Start-Up Stories

Start Up a Franchise Business – ‘Real Life’ Practical Advice Shared

 

Many people decide to start their own business by adopting an already successful business model.  This is the franchise option. Buying a franchise gives your commercial plans a head start.  There’s a lot to be said for opting for the franchise route but you must make sure you make the right choice of franchise to suit your talents and ultimate business objectives.

A franchisor is the business rights owner of the concept and operation. A franchisee is someone who buys the licensed rights for an agreed fee from the franchisor to operate the business in a particular territory for an agreed period of time.

Andrew Marsh and David Fernando chose a business directory and networking franchise called ‘The Best Of’.  This is their advice to anyone considering taking the franchise route into business. It starts with Andrew’s four words: “Do what you know”.

This is their central advice:

  • Choose a franchise that suits your talents, interests and business background – it must compliment your skills and your  personality
  • Research carefully to ensure your franchise makes commercial sense for your available resources – don’t overstretch your finances
  • Expect a full training programme – both initially and on-going – with supporting marketing material.  Will you have a local area mentor?
  • Confirm that ‘back office’ tools and systems are available to help you manage your new franchise – the more automated the process the better.
  • Double check the licence fee and commission system to calculate the true franchisee running costs.
  • Treble check the growth potential – with no ‘me-too’ franchises in your locality to hamper development
  • Explore the performance incentives to reward your hard work

Here’s a little background to help you follow their journey. Andrew and David worked for the same company in the media and magazine publishing industry. Having built up a solid level of trust and understanding they decided to go into business together.  The only thing was they did not know what ‘business’ that was going to be. Purely by accident a friend introduced them to ‘The Best of’.  At the time ‘The Best of’ was a basic online local business directory. With their experience they envisioned not just an online directory but a hugely exciting online magazine with considerable advertising, sponsorship and promotional potential.

‘The Best of’ is zoned by local government boroughs in the United Kingdom.  In May 2006 David and Andrew acquired the franchise for The Best of Merton (the precursor of The Best of Wimbledon and Merton). In July 2008, the Royal Borough of Kingston upon Thames was added to their holding.  Nationally ‘The Best of’ organisation is one of the fastest growing franchises with over three hundred sold.

‘The Best of’ concept has developed as they have grown.  The online community directory is still the centrepiece of activity but now businesses can take advantage of numerous additional products and services, including print media, regular networking meetings, events and exhibitions to promote themselves and gain new customers.  By the same token, each of these events provides an opportunity to strengthen the business base and membership of their own franchises. The whole proposition becomes a mutually advantageous ‘win-win’ concept.  Andrew and David have grown the business from zero to 400 businesses with numbers increasing as I write.

This piece began with Andrew’s quote “Do what you know”.  If you know sales, are outgoing, personable and enjoy mixing with a wide range of people then ‘The Best of’ could be for you.  You’ll need to make your own mark to build business and maintain the gains you’ve made.  Everyone is given the same tools to be confident ‘front of house’ and run an efficient ‘back office’.  ‘The Best of’ is not a fast track to riches.  It requires dedication and daily attention.

An attractive feature of ‘The Best of’ is that annual licence fees are fixed on the perceived value of the holding as geographical unit and not linked to income generation. This rewards hard work, as once the fee has been covered the balance remains with the franchisee.

Parting Pointers:

‘The Best of Wimbledon and Merton’ won ‘The Merton Business Award for Best Business for Marketing 2010’ in recognition of what David and Andrew have achieved. This is their final pieces of advice:

  • Be certain that your choice of franchise suits your experience, interests, skills and personality
  • Maintain your enthusiasm and optimism to drive sales
  • Ask for help and advice and keep up to date with system developments
  • Be flexible and make positive changes to your business plan – learn from other franchise owners
  • Remember ‘People buy People’. Your commitment and willingness to promote your client’s business will benefit your business
  • Savour the social interaction.  Enjoy it.

Take a look at their website to learn more:  thebestof.co.uk/wimbledon-and-merton, and: thebestof.co.uk/ Kingston. We wish you good fortune!

 

Start-Up a Pub Business – ‘Real Life Practical Advice Shared with You.

 

The Bell in East Molesey – Built in 1460  before Henry VIIIs Hampton Court Palace

 

Running a pub has always been a popular desire from people leaving the armed forces.  The reality of running a pub in these times of austerity is a challenging and demanding career choice – it’s no easy option.  This is a real-life review of the trade and the issues of running such a business.  If you are still keen after reading this you may have what it takes to make it in the pub trade.  While the figures below relate to the United Kingdom the grading may well compare with other countries.

Manager or Tenant?

The most common pub management roles are as either a salaried manager or a tenant. Salaries for managers fall within the £22,000 to £45,000 band depending on experience and performance. An average salary would be £27,000. (Source: Total Jobs)  A trainee could expect between £15,000 and £18,000.   Wetherspoon have a starting salary of £22,000 (August 2012) for solus managers – one manager premises.

A tenant with total responsibility for running their own establishment and who takes the risk will take a salary commensurate with their business plan.

A Typical Working Day

A working day starts when the dray delivery arrives around 7.00am. Having taken the kegs into the cellar preparation are made for the lunchtime trade and cleaning the premises.  On a normal weekday the house will then stay open until: 11.00pm.  Once the pub has closed the day’s takings registered by the tills, that are computers with a cash draw, are forwarded to Head Office. The working day ends anywhere around 00.30am after beer and back bar orders have been made, and emails and paperwork completed.

By 4.00am all the stock and sales figures have been received at Head Office from the entire estate.  By 7.00am the next morning the area and senior management would be reacting to the performance to highlight areas of strengths and weakness of your particular pub.

Manager Responsibilities

The manager is responsible for the professional operation of the pub to include:

  • Conforming to local licensing requirements
  • Bar Staff Recruitment – PAYE, National Insurance Payment
  • Restaurant management – Chef appointment and staff management
  • Payment of rent to pub estate
  • Completion of VAT forms
  • Fire, Contents, Buildings Insurance for the pub
  • PRS payment – Performing Rights Society
  • Management of running repairs –
  • General upkeep and maintenance of the premises
  • Payment of Business Rates
  • Payment of rubbish disposal – Waste Collection
  • Water Bills
  • Payment to brewery for lagers, ciders, ales and soft drinks
  • Stock of back bar items – Optic spirits, Wines, snacks
  • Recruitment of Deputy Manager to cover during Annual Holidays
  • Conforming to basic Health & Safety and Hygiene regulations
  • Payment to Sky for TV service
  • Payment of Bank Charges
  • Payment to Accountant
  • General financial management to avoid debt – this can involve careful control of stock to make sure an efficient rotation of ale kegs
  • Marketing initiatives that suit your locality and customer base
  • Maintain good relations with neighbours
  • Managing the conduct and behaviour of customers

Business and Interpersonal Skills

At any one time you will need a head for business, and a head for customer relations.  The brewery will ask you to prepare a business plan for your pub to include a financial forecast and a sales and marketing review.  Training and guidance will be given on this.

Training will also be given on how to handle customers.  This is not just a question of how to manage misbehaviour but also how to maintain good relations with regular customers, to protect your share of the market and blend harmoniously with the local community.

A Last Word from Des Drink – The Pub Landlord of ‘The Bell’ in East Molesey – built in 1460ad – before Henry VIII’s Royal Hampton Court Palace was built.

“You need to think of running a pub as a vocation.  It will become the main thing in your life.  As a manager you are the one in charge, the one people will turn to, you are responsible. It’s special. It gets into your blood”

 

Start Up a Restaurant Business – ‘Real Life’ Advice Shared

 

KONICA MINOLTA DIGITAL CAMERA

Father and Son -Tony and Guiseppe  of the Palazzo Italian Restaurant

Running a restaurant is a popular dream for many, but if you haven’t prepared properly the dream could quickly turn to ashes.  The failure rate is one of the highest among new business start-ups.  That’s the bad but honest news.  You are about to read an account of Tony, Guiseppe and Vincent Mingoia who have run the ‘Palazzo’, an Italian restaurant for eleven years. They wanted to share this advice with you.  This way you will be better prepared and have your eyes wide open to the challenges of setting up and keeping a restaurant business going – and keeping solvent!

This is their key adviceDon’t Do it!  Don’t start a restaurant – unless you:

  • Are prepared to work harder than you’ve ever worked before
  • Accept the restaurant will become your  way of life
  • Can live with uncertainty, stress and constant pressure
  • Are flexible and willing to make improvements
  • Have ‘two brains’ one for business – one devoted only to your customers

The Palazzo has been open for eleven years. For an independent family restaurant that’s a rare achievement. Their success is built on unremitting hard work, a total passion in what they do, and never forgetting it’s the customer who is number one.

Tony with his sons Giuseppe and Vince keep it personal.  Unlike a restaurant chain with a limited menu selection and most dishes coming pre-prepared; the Palazzo offers more choice with fresh dishes cooked to order and reasonably priced.  Personal skill and dedication rather than the ability to operate a microwave is their special ingredient.

Eleven years ago there were just five eating places in the Palazzo’s stretch of the high street.  Today, there are 15.  How have they survived with such competition?

  • By choosing a prime location – close to a car park and dead centre in the busiest section of the high street.
  • Being large enough to cater for guests – either single tables or party bookings at lunch and dinner.
  • Using a seated bar area for drinks, snacks and coffees – morning, noon and night
  • Having pavement tables for when the weather is fine or as a smokers’ retreat
  • Offering readily affordable prices to encourage frequent visits
  • Setting a weekly turnover target that recognises different weekday, weekend and seasonal patterns – (you must calculate your weekly breakeven figure)
  • Welcoming private bookings for the restaurant
  • Booking entertainers at the weekend
  • Being consistent in quality
  • Devising new menus and introducing dishes to cater for changing tastes – including a good selection of vegetarian dishes.
  • Promoting special Christmas & New Year Menus for private and corporate bookings
  • Importantly, having a style of service that’s attentive without being overbearing or intrusive.  One that’s sensitive and reads the mood of your guests.

Here’s Tony’s advice for someone thinking of opening a restaurant or a small business generally.

 

  • Think carefully about your market – is your concept right for the area and will it match the customers profile in your locality – at least enough to establish a solid  and loyal customer base

 

  • Have a sufficient financial ‘buffer’ to carry you through quiet periods – creating customer loyalty takes time and it may be months before you breakeven and cover fitting-out and initial running costs.

 

  • Hire experienced staff – better to have a few good people than amateurs who can damage your reputation – be prepared to lend a hand at anything that needs doing.  Keep it lean, only have extra bodies on the floor when demand will pay for them.

 

  • It’s not unusual to experience frequent periods of low sales in the restaurant business, remember the bank can withdraw support at any time, and if you haven’t got a good track record, you must assume they probably will.

 

  • Don’t underestimate the time it takes to meet all the different Health & Safety and Environmental regulations involved in the catering business.

 

  • As soon as you’ve created a regular, sustainable income with a business model that has been tried and tested, look to gain the freehold of your chosen premises.  If things don’t work out, at least you will have acquired a valuable asset.

 

“Remember, you’re not just selling food, if people make the choice to walk through your door, they want to absorb the atmosphere; relax and enjoy being with friends.  For the time they’re with you they want put the outside world ‘on-hold’.  Our duty is to make that brief time special – every time”

 

Start Up a Business – By Buying a Business – ‘Real Life’ Advice Shared

Ray Thomas Signing a Contract to Buy a Franchise Business Re-Sale

Buying a Small Business to Start Your Own Business

This is a quote from Ray Thomas who started his own business by buying an existing one.  He chose to buy a Chemex franchise resale for reasons you are about to learn.  These are his first wise words of advice and ones that are valuable to anyone thinking of buying a business as a way to start their own business, whether in the UK, North America or anywhere in the world.

“When buying a business, check and recheck your ‘due diligence’ there’s always something that you miss, something that’s not obviously apparent when you first start negotiations – don’t rush -take your time to understand the business you’re buying into”

Ray was very careful in his choice of business. He took the buying process step by step over a number of months.  He would like to share this experience, captured in these key points with you.

  • Choose a business that relates to your commercial experience and your own business skills
  • Buying a franchise resale has a number of benefits. Two of these are the training and support you’ll  receive from the franchisor; another is acquiring a going concern with an existing customer base
  • Get the latest trading figures to see how the business is performing and whether any circumstances have changed since the business was valued for sale.
  • Check the customer base to check the number of active and dormant accounts
  • Examine the customer profile to see how the business is spread between accounts – if the business is reliant on one or two accounts, the loss of these accounts could dramatically damage your future income.
  • If possible, agree a hand-over period in which the previous owner introduces you to the client base and explains the ‘back-office’ systems and day-to-day running of the business.
  • Make a generous provision for working capital to cover running costs – and keep an extra financial contingency for the unexpected.

 

To understand Ray’s story here’s some interesting background. Ray trained as a mechanical engineer. This gave him a career long ability to discipline his thinking and develop his analytical and organisational abilities. His outgoing personality and communication skills came into play as he moved into sales. Over time, he became a regional manager with a multinational company, firstly looking after the South West then extended his territory responsibility across to Wales and up as far as Birmingham.

As demands increased without a commensurate increase in his salary package, Ray started to explore opportunities where he and his family would receive a greater return for his efforts by becoming his own boss.  He investigated a number of different business avenues and narrowed the options down to franchising.  The question was whether to start from scratch with a ‘virgin’ franchise territory or to buy an existing operation.  The other question was which franchise to select

As Ray had experience of the motor trade, at one time being the sales manager of a chain of car dealerships, he examined a franchise involved with supplying garage workshops with tools and another specialising in bodywork repairs.  He also explored franchises that were related to his more recent experience in the Health & Safety and Personal Protection Equipment (PPE) sector.  Finally he chose Chemex a business-to-business (B2B) franchise that specialises in the supply and servicing of cleaning and hygiene products.

The Chemex head office volunteered two start-up territories within reach of his Swindon base, and one resale franchise in Swindon his home town.  Buying a resale franchise meant a higher investment but gave him a fully functioning business with an established clientele and an established reputation.

The Purchase Negotiation

Ray contacted the existing franchisee and spent a day with him to find out more about his territory and customers.  The franchisee wanted the business to be transferred to someone who would manage the business well and look after his existing customer base. He’d decided to emigrate to France as part of his own life plan.

On closer inspection Ray saw the business had been losing sales and turnover had slumped in the last year.  Another worrying aspect came to light.  One customer was responsible for 50% of sales.  If that customer withdrew his business from Chemex the whole financial picture would change dramatically.  These important factors demanded a revaluation and price renegotiation.

A revised price was agreed and on 26th April 2010 at the age of 60, Ray Thomas became a business owner. A new, exciting but challenging chapter in his life had begun.

Parting Points

Looking back, Ray would like to share these thoughts with you:

  • Put away those rose-tinted glasses when buying a business.  They’re always things that are not immediately evident when first learning about a business, not because they’ve been deliberately hidden but more to do with your unfamiliarity with the business operation.
  • Try to identify the pitfalls – get expert help to review the company’s trading record and customer base. 
  • Examine in fine detail the basis of any ‘goodwill’ attributed to the company.  Remember that ‘people buy people’. It’s potentially dangerous to buy a business that has been built mainly on the ‘personality’ of the incumbent owner.  When the business changes hands, customers may not want to keep their business with you.
  • Never rest on your laurels.  Look for new business every day.  It is inevitable that for one reason or other you’ll lose customers.  You need to bring in fresh business to compensate for business lost.
  • Make sure you ‘over-deliver’ on the quality of service you provide. You may not be able to compete on price these days – but an attentive, professional service not only wins business but builds customer loyalty. You’ve heard the saying that some people ‘know the price of everything but the value of nothing’.  Due to cost pressures customers do switch to get a better financial deal but often return when they realise they’ve forfeited quality, reliability and product performance.
  • Create a financial buffer to fund unexpected costs.  For us, the rise in diesel prices has hit our van delivery costs.  Unexpected events are another reason why you should grow your sales from existing customers and put time aside to contact and win new customers.