You bought the business: succeed with the masters

Succeed with the masters

Work harder on yourself than on your business

Twenty years ago I had the good fortune to help First Nations communities develop successful small businesses. Of the 50 or so new businesses that opened over the course of a few years, 47 succeeded. The norm would have been for 17 or 18 to survive.

These new Native business owners were assisted by other experienced entrepreneurs and supported by key people in their communities.  They were open-minded, willing to learn and had perseverance.  But the biggest factor in their success was our training program. Although some of the training was industry-specific, taught by industry experts, most was based upon five great writers whose work is available to you today.

We started with Napoleon Hill and lectures based upon his great book Think and Grow Rich and summarized in the CD series The Science of Personal Achievement. Hill focuses on the basic principles and values for a rewarding and successful life. Continue reading

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Considering the purchase of a franchise?

weighing options

Weighing the franchising options

For certain buyers, a franchise is a good fit.  As explained in the previous post, Franchises, a business-in-a-box, franchising is a method of being in business for yourself, but not by yourself.  Individual franchisees are local owners/managers who apply a prescribed system of business operation to produce and sell specific products/services throughout a market territory.

Franchising is a fast-growing area. There are franchises in almost every industry from recruitment to landscaping to building maintenance to consulting services to metal supply to education and the list goes on.

The important issue is –what skills are required to be successful in a franchise and what does a typical day as an owner of this franchise look like.

  • Some franchises require sales, marketing, and management skills to be successful and will make the owner $400,000 plus per year.
  • Some require training or coaching skills.  Others require operations and supervisory skills.
  • Some deal with the public and some are business-to-business franchises.
  • Some will make the owner a decent living and that is all.
  • Some are good for part-time or absentee owners and some require total commitment.
  • Some are great for multiple location owners and some are not.

If you are considering the purchase of a franchise:

  1. Use a good broker who knows the franchise system.
  2. Do your diligence before you buy – meet or speak with numerous current franchisees in the system that you have selected from their list of all franchisees, check for litigation and disputes within their system.

Sunbelt participates in the annual franchise meetings of the franchisors we represent and maintains regular contact with all of the franchises.  We represent some 50 franchisors in Canada and they represent one out of every 10 businesses we sell.

We are very discriminating about which franchisors we will represent:  we validate the franchise before we take them on and we keep validating them to make sure they are delivering appropriate services and support to their franchisees and that their franchisees are being successful.

The assistance you get from Sunbelt is free and will help you make the best choice for your future.

Franchises: a business-in-a-box

Buying a franchise: a business-in-a-box

For certain buyers, a franchise is a good fit

Our business brokers work hard to connect buyers with businesses where they can be successful. For some, the solution is the resale of a franchise packaged with a known name, system of operations, specific track record, trained employees, existing customer base and cash flow–a business-in-a-box.

Most people associate franchises with fast food yet there are franchises in almost every line of business including services and products for consumers and businesses.

Sunbelt represents some 50 franchisors in Canada and they represent one out of every 10 businesses we sell.

Franchising is a fast growing area. According to the Canadian Franchise organization, franchised businesses account for 40% of all retail sales in Canada. That number is even higher in the United States, where franchise consulting and development company FranStop says that nearly 50% of all domestic retail sales in that country were from franchise businesses.

Sunbelt is itself a franchise–we license the use of the Sunbelt name and the Sunbelt system of business brokerage that we feel works better than any other.

For certain buyers, a franchise is a good fit. Franchising is a method of being in business for yourself, but not by yourself.

A franchise is a known name and a system of business operation that teaches you how to produce and sell your product and/or service throughout your market territory. It is a proven system of business success that is teachable, trainable, reproducible and repeatable and that the marketplace responds to by purchasing your product or service. The individual franchisees are local owners/managers – a tactic to insure that the system is followed faithfully, allowing the success in one area to be duplicated and repeated in other areas.

A franchise’s success rates provide a very strong underpinning of value, which also corresponds with a lower risk. Remember that there’s a much higher rate of success based on buying an established business compared to starting one:

  • starting a brand new business, 35% are successful
  • buying a new franchise, 80 to 85% are successful
  • buying an existing business that has shown profit for three years, greater than 98% * are successful  *Sunbelt Business Brokers’ rate of success

Franchises are not created equal

When you start investigating the options, you’ll soon find out that not all franchises are created equal.

Under the standard arrangement, franchisees pay franchisors a royalty of a few percent of their gross sales for access to an operating system and a brand name, which is how franchisors make money.

Yet the franchise fee can be substantial ranging from several thousand dollars to hundreds of thousands of dollars. Other costs can include rent, equipment, start-up inventory, operating licensing fee, insurance and possibly a grand opening fee to help promote your business.

Keep in mind that you’ll still need working capital and a reserve for unforeseen expenses once you’re open for business.

With some franchises, like Tim Hortons and Canadian Tire, you’re only buying an income stream: when it’s your turn to sell, you will only get back what you paid, not market value. Most franchisors allow you to sell the business at market value.

You need to understand the dynamics at work before you walk down the aisle.  Talk to existing franchisees about their experiences. Ask them: “If you had to do it over again, would you buy this franchise? Are you happy with the franchise and are you making a living?” Keep in mind, of course, that your own results will be affected by factors like your own management and location.

Be aware that you’re really dealing with two sellers when you buy an existing franchise. The seller (franchisee) can sell you his or her rights to the business and franchise; but only with the agreement of the franchisor (the parent company). The parent company may try to sell you a NEW one, with a significant increase in risk.

Oftentimes there is a transfer fee involved and certain requirements for training before a new license agreement or franchise agreement is issued to you, the buyer.

Your ongoing relationship will be with the franchisor. The franchisor, who knows more about that franchise than anyone else in the world, will have a vested financial interest in your success and they will help you to learn how to manage and operate the business successfully.

So, can you follow a system and do it their way? Are you comfortable managing inside the box?

An experienced business broker will assist you in selecting the most appropriate franchise system and guiding you through the financing and approval process. Their services are free and they will help you make the choice that works best for you.

Looking for more information on buying or selling a business? Check out our many resources on www.sunbeltcanada.com

And for ongoing tips on buying, building or selling a business, be sure to sign up for our monthly newsletter. You can see a sample of the newsletter here.

So you bought the business: the numbers, part 3

Extending a helping hand

Converting prospects to clients

We have been exploring the numbers that drive the business you have purchased, the cost/benefit of your marketing programs and how to increase your bottom line.

The numbers I want to talk about today about are five and seven. These relate to the number of “touches” it takes to turn a prospect into a client.  After five touches or contacts the percentage of prospects who will actually buy from you is 50% to 70%.  After seven touches or contacts it jumps to over 80%.

Before purchasing, customers need to get to know you—your business, your staff. They need to know what you do and what solutions and benefits you offer.  They need to trust you and your business. And they need to see how you are different from your competitors.

Too often, businesses rely on a marketing program that touches their prospect fewer than five times and thus leave sales and money on the table.

Reach out

Let’s look at our mythical consulting firm, Snowstorm Consulting, and how they touch their prospects— businesses with more than 10 employees:

  1. They target direct mail to the businesses in their community with more than 10 employees.
  2. They have an excellent website (that 66% of prospects will check out before contacting them).
  3. They have alliances with other professional firms and deliver breakfast seminars as a guest speaker via these firms.
  4. Their sales people are members of various networking organizations including the local Chamber of Commerce, Business Networking International (BNI) groups, the Canadian Association of Family Enterprises, industry associations and community and church groups. Through these networking activities they get to meet many local business people.
  5. Their sales people call business owners to invite them to Snowstorm’s free seminars.
  6. They run regular advertisements in the local newspaper.
  7. They have a large sign on their office building, which is on a busy street.
  8. They are active in social media via twitter and a company presence on LinkedIn, Facebook and Google+.
  9. They write a weekly blog post with information of interest to their prospects.
  10. They publish a monthly e-newsletter distributed to people who have signed up from their website and other online channels.
  11. They contribute to the local newspaper articles of interest to business people.
  12. They host meetings and training seminars at their facility, supporting the professional firms they have alliances with and their charitable endeavors.
  13. They offer free information packages to prospects who request them by phone or e-mail.
  14. They are listed in trade directories as experts in their field…  and the list goes on.

Be consistent

Each touch is an opportunity to present the company in its best light if done well—the sign on the building, how the receptionist handles the phone call about the free information package, the content and handouts from the seminars and presentations. Each must convey the right image.

As a new business owner, you need to ensure that every way in which your firm has contact with a prospect or client is 1) handled well and 2) properly presents the image you wish to convey.

You also need to build 1) their understanding of how your solutions and benefits differ from the competition and 2) their trust that you and your business will deliver what they expect.

The more often you touch a prospect via the right image the more likely the prospect is to become a client. This is true for all types of business.

As a new business owner, you need to develop and implement a marketing plan with actions that touch prospects at least five times, but preferably seven or more. Many will cost little or nothing. But they may require an investment of time, yours or that of your sales staff. While the means of contacting or touching your prospects may be different from those of Snowstorm Consulting, it is important that you strategize and consistently carry out your plan. For the key to success is consistency—consistency in the image you convey and in the actions you take in support of your strategy.

Looking for more information on buying, building or selling a business? Check out our many resources on www.sunbeltcanada.com

And for ongoing tips on buying, building or selling a business, be sure to sign up for our monthly newsletter. You can see a sample of the newsletter here.

Return on marketing dollars: the good, the bad and the ugly

The advertising spend: the good, bad, uglyRespected marketing and advertising pioneer John Wanamaker said: “Half the money I spend on advertising is wasted; I just don’t know which half.”

A century and half later, many companies are in this same position, watching their margins erode. It’s a position they can’t sustain.  This is the ugly.

Media is changing so fast it’s almost impossible to keep pace. When will we lose the Yellow Pages? How much time and money should we put into social media? Do we need a mobile friendly website? Is TV a waste of time when our area has such a high concentration of PVRs? And on and on. Continue reading

You purchased the business – now learn the numbers

Growing profit

Growing profit

Three months ago you bought a business—Snowstorm Consulting.  You have a sold grasp of how everything works and why it is the way it is.

Now it’s time to go deeper into numbers and how they drive profit.

The five key profit drivers that exist in every business are:

  • the number of leads multiplied by the conversion rate, which together result in the number of clients;
  • the number of transactions per client multiplied by the average dollar sale which results in total revenue and;
  • the margin, which, multiplied by total revenue, will equal profit.

As Snowstorm’s new owner, you want to increase profit. Start by learning about the current numbers. Continue reading

Buying a business: you purchased the business, now what?

Staff meeting

Staff’s success is your success

You have just purchased a business. Your first goals are to:

  • learn as much as you can from the previous owner,
  • build positive relationships with suppliers and clients,understand the current  systems and processes that drive the business,
  • get acquainted with staff and consultants—their individual needs, strengths and preferences.

Fulfilling these takes time and effort, but only then can you set your objectives and plans for turning the business into what you want it to be. Continue reading