It’s been 34 years since the United States shocked the world and beat the Soviet Union in ice hockey at the 1980 Winter Olympics in Lake Placid, N.Y. The “Miracle on Ice,” as it came to be known around the world, was completed two days later when Team USA beat Finland and captured the gold medal.
Everyone on the team was praised for the achievement, and the victory still resonates as an example of what can be accomplished in the face of seemingly insurmountable odds.
But it might never have happened at all without the unwavering commitment from the team’s coach, the late Herb Brooks, to go against the wishes of the U.S. Olympic Committee and build the team his way.
Don’t be afraid
As portrayed in the 2004 hit film, “Miracle,” Brooks explained to the USOC that a new approach was needed in order to beat the Soviets. The committee responded with concern that the team might be embarrassed trying to make such a big change less than a year before the competition. Brooks’ retort was that the team had already reached that point.
Now, if he had not reached his players, if he had been unable to convince them to put in the time, effort and commitment to becoming the best team they could be, Brooks would be a mere footnote in Olympic history.
But he had complete confidence in his plan, and he was willing to put his reputation on the line to see it through. It’s not something that all leaders are willing to do. The fear of failure overshadows the vision of success and the plan often is never allowed to see the light of day.
History is filled with examples of leaders who were willing to take a chance and go after an idea that those around them believed would never work. Thomas Edison and the light bulb, Henry Ford and the assembly line, John D. Rockefeller and his oil business, Steve Jobs and the iPhone.
Each of these individuals had plenty of critics who thought the idea was crazy. And each of these people, and many more throughout history, proved those critics wrong and changed the world as a result.
Why not you?
The cautious approach will only get you so far in life. Sure, there are times when you need to be a little bit more conservative and think about what could be at stake if you’re wrong.
But sometimes, in order to grow, you have to stop trying to collect that elusive final and convincing piece of data and just go for it. And who is to say that your idea won’t be a game-changer that transforms the way we live or work?
If you believe you have a solid idea and you have a plan in place to make it work, it’s time to give it a shot. Summon the courage that enabled you to be a CEO and build the business that you now lead. If you’ve done your homework and gathered the information to reach this tipping point, it’s probably OK to rely on your instincts to take the next step.
As Brooks often repeated to his team as they prepared for their moment of truth, “You can’t be common. The common man goes nowhere. You have to be uncommon.” ●
Mark Scott is senior associate editor of Smart Business Los Angeles. If you have an interesting story to share about a person or business making a difference in Los Angeles, please send an email to MScott@sbnonline.com You can also follow us on Twitter at @SmartBiz_LA.
This is an important question when it comes to any opportunity in sales strategies: Is the deal worth winning?
In the early days of a business, it may seem that any opportunity is worth pursuing. In the long run, that may have been true. While profit is the senior goal, so is credibility and having customers who can positively recommend your product or service.
But before long, it becomes necessary to make sure opportunities are worth winning. The precision of that evaluation becomes more vital as a product or service becomes more complex, as there can be a number of hidden costs that aren’t taken into account.
Here are some key considerations in evaluating an opportunity as to its profitability:
Any opportunity falls above or below a threshold of profitability for a company. It is important to establish that threshold early on. It becomes a primary goal of a company to sell and deliver products and services as far beneath that threshold as possible, while still maintaining desired quality.
Figuring in this factor can and should be part of a company’s sales process and worked into sales strategies. If this is done, and is also incorporated into the company’s CRM solution, the profitability of any opportunity can be seen all the way through a sales cycle. That would be part of rating it as to its priority.
The possibility of future business is another aspect to revenue potential, which can be weighed as a factor in evaluating the profitability of a deal. Shrewd companies will take a smaller profit if it means more business up the road.
Dovetailing in with revenue potential is the strategic value of the opportunity to your company. Take a look at how well this potential deal fits in with and helps you make your company’s strategic targets.
Examine the leverage potential of this opportunity. Will you be able to leverage this deal into others? This may mean more sales from the company you just sold to, or it could mean deals from referrals.
If the company you are selling to is a leader in its industry, its purchase and implementation of your product and service may mean you are acquiring an entire sector of industry.
Any opportunity should be evaluated as to its risk. In addition to the risk of the sale occurring in the first place, there are a number of other risks that should always be examined.
Is it possible that your company will not be able to deliver the product or service? What is the possibility that your company won’t be able to deliver on time?
Then there are questions that nobody wants to ask and even fewer want to answer: What if your customer causes your solution to fail? What would be the impact on your business? How possible is it that your prospect company could find a solution to their problem themselves, thereby killing the sale completely?
You’ll want to make these analysis points part of your sales process, and work them fully into your CRM solution. Each will be a standard point of evaluating opportunities into the future.
All sales strategies must take this question fully into account: Is the deal worth winning? ●
Learn more about Nikolaus Kimla at:
Ivan Misner: Why drinking more water along with four other actions could really stoke your energy at workWritten by Ivan Misner
At one time or another, we’ve all tried to find the secret to being happier at work. Even the most upbeat employees are going to have those times when they just don’t feel the same level of energy and passion about coming into the office each day.
Last year, in an effort to boost the health of my staff at BNI’s headquarters in Upland, Calif., I stumbled across one of these secrets. I found that the secret to being happier at work is actually being healthier at work.
Here are five ways to not only be healthier at the office, but to be happier too.
It is easy in an office to reach for readily available hot coffee, tea, cocoa or soft drinks, but what your body needs in order to both work effectively and release fat stores is plain, pure water. Plastic bottled water usually contains BPAs. Instead, drink filtered water or glass-bottled mineral water.
Many people experience chronic, low-level headaches, which can often make you unproductive at work. When we are dehydrated, one of the signals our body gives is that low-grade headache. Try drinking half your body weight in ounces in purified, preferably alkaline (mineral) water for headache relief.
Find reasons to walk
When you have to move from your office to another office, take the stairs or walk the long way around. Another way to increase your physical exertion is to park further from the door at work.
Use your break time to take a longer walk or spend part of your lunch walking. Some offices have started walking clubs, where several staff members walk together in the morning before work or on their lunch break.
Simply walking 20 to 30 minutes per day can increase your body’s release of feel-good hormones, such as oxytocin, norepinephrine and serotonin. It can also help your fat-burning systems melt away excess body fat.
Bring your lunch
Such a simple change has the ability to make a huge difference in how healthy you are overall. Pack a power lunch made of fresh, organic vegetables and whole grains, such as brown rice, steamed quinoa and fresh fruit. This enables you to avoid the temptation of easily accessible fast food, fried foods and foods high in sugars.
Find an accountability partner in the office
Anytime you are trying to make major shifts in health habits, it is powerful to have someone to help you with the changes. Pick someone who has similar goals to your own and who you know can be positive and supportive. Plan regular times to check in with each other, use various methods of contact (email, text, phone calls, as well as face to face), and, most of all, be honest!
Find your positive attitude
There are many studies that substantiate how much your attitude affects both your health and your level of happiness in life. When people consistently take the negative view on things, their immune systems become depressed, their overall outlook on life dims and they can become negative and unhappy about everything.
Being happy is always a choice. Learning how to choose to be positive goes a long way in creating health and happiness. ●
Ivan Misner, Ph.D., called the “Father of Modern Networking” by CNN, is considered one of the world's leading experts on business networking. Dr. Misner has written eleven books including the three New York Times Bestsellers, two #1 Amazon.com Bestsellers and a Wall Street Journal Bestseller. He holds a Ph.D. in Organizational Behavior.
Learn more about BNI:
Few brands have forgotten about the waves created by the 2009 debut of “United Breaks Guitars.” The video was made by musician Dave Carroll who was upset about United Airlines breaking his guitar on a flight from Chicago to Omaha, Neb.
When it went viral, it cost the airline countless customers. How many customers? The Huffington Post estimated through the 4 million users who viewed the video, that it was about $180 million worth, or 10 percent of their market cap.
In response to the video, United apologized, complimented the song and even asked to use it for future internal training. They assured Carroll that because of the incident they were changing their customer service policy. But even with their apology and promise to change, United’s image never fully recovered.
So what do you do in the age of social media when you get a customer complaint that goes viral faster than the average criticism, and reaches a good portion of your audience and beyond, painting your brand in a bad light?
Here are three tips on how to handle the situation gracefully and recover with your reputation intact:
Don’t delete anything!
If your complaint comes in the form of an online public comment, don’t delete it. It’s so easy to just delete a comment from Facebook or a tweet that you don’t want too many eyes to see. But by the time you delete it, someone’s already taken a screenshot of it and circulated it through retweets and on Tumblr.
This makes your brand look even worse, like you’re desperately trying to cover your tracks. Instead, keep the comment up and respond promptly — though not so quickly that you make errors in grammar and false information alike.
Admit it was your fault, and make it public
So now you have a public complaint that you haven’t deleted and a public, quick response all ready to go. Not only should you respond on whatever medium the complaint is on, but if it’s a large enough mistake on your part, publicly make an additional statement in the form of a press release, blog post, video or some other outlet that presents the ability to make a grander than usual gesture.
Be sure to include what it is you’ve done. Acknowledge that the incident was your fault, how you can learn from the experience and what you can do to make it up to the customer. Being honest and genuine about the problem will always win over backtracking and denying that you’re at any fault to begin with.
Offer what you can
Whether you’re an international airline or a local mom and pop shop, don’t let an unhappy customer leave your place of business as an unhappy customer. By the time you’ve handled the situation personally, your customer should have a smile on his or her face and something positive to say about your business. If that means offering a free product or service, it’s a meaningful gesture to provide to keep the reputation of your brand on the up and up. ●
Deborah Sweeney is the CEO of MyCorporation.com. MyCorporation is a leader in online legal filing services for entrepreneurs and businesses, providing start — up bundles that include corporation and LLC formation, registered agent, DBA, and trademark & copyright filing services.
Learn more about Deborah Sweeney:
There is a big difference between the Green Dot Corp. Steve Streit leads today and the one he thought he would be leading when the company launched in 1999.
“We thought this was a card that kids would use to buy things online because their moms and dads would never let them use their own credit cards,” Streit says. “I thought I had invented what I called a credit card for kids. But everybody was buying them but kids.”
When Streit learned that his prepaid debit cards were attractive to consumers who had bad credit and couldn’t get checking accounts or credit cards, he decided it was time to change direction.
“I thought that’s a way better idea than kids buying stuff online,” says Streit, the 2,000-employee company’s founder, chairman, president and CEO. “So we changed the packaging and it caught on much bigger.”
Green Dot now has a presence in more than 90,000 retailers across the country. It allows consumers to buy an FDIC-insured back account right off the rack.
“It’s a productized version of a checking account without the person behind the desk who enrolls you,” Streit says. “But once you have it, it’s just a bank account.”
Streit was a panelist in November at the EY Strategic Growth Forum® in Palm Springs, Calif. He spoke about being a disruptor, growth and keeping the customer front and center.
What is the value of constant disruption in business?
You need to make sure you’re always bringing in new, modern people who say, ‘Hey, that was really stupid. I know you thought it was really cool five years ago, but it’s not cool anymore.’ You need to make sure you’re open to that, to make sure new thinking always dominates the room while not upsetting the apple cart where you make all your money today. You have to be forward looking.
Disruption is a big thing. We’re always looking at new services and new features. Remote capture deposit is the ability to take a photograph of your check and the risk officer will say, ‘Hey, that’s risky.’ The answer is, ‘I know, getting up in the morning is too. But you still do it.’ So this is what consumers want. The question is not whether we’ll do it. We will do it.
The question is how do you do it in a way that is compliant, safe, thoughtful and responsible. As the company gets bigger, you have this built-in resistance to change. It’s a really bad word and people freak out. But it’s important to have that mindset.
How do you find the right people to keep growing?
We’ve really found a sweet spot of recruiting very senior executives who are frustrated with their current big company because the entrepreneurial energy is sucked out of them like a vacuum.
So you say you’re really bright and you’re really thoughtful and you want to get something done. Wouldn’t it be awesome to work for a company that cares about customers and is mission-based? You can actually do it and have that access to senior management to get it done instead of being pushed down.
How do you maintain customer focus?
You have to help your people understand you’re not doing a function. If you mess up at your job, a single mom may not have been able to buy Enfamil for her child at a retail store because you missed a line of code that made their card non-transactable.
This is about a customer. Everything we do is about a customer. If you can just keep that customer focus, pictures of the customers, visits to the office, everybody is mission-based. I don’t care if you’re running internal audit routines for the Federal Reserve or you’re a salesperson.
We certainly take big, bad competitors seriously. But the love of customer and the power of focus is what has helped us succeed. ●
Learn more about Green Dot Corp.:
How to reach: Green Dot Corp., (866) 795-7597 or www.greendot.com
Stefan Richter is not one to hold back when it comes to offering an opinion on just about anything. Take his view on the fame he has gained from being a contestant on the Bravo reality TV series, “Top Chef.”
“It’s the same story every day,” Richter says. “It doesn’t change. They come in and they want to talk about ‘Top Chef.’ ‘Oh my God, Stefan, this episode was cool.’ People walk in all the time, and it’s the same story. For them, it’s the first time they have talked to me, but I’ve already told the same story 700 times. You have to have enough patience to deal with it.”
Richter, described on his website as a “larger-than-life personality and world-renowned chef,” loves the adrenaline rush he gets by competing on shows like “Top Chef” and by owning restaurants like Stefan’s at L.A. Farm in Santa Monica, Calif.
“It’s been an interesting ride,” says Richter, who also owns and operates three restaurants in his native Finland, as well as Stefan F. Richter’s European Catering. “It comes with pros and cons. I love people and the good thing is, I’m very hyper. I love people, and I love new clients and new faces. I love them. But somebody who is not as hyper and as social as I am, it’s a bit of a hard time. It takes so much energy out of you because you have to talk to people every day.”
Fortunately for Richter, he really doesn’t mind answering the same questions over and over again.
“It has helped my career tremendously,” Richter says of the show’s influence on his life. “Without ‘Top Chef,’ I wouldn’t have what I have.”
Richter was 13 when he left home to begin a four-year apprenticeship for a chef in southern Germany. His mother played a big role in inspiring him to become a chef, spending time with him in the kitchen after school beginning when he was 5 or 6 years old.
“I went to my mom’s work, and I would spend some time there,” Richter says. “I always enjoyed the whole idea of the restaurant business. It was always healthy stuff. Not weird healthy, but it was always from scratch. It could have been fried, but it always was good stuff made from scratch.”
Being a chef, says Richter, is the kind of profession that is not open to just anyone who wants to do it.
“When you’re a chef, you have to be creative, and you have to have talent,” he says. “It’s about talent. I know people, and they want to be chefs so bad, but they have no talent. If you love fixing cars, you’re probably going to be a good mechanic. But if you hate cars, and you’re only being a mechanic because you have to, you’re going to do a (expletive) job fixing cars. You’re not going to care. It’s all about how much love you have for what you do and how much talent you have.”
Richter doesn’t have one particular kind of food that he likes to cook more than any other.
“Cooking makes me happy,” Richter says. “It’s my happy place. It could be fish; it could be meat; it could be anything. I don’t love one more than the other. I love it all. Let’s face it. A great taco is a great taco. It just has to be done well.”
Of course, there’s a big difference between cooking in your kitchen at home and cooking for customers in a restaurant, especially one that has your name on the front door.
“You have to find good people and train them,” Richter says. “You have to find people who have that passion and enjoy doing it, not the ones who are doing it for a paycheck. And you have to give them the ability to be creative. My cooks are allowed to do specials. I taste them before, but they can do specials. Otherwise, they are going to walk away and create their own. So I’d rather keep them happy and let them cook a bit.”
Don’t be late
Richter is admittedly hyper, but he doesn’t spend a lot of time worrying about what the future will hold. But one thing that does stick in his craw is people who are late. It’s one of the reasons that his watch is always 15 minutes ahead of the actual time.
“In 15 minutes, I can fix a lot of stuff,” Richter says. “A lot of people, they don’t think about that. What bugs me most about business is when people will say, ‘Hey, let’s have a meeting to talk about whatever and whatever.’ So you say, ‘OK, let’s meet in the restaurant at 11.’ Then they call you and say, ‘Hey, sorry, I’m stuck in traffic.’ Dude, you’ve lived in L.A. for 12 years now. You should know better. If you’re not on time, I’m not interested. You’re wasting my personal time.”
Looking to the future, Richter says he’d like to have a child someday and take a motorcycle trip through Russia and Europe. Other than that, he plans to continue opening restaurants a few at a time.
“I don’t want to go crazy because I’m not greedy,” Richter says. “People get greedy after they open one after the other, and they spread themselves so thin that they can’t produce a good product. I’d rather stick with what I know.” ●
Learn more about Stefan Richter:
How to reach: Stefan’s at L.A. Farm, (310) 449-4000 or www.stefansrestaurants.com
John Ireland read the notice advertising for a newspaper carrier and just had to show it to his 11-year-old daughter, Kathy. He knew exactly what her reaction would be.
“He kind of gently shoved this newspaper ad under my nose,” says Kathy, flashing back to one of the defining moments of her childhood. “The ad read, ‘Newspaper carrier wanted. Are you the boy for the job?’ Dad knew the kind of reaction that was going to get from me. I wrote to the paper and said, ‘I’m not the boy for the job. I’m the girl. I can do it just as well as any boy.’ And 30-plus years later, I’m still the girl with the paper route.”
Fans know her for her appearances in Sports Illustrated’s annual swimsuit issue in the 1980s and 1990s. But as she says, she’s “still the girl with the paper route” and that girl, with an endless supply of determination and dedication, has built a $2 billion design and marketing empire.
“The modeling industry — that was not part of my path,” says Ireland, speaking in November at the EY Strategic Growth Forum® in Palm Springs, Calif. “But it was a wonderful opportunity. I believed it could be a chance for me to pay for college or to start a business. I’m a slow learner. The entire time I worked in the modeling industry, I tried and failed at many businesses. I look at failure as an education — in that respect, I’m very well-educated.”
When she started the business now known as kathy ireland Worldwide, Ireland says she was “an aging, pregnant model at my kitchen table.”
“I was 29,” Ireland says. “I never felt comfortable earning my paycheck based on how somebody else felt that I looked. I didn’t see the sustainability there. I was always more interested in designing for the red carpet than walking it. It just took me a while to get there. Had one of those earlier ventures taken off, the modeling never would have gone on as long as it did.”
Today, Ireland is the founder, chair, CEO and chief designer for a firm that offers designs in fashion, weddings, home office and other areas. The business bears her name, but that wasn’t done out of vanity.
“It was available to register and protect and it did open some doors of curiosity,” Ireland says. “They just weren’t the correct doors for us. There are some doors even today that are opened simply because of curiosity and my ideas as CEO are not necessarily taken as seriously as they would be had I not had that long ago modeling career.”
In an interview conducted on stage at the EY event by Forbes’ Moira Forbes, Ireland spoke about the obstacles she overcame, the ones she still faces today and the importance of treating people with love and respect.
Growing the right way
Some would look at the product Ireland used to launch her business and say it wasn’t very glamorous.
“I was an aging model and someone offered me an opportunity to model a pair of socks,” Ireland says. “It was a small budget and things were getting a little rough out there, but it was a job. It was a time when not a lot of job offers were coming my way. I thought it would be an interesting place to start our brand, something basic.
“What could our team bring as far as innovation in utilizing wonderful fabrics and textures? If women embrace socks, I might be on to something.”
Ireland says many accuse her of being a control freak, using the fact that the company is named after her as an example. But she reiterates it’s never been about her own personal glory.
“I wanted to bring something to the table and have our team be involved,” Ireland says. “I wasn’t interested in putting my name on a product. I get accused of being a control freak, but I prefer to think of it as passion. I’m very passionate about what I do. I want to make sure we do it with integrity and do it the right way.”
Ireland’s father worked in labor relations and was an inspiration to his daughter in terms of the proper way to treat people.
“How people are treated is much more important than the green stuff in the bank,” Ireland says. “I love listening to people. I believe in that so much. I have problems in my life, and I like to hear other peoples’ problems and how they reach solutions. That’s what our brand is about. We began with a mission to find solutions for families, especially busy moms. We expanded it to finding solutions for people in love and for people in business.”
The socks were a hit with consumers, but Ireland remained cautious as she plotted the future and her business began to grow. That wariness of growing too fast has always been part of the thoughtful mindset that guides every aspect of Ireland’s life.
“In the early days, I grew too slowly because I was so afraid of growing at a pace where we couldn’t control the integrity of what was going on,” Ireland says. “One of the reasons we remained a private company is because it gives us the privilege to make decisions that are not based on a 90-day Wall Street Journal chart. We don’t have those responsibilities and accountabilities to show on paper what we’re doing.
“We can make more long-term plans that many would say are going to kill your business, but for me, it feels like the right thing to do.”
There were plenty of people who thought Ireland was crazy when she made the decision to end her company’s relationship with Kmart and work through an independent channel.
“People said, ‘That’s crazy, you can’t start in mass retail and go to the independent channel. That’s never been done,’” Ireland says. “It’s never been done doesn’t mean that it can’t be done. We’ve got to turn down that noise and negativity.”
When financial performance sunk, there were moments when the decision looked like a mistake.
“We were in debt and starting all over,” Ireland says. “I found myself in that situation. When you’ve got payroll and the money is not coming in, you have a choice. You get inspired and you get innovative or you give up. There was never any quit, and I’m very blessed to work with an incredible team.”
Ireland admits that balancing her work life with her three children and husband back home and the many philanthropic causes she has become involved with over the years is a huge challenge that she doesn’t always manage effectively.
“It’s something I struggle with daily,” Ireland says. “Oftentimes, I’m really out of balance. People often ask, ‘Can women have it all?’ I think we can, but not all at once. I really believe that our lives come in seasons, and in each season of life we have to prioritize our time. It’s important for individuals to figure out their own values and their own priorities. Put barriers in place to protect them because they will be challenged.”
One issue that is particularly close to Ireland’s heart is human rights and the fact that there are so many people, particularly women and children, being used as slaves around the world.
“It’s the fastest growing illegal business and human beings can be sold again and again,” Ireland says. “And that terrifies me. What I’ve learned, is that as we grow, we have more leverage. When we’re smaller, we bump into a funky situation when we call them out. ‘Hey, you broke our human rights contract.’ They say, ‘Well, don’t work with us.’ When you have some leverage, you have a much better chance.”
Something that has helped Ireland in all aspects of her life is the ability to take challenges or take criticism that comes her way and use it to get better.
“It’s the importance of asking powerful questions,” Ireland says. “When someone says no, I ask why. When someone says yes, my question is how. ‘How are you able to manufacture these socks at such a great value? What’s going on at every level? What’s going on in the factories?’ Asking those questions is powerful.”
But one of the most transformative moments of Ireland’s career was when she fell flat on her face in her driveway while fooling around on her son’s wagon.
“I was a mess,” Ireland says, referring to her broken nose, cracked teeth and other injuries she sustained in the fall. “One of my girlfriends, I didn’t ask her to do it, but she took it upon herself to put construction paper over every mirror so I wouldn’t see myself. Our son thought it was wonderful I could scare his friends.”
The transformative part of the injury was the fact that her business experienced its largest surge of growth during her recovery.
“No one could attribute it to my appearance because I was a mess,” Ireland says. “No one could attribute that growth to what I did for a living the last century. I still have a scar on my nose and makeup usually covers it. But it’s a wonderful reminder of the turn our company took.” ●
- Find your opportunity.
- Believe in yourself.
- Treat people with respect.
The Ireland File:
Name: Kathy Ireland
Title: Founder, chair, CEO and chief designer
Company: kathy ireland Worldwide
Ireland on Elizabeth Taylor: She mentored me before I met her through reading and learning about her. She caused me to look at life, philanthropy, business and jewelry with a whole new set of eyes. In the 1980s when the AIDS epidemic was just coming around, she was so frustrated that nothing was being done. She said, ‘Why isn’t anyone doing anything?’ She looked in the mirror one day and said, ‘Wait a minute. I’m somebody. I can do something.’
When she called her friends and asked for help, they hung up on her. Her business associates pleaded with her, ‘Just leave this thing alone. This is not going to be good for you.’ She was getting death threats. But what I love about Elizabeth is she did not let any of that stop her. She believed in what she was doing. You have to have that passion.
Ireland on entrepreneurialism:When I was younger and people got out of college, they had to find a job. Today, people have to invent one. Entrepreneurial skills are more important now than ever before. Whenever we face times of uncertainty or economic challenges, entrepreneurial skills are critical.
When I’m able to connect with entrepreneurs, I learn from them far more than I can teach them. Selfishly, it’s a blessing for me when I’m able to have those experiences. I look for them as often as possible. We help each other.
How to reach: kathy ireland Worldwide, (310) 557-2700 or www.kathyireland.com
“They’ve totally changed what they are,” says Thomas Leaper, partner in-charge of the Franchise Services Group at RBZ, LLP. “The ones who are successful know what they don’t know.”
The franchise model allows frustrated baby boomers — not yet ready to retire — the chance for a fresh start. But as they take on this new opportunity, it’s easy to lose sight of the financial details that are the lifeblood of any solid organization.
“The franchisee may not know how to manage the financial end or may use the excuse, ‘I don’t have the time to do that report. I have to go out and sell,’” Leaper says. “It’s a disconnect that can lead to trouble.”
Smart Business spoke with Leaper about how to help new franchisees build a more sustainable business model.
Why are so many baby boomers looking at franchise opportunities?
Baby boomers have lost confidence in the real estate and securities markets. They look at them as being volatile in terms of investment and have become cynical about the motives of corporate employers. They are being driven to look at business opportunities that present a solid investment vehicle for their interests and allow them to control their own destiny.
There is also the availability of capital. It really dried up during the economic downturn and paralyzed the franchising industry, both on the franchisor and franchisee side. Franchisors were no longer selling franchises because people didn’t have the capital or risk tolerance to invest in a franchise opportunity.
And existing franchisees were hit very hard at the unit level, especially in the retail sector. But confidence is growing in this area. A good sign of this confidence is the number of financing options now available specifically for individual franchisees. The Small Business Administration has a lot of money that it’s trying to deploy. Beyond that, there are a number of private banking institutions that are increasingly interested in funding the franchise sector.
It’s the firm’s responsibility to demonstrate that accounting is as important as legal, sales, marketing and operations to the health of their business. Teaching proper accounting procedures is integral to any franchise training and on-boarding process, and illustrates the importance of working with professionals that can help newer franchisors deliver the message. ●
At the end of the day, leaders have to make decisions — hey can’t just sit on conflicting values. So, at some point along the way, it becomes a lose-win situation. The crisis lies in the simple fact that too many leaders don’t understand how to achieve ethical decision-making.
In broad terms, how is leadership taught?
That segues to a discussion of the hallmarks of effective leadership. What might those be, generally speaking?
Leaders need to be storytellers. Leaders need to develop a contextual basis for their narrative. Lincoln was also very clear about not doing this alone. He cherry-picked his cabinet carefully, as a CEO would, and made sure his team executed and implemented. ●
Together, you should determine what entity type to be, based on the kind of business performed; and the accounting, tax and legal issues that would serve as the basis of selecting a state for incorporation or other selected business entity (i.e., general partnership, limited liability company, limited partnership).
If you’ve thought about an exit strategy, that would affect your selected entity and where you would form that selected entity. Some companies are set up to go public eventually while others might be designed for sale to private equity firms or to remain in the family. If you’re not sure, your professional advisers can walk you through this process. It’s really about getting back to the fundamentals of your business and the related corporate and tax laws, regulations and estate issues.
Right now, a limited liability company (LLC) is a popular setup because the administration is easy. But it’s not always the right vehicle. It works well for smaller operations such as family-owned businesses or ownership of certain types of real estate. But I’ve seen it become problematic with larger businesses that have issues regarding corporate governance.
Look at where you need to be and get a good real estate broker who knows the area to represent you, particularly for professional service companies. The broker can determine what the market is and what landlords are willing to give, and also connect you with the best attorneys who have done multiple deals with that landlord. Some landlords require a personal guarantee from partners of a law firm, while others will treat it like a corporation, so there’s no recourse if they default on the note beyond the initial guarantee.