Category Archives: Small Business & Entrepreneurship

For the small business owner.

Why Owning a Franchise Needs to Be One of Your New Year’s Resolutions

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You made it! The Mayans were wrong, your family didn’t drive you completely crazy during Christmas and civilization endures. But, there’s another hurtle left to jump: your list of resolutions for 2013. As the number of remaining days in 2012 shrinks, it’s time for you to consider your future…

 

Will 2013 be the year you (finally) learn to love kale and embrace the treadmill? Is this the year you start– and finish– all of those DIY projects? A year from now, as you reflect upon the past 12 months, will you pat yourself on the back because you did what you finally promised yourself you would do: start your own business and become your own boss?

 

Or, will you let 2013 be a carbon copy of 2012?

 

(The correct answer is no.)

 

If you plan on making 2013 your best year yet (and one of financial independence) owning your own business needs to top your list of new year’s resolutions, and here’s why:

  1. THE FISCAL CLIFF: Despite what you’ve heard or read, the majority of small business owners aren’t so doom and gloom about the fiscal cliff/slope/precipice as you might think. As the backbone of our nation’s capitalist society, small business owners know and live the value of progress and forward movement. They’re unafraid of putting their shoulder to the wheel and know that no matter what happens, they’ll make it work.
  2. FUNDING: Traditional SBA-backed loans remain a touch-and-go source of funding for small businesses. Some find traditional lending to be the best and easiest way to raise capital. For others, banks are unwilling to loan for whatever reason.  As a whole, banks say they’d like to make more loans but it seems that many have upped their standards due to regulatory pressure. Regardless, securing a loan is definitely possible. 
  3. YOU’RE A VETERAN If you’re a military veteran you are in high demand– especially in the franchise industry.  Many franchises are so pro-veteran they’re only recruiting veterans to become franchisees, like J Dog Junk Removal. Often, veterans are offered significantly discounted franchise fees, financial incentives and mentorship opportunities “regular” franchisees don’t receive. As an added bonus, Sprigster’s “Boost a Hero” program is specifically designed to help veterans and their spouses become franchise and small business owners through crowd-funding.
  4. YOU’RE A FORMER CORPORATE EXECUTIVE OR SMALL BUSINESS OWNER: Exiled or retired corporate executives and former small business owners make excellent franchisees. Franchisors are always keen to recruit those with business experience, especially those with an entrepreneurial spirit and previous management training.
  5. PREDICTIONS FOR 2013: Again, despite what you may have heard, the franchise industry is yet again poised for growth unseen by most other industries since 2008. The number of franchise establishments is expected to increase by 1.4 percent in 2013, from 746,828 to 757,055 with the number of jobs increasing 2 percent, reaching 8.262 million, according to a study by the IFA’s Educational Foundation. In addition, the same report also projects the gross domestic product of the franchise sector to increase 4.1 percent in 2013 to $472 billion.

Still not convinced? Consider all of the franchise opportunities available in your area, your preferred industry or investment level at Franchise Buy.com.

What’s For Dinner? Menu Predictions For 2013

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According to Pantone, the “it” color of 2013 will be emerald green. But that’s not the only trend worth considering– what about the “it” menu items diners are sure to see on their menus next year?

 

A survey of over 1,800 professional chefs produced the National Restaurant Association’s list of top ten menu trends for 2013. The top ten list indicates that consumers have four things in mind: cost, where their food comes from, gluten and their kids.

 

Consumers remain concerned about food costs while eating out, as suggested by the prediction that new cuts of meat will continue to appear on menus. These new cuts of meat, like the Denver steak, are lesser-known and less expensive but have become more popular as tough economic times have eaten into consumer’s disposable income.

 

The locovore movement continues to grow as more diners look for locally grown produce, locally raised meat, and sustainable seafood. Thanks to the popularity of cooking shows, food magazines and the rise of the celebrity chef, consumers are increasingly aware of how food appears on the dinner table– and they want it to be in an environmentally conscientious manner.

 

Gluten-free items began appearing on menus a few years ago– thank you Miley Cyrus– and, if anything, have increased in number and popularity. Pizza franchises like Domino’s offer gluten-free crusts in an effort to include those who have Celiac disease or a gluten sensitivity.

 

Some of the top trends carried over from last year, including children’s nutrition and locally sourced produce.

Do you think the predictions for 2012 proved to be true? Do you think 2013’s top ten list is missing a trend?

Yummy Cupcakes: a Hot Out of The Oven Franchise Opportunity

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There’s no denying the allure of a cupcake: sweet, creamy frosting (preferably chocolate) and moist, delicate cake (preferably vanilla) is a winning combination. But, can you be successful owning a cupcake bakery? Can it really make you money?

The short answer? Yes — and Yummy Cupcakes has proven it’s more than just a possibility.

 

In 2004, Executive Chef Tiffini Soforenko opened the now award-winning Yummy Cupcakes in Los Angeles, California. Since then, she’s served gourmet cupcakes and other treats to customers and celebrities the world over. (Martha Stewart, Rachael Ray and even Steven Spielberg like Yummy Cupcakes!) As of September 2012, Yummy Cupcakes began sharing its secrets to sweet success as it expands as a fresh new franchise concept.

 

Yummy Cupcakes’ hub and spoke business model positions each franchisee at the center of multiple incoming revenue streams. At the center of the business model is Yummy Cupcakes’ bakehouse, a location that both sells and bakes cupcakes. A bakehouse is capable of baking up to 12,000 cupcakes a day– enough to sustain sales at 2-4 satellite Yummy Cupcakes locations, which don’t perform any onsite baking. In addition to cupcake sells (the average ticket is $14), half of Yummy Cupcakes’ business comes from catering sales.

 

“Taste is very subjective, but our Los Angeles locations win ‘Best in Show’ each time in one of the most competitive markets,” says Dennis Mulgannon, Yummy Cupcakes’ director of franchising.

 

Part of Yummy Cupcakes’ success lies in its proprietary icing and cupcake recipes. The franchise doesn’t use a single pre-made mix for any of its 430 flavors– some of which are vegan and sugar-free– and include interesting combinations like Green Tea Wasabi and Turkey and Gravyin addition to more traditional, sweet offerings.

 

Currently, Yummy Cupcakes operates three locations in California and two international locations in the Middle East. Since it began franchising in early September of 2012, Yummy Cupcakes already has locations in Boston, France, Italy, the U.K., NYC, Texas, Nevada, Colorado, Oman, Japan and Abu Dhabi.

 

So, who are they looking for when it comes to potential franchisees?

 

“We’re looking for candidates with business experience– be it former small business owners or former corporate executives,” explains Mulgannon. “A passion for baking is great, but we’re not looking for someone who likes to make cupcakes– we’re looking for someone who understands basic business skills, knows what a P&L is, and how to manage a growing business.”

 

For those who are interested in starting a Yummy Cupcakes franchise or simply want more information, visit: http://www.franchisebuy.com/franchise/Yummy-Cupcakes.

 

Sports Image: The answer to underfunded school sports teams?

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A franchise might just have the solution as to how America can put its youth back on the global playing field– literally.

 

The education system has seen its share of cutbacks thanks to the Great Recession. A report released last year indicates that cuts to education funding has led to:

 

  • reduction in early childhood education programs
  • increases in class size
  • termination of art, music, physical education, and other elective classes
  • elimination of Advanced Placement courses, extracurricular activities, special science, foreign language, and technology programs

 

To some, sports might not be a “subject” but that’s not to say that sports don’t have their place in the education system. The disintegration of organized sports in America’s school systems is a major problem, as a recent study of 317 middle school students commissioned by the American College of Sports Medicine found that:

  • The fittest group of students scored almost 30% higher on standardized tests than the least fit group;
  • The least fit group had grades in four core classes that were 13-20% lower than the fittest group.

So, what do we do? As it turns out, the franchise Sports Image might just have an answer.

 

As a marketing consulting agency for grassroots sports teams that are in need, Sports Image solicits sponsorships from various businesses– large and small– for teams that need everything from new uniforms to a new scoreboard.

 

As President and CEO Eric Hortsman puts it, “Sports Image is a booster club on steroids.”

 

To date, Sports Image has given over $10 million in equipment and $1 million in cash to elementary school, middle school, high school, public recreation department, religious organization, Division II college, and Division III college teams.

 

Unsurprisingly, Sports Image has watched the need for its services rise considerably since the Great Recession. Then again, the public and not for profit sectors always need financial help, something that the franchisees of Sports Image are happy to give.

 

“A lot of companies do good and charitable work. Sports Image, at its core, is helping others,” says Hortsman.

 

Tom Carmichael, a Sports Image franchisee in Virginia, loves what Sports Image does for communities, as he’s “really been taken aback by how schools are hurting.”

 

“Being a Sports Image franchisee means having your own business but also being able to understand the wants and needs of a school, and then being able to go out and get it for them,” he says.

 

As for the sponsors, “They love it,” he says. “They get good advertising from it.”

 

Prior to becoming a Sports Image franchisee, Tom spent 33 years working his way up the corporate ladder at the same company, which he admits was a wonderful opportunity. He noticed that fewer and fewer new hires had a “team mentality”, something that had been instilled in him as a youth sports player.

 

During his college years, Tom played baseball and basketball despite being legally blind in one eye. He credits his coaches with giving him confidence in his abilities despite his handicap. In addition, he’s still best friends with his teammates from his college years.

 

“It’s like putting on an old jacket; it just fits me really well.”

 

Satmetrix: What to do when your customers go from engaged to enraged.

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The advent of social media has ushered in a new customer service paradigm. Interactions between a business and its customers — positive or negative– are now part of a company’s narrative thanks to platforms like Facebook and Twitter.

 

For businesses, this presents an opportunity to engage with its customer base and obtain feedback on its products and services. Under normal circumstances, this is a good, even great, thing. But, when a customer turns from engaged to enraged, a business is often caught off-guard, especially if a customer chooses to vent his or her frustration publicly. An angry customer is a scary thing; an angry customer on Twitter or Facebook is terrifying.

 

 

 

 

 

 

 

 

Dissatisfied customers present a unique challenge to franchises. Negative feedback expressed publicly can not only tarnish the reputation of the local outpost, but also influence a potential customer’s perception of the brand overall. As Forbes reported earlier this year, “when you make a decision to choose one brand over another, you’re influenced more by the company’s reputation than any particular product it offers.”

 

So how do you manage your reputation, keep your customers happy, and protect your bottom line? Satmetrix has a suggestion: put your net promoter score to work.

 

There are three types of customers: promotors, passives, and detractors. Customers that support and advocate for your brand are promoters. Those that support your business but aren’t telling their friends and family about you are considered passives. Customers that speak out against your business due to a poor experience are labeled as detractors. A brand’s net promoter score is calculated by subtracting the percentage of detractors from the percentage of promoters and provides a company with a numeric indication of its customer base’s level of satisfaction.

 

 

 

Traditionally, a net promoter score was calculated through surveys, which have become so ubiquitous they’re ineffective. Fewer and fewer customers care to respond to surveys because they get so many. Spark Score, a program from Satmetrix, surveys what customers are already saying by sweeping the Internet and social media.

 

At this point, the folks at Satmetrix decided to go a step further. After the net promoter score has been calculated, more questions are asked. In doing so, Satmetrix is able to draw a correlation between the net promoter score and what’s causing a customer to recommend your brand or, in some cases, to not recommend your brand. The goal is to identify the moment that franchises (and other businesses) are dropping the ball in order to fix the underlying error, improve overall customer relations, and ultimately win customers back.

 

A recent study performed by the Gallup Business Journal indicates that bringing on new customers is about emotion, not price or product. It costs more money to woo a new customer than it does to keep an existing one. In addition, satisfied existing customers spend an average of 2.6 times more than one that’s relatively satisfied and 14 times more than one that isn’t satisfied.

 

In the graph below, total revenue is represented by the total sales from passive and promoter customers in a nonexistent company. Total potential revenue represents the total sales from promoters, passives, and detractors who have returned as passive customers after having their customer service issues resolved. On average, the difference between the total and total potential revenues each month is $9,333.

 

The way Satmetrix has designed their program gives franchises the ability to assign each customer type a value, placing into perspective the real cost of a dissatisfied customer. In the case of the nonexistent company above, one detractor equals 2.6 passives and 1 promoter. So, when you lose a customer due to a poor customer service experience, you may need two customers to make up the difference in lost revenue.

 

At the end of the day, it’s more than the loss of a customer and sales; a detractor also has the ability to turn potential clients into detractors before they’ve even become a paying customer. When you’re looking to try a new restaurant or need help mowing your lawn you turn to family members and your friends for recommendations. The same applies to every business.

 

Satmetrix hasn’t stopped at creating a better net promoter score or helping companies assign a value to each customer type. With Satmetrix, sales teams can respond to customer service emergencies in real-time, assuaging a dissatisfied customer’s frustrations before they’ve said sayonara and been welcomed with open arms by a competitor. It’s also at this point that Satmetrix can help companies identify exactly where they’re going wrong in the sales process. As Carol Tice of Entrepreneur magazine points out, two of the best ways to keep angry customers from storming out and never coming back are reaching out via social media and fixing the broken policies.

 

What the Olympics Can Teach Us About Franchising

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The world’s best, strongest, fastest, and most talented athletes are competing for personal glory on the world’s most public stage: the Olympic Games. Behind the fanfare, sponsorships, and medals lie years of hard work, sacrifice, and standing on the shoulders of your supporters.

 

As a franchisee, your business is your Olympics. While you may not find yourself on a podium decorated with a bronze, silver, or gold medal at the end of each day, your customers, employees and franchisors are judging your performance.

 

The Importance of Passion

Take a page out of an Olympic athlete’s book: passion is paramount. How else could you dedicate 20 years of your life, as Michael Phelps has, to hours and hours of training? To not watching your favorite television show? To not ordering dessert? The only time that sacrifice doesn’t feel sacrificial is when what you stand to gain is greater than what you are forgoing. That, and when what you’re doing still feels like fun.

 

Olympic athletes are often quoted pre-and-post event on the importance of, “going out and having fun.” Without some semblance of fun, the hours in the gym, pool, or at your business, would be unbearable. That’s why when choosing a franchise concept it’s important to be truly interested in or passionate about the business you’re about to buy into. Franchise agreements are written in terms of years. Most are between 10 and 25 years. Can you imagine doing something you don’t really like for so long?

 

What It Means to Be a Part of Something Larger Than Yourself

 

There’s something to be said for being a part of something larger than yourself. Recognizing your place as part of the whole (as opposed to the whole) can be humbling and empowering.

 

As a business or franchise owner your importance is obvious. Without you there wouldn’t be jobs for your employees or services and products for your customers. Then again, if it weren’t you it would be somebody.

 

Embracing this reality and mentality can make you a better manager and franchisee. When you accept that your role, while important, exists only thanks to your franchisor, your customers and your employees, it’s easier to be more appreciative of how your business truly works.

 

Furthermore, realizing your place in something bigger serves as a reminder that you are responsible to and accountable for others—an important inspiration for staying true to your endeavors when you lose sight of your goals. Perhaps this is why Olympians become so overwhelmed with emotion; they see they represent more than just themselves.

 

The Importance of Support and Guidance

Regardless of what you may believe, we all stand on the shoulders of those who have come before us—and thank goodness for it! The experience and knowledge of others is invaluable whether you are an Olympic athlete or a franchisee.

 

Can you imagine going to the Olympics without the guidance or tutelage of a coach? Can you imagine becoming a business owner without support from your family or friends? As a franchisee, you not only have the support of your friends and family, you have the support of a network of franchisees and franchise support systems designed to make you and keep you successful! While your personal and financial preparation is your responsibility, you are not without resources or guidance.

 

 

 

What Does the Affordable Care Act Mean For Franchising?

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Last Thursday, The Supreme Court ruled the Affordable Care Act as constitutional. In the days that have followed, some have rejoiced in victory and others have contested the ruling in anger. However, everyone is asking one salient question, “What does this mean for my future healthcare costs?”

 

If you’re a small business owner (which includes franchises), you’re probably particularly concerned with the potential added costs of the Affordable Care Act. Do you have to provide healthcare for your employees? If you’re an employee of a small business, you’re probably also concerned. Does this mean that you’ll lose your job? Or, will you be asked to work part-time hours so your employer can opt out of paying for your health insurance?

 

First of all, here’s a breakdown of what the law requires. For more detailed information, head here.

 

  • If you own/operate a business that employs 50 workers or less, you will not be required to provide healthcare coverage because you are considered a small business by the Affordable Care Act.*
  • If you own/operate a business that employs more than 50 workers, you will not be required to provide healthcare coverage. However, beginning in 2014, employers that do not provide adequate health insurance will be required to pay an assessment if their employees receive premium tax credits to buy their own insurance. These assessments will offset part of the cost of these tax credits. The assessment for a large employer that does not offer coverage will be $2,000 per full-time employee beyond the company’s first 30 workers.
  • If you are self-employed with no employees, you will be required to purchase health insurance or pay a tax equal to 2.5 percent of your household.

 

Last Friday, The International Franchise Association conducted a survey of nearly 200 franchise owners, operators and executives. Asked if they’re more or less likely to hire based on how the Supreme Court ruled last Thursday, of the 200 survey participants 85 percent said they would be less likely to hire. Fifteen percent said they would be more likely to hire.

 

At a separate time but in tandem with the IFA, The Hudson Institute conducted a study that suggests 3.2 million jobs at franchise businesses remain at risk as a result of the employer mandate provision of the healthcare law.

In a recent Washington Post piece, FASTSIGNS chief executive officer, Catherine Monson, called the law “truly unworkable and unaffordable for our country’s small business owners.” Monson lampooned the Affordable Care Act, saying that it is “one of the largest tax hikes in U.S. history,” one that comes at the expense of small businesses, and will ultimately impede growth at a time when our country needs it most.

 

Just to be clear, the Affordable Care Act isn’t one of the largest tax hikes in U.S. history. Presidents Bush and Reagan both introduced tax increases larger than Obamacare.

That said, the law does include a number of tax hikes:

 

  • $27 billion : the amount the individual mandate will raise during the next decade.
  • $30 billion: the amount the tax on unusually expensive health insurance plans will raise during the next decade.
  • $60 billion : the tax on insurance companies
  • $200+ billion : the amount the largest tax increase in the law comes from high earners, who will see Medicare payroll tax increase by 0.9 percent

 

“Bottom line: the law will deter growth by unintentionally discouraging franchisees from owning and operating multiple locations, creating a competitive disadvantage for our franchisees who do own more than one or two locations (and who may want to open additional stores), and barriers to entrepreneurs who are looking to capitalize on the franchise business model to grow their business and hire more workers,” writes Monson.

 

What do you think about the Affordable Care Act? Is universal healthcare something that the United States needs to embrace? Or, is it a hindrance to job growth?

 

*If you own/operate a small business that employs 25 workers or less, you will not be required to provide healthcare coverage. However,  the government offers subsidies for small businesses with less than 25 employees who make less than $50,000 annually. A tax credit to defray 35 percent of the cost of healthcare will be given to for-profit companies; a credit of 25 percent to not-for-profits. In 2014, those percentages will rise to 50 percent and 35 percent, respectively.

Early Bird, Night Owl: Should You Extend Your Hours?

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The old adage that nothing good ever happens after midnight may no longer be true– at least in the business world. Franchises and other chains are staying open later and starting service earlier, hoping to earn business from both the early bird and the night owl.

 

McDonald’s reported, along with strong quarter 4 earnings, that the hours of midnight to 5 a.m. are the fastest growing time segment in its U.S. business. Nearly 40% of McDonald’s U.S. outlets are open around the clock, according to the Wall Street Journal. Should you be doing the same?

 

These days, everyone’s schedules are changing. The traditional 9-to-5 workday is a thing of the past. Many of us work multiple jobs, start the day later or work well into the night. It only makes sense that the businesses the population relies on (and vice versa) change, too.

 

If you’re contemplating changing your hours, there are three things to consider:

Does the projected added revenue cover the added wage expense? Staying open longer (or later) means you’ll be paying your employees a bit more to keep your business open. Make sure to go over your finances to see if you can afford to do this for a few months, until the word that you’re open later gets around.

 

Have your current customers already expressed a need for your to be open beyond your current hours of operation? Do your customers often wish you were open more days or at different times? If so, you’ll probably reap the rewards of longer hours. If not, you might earn the business of new customers whose schedules don’t allow them to swing by between 9:00 a.m. and 5:00 p.m.

 

How will you get the word out to your current and potential customers? It doesn’t do you any good to change your hours of operations to accommodate your customers unless they know about it! Have your employees tell your regulars you’re changing your hours. Post reminders on your front door and print them on your receipts. Contact your local community newspaper’s retail reporter with a press release announcing the new hours, if you feel it’s necessary.

If you’re still unsure if your customers need or want different operating hours (or you feel you could snag a few more by staying open later) talk to your employees and current clients. Both parties probably will be happy to clue you in on trends they’ve noticed and what they want from your business.