Does Your Business Have What It Takes To Become A Franchise?

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I have been involved in franchising dozens of businesses, at last count over 60. Some from concept and some where we converted an existing business to the franchised model and I am really happy to deal with either pathway with one really important proviso.The business owner must have a reasonable understanding on what it takes to run a business successfully – franchised or not.And unfortunately I have concluded this is easier said than done.Done well, franchising does help to structure a business so that it has the best chance of success because franchising helps to put some great business practices in place. Systems and money management being at the top of the list. But overall, I have found that in most businesses, there are some aspects about business success which need to be reviewed and without sound business experience, creating a franchise is not likely to succeed.Understanding how business works is especially important, because you, as franchisor, will often be training less business savvy-franchisees on successful business practice.The most useful way I have found to think about business success is to look at the stages of business growth because it is through this journey that many learn the value of different business skills needed as they grow.The 5 Stages of Business GrowthWay back in the early 1980′s, the concept that businesses grow through defined stages was first discussed in an article published in Forbes by Neil C. Churchill and Virginia L. Lewis. This work is still cited to explain the importance of basic business elements to success.Before I go into the 5 stages, there is one important point to make.Businesses do not necessarily need to go through each stage. It is possible to speed through stages into whichever is your goal. The way to do this is to understand what is required. This is how the likes of Richard Branson create new businesses everyday – Richard will have all his business ducks in a row before he starts. But even his businesses will need to go through some of these stages on the way to creating an empire.In a nutshell these are the stagesStage 1 – ExistenceThis is generally the start-up stage for any business. With no revenue, the focus of the business owner is obtaining customers and delivering the product or service. Inevitably, the owner is definitely working in the business, often alone filling every role. A major concern is having enough money to cover this start-up phase. The strategy here is simply to stay alive.Stage 2 – SurvivalBy now, the business has proven it is workable and can be profitable but it is still simple in structure. There may be a limited number of employees supervised by a sales manager or a general foreman but neither will make any major decisions independently. They carry out the rather well-defined orders of the owner.Systems development is still minimal. Formal planning is, at best, cash forecasting. The major goal is still survival, and the owner is still the business and working in the business. The main aim is to get a return on investment and making the business profitable.However if the business is to grow, it is important to begin to understand the need to systemise and understand how business operates.Some small businesses choose to stay here, hardly making a profit, others choose to move into the Success Stage.Stage 3 – SuccessAt this point, the company is stable and profitable and cash is not a problem. Most telling, basic financial, marketing, and production systems are in place to power effective delegation.Organizationally, the company has grown large enough, in many cases, to have functional managers to take over some duties previously performed by the owner and some planning through operational budgets support this delegation.There should also be some strategic planning in place and the owner and, to a lesser extent, the company’s managers, should be monitoring this in accordance with goals.While cash is plentiful, the main concern is to avoid a cash drain in prosperous periods to the detriment of the company’s ability to withstand the inevitable rough times.Some choose to stay in this phase while others choose to move into a phase of growth.Stage 4 – Rapid GrowthIf the decision is made to grow beyond the Success Stage, then key problems will be how to achieve growth and how to finance it. Growth will return to a phase where cash management becomes critical.Churchill and Lewis report they found the keys to success here are having a sound understanding of delegation and how to manage risk in cash flow.As staff numbers grow, systems need to become more refined to ensure delegation is efficient and both operational and strategic planning are crucial to make sure everyone is on the same page.At this stage, the owner no longer works in the business but does have a strong presence over the way it is run and over things such as stock control.Churchill and Lewis state:’This is a pivotal period in a company’s life. If the owner rises to the challenges of a growing company, both financially and managerially, it can become a big business. If not, it can usually be sold-at a profit-provided the owner recognizes his or her limitations soon enough’Stage 5 – MaturityThe company has now arrived. It has the advantages of size, financial resources, and managerial talent. If it can preserve its entrepreneurial spirit, it will be a formidable force in the market.If not, it may enter a sixth stage of sorts: ossification and death.Franchises often do it betterYes, even in the 1980′s when the Churchill and Lewis first published their article, it was acknowledged that franchised businesses moved through the stages to Success and Rapid Growth better than those not franchised.Why?Because franchises often have the following advantages:First of all, they have, in most cases, a franchisor who really understands, through experience, the essentials of business, making sure clear structures are in place from the beginning to move through Existence and Survival fast.At the very least they will have:
A marketing plan developed from extensive research

Promotion and other start-up support such as brand identification

Sophisticated information and control systems so the whole franchise can be monitored

Operating procedures that are standardized and very well developed so delegation is consistent and efficient
I would add that, if the franchisor has really done the homework, there will also be:
Strong leadership for the group and an understanding of managing teams of equal partners

Good strategic and operational planning which has input from all franchise partners

And a very clear understanding of money management in the franchise group, making sure that all levels of the franchise can be profitable
I have to say, not many business I see have all these business aspects in place when they start to think about franchising. And the franchise process will help to put some in place. Things such as systems will be built and it will be essential to have a sound understanding of money management as the franchise structure is developed. If you are still working in the business though, putting in 60 or 80 hours a week, I think you will find the extra work and emotional energy to do the conversion can be more than a little overwhelming.The Pillars for Successful Business GrowthSo what’s the answer?It’s really quite simple…In discussing the five stages of business growth, Lewis and Churchill identified some skills needed and show that these skills are what are built up through the business growth process.
Money management
Systems development
Delegation, leadership and people management which results in leveraging you out of the day to day of the business
Strategic and operational planning
In my mind, today, there is at least one other skill to be added.
Marketing and your brand
The thing is, I know very few of us, if any, have the individual skill to deal with every business ability to a satisfactory level, so creating a team is an essential component as soon as it is possible. The key is to understand each area and to know who to put into your team to move you and your business forward.So here is some detail.Marketing and Your BrandHaving a good understanding of your target market, what is wanted of you and what your brand should look and feel like is essential from the earliest days of business.If you do not understand how important this is, you need to think about getting help from the beginning.Fundamental today is knowing that people respond to the power of Why. If you do not know of Simon Sinek’s amazing Ted Talk on this then visit Start With Why and listen to what he has to say.Once your brand is sorted, you need to think about how to get your message out into the very different market place of today. Central to this is your internet presence. Businesses without will generally not have the ability to grow beyond their local area if they even manage to reach that level.The foundation of marketing today is the ability to communicate to your people in today’s vernacular and the bitter truth is that’s the killer for 80% of businesses.Money Availability and Its ManagementManaging business through the various growth stages from inception to maturity needs a good understanding of money. How to manage cash flow, what level of risk is good (some is inevitable), expense management and the need to spend to get growth.The other requirement is the need for capital to fund different growth stages. Existence, Survival and Rapid Growth all need capital in one form or another and not having the cash can seriously hinder the process.SystemsSystems are the foundation of a growing business. In the early stages, not so much but moving beyond Survival requires the ability to delegate for which systems are essential.systems, no growth. It’ as simple as that!Delegation and LeadershipDelegation needs more than just good systems. The biggest problem faced by many entrepreneurs is letting go. Ego and thinking no one can do it as well as you is a trap.In today’s business environment, delegation needs to be done in accordance with the three Laws of Type I management – motivating people through their own intrinsic wish to do their best.Outlined by Daniel Pink in his book Drive: The Surprising Truth About What Motivates Us, Pink looks at how the best organisations motivate today in a way that gives their people the drive to take the organisation far.First is Autonomy. Select people who love the job they will be responsible for and then give them the autonomy or ability to do it their way with as few essential boundaries as are necessary.Second is Mastery. Select people with an open mind, who do not see their abilities as finite but rather know they will grow with practice and pain and who love a challenge. Put them into a job where they will always be looking to do things better but not one which will overwhelm. They will then go into the flow and give back to the organisation many fold.Third is Purpose. Human beings seek purpose, a cause greater and more enduring than themselves. Simon Sinek and his ‘Start With Why’ YouTube video will help to see this point.If you can combine profit maximisation with purpose maximisation then this will take you far. As Simon Sinek shows, think of Apple as an example.And finally, remember, leadership requires humility. Yes you need the vision. But the ability to give clear directions at the appropriate level, listen to your troupes, change direction when needed, and really understand what team work is all about is key.Again, Simon Sinek puts it so well in his latest book ‘Leaders Eat Last’. Simon’s central tenet comes from the US Marines where leaders always stand at the back of the line when it comes time to be fed. If there is no food left, it is their bad luck and that is when they rely on their troupes to provide from their share. Would your troupes willingly feed you?Strategic And Operational Planning and Keeping an Eye on Those All-Important KPI’sFinally, this is your job. Especially as the business becomes more sophisticated and grows larger.Making sure you have an eye on the strategic direction of the business and know where it is going. Every leader has a clear picture of this and can give this picture to the team.In ConclusionYes, at the beginning every business owner is in the business doing every task. But as you grow remember, the more you can put in systems and delegate and have some sort of business direction in place, the faster you will achieve the goals you are looking for.Goals are great. Planning how those goals are going to be achieved is better. Keeping an eye on how the organisation is travelling against those goals is best.The more successful your existing business or even a past business, the more likely you have what it takes to create a successful franchise group.Plan and check out how you are travelling with your team regularly.

Why Does My Auto Loan Hate Me? I Thought We Were Friends!

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Most of us fall in love with a car at a dealership and that’s the end of the story. Hey, where do I sign? Even if we do a great job of chipping away at the sticker price and feel pretty darn good about ourselves, we often get burned on the financing end of things. This is especially the case for people trying to score an auto loan with some bad marks on their credit report. Many times, these people are so surprised to hear that their auto loan has been approved that they sign on the dotted line before the dealer has a chance to change his mind! Only later do they realize just how poor they will be for the next 5 years because of the interest rate on that auto loan.What are my financing options?See, now you’re thinking! Impatience will cost you in the auto loan game – every single time. Potential auto loan sources include: a traditional bank, a credit union, financing through the dealership, and the newest darling on the scene – online auto loans.OK, so what is the best option?Well now, this all depends. How does your credit history look? If you have a mortgage and checking account with a traditional bank, then they will probably give you a great rate on your auto loan. The dealership will often find an auto loan for people with a poor credit history – but the cost of driving that car off the lot could eventually lead to even worse credit, when they have the car repossessed because they can’t afford the payments. The best place to shop around for the best rates on an auto loan is definitely online.Uggh! I hate that stupid Internet! It takes me forever to find what I am looking for!Oh come now – how long can it take to type “auto loan” into Google? If you don’t care about possibly paying thousands of dollars more in interest by letting the dealership “help you out” with financing, then by all means go that route. But, for people that want the best rate possible on their auto loan, the Internet is the place to start the search.But how do I know that I can trust those Internet people with my financial info?Very good point – and that is definitely something to consider. To begin with, many traditional banks offer online auto loan applications as a service to their customers, which also saves the bank processing costs. You can apply for Chase Manhattan auto loans online or down at one of their branches. In many cases you will find that banks offer these online loans at a smaller APR than you can get by actually going down to a branch. Chase Manhattan auto loans is one example of this, but many financial institutions offer their online customers a better rate.Now why would they do that?Not too trusting, are you? Hey, that is a great trait to have when shopping for auto loans – don’t forget it! What you are looking for is the catch, and here it is: In most cases, you will get a lower rate on your online auto loan because you will be required to sign up for automatic electronic payments. Plus, seeing a loan officer at the branch takes up the time of employees, and uses other resources that aren’t needed when you submit your application online. But remember, not all institutions offer lower rates like Chase Manhattan auto loans. And even Chase requires you to sign up for automated payments in order to get a break on the rate.And what else should I know?At the very least, shop around for rates on auto loans using the Internet before talking with the traditional institutions, such as bank branches or dealerships. Just knowing what kind of interest rate you can get on an auto loan can help you when you are down at the dealership drooling over that hot new car! Remember, knowledge is power – so don’t just walk into a dealership without knowing what kind of interest rate you can expect for an auto loan.

The Resolution of Paradox – Life Mastery Through the Traditional of Martial Arts

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My career in the martial arts started in 1964 with irony. I studied a martial art normally categorized as “soft” judo, but found that in application there was a lot of “hard”. Judo provided the toughest workout of any sport I had ever practiced including football. I had more sore muscles, more muscle strains, and more bruises in judo than in all my other sports combined. And, in contest application, the concept of harmonizing energy or using the other person’s strength against him was all but invisible. It was struggle, plain and simple. Later I added the “hard” art of karate and the “soft” art of aiki-ju-jutsu to my repertoire. Unifying them made me realize that at times karate can be soft and aiki can be hard. Teaching emphasis was one thing, application another. One’s personal interpretation of and skill at the art also had an effect on the resulting “hardness” or “softness”.The apparent dichotomy of hard and soft was being homogenized and unified within me as a martial artist. Other major themes (long vs. short range, straight vs. circular movement, internal vs. external energy, traditional vs. modern practices, etc.) seemed also to be in conflict and yet existed within one martial artist, one method of instruction, one school, one style, or one art–this was a paradox. But I did not accept it as a true paradox since I believed that paradox is a statement of our own limitations in understanding. Something cannot be black and white at the same time, in the same sense, in the same context. That they may seem to be paradoxical but are actually ironic. Apparent paradoxes then should be able to be resolved.F. Scott Fitzgerald once said that the highest form of thought was to be able to hold two conflicting ideas at the same time. I do not agree. Conflicting ideas produce inadequate understanding, indecision, inaction, thus inadequate achievements. But apparently conflicting ideas which are resolved within the thinker–now that’s something else.Certainly mastery and “high thought” are not achieved simply by taking a few conflicting ideas, figuring out how to resolve them to one’s own satisfaction, and then promoting oneself to twelfth dan (traditional ranks go up to only tenth dan which are very rare and are usually awarded to very experienced, very elderly, and usually very wise practitioners of the martial arts). Instead, mastery of any subject, especially those like the martial arts which are fraught with perfectionism, dedication, true believers, fidelity, and multitudes of methods and emphases –mastery of these arts means that the ironies and apparent paradoxes of that study must be understood and resolved.Karate and Aiki each present us with a philosophical “paradox” when applying them in self-defense. Karate says “Do not fight until pushed to the limit. When there is no other choice, then fight full-out, to the death if necessary.” Aiki says, “Harmonize with your opponent and try to frustrate his aggression or, if necessary, control it through the use of his own overextended balance and strength.” If pushed to the limit Karate resists while Aiki accepts and redirects. And yet a technical direction in each art seems to contradict the philosophical route each prefers. Karate insists that the first movement should always be defensive. Aiki suggests that one can catch an opponent more unaware and off-balanced if one “attacks the attack”. Yet Karate is often seen as an aggressive art; Aiki is seen as a defensive art.Of the perceived philosophical choices between Aiki and Karate, I tend to prefer the more peaceful Aiki route. But I realize that (a) a single perception may not accurately portray the art as a whole and (b) even if it did, sometimes a person is given no choice but to stand up for himself and resist! Aiki’s peaceful “redirection philosophy” means very little ethically if one does not have the cannon of karate “fight to the finish philosophy” in one’s arsenal. You do not choose a peaceful harmony if that is your only choice!Similarly, there are challenges within the martial arts community which must be met one way or another: with resistance or with acceptance. Many martial artists are unnecessarily critical of each other, perhaps showing a lack of confidence in their own art, or, more precisely, in themselves. You can see this in the letter section of any martial arts magazine in any given month. Some who may appear uncritical politically, perpetrate a watered-down version of a martial art, inflate their credentials, make false claims about their history, abilities, etc. They don’t criticize, they brag. Another version of those who provide the fuel for martial controversy are the sales-oriented martial artists who care more about selling superficial knowledge and recognition than offering deep understanding and qualified skill. When these people present themselves in the martial arts, it is like a challenge not only to the livelihood of hardworking legitimately qualified martial artists, but more fundamentally to the reputation of the martial arts in general. But how do we meet this challenge with the philosophy of Aiki or Karate? If one uses “karate” to directly oppose because one feels “pushed to the wall”, one also becomes one of the criticizers of which there are far too many–a voice in the multitudes which cannot be distinguished. If one takes the more tolerant Aiki approach, one sees the quality and benefits of martial arts study gradually being eroded and the meaning of a black belt becoming ludicrous. What a paradox!Not only is the idea of resolving paradoxes important to individual mastery but the method toward mastery may just be what we, as a society, need to balance our philosophical extremes. Great masters of the martial arts, notably Funakoshi (karate), Kano (Judo) and Ueshiba (Aikido) intended the study of their art to be a method of improving the individual so as to eventually influence society. They saw their mission as one of spreading their art so that the more individuals would improve, the more improved individuals would populate a society, and the more common ground the individuals in a society would have. Yet if this martial method gets corrupted not even the individual can improve, and certainly society can not be effected in a positive way. I would like to submit that individuals do have an influence on society but not by force of numbers alone, rather by positive example and by creating ideas and technologies which philosophically influence other individuals and thus indirectly influence their societies. I think the masters of the previous era might accept a small variation to their theme of peace and harmony through the martial arts: the martial arts provide one method by which paradox can be studied and eventually resolved. In my opinion, it is the method of resolving paradox which is the key to personal mastery, and a philosophical change in society.The martial arts are a relatively insignificant sub-culture in a world of political extremists, religious paradigms, and self-improvement methods. As a whole, one cannot say that the very study of any martial art makes one a better person or improves society directly or indirectly. Martial arts are not a direct means to a given end. Rather, martial arts offer one method for personal challenge and self-discovery through which time mastery can be attained. It is during the attainment of mastery that methods of resolving paradox are discovered. Those individuals who have reached the high goals of inner peacefulness and personal worth may choose to reach for yet higher goals outside themselves. These are the people (martial artists or not) who will change the world. Major philosophical changes have come from the influence of methods and experiences of much less significance than the martial arts. But for practicing martial artists, traditional budo may just be the most appropriate method of life-mastery and then of social renaissance.Everyday we are confronted with experiences which are, in the larger world view, insignificant, yet these items challenge us with indecision because they make us face philosophical paradoxes.Three teens in a banged up sedan zip into a parking place by entering the parking lot against the flow of traffic. Should one oppose them? Or should one say to oneself “teens will be teens” and tolerate it? Opposition would be difficult if the teens did not take kindly to verbal discipline, since there are three against one, and words would probably not influence their driving or parking habits in the long run anyway. Yet tolerance of little incidences like these encourages their repetition. The offenders convince themselves they can get away with inconsiderate behavior on a regular basis. Repetition of such behavior without any retribution creates in the offended party, an unconscious sense of disorderliness and, more importantly, helplessness to protect what one perceives to be a socially accepted right. In short, one takes a relatively insignificant situation and raises it to symbolize deeply important philosophical principles.Should we tolerate the little things which challenge our individual rights or personal safety? Should we take the chance of opposing too soon and become like fascists? Resolving paradox, even in seemingly insignificant matters, is itself no insignificant matter. Ultimately, in this example, the paradox unresolved comes down to a permissive versus a restrictive society. By what guidelines does one choose the balance? I do not propose that in a little column about training toward martial arts mastery, I can offer the answer to this most difficult of questions or even more minor situations which are emblematic of these questions. Rather I intend to show that the traditional martial arts, properly studied, lead those who wish to achieve higher goals than learning how to punch, kick, throw and lock, to the confrontation with paradox. And that it is the resolution of that paradox whether it be through opposition or redirection, that makes one a master of one’s art, one’s self, and ultimately gives one a framework by which to tackle much wider philosophical problems.Ultimately, paradoxes reduce to “What Should Be vs. What Is.” Either we are logically stumped because our reasoning, although faultless, is confronted with an equally faultless yet opposite reasoning (Light it has been proven is both waves and pulses simultaneously), or we are ethically confounded because our ideals, no matter how carefully parallel to apparent human nature, always seem to be frustrated by those who take advantage of them (“Treat them with discipline and they hate you; treat them with love and they take advantage of you, thus becoming undisciplined.”)What Should Be vs. What Is: is it the ultimate paradox or is it just a larger cousin of the little ironies we face (and resolve) every day? In the martial arts such frustrating questions do not occur to the everyday practitioner. If they occur at all, it is to the experienced and dedicated martial artist who has more years in his/her art than most students have in their entire educational career. “What Is” in the martial arts is, for the most part, short term students studying a catalogue of physical movements in order to feel better about themselves. “What Should Be”, at least to this author, is that students become artists, who during the years of mastering their art, confront the ironies and seeming paradoxes and use these confrontations to master themselves and the living of their lives. How does one resolve the paradox of What Is vs. What Should Be in the martial arts? By helping create a path for some of the short term students to become long term students, for some of those studying physical movements to stumble into the grotto of intellectual and emotional self-development. And how does one do that? One begins by writing this article.