Turn the key for a powerful business

Michael Gerber “The E Myth” calls it the turn key revolution. This revolution began in the 50’s with the McDonald brother’s making hamburgers. Ray Kroc saw how the brothers had a system of making burgers that was so efficient and fast, people lined up in droves. Now there are almost 30,000 Mickey D’s around the world.

So why has this turn key model grown so fast as a way of doing business? Simple: It Works! And it works for many different types of owners all with different business personalities. There are more than 3,000 different business models that are turn key. Fast food and restaurants are the categories you think of first; but, most are actually service businesses and most of those are run out of the home with small staffs. I am, for example, a franchise coach. A franchise called, The Entrepreneur Source, and we help folks find the right franchise. A franchise to find franchises. What a country! Find a need then fill it with a business system that can be duplicated and is scalable.

Why it works: it is the system! Virtually every franchise has a cookbook or training manual for the owner. Ray Kroc took the system created by the McDonald brothers and ultimately took it to the doctoral level, Hamburger University. Every employee or team member knows clearly what to do virtually every moment the business is open. Think of the works of a clock. Wind it up or add the battery and all the gears and wheels work in tandem to move the hands accurately. You can depend on the accuracy of this little system, as you can depend on the system in a turn key business. The watch keeps time the franchise makes money. So powerful is this formula, that many take a portion out of their life saving in the stock market or retirement to achieve a greater return on investment and an investment they have more control over.

So how risky is a franchise investment? Almost 8 out of 10 franchise businesses will survive 5 years verses 4 out of 5 failures in 2 years for non-franchise start-ups. But beware, the success is in you! I have owned several businesses and can assure you that the heart and effort of the owner controls the success or failure of the business. Even a great system will not overcome lack of effort, fear, or other personal issues. Fortunately, most viable franchisors will uncover these warning signs and refuse to award their valuable systems when the warnings signs are there. This is another benefit of franchising. If you get a hard sell on a franchise beware. The legitimate sell will be both sides asking penetrating questions. This is truly an eye opening, valuable, and fun process. Most franchises challenge you not only to read a daunting document (FDD) and talk to several existing franchises; but, they may ask you to complete a business plan and cash flow projections. When the prospect writes the check, he should be very comfortable and then he goes to training for the frosting on the cake.

You are never alone! Even with great preparation and a great system, every business start-up is different. Markets, the economy, demand for the service all make for questions and the search for solutions. Perhaps the least understood power of a franchise is the emotional support for the owner. Starting any new business is hard work and it takes 50-60 hour weeks in the beginning. During those tough times, you need more than your mate saying “honey you can do this”. You need someone who has been right where you are to say “here is the solution and if you continue working hard this is the prize. If I could do it you can too”. Typically, through training, important friendships are made that continue for years. This emotional support is a very important part of the system for success.

So what can go wrong? Stuff happens in business as in life; but, the single most important axiom in the turn key system is?? Don’t turn the key if you don’t want to follow the system. In business there are certain personalities that know they are smarter than the system and they will deviate soon into the start-up. They never understand their own belief system is undermining and torpedoing their success. I am sure a huge percentage, I will say even most failures, are hard headed owners that blame the system or their market rather than simply embracing the system. Note: If the government wanted to fund an important study, a test to uncover this gene would save many broken homes and lives.

So do you have what it takes? Engineering types, number crunchers, nurses, teachers, all make good franchise owners because they are system oriented. On the other hand, the inventor, the dreamer, the artist, tends to get bored quickly with the system (not good). There is help! A franchise coach usually is compensated by the franchisor companies so the coaching is low cost or even free. Guys like me, come along side and help the investor evaluate the myriad of choices and models (or you can jump on the internet and drive yourself crazy). The coach will get to know you and only show you ideas that fit your profile. We are the starting point in the system. Did I mention the benefit of the system?

Bandon Dunes Golf Trip, Oregon

A few times in life we are truly Blown away. Leading up to this trip we watched the weather and the forecasts for our Three days in March were High 52, rain and wind. God had a different result. 1st day we even had hail, but the next two day's the heaven's opened and the following photo's were the result. The Oregon coast is rough and the land for these courses is called links land, (Links courses) which is the strip of land between the sea and useful farm land. Ireland and Scotland are renowned for famous Links courses ie. St Andrews, Royal County Down. The three courses at Bandon are equally as beautiful and challenging.










There were even some surprises, almost tame deer. The trip is daunting, 12 hours each way, whether flying to San Fransisco or Portland you must take another short hop to North Bend. Right, never heard of it! Then it is still a half an hour by shuttle. Don't bother with swimming trunks or tennis Raquel, this is all golf. Accommodations are very comfortable, yet understated.

Men design Golf courses and God designs coastlines. When you put great design together, the results are breath taking. It was worth the 12 hour trip.

Aren't we really working for ourselves

Unless you are employed in a large government bureaucracy, chances are you are or were evaluated by the rules of profit and loss. In the “New Career Economy” in fact for decades (maybe centuries) employees and groups of employees bending their backs for the man, have been measured by a simple yardstick, “Is my productivity, profit to the company, outweighing my cost to the company”. Whether we see this in our jobs singly or as a division, profit is the engine of any business enterprise. Even in most “non-profit” enterprises. As a capitalist and entrepreneur, this is how it should be. It happens to be the only economic system that works over the long term giving more prosperity to the most people and generations in our industrial and now high tech society. Perhaps in our future we will be able to create value and wealth out of nothing; I will be the first to say “Now that is interesting”.
So if making money is our report card, haven’t most of us already been in business for ourselves? A lab technician in a doctor’s office paid $21.00 per hour plus $7.00 in benefits should know that if the lab revenue from her work is less than $2500 per week the owner is straining to keep her. If you don’t know how you fit into the P&L equation, shouldn’t you ask? Sure you should and the higher ups will take notice of your interest.
You will also start noticing other things like: Why does Ralph make two trips to parts when he could bring two parts back on one trip or I am the fastest employee on the production line and rumor has it we are still not making money. Can I help others do more and faster, (other wise none of us will be here). Intuitively you probably know what business is all about and if you don’t or don’t care about your employer or free enterprise then you are experiencing the consequences. I have always wondered what America would be like today if organized labor and management had worked hard to partner rather than being adversaries. The pressure to make a profit must be shared (not equally, remember the Pres. makes the big bucks) and understood by all in a company because all have a share of the risk (unemployment) and the reward (continued employment and a raise now and then).
So have you ever thought about your own business? Does it make sense to exercise that business intuition and go out alone and fulfill your dream of real independence? In the book “The ‘E’ Myth Revisited” Michael Gerber talks about what it takes to go it alone. First! Don’t go it alone!
Statistics say that most non franchise businesses fail (4 out of 5 in the 1st two years) for many reasons like: not enough capital, no marketing plan or stamina ($), didn’t understand the market and demand, and dozens more. Many businesses are developed out of hobbies. Wouldn’t it be great to profit from something you love to do? Maybe! I remember out of college, I found a job as an assistant golf professional in Massachusetts. After two summers I realized that everyone was playing while I was working, and I was losing my joy of golf. Starting a business around your hobby at a minimum will force you to find a new hobby and probably worse.
So how do I find something and avoid going it alone. Two ideas! If you have significant capital or money languishing in Mutual Funds, consider buying an existing business that has proven performance and future opportunity. These companies are valuable and will be priced according to the cash flow and profits they produce. A price of 2 to 5 times their net profit before tax, plus the value of hard assets and real estate, is common. These companies are worth the investment because they have momentum, customers, and a staff that is qualified and doing the job. Please understand this idea is still fraught with challenges and you need good advisors and coaches as part of your team. The second idea is to buy a franchise. Franchises are designed for start ups because you will not be alone. Statistics say that a franchise will succeed eight out of ten times over the first five years. Not only are you not alone you will have a system and a cook book. Here is what you do on day one, then day two etc. There are over 3000 different franchise models and when you hear that small business is the real economic engine of America, it is true and most small businesses are franchises. Drive down main street or visit a mall, 80-90% of those stores and restaurants are franchises. Those multitudes of businesses represent only 30-40% of franchises. Most franchises are located in homes or are hidden in business parks (service businesses).
Maybe you are out of work or frustrated by the New Career Economy. You have skills and business intuition. Add a little (or a lot) of capital and you have more options than you think. No one has so much money that a little coaching wouldn’t help. Even corporate CEO’s use advisors to coach new skills. There are even franchise coaches (like me) who help merge your business personality, financial strength, and dreams with the right franchise model. If you have always been working in a profit oriented company, perhaps the option of scaling back to your own personal profit and loss, your own business is an answer for you. There are plenty of other Silver hairs out there to cheer you on and coach you along the way. Let’s Boom!

The New Career Economy (new is not good)

The phrase New Career Economy has recently been cast to describe a sea change in how we all consider our life’s work. A “Career” may now be a term fondly recalled but never to be seen again (except maybe as a federal employee). Remember your parent, uncle, or cousin who worked for the big company? Twenty years plus they were loyal and true and maybe this company fed the whole town in a rural area. The company did well enough to pay the best wages and added great benefits, and of course they were rewarded with the best and brightest in that town.
So what happened! Some Americans think that NAFTA or CAFTA did us in; but really, it was bigger and deeper. After WWII, America took its manufacturing advantage and became the greatest producer of goods and produce (via farm machinery) ever seen in the world. From autos to toasters and from tomatoes to cornflakes we were the super-super market for low cost products. In the 70’s- 90’s the world starting catching up and the Japanese realized they could copy and improve on what we made. I can remember visiting the Chicago tool show in 1980, there was a new CNC milling machine that turned at 40,000 rpm’s. The machine took 5 min to reach top milling speed. There were hundreds of oriental engineers surrounding the machine all taking notes. Soon great machines at lower prices were arriving from all over the world and American companies were losing world market share.
Wages in Japan, Mexico and then China and India, were a tenth of our wages. To compete, our companies had to move production offshore and take advantage of those wages. Some industries like steel, auto’s, textiles, and furniture were just not nimble enough or were too capital intensive to compete in the new low wage, low margin environment. Globalization of manufacturing was the cause of this New Career Economy. Big manufacturers can no longer be loyal to their once beloved employees and they particularly can’t afford high wages and benefits.
The New Career Economy is”new”; but, surely not what we need for a solid retirement. If your hair is starting to gray and your children are back home after college, this recession of 2007 is catching many of us off guard and left us longing for days gone by. Fortunately the technology industry has continued the dream for a few; but, the post war glory days are gone forever. Alas we have become a service economy! Lawyers, doctors, accountants (did I say we have too many lawyers) are at the top of the food chain. Right below are the hundreds of thousands of small businesses serving our every need. Unfortunately, except for the professionals, profit margins are low and ultimately can we continue to just serve each other? Or will somebody have to actually make or produce a product. If China is producing all the steel and making the tanks, missiles, and airplanes, what does that all mean?

Is there a "E" fire in there somewhere?

Welcome to the musings of a 60 year old Boomer who is just not done yet. Here you will find some unusual stuff, some political (I am a conservative with liberal friends), some travel, especially golf for example: I just got back from Bandon Dunes Oregon (great pics). I have children and grandchildren (Plenty of stories). Your point of views will be respected here if they are respectfully submitted. Start screaming and I will lose patience in a flash. Let's have some fun and learn from each other. I am not a techie and my first posts will be unusual and maybe too self promotional because they are designed for a specific audience: the unemployed and underemployed. My first few posts will be a little long because they will be used by a friend who is starting an important effort called United Boomers of America. Thank you, Bill. These will be incorporated in a book Bill is writing for this effort called "Boomer Bridges". UBA is a powerful idea giving Boomers tools to navigate life, this recession, and the New Career Economy. My component of the book will be to encourage displaced business people and give them hope that they have options other than back to their corporate life. As a Franchise coach, I take individuals through a process of discovery to see if self employment is a good option. My chapter in the book is "Should you fire the bosses".

Sub Chapter Titles:

New Career Economy- If you have silver hair and Boom you need to know what is going on out there and in this case "New" is not good.

Truth is, you have been working for yourself!! In the New Career Economy you certainly are measured as a unit of "profit and loss" and therefore you are a small business already.

So what are my resources if I want to research starting something on my own.

Could I be a real Entrepreneur? I love to dream up new ideas. The "E" Myth revisited, by Michael Gerber.

Do I have what it takes to start a business or buy a franchise? Self Test

Eight Myths about Frachising by Terry Powell


So if you want to join this discussion or add your experiences, jump in.