Monthly Archives: January 2009

Social Media – the Way Business is Going

I subscribe to some key chaps that I get inspiration from. Today I got this post from Guy Kawasaki’s blog where he alerted his readers to an article written about how Barack Obama strategised his presidential campaign making use of social media. Click here to read it.

I was blown away by the stats in this article written by Edelman. I would say to you just pay attention to what went on and what was made possible in the space of time it was done.

I know that I am working myself towards engineering my own business to work the way business will be working in 10 years time. Its frustrating in that you always need to think ahead in terms of the way businesses are going – but I do think that there are a lot of business owners (including franchisors) who really have to pull their finger out and get on top of business models of the future. And that, my friends, includes mastering Social Media and Networking.

Long gone are the days of it needing to take thousands of pounds and hundreds of hours to get recognition and target a specific market. Competition is rife now especially for the uneucated and uninformed business owner out there.

Make sure you find out today if there is something you are missing out on. We will be left behind if we don’t! I have been fighting the onslaught of the Blackberry…but since Barack has one and plainly uses one….hell….maybe I should!

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Negativity for the Franchise Model

Today I came across a site that really just raised the level of negativity towards Franchising. I find it quite interesting when individuals have a whole lot to say, but not much to say – if that makes sense.

The UK market is not regulated. Full stop. That unfortunately creates the space for nonsense – much like children who have never learnt the word  ‘No’. I agree that there is a lot that needs to be done in order to secure the market place – especially for the uninformed prospective franchisee, and to be honest the premise behind most of my work is that I set about trying to educate the man on the street about the model.

I’m not an advocate for franchising, however I am an advocate of GOOD franchising. Ethical business practice is one of the sole defining factors of a successful franchise model – and I mean this from both the franchisor and franchisee sides to the coin. I have been privy to more than one unethical franchisee in my time, its not just franchisors!

I’m tired of the ‘moanie minnies’….if they are going to throw more negativity into the pot – how is the industry ever going to come straight? My suggestion is: Buck up, muck in and help where you can to bring the children in line…i.e. start changing things from the inside…don’t stand outside the fishbowl and giggle and laugh while the fish keep swimming in circles.

The Best Place to Find Franchise Ideas

The best place to find franchise ideas is in researching which businesses do well in any economic climate. Some of the most successful franchised businesses have common characteristics:

(a) A mixed model of revenue streams (i.e. diversify how the franchisee and franchisor make money)
(b) Stringent franchisee profiling and recruitment (only bring on the best)
(c) Consistent brand management and promotion
(d) Consumer demand for the service/product is continuous and on an upward trend
(e) Adapt to market/consumer trends

A ‘great’ idea is a far way from a profitable business, and in most cases a profitable business is a far way from a long term success story.

Modern business should take a page out of historical business practice…don’t tell the customer what he wants and how he wants it….but instead…listen, take heed and hasten to deliver what the customer says he wants and how he wants it. Therein lies the secret to customer loyalty and business longevity. Quite simple to keep to, but most stubborn business owners feel differently.

How Government Could Help Small Businesses

I normally turn to regulated countries to see how they have progressed in their franchise markets in order to take the industry and all the people that go with it to greater heights.

There is an organisation in the States called: The Small Business Administration (see: http://www.sba.gov/aboutsba/index.html) who help small businesses start, build and grow. On their site they say “We recognize that small business is critical to our economic recovery and strength, to building America’s future, and to helping the United States compete in today’s global marketplace.”

How do they do this? They have a framework in place that helps to expedite small business loans (amongst other things). A good example is that Franchisors can have their business accredited/approved by the SBA, so that any incoming franchisees seeking finance have a fantastic chance of getting their finance approved quicker. Obviously the usual finance credibility criteria would stand – however, by some of the hoops already being jumped by the Franchisor right upfront – he has a better chance of growing his network of franchisees with this endorsement.

We still don’t have something like this in place in the UK. Some banks will say that they ‘approve’ certain franchisors (but only off the basis of that model already being run elsewhere and with multiple sites). However there is no real framework in place that (a) Banks can trust and therefore approve the Franchisor’s Business Plan and Model and (b) incoming franchisees can trust to give them an indication of the Franchisor’s value long term.

What have your experiences been as a prospective franchisee looking for finance to invest in a franchise?

Will there be a Decline in Franchises in 2009?

I have been doing some thinking about this question. Because, in essence, the franchise market has only but had an upward trend year on year. My belief is that what goes up, must come down. Mustn’t it?

The answer is…franchising is like the rest of business…dependant on market forces. Two things that separate franchising from the ‘corporate world’ is that it hinges on the strength of small business and an increasing demand for a particular product/service.

In the economic climate we find ourselves in now, there are some identifiable areas where I would think you would see franchising slow down:

– Residential property (estate agents, managing agents, letting agents)

– Builders

– Property contractors

– Finance brokers (particularly morgage services)

But these are slightly obvious ones! Where there has been an extraordinary squeeze on an industry, and it ultimately affects the consumer reaction to that industry pretty significantly…you will see a slow down in that franchise market. The squeeze will be two-fold:

(a) the demand for the product/service on which the model is built will drop (so is no longer an attractive franchise option)

(b) the existing franchisees will find it hard to continue to operate unless the franchisor looks to dramatically alter the model to ensure the survival of the network

So where does that put franchising in 2009? I think it will be exciting to be honest. As we all know, in the UK, there are a lot of franchises that really shouldn’t be franchising and their models will be severely tested in this climate.

What is also great news for franchisors, is that there is an influx of highly skilled people into the pool of prospective franchisees – which, up until 2006 ,was diminishing …fast. Yes, it is unfortunate that they have lost their jobs, but it has also opened doors for them and given them the prospect of owning their own businesses and not going back into employment.

I do worry about the existing franchisees out there more than the franchisors because they are not in a position to make the enormous change to the model to make the difference. My hope is that the worthy franchisors out there are doing the work to keep their franchisees successful, motivated and enhancing the model as times change.

Banks Holding Back Business

What is incredibly frustrating for business today is not that the owners are not working hard enough, bringing in enough revenue, or not being intelligent enough about their spending….its that their financial backbone of support has been torn away.

Unfortunately the press bombards us with stories of companies like Woolworths and highlight them as ‘victims’ of the ‘credit crunch’, but on looking closely what you will find is that these businesses that have ‘sadly’ had to close their doors after X hundred years of trading…are quite frankly: badly modelled and badly operated by today’s business standards.

Consumerism is so sophisticated, fickle and judgemental nowadays, that if you, as a business owner are not savvy enough and smart enough to move with what your customers’ wants and desires are…then you will go one way: DOWN. Sorry Woolies, but as nostalgic as your brand was, that wasn’t enough to move you into surviving the next 100 years.

My point though…is that off the back of a climate created by the failure of the financial institutions – previously successful businesses that were fantastic, managed superbly and have a viable product/service that is desired and people are willing to pay for …have lost one of their most valued resources: a bank manager that is supportive and caring.

I would love to really know who is milking the system now? There is always someone isn’t there? Isn’t that why  the whole sophisticated 1st world country’s financial system broke down – someone milked too much somewhere and the cow fell over and died.

I am meeting more and more small businesses who are becoming hugely stumped in their growth plans…because although they have had many years of a great track record with their banks…they are being turned away point blank. Isn’t there supposed to be a focus on investing in business, creating more jobs, improving spending and getting the economy back on track?

[silence]

What are White Collar Franchises?

This is an interesting phenomenon that has arisen over the last few years..the White Collar Franchise (WCF).  It  means in essence a business opportunity where you get all the cool thrills of running a business, with the benefits of looking and feeling good about it…without worrying too much about “labourious” back office work. Well, at least that is a pretty generalistic point of view.

The WCF is generally described as an executive/ management / investment style business opportunity. So, they wouldn’t necessarily be the kind of work where you would do any physical labour and/or actually deliver the service. You would be smarter about it and manage/delegate that to someone else, because the franchisor would have put the proposition together to ensure this is covered.

I would say that for knowledge workers such as myself, that is probably a God Send…because I am definitely not good at cleaning carpets, removing dents from cars, making burgers, driving courier vans etc. Thank goodness there is an option for people like me…the ones who are pretty good at achieving milestones and objectives through our unique ability to engage and motivate others.

The good news for franchisors in this arena, is that there are load of professional ‘white collar’ types who have flooded the market now, thanks to the scale of redundancies in the professional and financial sector (banks and investment houses). They have the perfect skill base for WCFs – they are used to communicating well, adhering to due diligence procedures and relying on their savvy client management talents.

I have yet to come a cross a terribly exciting WFC though…so far its the Tax Advisory, Accountants and Consultancy ones that seem to take the stage. Let me know if you come across one!