Like Us on Facebook!
This blog may be one of the hardest for a budding entrepreneur or franchisor to wrap their minds around, pill but it is the most important. It is likely not news to anyone that 8 out of every 10 new businesses fail in the first 18 months. I am sure you are heading into yours with the unbridled optimism of the 20%. You have read all the books and are absolutely sure you can avoid the pitfalls written about in standard business texts, check value proposition, Rev model, differentiation, and of course, dough ray me. These same things have been written so many times, read as many times and been talked about as bits of genius so often, you would think that they would cease to be any issue whatsoever. Yet, 50 years after the first time it was stated and we became aware of how many businesses fail, they are still failing and at virtually the same rate. Are we to assume that the exact same numbers of people are still not applying the worn out wisdom of their fathers as stated above or could it be that there is something else?
Bob started his plumbing business several years ago in the Midwestern town he grew up in. Bob had nearly 20 years of plumbing experience and was a teacher in the subject at a local trade school. When Bob decided to open his own shop there could scarcely have been anyone in the area who knew more about plumbing. He opened his doors, tended to his existing customers with efficient and dedicated service. He was fair with his pricing and always sought to provide extra value. Yet, a year later his business was on the brink of collapse. He decided that he needed better tools to attract more advance jobs, so he spent his remaining resources on a better truck and top of the line equipment…which he subsequently returned to the bank’s possession along with his house roughly 6 months later. Bob had done everything he could think of, had all the experience in the world, and failed as if he did and knew nothing.
Susan started her business in the Northwest and it took off like a rocket. Susan was an accountant by education, but her business was a bakery. She built a great profit model and was enjoying all the bread she was making. Then demands poured in for her to franchise her concept. She had visions of great wealth, success and her stores on every street corner. She did the research, got her franchise docs in order and rolled out her concept. Soon franchisees were lining up and the franchise fees were rolling in. Unfortunately, in less than a year she was facing three separate lawsuits and has rogue franchisees across her system. She was dead in the water. She was smart. She knew accounting and baking. She had studied franchising. She knew in her bones that all she needed was more time and more research in finding answers. She poured herself twice as hard into her business and perfecting her model, and she was sued out of business in 12 more months.
What do they have in common? Both were experts in their fields. Bother were earnest and had no fear of hard work. Both had products that were in demand, differentiated, seemed to be Rev sound and met a customer need. So why did they fail?
The story of French Fry Heaven, my business, is not free of trips, missteps and difficulties. Not every franchisee has been spot on their game (but most have). Not every decision we have made has been great, though always well intentioned. Yet, here we are three years down the road, in business, growing and evolving constantly. We have what could be the lowest tech idea in the past 30 years. Our product though while awesome, is an indulgence, not a need. We have gluten free, 0 trans-fat products because we listened to our customers. We offer franchisees the ability to sell only two or three of the highest potential margin items in food service. We have met all of the important criteria as laid out by experts in the business field. Is this why we are succeeding? No. The key to the success of French Fry Heaven is SURRENDER.
If there is any word that sits more poorly in the mouths of entrepreneurs, franchisors, soldiers and business people in general than, Surrender. Hell, I am imagining several of you reading this absolutely ready to abandon the blog simply because I even used the word. However, I will also confidently state, that the people who are most bothered by this word are well on their path to failure and collapse.
Jerome in PA bought a printing business. He had an MBA and years of business experience. He put together a pricing model for his business, marketing and went out to bid on jobs. In no time his business was booming as he won order after order. He was stealing jobs from the big boys and becoming the printer of choice for half the businesses in his territory. His revenue line was fat, his staffing model tight, his COGs were negotiated extremely well, yet every month, he was pouring money into the business to keep it alive. He went on like this for a year or so until in desperation, having exhausted all of his resources and knowledge, he did something he loathed to do; he surrendered! He stopped fighting or thinking he was going to figure things out; he knew he wasn’t. He came to one of the best places an entrepreneur can reach; the point of surrender. He reached out to the great people from SCORE.org and asked for professional help. He admitted to his counselor that he couldn’t figure it out, that he was defeated. The SCORE advisor asked him if he was prepared to do whatever he was directed to in order for his business to succeed; he was. A few weeks later, his business on the brink of collapse despite a nearly 100% revenue increase YOY, his advisor began looking into the business. He discovered that Jerome had been bidding all of his jobs based on his presses running 24hrs a day. However, that rarely happened and when they figured out how often his presses actually ran, it became apparent that the reason he was winning so many jobs was that he was underbidding the competition and his own costs. His mentor helped him adjust his pricing. His advisor then went through all of Jerome’s contracts and created a large stack of contracts he was going to have to break. Jerome was reluctant to do so. He saw shame, lawsuits and embarrassment in doing this. However, he had surrendered and agreed to do as he was told. He went to all of these customers, and while he lost a majority of them, he was surprised that several understood and reupped with him for the new price model. The next year was spent rebuilding his reputation and focused on providing excellent customer service to those few he had left. His revenue dropped considerably, but so did his loses. The following year, his reputation for quality spread and many of the customers who had signed on to his previous failed model came back to the new one. Had he not surrendered, he never would have succeeded, grown his business and began franchising it across the country. If you sit with him today on his yacht, he would tell you that the day he surrendered was the day he succeeded.
So many entrepreneurs are stubborn. The number one reasons I believe most businesses fail are three fold, bad concept, lack of sufficient capital and the biggest of all, the founder thinks he’s the guy to lead the company in perpetuity. So many businesses collapse because the founder just refuses to admit when they’re stumped or they have no idea how to correct the flaws in their model. They trudge on down the road they’re stuck to with their pride and ego leading the way. It leads right to the edge of a cliff. Even teetering on the edge, they can stop themselves from falling, but only if they are willing to embrace being humble. This does not mean quitting or selling out. It means accepting that they, like every other person on the planet, are limited. Limited, like the tech guy who can’t sell; the sales guy who can’t price, the financial guy that can’t lead. These are just some of the descriptions of all of us. How many of us are willing to admit it?
French Fry Heaven rolled out with an awesome concept. Our product is second to none and our model outstanding. Sales have been through the roof and our company is growing by leaps and bounds. However, there are holes. Holes, which often we can’t see. There are areas we are not doing as well as we would like. We earnestly try and pursue every answer to these, of which we are capable. Our franchisees may not love everything we do, but they can’t say we aren’t putting in every effort to produce for them. We could have gone on like this for decades; producing good results, but falling short of where we could be for those that put their faith in us. However, we came to that precipice, looked down into the chasm below and instead of swinging our fists, fighting all the way down, we surrendered. We admitted to ourselves that some of our goals could not be met by us. We admitted we didn’t have the knowledge or resources to see some of the things that would make us an even stronger brand for our franchisees. So we reached out to industry professionals, who we vetted, and knew, had the ability to provide that added direction we needed. We surrendered. Then we entered into a bold new phase of growth and success free to follow and apply our talents where they are needed most. We have no less hunger for the success of our franchisees, but we now have more confidence in our collective ability to deliver this.
Stupid people, ego filled, cannot surrender. They try under their own will to fight on till the bitter end, no matter if they are going in the wrong direction or not. Religious people know that to surrender to God’s will is a sign of strength, not a sign of weakness. It takes a tremendous amount of strength to admit you need help. Letting those that are best able to handle challenges, handle them, frees you up to take care of so much more in every area of your expertise. One of the 1000 terrible mistakes you can avoid is to stay in regular dialog with yourself and when you reach a point where no amount of effort on your part will solve a problem; do not hesitate to surrender that piece of your business to someone who can help. Tell your ego to shut the hell up and remember that it’s better to be the #2 in the #1 company than to be the #1 in a pile of #2.
Related posts