A lot of owners get into business with the product they sell in mind. They have an affinity for the product itself or more likely they have good memories wrapped around experiences they have had with the product as a consumer. They may even be a raving fan of the product or service.
That alone is not a good reason to get into business.
What most people are working for is to secure their future, possibly their children’s and grandchildren’s future as well. They want to spend more time with their family, not in an office or travelling on business. The want to be present in their future, not an occasional spectator.
Business is not something you DO as much as it is something you BUILD.
Life is something you do. Being a Father or Mother is something you do. Being part of your kids growing up is something you do. Being happy is something you do.
With that in mind, I have a plan for building in a way so you can do more of the things that matter to you. Let’s figure out how you can build an empire and what you do with it.
Compound Growth Plan:
There are a number of ways to pursue this from a multi-unit growth of a single brand to building out locations representing multiple brands into a portfolio. You can diversify risk by partnering or syndicating deals. You can work at the franchisee, Area Developer or Regional/Master Franchisee level.
However you do it the core concept is the same. Make an initial investment, put in the work to make the first location a success, replace yourself in that operation and take some of your profits and open the next. As you build your empire you will begin to have enough team and resources that your top managers can do the new opens while you step into a more strategic role.
After a few decades in franchising and almost as long as a business owner, I have my own thoughts on how to maximize this plan. I have also seen others build in ways that I wouldn’t, but they were successful too. A well thought out plan is the key to making any approach work.
I am a big fan of the franchisors that have built a family of brands in one style of business. These can be restaurants, fitness, services, etc. You get a lot of benefit in terms of systems, technology, support, training and real estate strategy. One of the key benefits is that with multiple brands to work with you can densely place locations you own by picking from among the brands.
I recently drove past a mall with 2 different boutique fitness brands, both from the same parent company. In service brands you could even share office space and staff among the multiple brands you own from the same family.
Staying focused on continuously replacing yourself and leveling up as you steadily add operational revenue to your portfolio is key. Some businesses have trends that wax and wane so you will sometimes sell a business out of your portfolio as you add more.
Generational Wealth Transfer:
If your goals include building for your children’s or grandchildren’s future, we need to think about how this is going to come together. There are many approaches for wise tax strategy and I will leave the routine stuff for you and your accountant to discuss. With the right team of advisors you can maximize your generational wealth transfer.
One strategy is somewhat related to a popular tax and penalty free 401K rollover plan that has been used by thousands over the years to fund their franchises. With a couple tweaks to that plan, I am told, they have set it up so that instead of funding your business, you prepare for the eventual sale. When you sell your business the proceeds incur mitigated capital gains taxes and drop directly into a tax shelter going forward.
This plan needs to be put in place as you are starting your business. Once you are under way of when you are getting ready to sell, it is too late for this approach.
There are other avenues, including pulling your kids into the business as a succession plan. Just this month I started working with the adult Son of a candidate I have worked with for years. We are moving the Son from a multi-unit owner to a Regional Developer, just like his Father has been. From there I will continue to look for opportunities that fit the Son and we will grow his portfolio like I did with his Father.
Succession planning is very common and many of our candidates have brought in their next generation for us to advise on growth opportunities.
What will be your success story? Let’s go find it!
George Knauf is a highly sought after, trusted advisor to many companies; Public, Independent and Franchised, of all sizes and in many markets. His 20 plus years of experience in both start-up and mature business operations makes him uniquely qualified to advise individuals that have dreamed of going into business for themselves in order to gain more control, independence, time flexibility and to be able to earn in proportion to their real contribution.
Contact the Franchising USA Expert George’s Hotline 703-424-2980.