Smart Savvy Strategies

You can build the right plan, apply your skills to accomplish almost anything you set your mind to and mitigate risk in the process.

A lot of people think of business owners as big risk takers. In reality business owners are big risk avoiders!  We acknowledge risk then work to eliminate all the risk we can and understand those risks we are unable to eliminate so that we can build a plan to deal with what remains.  Once we have done that then business owners will take a calculated risk.

As I look at the field of franchise opportunities I see a wide range of great options, but know it is scary for candidates that would leave a job to start them.  Some of the most compelling franchises out there are so confident in their abilities and how well their systems are built that they will create ways that their new owners can mitigate risk and make taking the leap more palatable.

One of the older ways that franchisors made it easier for candidates to take the leap was to create semi-absentee franchises where new franchisees can keep their job while they begin building their franchise empire.  The business model has to be simple, streamlined and easily run by a manager.  There has to be a relatively stable employee base and they are more likely to provide a service than products or food.

These semi-absentee models have been used by countless corporate executives looking for a future transition out of their jobs and business owners looking to grow a portfolio without selling their first full time business.

The game plan is to make a reasonable down payment (often as part of an SBA loan), leverage the bulk of the investment , pick a location, hire a manager and then manage the manager with 10-15 hours per week (married couples often split the responsibility).

Once you have your first store open and doing well then you open another.  And so on, and so on.  We have seen owners grow this into a cash flow and asset that becomes a home run safety net and growing asset.  Others have grown large portfolios that they keep as long as they like for the ongoing revenue then sell the asset they built when they want to retire.

Please note:  The fact that a franchisor offers a semi-absentee franchise alone does not make it a smart buy.  There are still a lot of criteria that need to be met for it to be successful.

The next generation of these semi-absentee models is a fully absentee model, what I often refer to as “The Ritz Carlton Model” as that is where I have watched it used for years to great success. This fully absentee model or investor model is an interesting choice for larger investors that don’t want to come in and learn a business, they want experts that already understand all the ins and outs to run it for them for a management fee.

In this model the investor puts up the funding for the franchise licenses and cost to open and operate the businesses and then hires a management company arranged by the franchisor to run their business for them. Their time investment drops to only an hour or two per month.

Some investors want to build an even greater perception of investing safely by acquiring an existing operating franchise. Notice I used the word Perception.  While some true values out in the market, you don’t control the timeline or what brands come up for sale in the markets you want to operate in. The temptation for a lot of buyers is to move too quickly on poor acquisitions because they have been waiting a long time for a resale to appear. This is the risk in resales, buying something you should have passed on.

Long gone are the days where there was one basic franchise model primarily in just a few industry segments and you had to try to conform to it. Today you have countless options to fit you from product or service to the model it uses to operate. Franchisors have adapted to utilize the amazingly skilled talent that started coming out of corporate America, looking for ways to build their personal empires.

Do you believe jobs are less risky?  How is that working out for you?  Do you risk being downsized, having your comp plan restructured, being replaced by the (lower paid) person just below you in the food chain?  Are you building someone else’s empire?

We are seeing a lot of layoff announcements right now. Imagine how much less stress those professionals would have if they had established a second cash flow years ago.

It is getting harder, and harder, to say that a job is safer than controlling your own destiny!

What is your success story?  Let’s go find it!