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Growing up, I was always interested in business, and I knew I would become an entrepreneur one day. What I didn’t realize was that becoming an entrepreneur is much more than just starting a business.
When I moved to Fort Collins, Colorado back in 1997, I wanted to start a T-shirt business. I went out and borrowed $30,000 from friends and family and found a location to lease in the center of downtown Fort Collins. I spent days completing paperwork and nights doing the tenant finishes, and I screen-printed T-shirts in between. I hired two employees, and it took me about two months to get the store up and running. It was a fun business, but I quickly realized I didn’t have the knowledge needed to be successful as a business owner.
What started as a three-person T-shirt business in Colorado later catapulted me into the hotel industry and eventually real estate and inspections. Here are the mistakes I made along the way and the valuable lessons I learned during my entrepreneurial journey.
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Leverage a proven operating system
During my time running the T-shirt business, there were many aspects such as accounting, human resources, and contract negotiations with vendors and suppliers that I truly didn’t understand. I also didn’t hire the appropriate people to help me. Before I opened the store, I dreamed about opening several more franchise locations. That all came to an end about a year and a half into it, and I ended up selling the store for what I had originally put into it.
I made a little money, but it wasn’t even the equivalent of what I would have made as a manager of a retail store. Looking back, it’s clear to me that being a part of a proven franchise system would have been the best way to prevent many of the mistakes I made. In hindsight, I should have either partnered with a successful franchisor or hired a consultant to help with setting up the systems that would have made me successful.
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Get in the weeds and research your industry
In 1999, I decided to get into the hotel business and became a Wyndham franchisee. Along with a few others, I decided to buy the franchise rights to build a Days Inn & Suites by Wyndham (at the time they were known as Cendant). I borrowed money from friends and family for my share and was on my way to developing, owning and operating the property. This was my first true experience with a franchise system, and I thought it was the best thing ever. The franchisor provided training, procedures, property-management systems, guidance and an operating manual.
I thought this was going to be a home run, but within a year and a half, I realized that even though these “systems” were available, it was more of a resource rather than the in-depth knowledge I needed to be highly successful. Now, don’t get me wrong, this could have simply been my lack of knowledge or utilization of the “systems,” as this was still the first time for me as a franchisee. However, I ended up losing money on this venture and had to start all over again after I paid my friends and family back. This was a huge setback.
To anyone who is either in a similar position as I was or is looking to become a franchisee, I would advise you to understand the ins and outs of your industry. Ultimately, having a proven franchise system isn’t enough. Not only do you need to understand your industry, but you also should be well-versed in the day-to-day operations. I would strongly suggest visiting several existing franchisees and shadowing them for some time to fully understand your business.
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Think 10 steps ahead
In 2003, I was off to my next venture in real-estate inspections. My mentor Craig Auberger and I had a conversation about the real-estate inspection industry, and it intrigued me.
With about $5,000 on my credit card, I started 1st Ohio Inspection Services. I started out doing a lot of marketing and networking and was getting busy enough that I brought on a few other inspectors and trained them to get out in the field. About a year and a half into the business, I was doing an inspection on the roof. With one swift move, the ladder slipped, and I fell approximately 18 feet onto a concrete driveway. I landed on my right wrist and elbow and had to have nine surgeries over a period of several months. During this time, both my mentor and wife told me that since I couldn’t physically do inspections anymore, I should shut down the business. However, I had been planning for a scenario like this all along. I had already put “systems” in place that I knew would allow me to continue operating the business in an instance where I was not able to be involved in an inspection capacity. Strongly influenced by Michael Gerber’s E-Myth Revisited, I ran my business under the pretense that I would one day franchise it.
I eventually dropped the Ohio in the name, called it “1st Inspection Services,” sold my Cincinnati corporate store and continued growing the franchise system. Today, I have nine locations open with two slated to open within the next six months. It is imperative to have an exit in mind. Anyone wanting to get into a business, regardless of industry or sector, should think ahead and have a general plan of how he or she could exit and continue operating.
Franchise systems provide franchisees a playbook that includes the franchisors’ know hows, operating manuals and procedures, intellectual property and branding. Being part of a franchise systems gives you the brand awareness via national, regional and local advertising to help build the name recognition. Ultimately, I’ve learned that becoming a successful franchisee is three-fold: You need to leverage a proven operating system, but you also need to understand your industry and business thoroughly while keeping an exit strategy in the back of your mind.
