a lot of people at least assume that they would leverage in terms of franchising. But business services, general retail, health and beauty, fitness, lodging, senior care — I mean there is just a plethora of industries within franchising.
So, it’s important as you’re talking about it as you are going into this process to really think about what the end game looks like for you and your family, and then work the reverse engineer to find the format that fits that. Now ultimately, you end up validating a specific franchise concept.
So, how do they overcome the fear of making sure that they are finding the right franchise?
Terry: Well, we touched on that in a number of different ways, and the reality of it is unfortunately, it’s not about the right franchise. It’s about opening yourself up to looking at the franchise business model as the right vehicle to use to develop that income, lifestyle, wealth and equity vehicle. Then it doesn’t matter so much whether it’s the right or wrong one because it doesn’t have a direct core relation to your success or how far you can go with that.
Just the 95 percent figure over 32 years that I just talked about with our clients, there were a billion dollars in franchise investments. They, 95 percent are running into something they would have never looked out on their own or would have prematurely dismissed or had dismissed and today they are using it as their vehicle.
So, it’s not necessarily if it’s the right one for you, the real key is can you pass the mustard so to speak — to be considered to be awarded the franchise. That’s the bigger question, and not that you need to be fearful of that, but you need to be aware of that that franchises nobody really wants to buy a franchise or be sold one, they just want to own the outcome of it.
Franchisors are looking for this win-win interdependent relationship because they can’t win unless the franchisees are successful. So, there are really going to be looking at you as you’re going to be looking at them to make sure it’s a good fit. So, it’s a 2 way street and both sides are looking at it for the benefit of that win-win relationship, yeah.
David: Let’s move into financing because money obviously is a big part whenever you’re talking about making an investment into a franchise obviously how am I going to afford this is a big part of that question. How do you guys deal with financing from the onset?
Terry: Well, we strongly believe that financing is really part of the education awareness and discovery process earlier on and you do that before you even start to worry about or look at what kinds of businesses should I be thinking about investing in our study. So, we believe that it’s, it really has to be part of that creating that safe space and opening up the horizons beyond the perception criteria.
Because if you ask most people, they will tell you that the financing part of is the thing that they feel least confident about and have the most anxiety about. But the reality is it has become pretty much standard fair to be able to leverage various types of financing that your organization David are experts in.
We utilize your group and others to be able to make sure our clients understand the options that are available and there are multiple options. Today franchisers are financing many times with more than one source of financing. So, it’s not really as difficult as it may seem.
David: Yeah, and I would agree with youwhole heartedly it’s funny we, my perspective is one and most important thing someone can do today to get prequalified for financing because similar if like you were to buy realestate, if you were going to start looking at homes, your realtor
would suggested that you go get prequalified by a mortgage professionals that you have some clarity around your financial capacity and that discipline is a standard in that industry.
But it had an existence in small business and franchising. So, we pioneered that concept about 10 years ago, today you are absolutely right, about a third of the transactions that we are a part of use multiple forms of financing. That’s a very common practice now. So, things from the SDA to roll over to business startups, portfolio loans, even unsecured loan.
In fact actually we decided we want to do one more poll here because I think while it’s common to you and I in our industry it’s actually possible for people to utilize their retirement assets to invest in a small business or franchise. It is very intuitive vehicle for entrepreneurs and franchise owners to invest in themselves rather than using somebody else’s cash.
So, we wanted to ask a quick question here, I currently have blank in retirement funds and you can actually interact with the screen like you have in the past poll and this, we’ll publish this back here in just a second. But this is one of the ways that we’re seeing many people finance a small business or a franchise today.
Why don’t we go ahead and publish those results now? Let’s see what that looks like and you can see the results here on the screen, looks like we’ve got a very diverse group here. But this is one of many ways that people are financing businesses. But the last one because I know we’re getting short on time here Terry. The last one that we want to cover is friends and family. I guess that’s really two but no matter. Terry why is, why are friends and family “F” words?
Terry: Well, because they really contribute a lot to the fears and when you’re stepping outside the norm and thinking of doing something that many people including your family, your spouse and others will think is absurd or ridiculous and highly risky, they will not see you in that realm because they are used to where you’ve been, not thinking about where you’re going.
They sometimes will add up of their desire to make sure that you don’t do something that you shouldn’t do will sometimes become a barrier or they will increase the fear or the anxiety or get in the way of support.
Now it was just as many examples where they will support you. But you’d have to be careful that when you decide to become self-sufficient and go into controlling your own destiny that you understand that not everyone is going to see that exactly the way you have nor have they experienced the journey you have that has gotten you to that point of making that commitment to be self-sufficient.
So, you just have to be aware of that we coach a lot of people through that. I use, I grew up in Maryland, I used to use the term crabs in the basket with people when we used to go crabbing in Maryland we just we would put crabs in the basket and we had to put a lid on the basket or they’d climb out.
So, we got the basket about half way full, we get rid of the lid off and you think well, that’s crazy. They are closer to the top, why would you leave the lid off because the more crabs in the basket, when one goes to crawl out, the rest of them are hanging on to that crab.
It looks like they’re pulling him back in but they are really hanging on because they want to go with you. So, we use that analogy to help you understand where some of that might be coming from.
David: That, it’s interesting I’ve heard the crabs in the basket many many times but I’ve actually never heard about, heard it from that length. I was actually going to share one of my favorite quotes from Anthony Robins was that if you want to upgrade your life, upgrade your friend. That’s not saying cut everyone out I think the intention behind the quote was just surround yourselves with people who support or ambition they want to help us grow. So, something to keep in mind as we move forward.
David: All right, well, we’ve gone through quite a bit of information in a short period of time and before we close I think what we wanted to do is just spend a few minute talking about some very quick action steps that somebody can take if they are still considering franchising and moving towards that goal. That we could help walk them through that. So, the first I think was find a coach or mentor and Terry I’m going to let you handle that one.
Terry: Yeah, we’re going to provide some resources here for you, you’ll see some on the screen, you’ll be receiving a follow up email with the links and also the chapter of our book, your career 2.0. How to avoid the trap of the Battered Career Syndrome. Then of course there is some websites here franchisematch.com is a great resource that the entrepreneur source uses to engage individual, help to educate and inform them.
Then we have a grape start a business weekend events that will take place every other month and you can visit on and be connected with the coach that will help you explore the possibilities around being self-sufficient without needing to make any commitment or have any investor take place until you’ve determined whether or not that option or that direction is really right for you and your family.
So, a lot of resources available, the book is fabulous we’re going to give you a free first chapter of that book which will kind of get you to start in the journey of being self-sufficient and looking at your career from a 2.0 standpoint.
David: Great, well the second one and actually I was just, let me just continue on the finding a coaching or a mentor because if you think about it, a lot of people go into the internet, and they search for the information and you can get overwhelmed by that and I think sort of the main door what we talked about earlier, figuring out what it is that you’re trying to accomplish before looking at concept is a really good practice.
I think about like a college counsellor or your best manager or a business coach. We all hire people to help coach us through a process so that we can get clarity and have real intentionality behind the way that we move forward in all aspects of our lives. So, I’m certainly want to underscore the importance of finding a good coach or mentor.
Again the reason why I invited the entrepreneur source to participate is because Terry and his team are the best in class in that area. Then the last piece which we’ve already touched on. So, I’m really not going to spend a lot of time talking about this, is getting pre-qualified. If you go to our site at guidantfinancial.com there is a place right down the home page where you can get pre-qualified.
It takes literary minutes. But it’s a really effective way to understand sort of the financial capacity and some of the options that you may have available to you. I think certainly it could reduce stress and anxiety around how you might capitalize on an opportunity like franchising if you have that information early rather than late.
Then lastly as Terry is talking about there is a couple of handout inside this module that you could download directly we will also email them to you after the fact. Now we are getting close to the end of the hour, so I want to make sure that we get some questions. So, with that I’m going to go ahead and invite Patrick back on and maybe we can cover one or two before we close down.
Patrick: That’s great, so there is one actually question that I’ll plan them to summarizing. But it is from Sekish and his kind of general point was I am an engineer, I’m not a sales guy, I’m not a marketing guy. How do I attract customers when I first start out? How do I kind of overcome the difference, there are roles you have to play as a business owner when his nature is to be that engineer not that sales marketer?
David: Great question, yeah Terry I’ll go ahead and pass to you for first answer and then I’ll tap us out.
Terry: Yeah, it’s really about what we talked about earlier about for you not becoming the technician and believing you want or need to be the technician to solve those questions that you ask about how you go about creating business and marketing out those things. The franchise concepts are all going to have that worked out and how to leverage that and how to attract the right types of resources.
Meaning employees and other resources that they’ll provide you as part of their support. That will allow that to happen without you necessarily needing to be the person that can make that happen. So, how do you put together the right team? How do you bring the resources of the franchise system?
Saving yourself significant time energy and money. It doesn’t matter what your background or skills are. It’s you being in that ownership role and being the owner of the business rather than buying yourself a job and becoming the technician and feeling that you have to cover all those elements within a franchise.
David: Yeah, it’s funny I think that that question is one that people ask at many stages of their business no matter what. It’s funny especially I was talking about the gentleman I had coffee with yesterday and this is someone who manages a billion dollar investment fund.
His comment was it is, it’s such a better opportunity for him to be a great business leader and manager without being the chief cook and the bottle washer in the business. If you’re properly capitalize upfront, you should also have the ability to hire the team members that you need in order to execute the model and still play to your strength. Great question.
Patrick: Absolutely, great guys there are some other questions that came in we will address those with people after the fact we’ll reach out to you and try to get them answered to you. Like you mentioned we’re coming up at the top of the hour. I do want to respect people’s time, David, Terry, thank you guys so much for your time. Dave we really appreciate it, and I want to reiterate that this session was recorded.
So, you will be getting a link to this recording as well as the resources that David and Terry mentioned there at the end. Thank you guys very much for joining us, once you leave you will
have a survey, I’d really encourage you to fill that out. We do like to hear what other topics you would like covered. So, we can continue to host these types of sessions that you find valuable. Thanks again for joining us and we hope you can join us again in the future. Thank you, bye.
David: Thanks everyone