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Why Franchisees Fail

Fear: leverage it to achieve your dream of business ownership

Fear is a natural protective response, especially when you are about to experience something you’ve never experienced before. Fear of the unknown can keep us safe because it forces us to evaluate the situation before moving forward.  While fear can keep us safe, if the perception of fear is not managed and assessed rationally it can also keep us from realizing our dreams.

For example, a Gazelle can leap ten feet in the air and jump nearly thirty feet in a single bound. However, place them in a zoo, bound by a six-foot concrete wall, and they are paralyzed. They are paralyzed by the fear of not being able to see what is on the other side. Therefore, they won’t attempt to make a leap for their freedom. Many of us are like the gazelle. If we can’t see what lies on the other side we won’t take the leap. Thus, we remain caged by fear and live our lives always wondering, what if?

The Dream of Business Ownership

There are many people in the world that dream of owning their own business. Odds are that you are one of them. When people tell me that they would love to own their own business, I always ask, “Why?” In most cases, they talk about the freedom that comes with business ownership. Freedoms like, the ability to make their own decisions, set their own schedule, determine their own fate, and one day realize a level of financial freedom that just isn’t possible when working for someone else. However, I also find that few ever act on their dreams of owning their own business.

When I follow-up with, “What’s holding you back?” I usually hear things related to fear of failure, such as: What happens if I don’t make it? What happens if I quit my job and realize this wasn’t for me? I have a family and can’t put them at risk. I’m afraid I don’t know enough to do it on my own. And etc… While these are great reasons to take a step back and evaluate the opportunity before taking the leap, none of them should stop someone from investigating the possibility of business ownership. Fear of the unknown should force us to do our due diligence, it should not cage us.

Knowledge Is Power 

When we experience the emotion of fear we first must ask ourselves, “Why am I fearful?” Knowing the genesis of our fear helps us in our investigation of that fear. In many cases, fear is based on perception, a lack of knowledge, a lack of confidence, or all three. We let the fear of what might happen paralyze us. Starting a business certainly involves a lot of unknowns. However, if we take the time to understand all aspects of the business we might find that those things we fear are not to be feared at all. We might also find that if we operate as a good business person should their is more to be excited about than feared.

Experience tells us that the more we can learn about those things we fear the less fearful we are. For example, think about something you feared, but through education and practice you overcame that fear. For some, it might have been learning to drive a car. For others, it may have been learning to ride a motorcycle, jumping off a high dive, rock climbing, or navigating a boat. For me, it was learning to scuba dive. No matter what it was, once you became knowledgeable and gained experience the fear subsided and you became more confident.

Take the Leap

Business ownership is no different than learning to ride a bike. To overcome the fear, you must do your due diligence and educate yourself. Then, practice those skills that have been identified to be the best practices for whatever business endeavor you choose. If you are a person who just doesn’t have the skills or knowledge to start a business from scratch, but you have the drive, desire, and business savvy to try it on your own, there are other options. You can achieve the freedom of owning your own business and the support of proven systems through franchising.

Franchising offers an opportunity to own your own business while benefiting from someone else having figured out the systems, process, product, and brand. If you implement the franchisor’s systems properly and operate using tried and true business practices your odds of success are much greater than trying it without franchisor support. With that said, you must realize that franchising does not guarantee success. There are many out there who have tried franchising and failed. However, I have found that many of those who have failed not only failed to implement the franchisors systems properly, but they also failed to utilize fundamental business practices. In most cases, it is the franchisee’s failure to operate efficiently and effectively, follow procedures, hold people accountable, maintain tight financial controls, and focus on customer service that led to their demise. Likely, had they gone it on their own without the franchisor’s support they probably would have failed anyway and much sooner.

What If?

Business ownership is scary and it is a lot of work. However, if you talk to those who took the leap you will most likely find that the risk was worth it and the reward was much greater than staying in their comfortable job that restricted their creativity, passion and drive. Business ownership isn’t for everyone, but until you dig a little deeper you’ll never know if it might be perfect for you!

Big League Networking

Networking can be overwhelming and your mind can be racing with questions:

What events should I attend? Are they a good use of my time? What do I say? What do I want to achieve?

Networking can be used to find a new job, drum up new business, but successful networking all starts with a plan.

1. Determine success for the night

  • Before selecting an event to attend write down: Who do I want to get in front of? What do I want to achieve? Can my goals be achieved at this event? If the answer is no, DO NOT GO!
  • Set a specific goal: “3 new contacts”
  • Quality of contacts must be the mindset- not quantity of business cards collected
  • Work the room until you find your targets- takes practice

2. Interaction

  • The effectiveness of the networker is about the quality of questions they ask (this helps take off any pressure- make it about them)
  • Direct the dialogue to learn about the person you are conversing with to find out if they are a prospect
  • Follow what I believe to be the golden rule of networking:

“How can I help you?”
Sample questions to ask:

  • How did you get involved with this group?
  • What brought you here tonight?
  • Why did you get into your line of work?
  • What separates your company from the competition?
  • What is 1 thing you hope to accomplish tonight?

3. Slay Moby Dick

  • Attend networking events where a major target will be in attendance
  • Set the goal of making contact with this prospect or center of influence

4. Follow up

  • The new contacts do not mean anything without the proper follow up
  • Follow up with each contact by including: “I really enjoyed speaking about..” “Could we schedule a coffee to continue the dialogue on?…
  • Pro tip- write a few takeaways about the conversation on the back of their business card to keep the conversation fresh
  • Connect with them on LinkedIn the next day

Hope these tips make your networking more effective. Get out and attend an event or two; you never know who you may meet!

Remember: “The richest people in the world look for and build networks, everyone else looks for work. Marinate on that for a minute.” Robert Kiyosaki

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Ryan Rao is a Principal of Apex Franchise Development Group and is a franchise development expert who has grown multiple franchise based businesses into national and international brands. Franchising has allowed him to help individuals realize their dreams of business ownership, while permitting them to experience the independence, flexibility, and freedom that comes with being a business owner. He also serves as a franchise consultant, and is a personal growth advocate.

Follow or Connect with Ryan on LinkedIn at https://www.linkedin.com/in/ryan-rao/

Motivate your staff

The most important factor in scaling your restaurant from one unit to multiple units is the staff.  There is a tremendous need in the restaurant industry for professionals who buy into the process, develop their staff, and grow sales. The days of expecting clock punchers and “you should be thankful for just having a job” are gone with the baby boomers.

So, how do I motivate my staff?

1. Perception

“Limiting beliefs are a virus of the mind. They decline your success and happiness.” – Maddy Malhotra

  • Shift perception and titles to reflect empowering positive positions. For instance GM of a pizza shop to CEO of a small business which does $650,000+ in revenue.

2. Bonus

“Let your performance do the paying” – Charlotte Bronte

  • The pay for management should be a scorecard bonus program correlated to store performance. Management should understand the companies P & L and what affect food cost and labor cost have on the bottom-line. The bonus should be structured on the control of food and labor cost in addition to hitting and surpassing sales numbers.

3. Purpose

“As we look ahead into the next century, leaders will be those who empower others.” – Bill Gates 

  • Define a purpose for your management. People are motivated by interesting work, challenge, and increasing responsibility.  Provide opportunities to multi-unit management and store ownership.

4. Work Life Balance

“The measure of intelligence is the ability to change.” – Albert Einstein

  • Offer flexibility. Small gestures often make a big difference.

5. Listen

“ Most of the successful people I’ve known are the ones who do more listening than talking.”  –  Bernard Baruch

  • Empower. Create mediums for employees’ ideas for job improvement.

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Ryan Rao is a Principal of Apex Franchise Development Group and is a franchise development expert who has grown multiple franchise based businesses into national and international brands. Franchising has allowed him to help individuals realize their dreams of business ownership, while permitting them to experience the independence, flexibility, and freedom that comes with being a business owner. He also serves as a franchise consultant, and is a personal growth advocate.

Follow or Connect with Ryan on LinkedIn at https://www.linkedin.com/in/ryan-rao/

Disciplined Innovation

How creative is your company? A 2010 study of 1,500 CEO’s indicated that leaders rank creativity as the No. 1 leadership attribute needed for prosperity. It’s the one thing that can’t be outsourced; the one thing that’s the lifeblood of sustainable competitive advantage. Hyper-growth companies such as Zappos, Groupon, and Uber credit a culture of innovation as their primary driver of success. They take a deliberate approach to fostering creativity at all levels of their organizations, and deploy creative thinking to attack problems big and small. (Inc)

Check out these 7 ways to breed creativity

1. Question

“He who has a why to live for can bear almost any how.” -Friedrich Nietzsche

Breed a culture of asking “Why”? “Why” does your organization exist? “Why” do you do it this way? Create a “What if…” board in your workplace, where employees can pose outrageous “What if” questions.

2. Purpose

“Creativity dies in an undisciplined environment.” – James C. Collins

Every task must have a clear purpose and expected outcome. Purpose magnetizes passion throughout the workplace.  Steve Jobs purpose was to put a computer in every home. Your specific purpose must be your own, but the bigger and more important your purpose is, the more passion it has the potential to create within your team. Passion breeds creativity.

3. Empower

“Happiness is not the absence of problems, it’s the ability to deal with them.”  – Steve Maroboli

According to a 2008 study by Harvard University, there is a direct correlation between people who are empowered to make their own decisions, and their creative output. An employee who has to run every detail by for approval will quickly become numb to the creative process.

4. Expression

“Where all think alike there is little danger of innovation.” – Edward Abbey

Creativity is self-expression. Imagine a typical manager hovering over Picasso, barking orders, tapping his watch, questioning the return on investment, and demanding a full report on why he chose a certain brushstroke technique. Picasso’s creativity would shrivel.

5. Fearless

“The essential part of creativity is not being afraid to fail.” – Edwin H. Lane

From Benjamin Franklin to Henry Ford nearly every breakthrough innovation in history came after countless setbacks, mistakes, and failures. The great innovators and achievers weren’t necessarily smarter or inherently more talented. They simply released their fear of failure and kept trying. They didn’t let setbacks or misfires extinguish their curiosity and imagination. Employees should not fear sharing their thoughts. Embrace their ideas and the idea process. It should be accepted to say what you think, even if it is controversial. “We tried that; it doesn’t work” is not an acceptable response to brainstorming sessions.

6. Act Small

“If you want something new, you have to stop doing something old” – Peter F. Drucker

Smaller companies tend to be more curious and growth oriented. They have a stronger sense of urgency and are not afraid to embrace change.  In contrast, larger organizations often exist to protect previous ideas rather than to create new ones.

7. Nurse

“To have a great idea, have a lot of them.” – Thomas Edison

Innovation often starts with one idea and comes to life being something completely different. Create mediums to nurse ideas to life through the input of the team. Start an idea whiteboard and collaborate.

Here are some great links on innovation:

http://www.inc.com/articles/201106/josh-linkner-7-steps-to-a-culture-of-innovation.html

http://www.ted.com/talks/simon_sinek_how_great_leaders_inspire_action?language=en

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Ryan Rao is a Principal of Apex Franchise Development Group and is a franchise development expert who has grown multiple franchise based businesses into national and international brands. Franchising has allowed him to help individuals realize their dreams of business ownership, while permitting them to experience the independence, flexibility, and freedom that comes with being a business owner. He also serves as a franchise consultant, and is a personal growth advocate.

Follow or Connect with Ryan on LinkedIn at https://www.linkedin.com/in/ryan-rao/

Why do your employees leave?

Why are employee’s leaving your company?

Let’s reverse the question; Why do your employees stay?

How much does your company spend on recruiting? Interviewing? Onboarding?

The golden rule of being with one company for a career is retiring with the baby boomers. Much of the knock on millennials entering the workforce is the lack of “loyalty” to the company. To plug the holes of employees vacating, companies spend a considerable amount of resources on recruiting new employees.

Perhaps the model as we know it is flawed. Instead of accepting the turnover and spending resources on finding the next employee; let’s refocus our efforts on our current employees. Does your organization understand what your employee’s desire? Do you understand how to create an environment where very few employees would ever leave? Do you understand how to get the highest level of performance out of your employees? This type of environment entices top performers to FIND you, rather than going out to find them.

According to a recent survey by Time Magazine here is why employees stay:

  • I enjoy the work I do (67%)
  • My job fits well with the other areas of my life (67%)
  • The benefits (60%)
  • The pay (59%)
  • I feel connected to the organization (56%)
  • My co-workers (51%)
  • My job gives me the opportunity to make a difference (51%)
  • My manager (40%)

So how do you create a culture where employees stay?

  • Start with an extensive interview process ensuring you have the right candidate for the job.
  • Work life balance. Refrain from the rigid clock punching mentality and let employees work on their own time.
  • Create mediums for employees to have a voice in the company’s future
  • Help employees find their passion. Work closely with employees to ensure that each employee is engaged, excited, and challenged to contribute, create, and perform.
  • Understand your employee’s skills and abilities. When employees are in a position based upon their skill set they feel prideful, accomplished, and self-confident.
  • Train and Develop. Employees want to develop and grow their skills. Invest in it!
  • Employees need to understand their contribution of work to the organization’s goals. Discuss the relevance of the employee’s job, key contributions, and deliverables to the overall organization. Employees need to feel connected and that they are part of an effort that is larger than just their job. This creates the sense of meaningful work.
  • Organization’s financials- Employees who are worried about getting paid tend to leave
  • Finally praise goes along way. Praise employees for all accomplishments (big or small)!

Recruiting is expensive. Give retaining a shot.

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Ryan Rao is a Principal of Apex Franchise Development Group and is a franchise development expert who has grown multiple franchise based businesses into national and international brands. Franchising has allowed him to help individuals realize their dreams of business ownership, while permitting them to experience the independence, flexibility, and freedom that comes with being a business owner. He also serves as a franchise consultant, and is a personal growth advocate.

Follow or Connect with Ryan on LinkedIn at https://www.linkedin.com/in/ryan-rao/

I want to own a business; What are my options?

Three different roads to business ownership are possible each with challenges and opportunities.

1. Startup

Attempting to start a business from zero is the riskiest of the three but in certain scenarios it offers the highest upside. Having an idea is just the start. The business will need to consider corporate and production processes, accounting standards, business advisors, marketing, and REVENUE generation. How about the fact that a staggering 95 percent of small business will close their doors before they hit their fifth year of operation? If you are contemplating a startup seek out advisors who have been there and done it. If you are considering a startup, know that you must be agile and willing to embrace the ability to adapt.

Keys to success for a startup

  • Find a mentor
  • Have a strong personal network
  • Raise sufficient capital
  • Solve a problem, fill a need
  • Be the expert
  • Can you save someone money, can you make someone money, can your product or service make their life easier?
  • Identify your customer needs and wants and the value they associate with them
  • Value Proposition – Differentiate your offering based on unmet needs within the market place
  • Establish go to market strategy
  • Build processes
  • Be consistent
  • Sell absolutely everyday
  • Communicate any and all directions in writing
  • Surround yourself with people smarter than you
  • Track gross and net profits monthly

 

2. Buy an existing business

Generically a business acquisition is a greater financial cost in the short term than a startup. Because of the increased cost; risk is in theory mitigated. Depending on the sector, business valuations range. Due diligence is key. Mindset of the takeover must be larger than one person. The new owner has to communicate with each and every person in the company. A great majority of your time should be spent conducting a human capital audit by mentoring and coaching current employees. The major challenges in buying an existing business are getting the staff to buy in, shifting the company culture, improving communication gaps, and dealing with the resistance to change.

Keys to success

  • Due Diligence – Hire a professional if you are not an expert in valuing a business opportunity
  • Release control to capable supervisors and lead them
  • Create an advanced financial reporting and projection system
  • Instill a team-based mindset
  • Overhaul the business model
  • Strengthen all communication
  • Identify the strength and value of the existing brand/name
  • Speak to current clients/customers to gain an understanding of why they choose to do business with your target. Ask them, what needs to be improved and why? What are they best at and Why? What is that important to them?
  • Speak to current employees. Ask them why they choose to work there? Ask employees what can be improved and what impact would that have on their performance and for the customers of the business?
  • Develop an actionable strategic plan that incorporates all you learned while exercising your due diligence to acquire the business

 

3. Buy a franchise

Owning a franchise allows you to go into business for yourself, but not by yourself. A franchisor provides franchisees with a certain level of independence where they can operate their business. A franchise provides an established product or service which may already enjoy widespread brand-name recognition. This gives the franchisee the benefits of a pre-sold customer base which would ordinarily takes years to establish. A franchise increases your chances of business success because you are plugging into proven products, processes, and methods. Franchisees are required to operate their businesses according to the procedures and restrictions set forth by the franchisor in the franchise agreement. In exchange for the turn key opportunity most franchise systems require an initial franchise fee and ongoing royalty. Since the royalty is directly correlated to sales, franchisors have skin in the game to help the business run at optimal levels.

Keys to success

  • Follow the process and systems set forth
  • Believe in proven blueprint that others are successfully utilizing to achieve their dreams
  • Understand levels of support from franchisor
  • Interview successful franchises
  • Have clear expectations for the financial performance of the franchise
  • Community involvement
  • Be passionate about the service or product you will be offering to the marketplace
  • Embrace the franchise model

 

All of the above offer the freedoms of being your own boss. Which avenue do you want to pursue?

Checkout the census data here http://www.businessknowhow.com/startup/business-failure.htm

and here http://smallbiztrends.com/2012/12/start-up-failure-rates-the-definitive-numbers.html

 

Checkout these articles http://www.entrepreneur.com/article/227394

http://www.statisticbrain.com/startup-failure-by-industry/

http://www.businessknowhow.com/startup/business-failure.htm

http://www.franchise.org/what-are-the-advantages-and-disadvantages-of-owning-a-franchise

________________

Ryan Rao is a Principal of Apex Franchise Development Group and is a franchise development expert who has grown multiple franchise based businesses into national and international brands. Franchising has allowed him to help individuals realize their dreams of business ownership, while permitting them to experience the independence, flexibility, and freedom that comes with being a business owner. He also serves as a franchise consultant, and is a personal growth advocate.

Follow or Connect with Ryan on LinkedIn at https://www.linkedin.com/in/ryan-rao/