Doc Franchise Writings and Ramblings

I do not know a franchise company that doesn't attempt to train their franchisee's to create an organized and "intentional" marketing program. Part of that would be of course to create a calendar to organize by and then execute the calendared events.

Most do not create the events so that they don't feel badly about not executing on it. We must change this!

To all my franchisee, Action Coach Consultants and small business friends it’s 60 days before the end of the year. Let's finished the year strong.

I've made these sound as if they are "end-of-year." The truth is these ideas work around any time of year, but help when they are tied to significant dates or celebrations. Some of these are not tightly defined as "marketing" but perhaps sales & marketing campaigns. These are simple and straight forward. That was my intention. Pick only one or two of them. But, know that in doing so you could change your momentum and begin a very strategic start to 2010.

All the best...

1. Plan a year-end webinar series. Record the webinar, and sell both the live event and the replays. Or consider using it as a lead capture tool to bring people into your marketing funnel in exchange for free access to the webinar replay.

2. Share a compelling customer case study. This can be shared with new prospects, or those who just haven’t made a decision yet. Be aware of updated FTC guidelines especially as it relates to testimonials, endorsements, and disclosing any compensation. (I am not lawyer, and this is not legal advice. It is something to consider before investing in a case study.)

3. Issue a press release on anything that would be classified as newsworthy of your work, company or client successes for your market. There are both paid and free online press release services. Consider PRWeb.com or OpenPR.com.

4. Create a simple contact your best customer program (Minimum: Top 10 but a better number is 25-30) Mix a short survey in with a valued personal gratitude gift to them. Determine if there are special needs you can meet in their business by end of year. Take this opportunity to also connect with them on any social networks they may be on (Twitter, LinkedIn, Facebook, etc.). And please, remember, ALWAYS ask for referrals.

5. Prepare a Thanksgiving email message, expressing what it is you are grateful for relating to your work and your family. Provide a gratitude offer to them (You are making the special offer because of your grateful heart over their patronage).

6. This next one is a no-brainer P.R. driven ubiquitous opportunity: Celebrate “Black Friday” with a “Black Friday” themed campaign of your own. Since “Black Friday” is for retail businesses who are becoming profitable for the first time in the calendar year (going from red ink into the ‘black’), talk about how your product has helped customers be profitable from day one, or within NN days of purchase. Build a story around the success customers have had with the product. Refer to a case study (#2 above).

7. Consider a marketing campaign themed off of the 12 Days of Christmas. Perhaps build a tip list of the 12 essential tools necessary to get the job done. Some of these tools can be ones you sell, but don’t make it all about buying from you (yet). Offer value.

8. Cap off the 12 days campaign with a special 3 day sale of your tools. Done right, the campaign should help them understand how your product or service would benefit them, and an enticing offer to cap it off will help them make a decision (to buy).

9. As an end-of-year message tell your marketplace of your most successful product, or business activity so far this year. Then offer a special sale to commemorate the accomplishment. Use email marketing or social media — or both — to communicate this event.

10. CRITICAL: Set goals and objectives for whatever marketing activities you engage in for the next 60 days. This not only helps understand the results, but often yields better results (see Hawthorne Effect). It will also serve as a guide to future marketing activities, as you learn what your market responds to.

Happy Hunting!

One of the things that often slays me about coming up on someone's freshly designed website is just how much content they attempt to jam into the homepage.

Similarly, receiving coupons, whether paper or electronic with multiple messages also leaves me and virtually every other consumer albeit household or business...they leave us flat.

Franchises and small businesses have a real challenge. Common sense dictates to us that it is important that our potential clients and customers know precisely what we do.

The problem is what seems to make sense falls flat in practice.

First, if you want your brand positioning to resonate with prospective clients and potential franchisees, it's essential that you appeal to their emotions in some way. Fail to grip them emotionally and you are simply tossing money down the tubes.

Effective positioning sells your vision, company, or services. It may not be terribly creative, but if you can package some good creative content into your message that appeals to a strong need or want within your target audience, it will certainly create awareness. Effective positioning creates brand awareness and is convincing. It engages prospects as if you were speaking to them face-to-face, and when you succeed in making this connection your prospective client's perceptions and thinking processes about you become your brand at the individual level. If you can intuitively make the transition to branding and positioning from advertising check out Advertising Basics for Small Businesses for some pointers.

Secondly, should you achieve the enviable position of having a compelling position execution within your market, a stimulating message, your work has just begun. In fact, in branding and in any market segment the work is never over.You must expose your customers, prospective customers, and suspects (those who aren't currently interested in your company or product, but who might be shortly) to the same messaging over a prolonged period of time has two effect. The first is powerful. The second a willer. The first one is long after you are bored with your message they are still wrapping their arms around it. Keep it up. Here in Phoenix, Arizona Discount Tire Company still plays an ad from the 70's they created showing an older woman tossing a tire through a window, returning her tire for a full refund or replacement for the life of the tire. That is now a 39 year old ad. People just now are "getting it."...still!!!

The second is that an ad that is much less impactful in its delivery; where the emotions are not raised to such a high level, can lead to stagnation of your brand position. Test and measure. Obviously the folks at Discount created a very cheap (it even looks cheap) but powerful ad was created four decades ago and yet it lives and still helps them to keep a market position they value. An add for buy 3 and get one free has long since died. Why? No emotional tie!

Coke, one of the world's most valuable brands, reinvents its messaging and image when it decides they have begun to lose effectiveness. We often need to re-say the same thing in a new and vitally relative way as the years change to keep up with cultural adjustments. Apparently that isn't so true of the tire industry.

Creating an Effective Market Positioning

So how do you create an effective branding strategy? I want to suggest one effective strategy. It is the single benefit methodology. It could also better be described as the singular position technique. This concept directly links your brand to a single benefit. If your product is more environmentally safe, you shout it out. This is a characterization or personification positioning. It should involve, from a marketing strategy bringing a character to life (like our dissatisfied Discount Tire Company lady). They express product benefits or intriguing (defined here as socially powerful) personality traits in living terms. They are associated with the brand positioning. They show up wherever the message is being delivered.

Create a brand position that attaches your product or service to your target markets emotional high ground.Using the Discount Tire Company model we can play off their fear of buying the tires and shifting to a scene with our character, 6 months later, having a blowout, attempting to take it back to XYZ Tires and having the guy, cigar in mouth, shrugging and laughing versus her brining it back to Discount Tire for full satisfaction.

Although a calculated and well thought out advertising campaign may do a good job of creating brand awareness, it may fall short of inducing product preference or, the end goal, purchase. For this reason, don't rely on advertising as a complete solution. Instead, support it with marketing and sales promotion to help trigger a purchase. Branding comes together when positioning, marketing strategy (high level thought processes), advertising and the sales message and method are in alignment.

Apply the following criteria to test the effectiveness of your advertising message:

1. The brand position statement intelligibly and simply states a single message.
2. The Marketing Campaign evokes a specific and consistent, acute emotion throughout all the delivery methods.
3. The advertisements themselves are presented in a space (place where your market expects to find them and/or visits) where it will likely be noticed.
4. The overriding message is clearly evident and is easily projected at the customer service and support level.

Finally, understand that even a carefully thought out, highly creative campaign with a strong, concise message will fall flat if you do not stay true to the mission of the brand alignment-marketing-advertising-sales-support process for a massively long period of time. Time is your friend. Provided you have a product or service that is desirable you owe it to yourself and your business to stay the course and ensure everything you do will get you the place in your market you desire.

I hope this message rings true with my franchiser friends who have changed up their message 10 times in 10 years. You need to settle down, settle in and get out there and drive the emotions for your products straight to the cash registers of your franchisee's.

John is a 26-year professional in the franchise industry. He has been a franchisee, a franchise executive and an advocate/consultant to the public and to dozens of franchise companies. He is the founder and managing partner of Wilson Associates and can be reached at docfranchise@gmail.com. or direct office 480.838.1641

What? LinkedIN as a Sales Funnel?

I know that there are many frustrated franchise sales and development types out there who use LinkedIn. After several months or a year or two on it they are wondering what all of the ruckus is about? In all their time on LinkedIn they haven't generated one lead.

What's the problem? Well, the problem is that they are not using it effectively. They haven't discovered effective lead generation techniques.

LinkedIN is not about the most connections necessarily. Contrary to many users’ beliefs, whoever has the most connections does not win (unless your only reason for being on LinkedIn is to get a lot of connections). In addition to friends, family and secondary business contacts on LinkedIN, all of whom are mirrors of you and your services. I desire several hundred targeted connections of people interested in me, my services/products, or helping promote my business. Perhaps this happen-chance method is great for Twitter but LinkedIN has much to much content about you (or potentially) for it to be a drive-by experience.

I’m going to share with you 3 lead generation techniques that I regularly recommend. However, they are not all equally effective. If you are in the position where you will only implement one technique, then focus on the first technique I discuss.

Lead Generation Technique #1 – Groups

I've helped many people with their LinkedIn profiles and one of the biggest mistakes I see is ineffective use of groups. First, people are only involved in a few groups. Secondly, the groups they’re involved with are personal professional groups filled with people who do the exact same thing they do. From experience it is good to have a few of these to refer to; to determine what the rest of the market is talking about and perhaps pick up on a new method or technology. Rarely do they provide you with potential leads or even (in all sincerity) great strategic alliances. Why? The others in those groups, regardless of how different you may be, still view you as a competitor.

Ask yourself, who is my target market? What are their interests? (Jobs, careers, professions other than yours, executive improvement and skill sets, etc.) Join those groups – LinkedIn allows you to be a part of 50 groups at the free level.

Be active within those groups - in the right way! Post content that references their interests and not your sales message. You'll be labeled a spammer and discussion board leaders dislike having them in their LinkedIn groups. So, what is active in a good way? Start by answering questions – whether they are directly or indirectly related to your business. Ask thought-provoking questions around the issues and problems addressed by your products and services. If you start a discussion, make sure you follow-up with it and respond to comments.

Become an authority within groups. Share important news articles from other sources that relate to the needs of the group. Remember, not everything has to be about you. Meet their needs. Be a good discussion group member. Having said that, if you write a blog, submit your new blog posts as news articles to your groups. NOTE: Post these in the new section of the discussion group and NOT in "New discussions" or questions. Now, if you post a discussion question relative to the blog post, you can add the link to the bottom of the post as additional information, but the discussion item should be able to stand on its own. I think it is very rude when people essentially just say, “read my blog post, here’s the link, don’t forget to comment!”

Finally, become the authority in the group. Normally you cannot do this within an existing group. Of course many groups are so universal in scope they have sub-groups. Typically this is not true. You become the expert by starting your own group. Just remember, if you start a group, make it interesting to a wider audience than just you. You come across much less salesy if you create greater scope. If your franchise is a "Fast & Fresh" Mexican Food concept then add additional restaurant territory along with it. A title like, "Future Franchise Food Concepts" might d the trick. Be creative. Ask other creative types. Often indirectly related to your business is much more appealing and still allows you control of the forum.


Do Not recreate the wheel...er...forum! You may have to research what groups are already out there in the LinkedIN world. If you find another similar group but it has very few members, I would recommend going forward with your offering as long as you have a more compelling proposition. This requires some work as you can see. The work involves promoting it in other groups where there would be potential members, pre-inviting LinkedIn connections to join, and using your email list or sales database outside LinkedIn to promote it.

Something else to consider - you want to get the group growing as quickly. No one will initially find it on their own. On LinkedIN group search results are listed in order of group size and there are a ton of tiny groups. If you prepare you won't get lost in the jumble. If you do start out slow and build more slowly just be prepared to get lost in the search results until you have enough members to move you into the higher echelons.

Lead Generation Technique #2 – Introductions

The introduction feature of LinkedIN is rarely used. This is terribly unfortunate. If you know the LinkedIN story you'd know it is one of the main reasons that LinkedIn was created.

The free level of LinkedIn allows you to have 5 Introductions active simultaneously. The introduction feature is basically traditional prospect research made easy. Most members allow their connections to see their other connections. So, spend time reviewing all of your 2nd degree connections to find people of interest and request an introduction. The advanced people search will show you people who are 3 degrees away. Again, when you find someone of interest, request an introduction!

Lead Generation Technique #3 – Become an Expert


The Answers forum in LinkedIn is not just a place for you to look for advice. You should consider it your own professional forum. It is a place where you can become an “expert” in the eyes of the entire LinkedIn Community. Further, it’s also a place where people self-identify themselves as being interested in and wanting specific products, advice, and services.

When someone asks a question in the Answers section, they can specify up to 2 categories that are related to the question. After the question has been open for 6 days, the questioner can then identify one of the answers as the “best answer”. The person whose answer is selected then gets an expert point in those categories. Pick a couple of categories to regularly monitor in order to find people asking for your business and to answer questions that could score you expert points.

So John, what's next?

Well frankly group, that's my coaching for the day. In all sincerity, the rest is up to you and your promotional, marketing and sales skills. Generate the activity above and you will interact with many people you wouldn’t have otherwise found. Those are your leads and strategic alliances. Connect with those people. Begin building relationships with those people. And, ultimately sell to those people.

I hope you find this useful -

John is a 26-year professional in the franchise industry. He has been a franchisee, a franchise executive and an advocate/consultant to the public and to dozens of franchise companies. He is the founder and managing partner of Wilson Associates and can be reached at docfranchise@gmail.com. or direct office 480.838.1641

Most likely if you are over 30 and live in the USA, you have lived a life that has been in support of franchise chain businesses.

I recall the drives between my house in the Chicago area down to my grandmothers' in St. Louis and Terre Haute, Indiana and counting all the Howard Johnson's and all the Shell Stations and all the Aamco Transmission shops in the towns as we passed through. But mostly I waited for the "big 3," McDonald's, Dairy Queen and A&W Root Beer stands! Reflecting back most of those succeeded (at least for as long as they wished); some of them failed, but all of them fought passionately for the my attention.

Today I realize there are hundreds of factors that dictate a franchise’s success. Master your franchisee training but fail to maximize the value of your territory and that franchisee is in for a world of hurt.

This leads me to my point. The branding of any franchise continues to be one of the most essential ingredients in a franchise’s profitability; from the corporation down to the single unit.

I can still remember walking into an Applebees in Long Beach for the first time. There was just something authentic about it. It "felt" like the local or neighborhood bar & grill. Clearly, someone in their corporate offices had gotten all the small details right and the result was a memorable franchise experience.

Today I realize that branding is often the difference between whether a franchise rises into the public consciousness or if that business, as good as its products and service may be, drifts away unsuccessfully into oblivion.

Janet Muhleman, the president of re:group, has gathered together her belief set on branding in the latest edition of Franchising World. Here are her seven tips to improve your franchises branding:

1. Listen to your customers

2. Tell your brand story, what you believe in, why you do what you do.

3. Create a brand personality that people relate to and want to engage with.

4. Make believers out of your franchisees and their front-line staff so they can live the brand.

5. Engage your customers consistently and openly at every possible touch point.

6. Measure your performance and be prepared to embrace change and innovate to stay current and relevant.

7. And finally, as you listen to your customers also remember to be genuine and lead with your heart.... Now, re-read - Return to No. 1!

Branding is local for most businesses in North America. You have to convince YOUR customer (and not just the universal position) of who you are and what you do...so stop the self defeating self-talk about the company and what they should do. YOU OWN YOUR MARKET.

I welcome your thoughts on this topic - Do you have anything else to add?

John is a 26-year professional in the franchise industry. He has been a franchisee, a franchise executive and an advocate/consultant to the public and to dozens of franchise companies. He is the founder and managing partner of Wilson Associates and can be reached at docfranchise@gmail.com. or direct office 480.838.1641

This is a continuation of yesterdays article, "Franchisors, Here's a Criteria You Might Have Missed!"


Due to the tragic problem of ignorance and passivity in our world today, I've been extolling the benefits of reading. Yesterday, we talked about number one: reading sweeps the cobwebs away; it expands us. Today, I'll note three additional benefits.


2. Reading increases our power of concentration.

Through the discipline of reading, the mind is programmed to observe and absorb. It replaces the "Entertain Me" mentality with "Challenge Me." The eye of a reader is more observant, alert, probing and questioning.

After I left home for the last time I found myself in a house full of party animals. Since I lived with just my mom I had become comfortable with solitude and with solitude I found reading. One day, when the house we rented was uncharacteristically quiet I lay on my bed and began reading a book my sister had given me, In His Steps by Robert Sheldon. As I read it was changing my life. Suddenly I realized I was being watched. One of my roommates was at the door staring at me. Finally he spoke up, "So I guess this is why your mind is so much calmer than the rest of us huh?" It struck me that he was probably right.

3. Reading makes us more interesting to be around.

Small wonder the boredom factor in social gatherings is so great! After you've run through the weather, the kids, the job, and your recent surgery, what else is there? Being a reader adds oil to the friction in conversation. Furthermore, it opens to the businessman new avenues of approach to the outside world. It helps to meet the inquisitive and those needful of our products and services on their own ground or expansion of places they wish they could go. We need to read widely, including some periodicals as well as the classics.

4. Reading strengthens our ability to glean truth from Inspired Reading.

In the Bible, in the New Testament section there was one of Jesus followers. His name was Paul. Paul was a late player to the "Party of Jesus" but become one of its greatest advocates. If you have any sense of the Christian faith at all it most likely has much to do with Paul. He was what you might call a true warrior. At one point Paul's faith in Christ had gotten him tossed in the pokey. Only this was serious. This was probably going to be it for Paul. Paul was in the dungeon awaiting death, he asked his friend to - bring the cloak which I left at Troas . . . and the books, especially the parchments. - 2 Timothy 4:13

The "parchments" referred to the sacred manuscripts, copies of what we think of as Biblical Scripture.

But what about "the books"? What books?

Obviously, those volumes he was reading prior to his imprisonment. Right up to death, that capable spokesman for God - that master of logic - was reading. He certainly would have agreed with another great Christian of letters and of reading John Wesley:

Either read or get out of the ministry!

I think the same holds true of businessmen, of franchisees especially. We have the opportunity to be on the cusp of our market segments but we can lose that edge if we don't keep up. Franchisors you need to create a preferred reading list for your franchisees. You need to have a book of the month club.

Can't find the time? Come on, now . . . not even fifteen minutes? Don't know where to start? How about the library? Most every town has one. Heck, go to the second hand book store. They're filled!

They probably even have books with pictures in 'em. (For your kids, right?)

I'm often confronted with people who have had relatives and friends who had made attempts into business, some with a more entrepreneurial bent into their own, independent business and others that became franchisees. If I am presenting them with an opportunity in franchising most invariably the acquaintance had a bad experience or was in the midst of one. Typically after a long and protracted exposition on this person's accomplishments, skills and education a question follows relating to what happened.
I have no response about the person because hearing someone's monologue about someone they know, like and perhaps admire is never the whole story. What I will do with them is provide them with components that I believe every business person must possess in an attempt to get them to do a gut check to see if they have these or have displayed them in the past. I will tell you without them and you will have a challenge succeeding. Here they are:

Are you a decision-maker?: I put candidates through a process sale and I make them follow each step. I do this to determine A) Can they follow a system/instructions and B) Will they come to conclusions about the homework they complete. Can they make decisions. In small business decisions constantly need to be made, and many times you don’t have the luxury of time to digest all the information you would like in order to do it. You will have employees and vendors who will look to you to be confident and timely and provide the resources necessary to accomplish the objective set forth in your decisions. Are you a decision maker or do you over-think and procrastinate your way to nowhere?

Do you have learning and adaptation capacities and some basic business skills?: There are so many skills critical to business success–sales, marketing, accounting acumen, communication, delegation (NOT abdication) and leadership come to mind. You must be able to execute a daily game plan that translates into a monthly strategy and into a quarterly development and then read what just happened. The ability to learn and adapt is a trait some have and others simply do not. The franchise system provides you with the 90% solution but there is always real life and it requires your ability to adapt and use what you brought to the table in order to create the right response. In the military you are taught to start and finish a task by understanding the steps to the end game. They are taught a code of conduct that establishes their baseline, and on top of that they’re taught their military occupational specialty, leadership development, and other skills that they can lean on in business. Hopefully in your business background you had similar experience. If so, a franchise or small business ownership situation will tax that training, skills and learned responses.

Do you persevere or procrastinate?: Every business owner should realize that between successes and accolades there are dark days. Much of this foreboding occurs right at the outset, when you are a brand new franchisee. Do you have the mental toughness to stick it out? Are you a complainer? If so, do NOT become a franchisee. Just don't. Stop now. I mean it. You need to see the situation for what it is; a current condition that has solutions and you must determine you, your resources, skills and presence of mind are bigger than the situation and you will do what it takes to succeed.

Look if owning a business was an easy decision to make, everyone would do it, but being the boss isn’t for the faint of heart. Frankly, most people never get out of the blocks because they want life laid out for them and somehow they feel paying a fee means someone will just turn on a cash machine for their paltry efforts. I hope this isn't you.

A veteran franchisee understands that a firm and focused desire to succeed is critical to any operation. This means defining the goal and the primary milestones or objectives in accomplishing that goal–and learning to keep your focus as you continue to strive for that goal even when you face unforeseen obstacles or impediments.

There are many great franchises out there. Some have amazingly well put together strategies, training, and business systems. But businesses are driven by people with vision, skills, perseverance and determination. Is that you? If it is then get on board, daylight is wasting!

John is a 26-year professional in the franchise industry. He has been a franchisee, a franchise executive and an advocate/consultant to the public and to dozens of franchise companies. He is the founder and managing partner of Wilson Associates and can be reached at docfranchise@gmail.com. or direct office 480.838.1641

I love technology. It intrigues me. It keeps me excited and ever learning. Technology has also changed the face of business in spectacular ways. It has enabled businesses to embrace a greater community, it has increased productivity, and simplified communication. There are so many positives that they would be hard to name here in this post.

There is one aspect of technology that I find sad, and that is how it has made us lazy regarding personal contact or “face time” with customers and prospects. Email makes it so easy and efficient. But, you know what they say, “out of sight, out of mind.” In business this situation can be the kiss of death. If your entire relationship is email and text based, there is virtually no relationship.

Never believe that expediency is a better choice than relationship.

Electronic customers take on a different dynamic. Customers within a few hours drive are worth having face time with. When they are both a distance and treated with a steady diet of E-Mail you are in jepoardy.

Companies like the investment company Edward Jones, does not allow it’s advisors to use email with their customers. They do allow personal, voice and snail mail contact only. This effort is rewarded repeatedly. Here are some other things that I do to make “face time” work for me:

Coffee Clutch Time: When a person contacts me to see how we might work together, I typically suggest we meet over coffee. This way I can size them up better and try to understand their motivation. I’ve struck up some terrific business relationships this way.

Network meeting: You can use these events to spruce up your sales skills and put a face to a name. It gives you a chance to help someone on the spot. It also is an opportunity to create dialogue and open up lines of communication with potential partners.

In-person presentations: It has been my experience that an in-person presentation is your most powerful ally. I can demonstrate my desire to serve their business needs and I desire it enough to get out of my office and shake some hands. Virtual relationship is an oxymoron. A physical business shows you’re a real business.

Ignore email: I actually did not believe this until I took a lesson from a marketing wizard. Purposely visit customers or at least make phone calls when you get electronic messages. Showing up to chat WILL get you more business. It certainly ensures you will be taken seriously. I can’t tell you how many times I’ve taken something in person to a client that I could have just as easily emailed only to get other projects given to me on my way out the door. Seeing you reminds them of other ways that you can help. In today's virtual discussion environment, it is so rare that it also creates a certain amount of felt need to make sure your time was not wasted.

“I’m in the area” opportunities: Sometimes, when “I’m in the area” I call to see whether I can pop in to say howdie. These friendly requests always brings a smile and some great conversation.

New service meetings: Recently, I emailed a number of old files and offered to bring them a coffee and discuss what I’m offering these days that might be of help to them. A number of them took me up on it, and this effort resurrected some old business.

The point here is not to rely on convenience to grow your business. It’s not about you - it’s about your clients and customers and nothing tells them you care as much as hearing your voice, feeling the palm of your hand in theirs and listening to your laugh when they tell their latest jokes.

John is a 26-year professional in the franchise industry. He has been a franchisee, a franchise executive and an advocate/consultant to the public and to dozens of franchise companies. He is the founder and managing partner of Wilson Associates and can be reached at docfranchise@gmail.com. or direct office 480.838.1641

The proliferation of B2B franchises - service based franchises - coaching and consulting franchise opportunities has created a whole new category and level of need for financing.

It's been hard enough if you were a capital based franchise (we need build-out, equipment, vehicles, etc.) For a time it seemed all small business capital had dried up. It is a bit better but not a lot.

Today, non-capital intense businesses whose primary needs are working capital, capital for growth (more territory, expansion of marketing efforts, etc.) and only minor capital expenditures compared to manufacturing and retail types still may require capital in addition to their candidates capabilities.

Where do they go? Where does anyone go? Are there alternatives?

Before you run out and begin your search for capital, you may want to consider an approach that many businesses — particularly start-ups and small businesses that may not yet qualify for loans or be able to attract venture capital — have used with more than a little bit of success. It's called bootstrapping. Bootstrapping or booting refers to a group of metaphors that share a common meaning, a self-sustaining process that proceeds without external help. The term is often attributed to Rudolf Erich Raspe's story The Surprising Adventures of Baron Munchausen, where the main character pulls himself out of a swamp, though it's disputed whether it was done by his hair or by his bootstraps.

Today we refer to bootstrapping and it means finding money and resources by any means possible, including begging, borrowing, bartering, sharing, and leasing everything a company needs.

In short, bootstrapping is guerrilla financing.

So, who bootstraps? Many companies do. In fact, some estimates put the total at 75 to 85 percent of all start-up businesses. Three fundamental rules for effective bootstrapping are

• Hire as few employees as possible. For many companies, employees are the greatest expense. When you add up salary, benefits, overtime, and other employee-related expenses, it doesn't take long for any budget to feel the pinch. Bootstrappers avoid this pinch by hiring (and paying) as few employees as possible.

• Lease, share, and barter everything you can. No, you don't have to pay cash for everything that you need for your business to run. Many companies share facilities, equipment, and even employees with one another to spread out their respective costs. An increasing number of firms also have discovered the wonderful world of bartering, the trading of goods and services to other companies in exchange for the goods and services that are needed.

• Use other people's money. Why use your own money when someone else will let you use his or hers? We're not talking about getting a loan, we're talking about convincing a vendor to allow you to pay 30 or 60 or even 90 days after you receive your goods from them. Or, on the other hand, obtaining payment from your customers before you deliver their goods or services. In each case, you have an opportunity to use someone else's funds to your advantage — for a while, at least.

Some of the more common approaches to bootstrapping are:

• Seeking funds from friends and family.

• Getting a home-equity loan.

• Offering equity to employees and vendors in lieu of salary or cash payments.

• Bartering for goods and services.

• Tapping your credit cards.

• Convincing vendors to accept extended payments.

• Starting your business part time while working a full-time job.

• Getting an extra job.

• Working from home or in your garage.

• Sharing offices with another company.

• Encouraging customer financing (deposits and early payments).

• Looking for angel investors.

• Pooling founders' savings.

Although the need for bootstrapping tends to go away as a business grows and becomes more established — and therefore becomes more attractive to conventional lenders and investors — any company, no matter how big or how small, can benefit by applying bootstrapping techniques in its day-to-day financial activities.

One of the greatest dangers as businesses become more established is the growth of overhead — the costs of facilities, administrative personnel, equipment, utilities, office supplies, furniture, and so forth — at a rate far faster than the growth of a company's sales. This is a recipe for poor profits, sluggish growth, and loss of competitive edge.

Bootstrapping can help keep your company lean and mean while keeping overhead in check and profits high.

John is a 26-year professional in the franchise industry. He has been a franchisee, a franchise executive and an advocate/consultant to the public and to dozens of franchise companies. He is the founder and managing partner of Wilson Associates and can be reached at docfranchise@gmail.com. or direct office 480.838.1641

The odds are against success. The numbers don't lie. The challenges facing the operations of a larger small business development compared to a smaller business component is significant enough that it is best to start smaller, ensure your grip on the business model and then grow from there.

These are all expressions I have used. For the most part I still believe these...IF we were talking 5 years ago I would stand by them, in front of them, behind them and arm myself on all of the information that supports them.

Today is a different day however.

Reading newspapers, listening to the radio, or watching TV today is like drinking from a fire hydrant. There are massive changes in the conditions of our economy. The changes mean franchise companies, particularly new and emerging franchisor's need to rethink their sales and development strategies.

Here are some recent headlines:

* Economy Weakens as Deeper Job Cuts Materialize
* Manufacturing Shrinks Most in 26 Years
* U.S. Slips into a Recession
* Jobless Claims Skyrocket
* World Markets Slump on Economic Fears

In a discussion with several franchise executives recently, the question surfaced, "How can we expand in this market?" I quipped that I was excited about franchise growth in the next few years. I explained that the rules have changed and that smart franchise companies will capitalize on the current economic climate and trends. When my optimism was challenged, I shared why I feel this way.

Why be optimistic?

In times of great upheaval come opportunities. If you read past the doom and gloom I am sure you've read that statement as well. Millionaires were born out of the decade that followed the Great Depression. While it is true that the Crash of 1929 brought unprecedented misery and economic hardship to many, during the same period opportunities were created for the creative, quirky and fearless. The worst course of action as that time exhibited is to do nothing, go about your business and not create a strategy that doesn't recognize the current reality.

While caution should be exercised in positions of leadership, don't ignore the obvious. American workers are going to have to change their lives dramatically. Many people - out of necessity - will have to consider starting a new business, purchasing an existing business, or following the more prudent path of franchising as a route to a new career. Their jobs have, literally, disappeared and reality has finally slapped them so hard that they realize things will never be as they were; security will never be in a company, a position, in a career path again!

On the financing side of the equation while the days of freely tapping home equity and 401(k) plans are gone, many individuals still have the financial resources and/or the ability (courtesy of the U.S. Treasury) to qualify for the recapitalization of existing SBA loan programs to fund their startup. There is money to be had.

Back to the Franchise Companies

The biggest challenge for emerging franchisors in these uncertain, yet dynamic, economic times is how to fund their franchise expansion. Franchise companies face several challenges in today's economic environment:

1. Lead costs are above historical averages.
2. The cost of franchise support is higher as well.
3. A poor choice of franchisees will kill your future growth.

All of these things make Master Licensing and Area Development more attractive growth strategies for newer franchisors who lack the ability to fund an aggressive, rifle-shot franchisee recruitment program and build the infrastructure required for ensuring proper progress and success for new and individual franchisees.

The more responsibility a franchise company must take on to secure the future for the masses of their franchisees, the greater downward pressure exerted on front-end expenses before revenues are produced.

The inability to invest in ubiquitous operational support in the first two years of new franchisee operations is the leading cause of franchisee failures, which in turn cripples the future franchisee validation necessary for recruiting new franchisees. This dynamic creates a death spiral. Emerging franchises who attempt to grow and develop their business from a centralized point create more risk for themselves and their franchise system.

Master Licensing (ML) and Area Development (AD) alleviate significant amounts of the cost burden associated with newer franchise systems. By definition ML's and AD's take on the key responsibilities and costs for providing training and support. With an AD strategy in place:

1. The bulk of the franchisee recruiting costs are funded by an AD or these can be centralized and made a component of an off-loaded relationship with a franchise development company. Either or both ways, it reduces franchiser overhead and provides more focused effort with less pressure on the corporate funding sources. If this is done properly, it will revolutionize recruiting.

2. The resources associated with providing a high-quality support system are delivered and managed by a qualified ML/AD. Not only is this more cost-efficient for the franchisor (because the costs of building a support infrastructure and managing recruiting locally are borne by the ML/AD), but the quality of support to franchisees can be geographically proximate, more focused on business nuance and decidedly more personalized.

The key to success in enabling this growth strategy is in understanding the basic operating principles of Master Licensing and Area Development, including how to recruit and manage them, as well as how to properly structure the agreements. The three mistakes most franchisors make in structuring a program are:

1. Assuming that an Master Licensees is the same type of candidate as a franchisee, only with more capital. Some of the most successful ML's I have known over the years are those who did not necessarily have the best balance sheet, but rather an adequate one; however, they had the core talent, enthusiasm, and skills necessary to drive an organization.

2. Creating a development schedule that is too aggressive. This will drive your AD's to choose franchisees based on meeting a timetable, rather than on purely on their qualifications, which leads to a lower quality of franchisees. They will always want better franchisees because the focus on branding for them is now personal. Craft an agreement that allows them to focus on the best things.

3. Assuming that an AD/ML can do both recruiting and operations. I have never, never seen this structure work over the long term. Offload development to a professional organization that takes responsibility for a significant amount of the lead costs and understands the needs of the ML's/Ad's.

There are many other things to consider in designing a franchise growth strategy for these challenging economic times, but having 10-100 (depending on your organization) qualified Area Developers reduces your company needs for funding recruiting and allows you to focus capital expenditures on improving your franchisor operating system.

This can ultimately fuel profitable growth for emerging franchise systems, something they could not have come close to replicating internally. If you are looking for an organization who can provide you with the tools to make this adjustment in your system you know where to find me!


John is a 26-year professional in the franchise industry. He has been a franchisee, a franchise executive and an advocate/consultant to the public and to dozens of franchise companies. He is the founder and managing partner of Wilson Associates and can be reached at docfranchise@gmail.com. or direct office 480.838.1641