Four Tips to Make Your Company Outlive You
After running nuclear reactors for submarines, Loren Goodridge was ready to be his own boss. Navy alum Goodridge became a Subway franchisee in 1992, and has since been recognized for his strategic planning skills by Subway CEO Fred DeLuca and grown his franchise company to 20 units. Armed with military-refined leadership skills and a strong sense of entrepreneurship, Goodridge continues to actively strategize for his units and push for continual, productive growth for both his business and the Subway brand.
Goodridge shares his tips on how a new or prospective franchisee can develop his business and plan strategically in an ever-changing marketplace.
1. Don’t Do Anything Without Strategic Research
The first thing anybody should do if they want to own a franchise is go and talk to other franchisees for that particular brand. Find people to help and mentor you through the beginning stages of the ownership process. If you see happy franchisees that are making money, then you are on the right track.
Networking with other franchisees can lead to long-term partnerships. Two of my most-trusted associates run and oversee a combined nine of my franchises. Each is in charge of day-to-day operations and, in return, receives a certain percentage of ownership. Without networking with these two individuals, I would have inevitably lost control of my operations if I took on any more franchises.
2. Prepare in Advance for Inevitable Tough Times
Your attitude is the most important thing when starting out. When my first Subway unit opened in 1992, I went from having 15 employees to five within the first few weeks. So I wouldn’t constantly take money out of the business, I ended up working another job for six months to continue the financial security of the franchise.
The trick is not to run the company out of a shoebox. You can put money in, but when the financial flops come is when franchisees continually take money out. Even though they might be doing it to keep the business intact, it will eventually hurt in the long term. Realistically, don’t plan on an income for at least six months.
For those who have just started out, honesty and integrity go a long way in this business, especially when it comes to your staff. Keep them involved and be open with the financial aspects of the business. Make sure they know what the goals are for the company and reward them if it happens.
3. Map Out Your Next Few Years Realistically
This is where a lot of franchisees hurt themselves and it’s the most important starting out. A lot of owners take on too much debt in the beginning and have trouble getting out of the hole.
I create a budget on a 12-month timeline. Within that budget, I factor in a 5–10 percent growth rate. I also factor in a 5 percent decrease in sales. This enables me to see what happens if the company or brand takes a hit on sales. Knowing the possible consequences of the financial future is just as important as the positives.
Along with the budget, I create a long-term strategic growth plan and marketing strategy. This is a five-year plan for all of my companies—everything from the sales numbers to employee incentives. Furthermore, for the first year of the plan, I map out each month specifically in regards to building the company. This way, we know exactly what we are working on to achieve short-term goals and grow as a result.
4. Let the Customer Drive the Business DecisionsIn order to survive long-term, the numbers need to be there. If you own one franchise and do little to build the brand, the status quo will eventually catch up to you. When that happens, you have little options on what to do for growth and end up at the mercy of your location.
Finances are the most important factors for a business, but marketing and customer service are close seconds. In this business, the customer is always right. The customer is not there for you. You are there for them.
Building up good customer service can be done in a number of ways. Secret shoppers are a good way to gauge service, but a lot of the times they might pick out intricate things that real customers aren’t really looking for. The most efficient way to gauge it is to enable customer surveys. As tedious as it may seem, this is a direct line to what your customers think of your stores.
It doesn’t stop there, though. You need to make sure this information is integrated into the business. Every week, my management team and I meet for about two hours. The first hour is business as usual, but the rest of the time is used to discuss the state of each unit. This rap session is a good time to talk about what the customers think and how we can work to better serve them. The management team will then go to their staff to discuss the implications of the session.
Be sure to communicate the negative aspects of the business carefully. Treating staff poorly in this regard has a snowball effect on the business. Poor treatment of employees leads to high turnover, which leads to poor customer service, which then leads to declining sales and finally ending in profit loss. At the end of the day, your customer drives the business, not you.