THE PICTURE OF SUCCESS
TOP PERFORMERS SHARE REAL-LIFE LESSONS FROM BUYING A FRANCHISE
in this article:
December 2013 - What does buying a franchise really teach you? Simon Lord asked New Zealand’s best franchisees what they have learned about franchising, about business and about life
Ivy Joe has a diploma in International Finance & Commerce and ran a number of businesses for ten years, but she believes that it was only when she bought The Coffee Club franchise in Bethlehem that she started to achieve what she really wanted out of life – a good business that allowed her time for herself and her family.
Brent Lemon is a sheep shearer from Greymouth who spent years working in a freezing works before he and his Wyoming-born wife Mary bought a Just Cabins franchise. Now, he’s a shearer by day and a part-time entrepreneur too, with 39 cabins generating substantial income for the family.
Courtenay Stefanek left Vancouver to see the world and, after a variety of jobs in retail and hospitality, ended up selling gym memberships in Tauranga. She got fed up ‘making a lot of money for someone else,’ so she bought a V.I.P. home cleaning franchise in Mt Maunganui. Five years later, she has three staff and her business is constantly growing.
Bruce Mildon serviced and sold milking machines on commission for 15 years. Three years ago, he took on a Paramount commercial cleaning franchise in Hawkes Bay. Today he employs 25 staff and has a turnover of nearly $600,000.
What unites all the above people is that they were named Franchisees of the Year in their categories in the 2013/14 Westpac New Zealand Franchise Awards. In the case of Ivy Joe, she was named Supreme Franchisee of the Year for the second year running, the first franchisee to achieve this feat in 19 years. (In 2014/15, Ivy made it three in a row - possibly a world first! - Ed.)
We talked to each of them to find out what they had learned from buying a franchise and what they thought were the key lessons for others who would like to find success in their own lives. They outlined how the franchise helped them channel their knowledge, skills and experience to create profitable outcomes.
Ivy Joe is a prime example. When she bought The Coffee Club in Bethlehem, Tauranga, she was no stranger to business. She came to New Zealand from Guangzhou when she was just 23 with her new husband William, who had been here since he was 15 and had worked in the hospitality industry. Although Ivy had her business diploma, they had no real management experience; nonetheless, the young couple bought a run-down Chinese restaurant in New Plymouth with borrowed family money. ‘We believed we could do it and slowly worked out what worked and what didn’t,’ Ivy says. ‘In the end, it was simple – get the price right, get the food right, get the service right and make sure your customers are happy.’
It was a formula that they applied first to the restaurant, which they sold to William’s brother after three years, and then to the café they took over next. ‘That was a real challenge at first – I didn’t know how to butter bread or make a sandwich, and had no idea what cottage pie was,’ laughs Ivy. Then they bought a fish and chip shop and, ultimately, a bar/restaurant. ‘We worked every minute of every day for 10 years,’ Ivy recalls. ‘It was such hard work and wasn’t really much of a life. So we sold up and went to China, but after three months I knew I couldn’t go back to that life any more. Our boys had grown up here and doing business in China is very different.
‘But I didn’t want to go on working all the time, either. If I was going to run a business again I wanted to work at another level, with professional systems that meant I didn’t have to do everything myself. That’s why I chose a franchise and, six years later, I don’t regret it. A franchise gives you systems, support, marketing help – it’s all there for you to use, and it’s always being improved and upgraded to help you stay ahead. I look at it this way: when you’ve only lived in a small village, it’s hard to picture what the world can be like. A franchise shows you the bigger picture and gives you the tools to help you grow. As a result, my business brain got bigger and I was able to see more and develop a proper career.
‘When we had our restaurants I was always going to the wholesalers, sourcing things, negotiating… But I don’t need to worry about that now; the franchise does all that for you. Then there’s the training and systems. The Coffee Club provide everything you need to recruit staff and train them up in specific roles so if, say, you’re appointing a duty manager all you have to do is follow the process. Once you can rely on everyone to do their job well, you can give them targets to achieve and space to develop, the chance to advance.’
And that gives Ivy the time to work on the business rather than in the business. ‘That’s where the real growth comes from, and it’s another area where the franchise is so great. I get regular visits from Bhana Magan, The Coffee Club’s business development manager. I can say, “I want to do x and y” and she will help me work out how to do it and what I’ll need. She helps me set up my business plan for the next year and ensures I’m on the right track to achieve my goals.’
Ivy says that one thing she has learned over the last six years is that, ‘Success isn’t just the money side, it’s about how you operate, too. I now work just 20-25 hours a week in the café. I have a great team, and the Awards are the result of all their hard work, too. They don’t need me to make coffee or serve or be in the kitchen any more, although I can jump in if I’m needed. I’m now able to focus more on marketing and the customer experience – after all, now we’ve won all these Awards, everything has to be perfect! But my sons are 12 and 14 now and I am spending a lot more time with them. They have karate lessons, swimming, badminton and lots of things so I’m a full-time taxi driver after school. But I have time for me, too; time to stop, read the paper over a coffee and go to yoga several times a week. I can breathe without being stressed about the business all the time – and that’s what the franchise has given me.’
Brent and Mary Lemon are used to breathing easily. A Greymouth boy, Brent grew up on a farm just 30 miles from where the couple now live and has been a self-employed sheep shearer for many years. He met Mary, an accounting student at the time, while working under the wide-open skies of Wyoming and brought her home to the West Coast. The couple have two children, now 23 and 12.
‘Brent was used to being self-employed, but hadn’t actually run a business as such,’ Mary says, ‘while I’d worked as a book-keeper, accounts clerk and a team leader in corporate services. so I had a business background but had never applied it to a business of our own.’ All that changed when the couple saw an advert for Just Cabins, which supplies extra rooms. ‘We thought that was just what we needed for our then-teenage son so we rang them. They said they didn’t have anyone on the West Coast but asked if we would be interested in taking up the franchise for the area? It all went from there.’
The franchise was a good match for their combination of practical and financial skills. ‘We’d had rental properties and after training I actually built the first few cabins myself, although we buy them ready-built now,’ says Brent. ‘We set ourselves the goal of having 30 cabins after five years and we’ve actually got 39 within that time, so it’s gone really well.
‘We’ve learned a whole lot from having the franchise about business planning, testing and measuring marketing, setting goals, contracts and so on. The franchise is all about working together. It was fairly new when we got into it – I think we were only the sixth franchisee. We talked to the other franchisees, went to conferences, shared information and experiences, and it helped everyone grow.’
Research suggests that a willingness to become involved in the franchise and help improve the model is often a characteristic of top-performing franchisees, and is one of the greatest advantages of buying a franchise: the opportunity to co-operate with and learn from others who are facing exactly the same challenges and opportunities as yourself, but not in competition with you. In fact, McDonald’s requires its franchisees to demonstrate commitment to brand development outside their own business before it will grant them a second unit.
Brent’s recipe for success is straightforward: ‘Follow the business model and keep looking for new opportunities.’ And Mary, who now has a dog grooming business, too, adds, ‘Look after your customers and treat them with dignity and respect. We have a lot of repeat business now and we have one of the highest rates in the country for word-of-mouth referrals.’
The couple admit they were surprised when their names were announced as winners of the Lifestyle Services category. ‘We didn’t think we had a chance of winning against all those other franchises and big city franchisees with lots of staff,’ says Brent. ‘It’s given us a lot of confidence that we’re not just doing well – we’re doing it right.’
Courtenay Stefanek had a secret weapon when it came to buying her own business – her father. ‘Dad’s been self-employed most of his life and actually used to teach courses for people who wanted to get into business, so I guess it’s in my DNA,’ she laughs. But although Courtenay did a business management degree in her native Canada, after she graduated she set off to explore the world for years. She settled in Tauranga in 2004 but it was only five years ago that she decided the time had come to put all that knowledge and experience to use.
‘I was doing high pressure sales and making a lot of money for someone else, which didn’t seem logical,’ Courtenay says. ‘So I decided it was time to use my degree and started looking into opportunities. I knew enough about the difficulty of getting a brand new business off the ground – the time and effort and capital it took – and when I saw an existing cleaning franchise for sale, it appealed.
‘From a distance, my dad gave me good advice. He was realistic without being negative and pointed out that when you are self-employed there is always a risk of failure unless you’re willing to put in the hard work. I guess I took those words to heart because for the first year I worked 8am till 4pm, then 5pm till 10pm every day. But I grew the business by 300 percent in the first six months and never looked back.’
Given that she already had a business management degree and had managed retail and hospitality businesses for others, what did Courtenay get out of buying a franchise?
‘V.I.P. was an award-winning franchise with a big brand, so that meant I’d have less work to do getting established. It’s been around for a long time and had lots of good systems in place, so I reckoned I’d learn plenty. And I liked the idea of there being a family of other franchisees to talk to and get support from, as well as the franchisors.
‘There’s a big difference between studying business and doing it for yourself, so I really appreciated all the practical training and support: how to quote accurately, how to work efficiently, the importance of regular invoicing and accounting, when to employ others and how to train them – all those tips add up. And once you’ve got a handle on it, you learn how to do what Ivy said: work on the business, not in the business. Thanks to better staffing and better scheduling, I’m cleaning about three-and-a-half days a week now and spending the rest of the time on bookwork and business building. I’ve built up the customer base and sold some parts on to other franchisees so I have a more efficient area, and now I’m looking at possibilities for more growth.
‘I think building a business always requires you to have a passion for what you do, and I’m passionate about this business and my clients. The great thing about being part of a franchise is that it supports me in focusing on those areas rather than all the other stuff.’
Bruce Mildon never really intended to be a franchisee, but he’s become a very successful one. ‘I’d never been self-employed before but my previous job servicing and selling milking machines was all commission-based so it wasn’t like going from wages to nothing,’ he grins. ‘I was used to the idea that there’s no such thing as holiday pay and if you don’t make the sale, you don’t get paid!’
So how did he become an ‘accidental franchisee’? ‘A friend was manager of a local commercial cleaning company,’ Bruce explains. ‘When Paramount bought it to expand in Hawkes Bay, she stayed on and I used to help out on things like spouting jobs. Then she moved on and I took over her role and although I was an employee, Paramount said to me, ‘We’ll pay you like a franchisee.’ Well, I was used to working on commission so that didn’t bother me, and once the cheques started to roll in and I saw the figures, I was hooked! I took on the franchise and in three years the turnover has virtually tripled to nearly $600,000.’
People looking at buying a business often get put off franchises by the thought of having to pay ongoing franchise fees to the franchisor but, perhaps because Bruce got the chance to ‘try before you buy,’ he never saw the fees as a problem. ‘Paramount had such a good operation and I knew I didn’t have those systems or the skills to develop them. So I didn’t think, like some people, “I’m not going to work to line someone else’s pocket.” I thought, “There are fees to be paid so I’ll just compensate by growing bigger!” And since the franchise was going to help me to grow bigger, it wasn’t an issue.’
Taking on an existing company meant that Bruce went from being a one-man band to employing over 20 staff – a challenge for any employer, let alone a first-timer. ‘But that was an advantage in a way,’ Bruce suggests. ‘I knew I couldn’t manage all those people on my own so I asked Paramount’s advice. They said to me, “You have two options: you can work in the business or on the business. Which do you want to do?” I said I wanted to work on the business, and they taught me how to do it. I have supervisors in place and I make them accountable so they take ownership for each job. I don’t want to be a cleaner – I’ve never even stood in as a relief. I want to run a cleaning company, so that’s what I do.
‘We set goals and targets for the business, and my job is to make them happen. I’m not really a salesman and I’d struggle with cold calling, but I’m very good at fixing a customer’s problems. So I employ someone to do cold calling and I follow up opportunities and referrals – and then I make sure they’re looked after.
‘The franchise has taught me a lot about managing relationships. I had a problem with one client, we couldn’t get a satisfactory result cleaning a floor whatever we did. Galvin Bartlett, the founder of Paramount, came down to have a look himself. The problem was down to something that had been done perhaps 10 years before we took over the contract, but he fixed it at his own cost and the customer was over the moon. Of course, when that customer opened new premises, we got that contract too.’
Bruce Mildon sums up the feelings of many people when he says, ‘I always felt I had a business in me, but I didn’t know where to start. The franchise gave me the opportunity. In fact, it didn’t just give me the opportunity: it gave me the customers, the training, and the systems to make it work. It’s a great way of getting started then, once you’re in it, you keep thinking, “How can I grow it? What are my goals? What do we do next?” And you find the franchise is behind you every step of the way. I love that support and I love that family feeling. Running your own business could be a very lonely job, otherwise.’
David McCulloch, the founder of Arano and now better known as The Franchise Coach, once said that ‘franchising is the biggest business school in the world.’ The very nature of franchising is that it can take people from almost any walk of life and teach them the skills to operate, manage and grow their own businesses on a very practical level.
To be successful in business, you don’t need to get into business school or do an MBA, but you do need to be willing to work hard, learn, and continuously improve. As Ivy, Brent and Mary, Courtenay and Bruce have demonstrated, buying a franchise can help you short-cut that process by providing practical guidance. A good franchise will help you set up and manage your own business, then take you through the necessary steps to achieve your goals. Choose well, apply the systems, listen and learn, and in a few years’ time you too could have a business good enough to win awards!’
This article was first published in Franchise New Zealand magazine Volume 22 Issue 4
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