Franchisees are the QB & Franchisors are the Coach

(Please note - this blog originally appeared on the Franchise Business Review website and you can read it here.)

We were reviewing franchise performance at TGA Premier Junior Golf recently when the conversation shifted to the universal components of the top performers – the crème de la crème.  There were three:

1.    They get out of TGA what they put in (an adage hugely relevant to franchising), and they put in a lot.

2.    They follow the model. 

3.    They are engaged in the system.

As the discussion transitioned to what we at HQ can do to better facilitate these qualities, we found ourselves engaged in an age-old conversation about the role a franchisor plays in managing its franchisees. 

On one hand, we take personal responsibility for the success or failure of each franchisee and our instincts are to do everything we can to help.  On the other hand, each franchisee is the owner and boss of his or her TGA franchise, so we at HQ have to respect the fine line between being supportive and overbearing.

My colleague LeeAnn O’Donnell made a great analogy for this relationship that really stuck with me.  She said: “Franchisees are like the quarterback and we’re like the coach.”

Yes, exactly.

Coaches utilize years of experience and proven results to create the game plan and in-game support.  The franchisor.

Quarterbacks combine the coach’s game plan, natural talent and years of skill development to lead the team to success.  The franchisee.

Coaches/franchisors cannot control a QB's decision-making and actions during a play - nor should they want to.  But, they can provide a strong system that a great QB can become a legend in (i.e. Tom Brady, a 6th round draft pick, winning three Super Bowls with Bill Belichick) and an average QB can execute with success (i.e. the Baltimore Ravens winning the Super Bowl with Trent Dilfer).

If you’re thinking about starting a franchise, I encourage you to consider three questions:

1.      Are you a QB comfortable with leading a team of role players (your employees) while shouldering responsibility for the execution and ultimate success/failure of your business?  If yes, proceed to #2.  If no, then employment with an established company is likely a better fit for you.

2.      Are you a team player who wants an experienced coach creating the game plan and helping you out?  If yes, proceed to #3.  If no, then starting a business alone from scratch is likely a better fit for you.

3.      Is the franchise system you’re considering a Bill Belichick (great), a Lovie Smith (decent) or a Josh McDaniels (poor)?  How does this match up with your own talents? 

a.      If you’re highly experienced, you can likely succeed in most competent systems, whether it’s Belichick or Smith’s, so you should probably pick whichever business is a better personal fit. 

b.      If you don’t have a lot of business experience, you can likely succeed with Belichick but you may struggle with Smith. 

c.      Under no circumstance should you continue looking at a Josh McDaniels system.

If you answered “yes” to the first two questions and your talents properly align with the quality of system in question 3, then you very well may be looking at a great business opportunity. 

Good luck and happy entrepreneuring.

Wild Entrepreneurial Ride - Zuckerberg, Keg Cups & More

TechCrunch recently discovered an interview with Facebook founder Mark Zuckerberg from 2005 when the company was still very much in its infancy.  You can find the video below and watching it in 2011 is almost shocking – a 21 year old Zuckerberg talking about how he doesn’t want to change the world and is happy with a network that solely includes college students.  Meanwhile, he’s holding a keg cup full of beer and glancing at a co-founder taking a keg stand.  This was filmed at their office.  Wow.

Fast forward six years later and you have a company valued at $84 billion and a 27 year old founder/CEO who has, in fact, changed the world.  According to TechCrunch, 11% of the world's population and 35% of people online are part of the Facebook community.

If there was ever a perfect example of the entrepreneurial journey, this is it.  Zuckerberg saw a pain – he couldn’t locate fellow students’ info at Harvard – and he created a solution.  He brought this solution into the marketplace and let the customers (i.e. users) take it from there.  He had no idea what he had created.  He threw his board into the ocean, found a wave and rode it.

To me, entrepreneurship is all about taking smart risks.  I remember my dad, an entrepreneur, telling me that he didn’t gamble in casinos because he couldn’t control the odds … whereas, at work, he gambled every day in venues where he could control the odds.  That stuck with me.

Zuckerberg had some traction at the time of this interview.  He would launch Facebook (“The Facebook” as it was referred to at that time) at a new university and have thousands of users within days.  So, he wasn’t working on blind faith.  He knew he had something, and he ran with it.  The “smart” part of the equation.

On the other hand, he had no clue what that “something” was or where the journey would take him.  As demonstrated by this video, he didn't have visions of grandeur.  But, he had the guts (or intoxicated bravado, depending on perspective) to move to Silicon Valley, put himself on the path and walk down it.  The “risk” part of the equation.

For every Mark Zuckerberg of the world, there are thousands of entrepreneurs who don’t make it.  However, for the millions of people with unexplored entrepreneurial aspirations, there are undoubtedly many Mark Zuckerberg’s out there.  If you take a smart risk, who knows what you'll create. 

Enjoy the video:

Coach Wooden & Leadership for Entrepreneurs

I was recently speaking with an accomplished entrepreneur about leadership when he referenced this John Wooden quote: “Never mistake activity for achievement.”

What a great maxim for today’s culture, and today’s entrepreneur.

I’ve always found the relationship between “entrepreneurship” and “leadership” to be interesting.  Paradoxical, to a degree.

On one hand, most of the good entrepreneurs I know are folks who are great at operating independently, and enjoy doing so.  They don’t like bureaucracy.  They despise long meetings.  They feel cramped sitting in an office all day.  They don’t like suits, cooler talk, memos or TPS reports.  They like to innovate.  Challenge the status quo.  Get things done.  This is why they shun the corporate world for a life in the trenches as an entrepreneur.

But on the other hand, if you’re successful as an entrepreneur, you then have to build the same corporate infrastructure that you left behind to become an entrepreneur in the first place.  Either that, or you need to hand over your baby to someone else – which some entrepreneurs do but many can’t and won’t.  These latter folks need to evolve from a small team captain into a C-level executive.  An organizational leader.

Motivated by this conversation and my enjoyment of the previous quote, I took off my USC hat for a weekend and dove into leadership books from the “Wizard of Westwood.”  I found many of the lessons relevant to myself as well as entrepreneurship in general.  These are my favorites (in addition to the "Pyramid of Success" and "Seven Point Creed") and perhaps you’ll be able to connect some of your own dots as well: 

·        Coach Wooden focused on process instead of the outcome.  “Failing to prepare is preparing to fail.”  For example, he taught players how to tie their sneakers in the first practice, and would often run plays over and over without shooting the basket.  What was important was not the shot but the action that made it possible.  "I'm not going to be talking to you about winning or losing because I think that's a byproduct of our preperation."

·        Coach Wooden experienced almost immediate success thanks to implementing an innovative, fast-break offense that disrupted and overpowered the slower traditional play of west-coast teams. The offense was based on the fitness, quickness, selflessness and teamwork of the players.

·        Although they were winning, they had yet to win a national championship so Coach Wooden decided to change tactics.  “Failure is not fatal.  Failure to change might be.”  “It’s what you learn after you know it all that counts.”

·        “Coach Wooden enjoyed winning, but he did not put winning above everything.  He was more concerned that we became successful as human beings.” - Kareem Abdul-Jabbar

·        “Be more concerned with your character than your reputation, because your character is what you really are while your reputation is merely what others think you are.”

Amen.  Good luck and happy entrepreneuring.

"Invest in Lines, Not Dots"

Mark Suster is a prominent 2x entrepreneur turned Venture Capitalist in Los Angeles who came up with a concept that will stay with me forever – “invest in lines, not dots.”

I had the pleasure of hearing him discuss this philosophy in a USC classroom last year and thankfully he wrote a blog about it that you can read here.

So what does it mean to invest in lines instead of dots?  Here’s a loose translation of how Suster described it in that USC classroom:

“An entrepreneur sends me a business plan.  That’s a dot.  A month later they let me know that they’ve secured their first customer.  Another dot.  I see them at a networking event a few months after that and they tell me a major player is moving into their space.  Dot three.  A month after that they tell me how they maneuvered around the major player and are back on track with their projections.  Dot four.  Then, a little while after that, they tell me about a significant strategic partnership they just formed.  Yet another dot.  And so forth.  After a while, all these dots turn into a line with a clear trajectory.  Invest in the lines that are rising quickly.”

Now, this concept is seemingly obvious and one that we all intuitively practice on a daily basis - but there are three things that make it truly valuable to me:

1. It’s transferable to many aspects of business.  For example, when hiring/promoting employees, analyzing growth opportunities, expanding into new markets, exploring strategic partnerships, etc. … “invest in lines, not dots.”
2. It’s also transferable to many aspects of personal life.
3. It’s a great reminder to be patient, conduct ample due diligence and avoid impulsive decisions.  “Don’t get too high when things are going well or too low when things are going poorly,” as my Dad often told me.

There are three things that I think are worth adding to Suster’s description … goals, if you will, to implementing this philosophy well:

1. Get enough dots to form a consistent line.
2. Be sensitive of the time function – you don’t want the dots to come in a burst, and you don’t want them to have too much time in between.
3. Create your own dots – don’t rely on third party sources (and their natural biases) to create lines for you.

So whether you’re researching a new idea, running a business or potentially committing money/time/resources to anything else in your life – I encourage you to follow Suster’s advice and “invest in lines, not dots.”

Good luck and happy entrepreneuring.

(You can read the original version of this blog, tailored to the franchising world, on the Franchise Business Review’s website by clicking here.)

Have You Reached Out to Your Customer Today?

I took a Feasibility course in entrepreneurship while getting my MBA and it was the best class I took in 20 years of schooling.  The professor, Steven Mednick, started every class by putting this slide on the overhead:

He then went around the room and randomly asked students – “Have you reached out to your customer today?”  It was a relevant question because I was in the fully-employed program, so everyone worked during the day and went to school at night.

The great thing about the exercise was that the room was filled with people who worked at everything from Fortune 100 companies all the way down to start-ups and held positions in every department possible … and yet, the question was applicable to all of us regardless of employer or occupation. 

Why?  Because lessons in entrepreneurship apply to every company and every person in the workforce.

And the key point of this class, and USC’s entrepreneur program as a whole, was that entrepreneurship is all about the customer.  No customer, no business.  It’s a simple message.  Seemingly obvious.  But brilliant nonetheless because it’s so important and so often forgotten.

I’d always looked at entrepreneurship as being about that great idea – the one we come up with in that glorious moment of clarity.  And to a degree, it is.  That’s the starting point.

The valuable lesson for me was learning what happens after that idea is conceived.  Historically, I would develop the idea by putting together a business model and product roadmap using my opinions and beliefs. 

Then I learned that my opinions and beliefs don’t matter.

What matters are the opinions and beliefs of the customer.  And there’s no way to know what those are without talking to them.  A lot of them.

Which is exactly what this course required.  We had to create an idea by the second class and then spend the rest of the semester analyzing and stress-testing it through this “Feasibility Funnel” created by Professor Mednick:

Each step required talking to people.  And not just customers.  Suppliers, partners, industry members, etc.  On top of that, we were required to keep a “Stranger’s Diary” where we had to talk to at least 50 strangers about the concept and record the key takeaways from each conversation.

The result was that my original idea took many twists and turns over the course of the semester.  This was 100% the result of talking to customers.  Let them build your castle for you, as I’ve discussed previously.  And the business plan became much stronger as a result.  I've since used this model to analyze several growth opportunities at TGA and elsewhere.

The great thing about the Feasibility Funnel and customer-centric approach to business is that they apply to start-ups and large companies alike.  Entrepreneurship and its principles live everywhere and I bet they’re applicable to you regardless of your company or position within it.  

Thus, every afternoon, I encourage you to ask: “Have you reached out to your customer today?”

(Post-it notes on my desk help remind me):

(Images, quote and content courtesy of Steven Mednick - Assistant Professor of Clinical Entrepreneurship & Graduate Coordinator at University of Southern California, President of Plenum Revenue Group and a great professor.)

Let's Solve Pains & Problems

Summer at TGA Premier Junior Golf is synonymous with one word for me – sales.  I’m responsible for the company’s franchise development and this is always our busy season as franchise candidates want to start the business prior to the new school year.  This year we decided to significantly increase our advertising budget, so the quantity of leads is even larger than normal and the profile of inquiring candidates has changed due to these efforts.

Thus, right now I’m doing little besides thinking about – and talking about – sales.

Sales skills are worth developing because everything in the professional world involves them.  Whether you’re selling a product to a customer, selling a service to a business, selling a co-worker on the best way to do something, selling a superior on a project idea – everyone in the workforce is selling something to someone. 

And sales is not the dirty concept that many make it out to be.  When people think of sales, they often think of that caricature of a slick, slimy and shady used car salesman.  But in reality, sales is a beautiful thing.  It generates the revenue that makes business possible and creates the jobs in finance, accounting, HR, etc.

Additionally, the best salespeople are a customer’s best friend because they solve problems and kill pains.  How great is that?

I’ve been fortunate to have had several recent conversations with folks who are very talented at sales.  Since this is the lifeblood of any entrepreneurial endeavor, I wanted to share with you a couple of the key points (in addition to the 10 Commandments of Sales featured above, which I LOVE) that have been helpful to me.

Sell to a Pain

Figure out what the customer’s pain/problem is. 

Sometimes the pain is obvious – i.e. a lady goes to McDonald’s because she is hungry. 

Sometimes the pain is not obvious – i.e. a lady goes to a car dealership … but why?  Is she starting a family and in need of a bigger car?  Has her old car deteriorated to the point where she needs a new one?  Is she going through a midlife crisis and in need of a sportscar to make her feel better?  Was she recently laid off, causing her to need a cheaper car?  Did she get a big promotion and now she wants to show off her new status class?  Etc.

The best way to sell to a pain is to ask questions and engage the customer in a two-way conversation.  Focus not on the product’s features or your standard “pitch,” but rather find out what pain/problem is driving the customer’s motivation to talk to you – and then focus on how your product or service solves that pain.

Some great initial exploratory questions for the customer (with the corresponding question being answered for the salesperson in parenthesis) include:

• What brings you in today? (What’s the pain?)
• What about this product/service caught your attention? (What features of our product/service should I focus on?)
• Have you been looking at other similar products/services?  If so, which ones and what have been your feelings so far? (Who am I selling against and how much do they know about the market?)
• Are you looking into this for you or someone else? (Is it your pain or someone else’s I need to solve?)

Earn the right to learn about the customer

Customers control the money and usually have many options, so they come to you, the seller, seeking information.  They expect to be the one asking questions.  They expect to be sold.  They do not expect to be the ones getting interviewed. 

Thus, you have to earn the right to dig down into the secondary and tertiary levels of their pain and their subsequent motivation for talking to you.  To do this, you need to build a level of comfort and trust.  Be an expert on the company and product.  Be friendly.  Show that you’re concerned with solving that person’s problem, not with making a sale (which sometimes requires pointing them in a different direction if you’re not a great fit).  Most importantly, be authentic.

A good process to follow when working with a customer is this:

1. Start the conversation by speaking generally.  Focus on the typical pains your product solves.  Speak passionately.  Get the person excited.  Stay at a 50k foot level.
2. Ask a few gentle questions (reference above).
3. Provide a brief overview of the company and product.
4. Ask questions as a lead in to talking about features.  i.e. “Do you listen to music a lot when you drive?”  If the answer is “yes” you know to highlight the awesome stereo system.  If the answer is “no” you know to move on to other features that the customer will find more relevant.
5. Work on the customer’s timeframe and don’t be pushy about changing it.
6. Say what you do and do what you say.

Keep in mind that everyone in the workforce is a salesperson to some degree and sales is about solving pains and problems.  If you approach sales with this mentality and are authentic about wanting to help people - whether it's a customer, colleague, supplier, superior, etc. - you’ll likely see a lot of long-term success in the business world. 

I hope these thoughts help you down the road to happy entrepreneuring.

What Does a Franchise Fee Buy You?

(Please note - this blog originally appeared in Franchise Business Review.)

Franchising is a great option for folks who dream of owning a business but don't have a great idea and/or want to mitigate the risk as much as possible.  When you invest in a franchise, the question really is - what am I paying for?

The answer, in a word, is “opportunity. “  Described in the dictionary as:

1. A situation or condition favorable for attainment of a goal.

2. A good position, chance, or prospect, as for advancement or success.

I’m the COO of a franchise organization called TGA Premier Junior Golf that filed its first UFDD in 2006 and currently has 47 franchises in 21 states.   We’ve been named to numerous rankings/lists as a top “franchise value” and “low cost franchise” in the U.S. with an average franchise fee of $17k and change.

I recently had one of those unfortunate conversations with a franchisee who wasn’t executing well and he wanted to know his exit options.  Thankfully I’ve only had a few of these conversations in my TGA career and this one was unlike the others because the franchisee pointed the finger at me.  “You sold me a bad territory.”  “This isn’t a viable business here.”  “Etc. Etc.”

Never mind that the franchisee down the road is one of our best in the country.

The conversation turned into a discussion of the central relationship between a franchisor and franchisee.  The franchisee believed his investment in a TGA franchise would guarantee success (even though the disclaimers clearly state otherwise).  “Build it and they will come.”  I’ve heard this sentiment from others as well.  And it is wrong.

The franchise fee buys an opportunity.  A “favorable (situation) for attainment of a goal.”  A “good … chance … for advancement or success.”

I remember the first few years at TGA when we were losing money.  We made several mistakes.  We asked questions of our customers.  We learned.  We pivoted.  We took three steps forward and two steps back.  We launched the business in 2003 and first said hello to the black in 2006.  By then, we had figured it out.  And we grew – quickly.  Profitably.

When a franchisee invests in TGA, they get two things:

A)   An express pass through those initial 3-4 years when a new business typically loses money, makes mistakes and constantly walks the survival line.  This “pass” comes in the form of TGA’s proven product, IP, strong brand, training, support, inclusion in partnerships and so forth.  As a result, most of our franchisees are profitable in their first year.

B)   Tangible goods that, in our case, would cost more than $17k if purchased/developed on their own - $2,000 worth of supplies, a website with backend CMS, a robust CRM system, national and local PR, cost-savings due to favorable agreements with suppliers among other things. 

Franchisors provide a model/framework for success.  You want to build a castle and we provide a proven blueprint and the necessary tools.  That’s what your franchise fee buys you.  The first thing I learned in my MBA program was that entrepreneurship is about execution.  A franchisor provides a great opportunity.  If you're exploring the franchise path to entrepreneurship, understand that it'll ultimately be up to you to capitalize on this opportunity by picking up the tools, following the blueprint and building.