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  • Discussion on Franchising or Expanding

    Hi Everyone,

    I have been talking with Troy and Dan. They both own a lawn care operation and have been interested in learning how to expand or franchise their business.

    Dan just recently wrote and said he has decided to start building a professional lawn care business with the intention of franchising in the future.

    He has a background or maintaining high end golf courses.

    Dan could you tell us a few things.

    Why do you want to franchise your business?

    What do you feel your franchise will be able to offer as opposed to other franchises out there. How will you stand out?
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  • #2
    My biggest problem for me is trying to get the money to get big. You have a double edged sword. You need to make money to get big, yet in order to be big, you have to have money.

    I really want to get huge here in the next 2 to 3 years. The biggest problem I am facing though is personal and business debt. I would love it if in 3 to 5 years I was just in the office all day long. And 5+ years I would love it if I just had to come into work maybe 2 to 3 days a week.

    I also want to expand beyond the state of Michigan and go south. I have in mind the Carolina's, Florida, and Texas as my choices.


    Troy

    Comment


    • #3
      Franchising is an excellent idea, especially if you are interested in spending more time on the business side of things rather than in the field. The task should not be taken lightly though.

      I am not an experienced franchiser however it is an option that I have investigated quite thoroughly.

      The first thing I would say is that you must have your own operation streamlined and profitable. If you struggle with cash flow problems or fail to plan properly then these things need to be resolved before franchising or expanding or you are simply growing the problem. As well, if you find it very difficlut to produce quality work with hired help this could be a red flag.

      Whether you franchise or just expand you have to have documented systems in place for everything. Morning procedures, after work procedures, job site procedures, year-end procedure... and so on. This must all be in place and running smoothly before making any other steps towards franchising. As Michael Gerber says 'People don't run businesses, systems run businesses and people run the systems'.

      So when I mentioned that employees not producing the same top quality work as you is a red flag it's because you don't have systems in place. The new employee should know how to produce exactly the same as you because it's part of your written system. They are trained exactly how to do the job. Without this kind of meticulous training how will franchisees know how to produce the same outstanding results as the parent company?

      So, in a nutshell... it's all about re-producable systems.

      By the way, Gerber's book 'The E-myth Revisited' is a must read for anyone thinking about expanding.
      Joel LaRusic
      Consultant/Author, Start & Run a Landscape Business
      www.mowboy.com

      Comment


      • #4
        Troy,

        There are three main ways I know of to expand your business. First is to find investors to help you fund your expansion. Second it to self fund your expansion. Third is to take on business partners.

        Unless you know some close associates willing to invest in you, this is going to be a tough way to go.

        Self funding is also tough unless you have money to do it.

        My suggestion is based on the way Paul Orfalea expanded his Kinko's company. This wasn't a franchise. He would find people he knew and got them to partner with him to open up Kinko's in different areas. Read his book here.

        Remember though the first thing he did was he got one store working and profitable. He had a business process that could be duplicated just as Joel stated above.

        My take is you need to get this process working first within your company. Get something up and running and keep tweaking it until you make it as profitable as possible. Then possibly try to spin off a route into a partnership with the best employee you have. Give that employee a financial incentive to do the best job they can. There is a tremendous amount of unused energy out there in people that you can harness if you give them a direction and a financial incentive to follow it.

        When you get one spin off partnership like that, you can then use what you learned from it and recreate it again and again. If you have proven results you can find others that will be looking to you to help guide them to their pot of gold at the end of the rainbow.

        I am willing to help you create more of a plan on how to do this as I am sure others on this forum are. Let's hear some of your feedback.
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        Comment


        • #5
          what I really want to do is expand the business myself, without the partners. I am afraid that the partners will not follow my ideas and run the business into the ground. I would rather do it myself to know that I did it all of my own. Yes, it's probably going to take me longer, but I feel that it's more secure that way.

          Comment


          • #6
            Sorry I'm late, I just received the link to this discussion.

            I'm new to the lawn care business as mentioned above. I am a detailed person who is passionate about what I do. It boils down to wanting to be the best at what I do and doing whatever it takes to get there.

            My goals with my new Lawn Care business are to provide top notch service to my surrounding area. Don't get me wrong, there are a few companies in my area already doing this, however, after speaking with many homeowners, these big companies lack an agronomically educated individual calling the shots and knowing whats best for a given grass.

            Why do I want to franchise? Before I can answer this, I must state the mission statement of the business: To provide reliable, affordable, professional lawn care solutions to customers.

            Reliable service is a huge factor in this business. Do you care enough about your customers property to make it shine? Will you mow it twice in one week if you have to? Can you keep and maintain a sound maintainence schedule? Do you present a professional image in all aspects of what your doing? Do you respect the money of your customers? I do, I can, and I will! This ties it together prestty well. Many companies offer a lot of services but preform them in blue jeans and tank tops, NOT ME. Many people can't confidently answer routine "grass related" questions, I do and can. If someone were to do work in or around my home, I would much rather a clean, professional looking individual versus a "grimmy" looking one. All of my customers love the fact that I am reliable, knowledgable, honest, and professional.

            Ok, so it seems like people really like what I have to offer, why re-invent the wheel? This is what people need, and this is what people want. Everyone needs a reliable, knowledgeable, honest and professional lwan care provider. More importantly, everyone wants their property to stand out. It's a winning combination.

            I think I answered why I want to franchise and how I will seperate myself from the pack. If I didn't, let me know.
            ****Dan****

            Comment


            • #7
              Troy,

              I know many people hate the concept of having partners but whenever you use someone else's money to grow they do become a partner in a sense. Many many people have been able to take on partners to grow their business and later buy them out. There are ways to set up a business system where everyone works together. The first thing is to create a a functioning model of this business system with one person.
              Please ask around and investigate this but I think you will find more people have been successful by building a business with partners than by doing it all on their own.
              I think many people are afraid when they take on partners, they will lose power and control over their business. It's this fear that keeps them from growing or expanding. The more you know how to run your business. The more people will come to you and need you to help them run their business. This is how you could grow.
              You can also learn from other people things you might never have learned on your own.

              Tell me more of your thoughts. What is your next step?
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              Comment


              • #8
                Hi turfman007,

                If you get a chance, read Copy This. It is a book about Kinkos and how they expanded. In the book Paul "Kinko" Orfalea talks about how a grad student wrote a paper on how he would like to expand Kinkos in Japan, where he is from. He sent this paper to Paul.
                Paul contacted the student and they met. Later Paul flew to Japan and met with the company who sponsored this Japanese student college studies. The person at this company Paul met with asked him with all of Kinko's success, how come they didn't use the franchise model to expand? Paul responded by saying something to the effect of this. Do you know what the franchisee / franchiser model is like? He then, with each hand, gave the other hand the middle finger. The Japanese businessman was stunned. Paul went on to say to describe how their relationship was always at odds. One located in itís ivory towers was telling the other, located in the field how to run things when it was the ones in the field who knew better how to run things.
                So instead of franchising his company, he had different business partners open stores under his company name Kinkoís. The partners invested their own money to buy into the winning formula and owned 40% of the store while the parent company owned 60%. There is a little more to this, but this is the basics of it.
                The Japanese businessman was so impressed with Paul that they help get Kinkoís Japan started and the graduate student who kicked off this idea was employed to get it going.

                Now my question to you is. If you do plan on expanding your business, why use the franchise model?
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                Comment


                • #9
                  Team Gopher:

                  To the best of my knowledge, a franchise model is similar to a an outline, steps that are followed to achieve a certain goal. These steps become systematic for everyone to follow guaranteing a desired product. For example, all Burger Kings probably have the same "instruction posters" hanging up detailing how to construct the Whopper right! It's what works.

                  Certain things need to be done in routine fashion for maximun productivity. Rules are meant to be followed.

                  Now getting back to your question, why use the franchise model? I'm not sure I would at this point. I like the way "Kinko" did it. Once you have a well oiled machine, why wouldn't people want to take advantage of the name you built? So, if I live in PA and I comminicate with a collegue in MD and convince him/her that my business is a success and they should open one, boom away we go. Being that it is an established company with a reputable name, customers are more likely to choose it versus a new "start-up" with no background.

                  I may be off-track as to what the franchise model. I have spoke about the way I feel is the "better way" to achieve growth. If I'm way off, please inform me.


                  Dan
                  ****Dan****

                  Comment


                  • #10
                    Hi turfman007,

                    This is good. You are thinking out loud and considering your options. I am with you so far.

                    Something next to consider is this. When Sam Walton started Walmart, the one edge he felt he had over other retail stores was that he could keep his expenses lower than theirs. So as long as he could keep his expenses lower, he could charge the consumer less and therefore attract more business. Attract more business he did.

                    Now apply this to you. How are you going to keep your expenses lower than your competitors and reach out to a larger market? Will you do this or will you go for a premium services that charges a premium as well?

                    How will you compete against a start up who's only expense is a truck and a mower or maybe even just a mower? Will you offer services which require additional skills or a license?

                    How will you stand out?

                    How will you profit?

                    How will you keep your expenses low?

                    Let's hear more of your thoughts.
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                    Download your Free trial of Gopher Lawn Care Software.

                    Comment


                    • #11
                      Team Gopher:

                      I plan on keeping my expenses lower by doing my homework while maintaing an evergrowing network group. I consider myself a people person and I have benefited from this personallity trait time and time again. Ex. Today I received free Season Greetings cards that I will have my business name printed on and sent to respected customers. This was the result of a call made to follow up on a faxed estimate. I asked about their carrer (people LOVE talking about themselves) and learned they print custom stationary/cards. You get the picture.

                      Being open minded allows many more options to come your way. Phone calls are cheap, call around and see who has better deals on certain products. Stop in and "schmooze" make them remember you! By adopting this mentality, I feel I can have an upper edge on on the competition. A structured operation will also aid in minimal expenses. For example: If I run low on seed, I call my local service rep and have more delivered, possibly to the job site itself. Don't stray away from what works.

                      Many people go into business with no intention other than making money fast. While doing this, they "keep " so much $$ for themselves they have to keep a higher premium to support their now "fun" lifestyle. GREED GREED GREED. My intention is obviously to make money, however, I would like to provide everyone with a product they can afford, not just the wealthy. Good things come to those who wait, SO DOES $$.


                      Competing against a startup will likey occur. My established business name and product will help a great deal in terms of competing. If "our" prices are close, why would anyone choose a smaller company versus an established one? I wouldn't!!

                      Additional services will consit of fertilization, weed treatment/control, and the like. It is easiler for the homeowner to pay 1 company for everything versus 1 for mowing, 1 for fertilization, 1 for aerating, and so on. Checks are expensive! For this reason, an applicators liscence will need to be obtained and kept up-to-date. Either by each individual or by the "owner" or something along those lines.


                      How will you stand out? Professionalism, Professionalism, Shiny red trucks with green and black logos, always clean. Unifiorms, excellent product, customer satisfaction, and affordibility

                      How will you profit? In large sums (LOL).

                      How will you keep your expenses low? Mentioned above

                      Let's hear more of your thoughts. (just having some fun)

                      Dan
                      ****Dan****

                      Comment


                      • #12
                        Hi turfman007,

                        Well good for you it seems you really want to do this. How about we develop up a business plan. This will then help create a sales platform to potentially get others to join you versus trying to go out on their own and do it.
                        We can then test it out and post it around the internet and see what others think of it. Would they want to get involved in such an organization. Would their be any value added benefit for them to do so? We won't know until we try.
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                        Comment


                        • #13
                          Business plan questions.

                          Business Description
                          - Give a one paragraph description of your business.
                          - Where is your business located?
                          - What services does your business offer?
                          - What value does it add to the marketplace?

                          Management Abilities
                          - What are your qualifications?
                          - How will your experience contribute to the success of your business?

                          Business Strategy
                          - What is your business strategy?
                          - What are the strengths of your business strategy?
                          - What are the weaknesses of your business strategy?
                          - What are the key strategic opportunities you have identified in your marketplace?
                          - How will your business take advantage of these strategic opportunities more effectively than your competition?
                          - How do you intend to maintain your competitive edge?
                          - Describe the key challenges you face and how will you overcome them?

                          Legal Structure
                          - Will your business operate as a sole proprietor, partnership, corporation or an LLC?
                          - How will your legal structure decrease your business's exposure to risk?

                          Financial
                          - How much will you personally invest in your business?
                          - How much money are you seeking from banks?
                          - How much money are you seeking from private investors?
                          - How long until you plan to break even?
                          - How long until you plan on making a profit?
                          - What will your start-up costs be? Be specific, describe each and the cost.
                          - What is your sales forcast for each month of the entire year? List each month's goal.
                          - What will be your monthly operating expenses? Be specific, describe each and the cost.
                          - What will your monthly fixed costs be? Be specific, describe each and the cost.


                          Mission Statement
                          - What is your business?
                          - How will your business succeed?
                          - What values are important to your business?
                          - How does your business improve the lives of your customers' and employees'?

                          Marketing Slogan
                          - What is your marketing slogan?

                          Market Analysis
                          - What are the positive NATIONAL trends that will affect your business?
                          - What are the negative NATIONAL trends that will affect your business?
                          - How will you take advantage of the positive trends and deal with the negative trends?

                          - What are the positive REGIONAL trends that will affect your business?
                          - What are the negative REGIONAL trends that will affect your business?
                          - How will you take advantage of the positive trends and deal with the negative trends?

                          - What are the positive LANDSCAPE INDUSTRY trends that will affect your business?
                          - What are the negative LANDSCAPE INDUSTRY trends that will affect your business?
                          - How will you take advantage of the positive trends and deal with the negative trends?

                          Customer Analysis
                          - What is your current customer base?
                          - Who are your target customers? (age range, education level, occupations, average home value)
                          - What zip codes do they live in?
                          - What do your customers want?

                          Competition Analysis
                          - Who are your competitors?
                          - How many employees do they have?
                          - What is their estimated sales volume?
                          - What services do they offer?
                          - What is the quality of their product?
                          - What is the price range of their product?
                          - Who are there customers?
                          - What are their strengths?
                          - What are their weaknesses?
                          - Are they a direct or indirect competitor?

                          Labor
                          - How many employees will you start with? Full or p/t?
                          - What will the hourly labor wage paid to employees be?
                          - What will your total annual labor hours be, see below?
                          * Jan total billable hours =
                          * Feb =
                          * Mar =
                          * Apr =
                          * May =
                          * Jun =
                          * Jul =
                          * Aug =
                          * Sept =
                          * Oct =
                          * Nov =
                          * Dec =

                          * Yearly total billable hours =

                          Equipment
                          - What equipment will be needed?
                          - How much will it cost to obtain this equipment?
                          - Where will you store the equipment?
                          - How much will it cost to store the equipment?

                          Advertising / Promotion
                          - How will you advertise or promote your business?
                          - How much will you spend doing each per year?
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                          Comment


                          • #14
                            Team Gopher:

                            I have been in the process of building a business plan for a few weeks now. I add, revise, and continue to build the plan a few nights/week. Once I am in a comfortable spot, I will post it here in the forum to share.
                            For now, let's continue as we have and brainstorm on different situations. I think this is a great idea. If forces someone to think and/or consider issuses they may not have thought have.
                            ****Dan****

                            Comment


                            • #15
                              Hi turfman007,

                              Posting it the business plan here will be very helpful because it will allow others to review it and provide real world feedback. I look forwards to seeing what you have created when you are ready.

                              How have you planned so far to sell or allow others to buy into your business?

                              When Paul Orfalea from Kinko's did this, he initially had 1 partner he split the first expansion store with. Different s-corps were formed to manage these different stores. Then as he expanded he would have himself and this partner expand with other partners. in a 30-30-40 split. The 30-30 part or 60% of the new store would be owned by the main Kinko coporation while the 40% would be owned by the new partner.
                              As they grew Paul owned 100% of some stores. But having the partners the way he did as he was growing really helped fund the growth of the business.
                              How will you do this?
                              How will you entice others to join your organization? What percentage will they own?
                              Also how will you entice employees of these different (franchises) to want to start their own area?
                              The more incentive they have, the more they will be willing explore with you.

                              Would you have a 50-50 split with your first partner? Then as you find others, would you do a 30-30-40 split? This would allow you to have regional managers who would have vested interests in growing and expanding certain geographic areas. A regional manager could be a 30% partner. If an employee really stood out, they could have an opportunity to spin off a new area and become a 40% partner in that new area.

                              Tell me your thoughts on this.
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                              Comment

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