Jim Penman is the founder of Jim’s Group home services franchise, which now has more than 2,500 franchisees and branches all around Australia, New Zealand and Canada.
Why did you choose the lawn-mowing business – was it something that you enjoyed doing?
I did enjoy it. After sitting at my student desk all week, it was good to get exercise in the open air. Even today, I feel that life falls short without some daily contact with grass and trees. I made sure that my mowing business never interfered with my studies though – mowing lawns just seemed to fit in really well back in those days.
At what point did you realise that your lawn-mowing business could be franchised and how did you learn what to do?
My mowing business was going so well that I soon realised I needed to reduce my personal workload, which had become excessive. I began by advertising my mowing round in the paper. This developed and I soon found success selling lawn mowing rounds. At this time my ambition was to create a research institute, and I needed a major business to fund it, so I asked myself how I could do this if I kept selling off my customers. The answer was obvious – by getting the purchasers to keep on paying me, therefore franchising was the way to go. I went to a franchising presentation by my main competitor, VIP, and learnt about how they successfully franchise. The VIP system made sense to me, especially the way it concentrated on working in one area. I suddenly felt the future was bright and I knew I could make franchising work for me.
How do you go about attracting the right type of people and what are the criteria you look for when selecting a franchisee?
I wanted Jim’s Mowing to be a quality business run by quality people, therefore I had specific characteristics that I was looking for in my franchisees. I wanted them to be trained in management with business experience and a professional background as well as having terrific interpersonal and communication skills. Also, the key characteristics of any entrepreneur (such as persistence, self discipline and motivation) are vital components to ensuring the success of the business.
I had to make sure that I attracted this type of person and the way I went about it was by basically offering them a deal that they couldn't refuse. Our contract put franchisees in a very strong position, it gave them clear territory rights, but allowed them the freedom to find work wherever they chose. This forced me to treat my franchisees like customers and also ensured that I attracted quality people. I could not rely on the contract to make them stay, so I had no choice but to look after them.
What type of ongoing support and training do you provide for your franchisees?
The core value of Jim’s Group home maintenance franchise is putting franchisees first. I am never, ever satisfied with how much we do for our franchisees. Improving our franchisee support is the single biggest obsession of my life, and it is intolerable to me that any franchisee should fail for lack of anything that we could do. For this reason we provide a myriad of different aspects of ongoing support and training for franchisees.
During our earlier days, we used to run meetings where the normal practice was to start with discussion about the system, gripes and so on, and end with training talks on subjects such as landscaping and customer relations. Any new ideas about how to do things were added to the Jim's Mowing operations manual, which we stored on our word processor and continually updated. As the business grew, so too did our methods of training and support. We began making training audio tapes, and asked franchisees who had flourished in tough times to train and mentor others.
One of my main concerns as the business grew was that it would become less personal and that the franchisees would lose the influence they had in the early days, so we set up a franchisee representative committee. Our group meetings alternated between large training meetings and smaller localised discussion groups, which were asked to come up with suggestions or complaints and delegate someone to take them to the committee. Representatives could be relied on to tell us, without pulling any punches, if we needed to change our ways.
The great thing about this system is that it is mutually beneficial – by helping our franchisees, it helps to grow and strengthen the business. And it’s not difficult to find the right type of new franchisee when you have your current franchisees willing to tell anyone how well they were treated and how much support they received.
What are the most important things you have learnt about succeeding in business?
There are three principles which I consider to be the most important things I have learnt to succeed in business. The first is that service to franchisees should always be above everything else.
The second is service to clients, which is something that has always been a passion for me. If you always look to the interests of your customers you are sure to succeed in whatever you do. It is vital that customers like and trust you and that you have enough understanding of them to know what they really want. I strongly recommend that no one ever refuse a cup of coffee or a chance for a brief chat, no matter how busy they might be. They should remember and even note down any personal details offered, such as names of children, forthcoming weddings and so on.
The third principle has to do with my own dislike of power hierarchies. I was determined that we maintain a sense of equality, and as the company grew I took steps to make myself even more accessible. In fact, I decided that staying in contact with franchisees was one of my key jobs and I invited any franchisee with a problem to call my mobile number. This same number is given in a personal letter that I send to welcome new arrivals, in newsletters and in audio tapes. My staff know that any franchisee who phones for me is to be put through with the highest possible priority. Emails will usually be answered within a few hours. There is a saying in the Bible that 'not even a sparrow falls to the ground without God knowing'. I wanted something similar for Jim's, that no franchisee should run into difficulties without us knowing exactly what was going wrong and doing everything possible to help.
What advice would you give to other people who would one day like to franchise their own business?
Success in franchising is a balance between two opposing principles: the need to give the best possible service and to do it while charging the lowest possible fees. In general we aim to keep fees below 10 percent of turnover, which is a lot less than what a retail franchisor gets. Out of this must come advertising, administration, training, personal advice and support, and a host of other functions. The temptation is to rely on franchise sales, which often leads to poor selection and a focus on sales rather than support. In the past few years at least three of our serious competitors have become unstuck for this reason.
Your primary concern should always be your franchisees. They are the ones that entrust you with their money and their financial future. The growth of Jim's is determined by our ability to find and keep good franchisees – good people make it easy to find and keep good customers. You must always be intensely aware of any problem your franchisees have with the system.
Tom Potter is the founder of Eagle Boys Pizza, which now has over 160 stores Australia-wide and an annual turnover in excess of $100 million.
Why did you choose to leave school at the age of 15, and how did you come to start Eagle Boys Pizza?
I always knew that I wanted to be either a baker or a chef, and neither of these aspirations required much schooling, so when the opportunity arose to apply for a position, I did and I left school to become a baker. I gained a reasonably good knowledge of the retail baking industry through working as a consultant in the food services and flour milling industries, and I also worked for another pizza company for a short period of time.
Originally, I thought that I would start my own business when I was around 27 or 28 years old, but an opportunity came my way when I was 23, which I felt might not be there in another three or four years, so I made what I thought was a premature start in my own pizza business. I managed to scrounge together $12,000 in start-up capital, and luckily I also had my mum to support me; she helped guarantee the leases on the first store. As thanks for her support and the respect that she had for my project, I made her a 50 percent shareholder.
Things just grew from there. I always had the vision that Eagle Boys would expand and become successful, and I foresaw the ability to open up numerous stores throughout regional Australia, but I didn’t spend too much time thinking about that in the early days.
The fast food industry, and the pizza business in particular, has always been highly competitive. What are some of the things that you do to differentiate Eagle Boys from the competition?
The first thing that Eagle Boys did differently was to go into towns where there was little mainstream competition, even though there were independents. By taking a franchise operation into country towns we brought with us a level of marketing that they had never seen before. This was our initial point of difference, which was enough to get attention, but not enough to guarantee success. Over time, what has made us different is our high quality product coupled with excellent franchisees.
We continually strive to find new areas of differentiation. Over the last few years, we have begun a new project, which is our instant service system called Express. We have now introduced drive through services, and smaller models of our stores which can be implemented in airports and sports stadiums. Overall, we are focused on winning ‘the race for space’ – trying to find areas where traditional pizza shops have not yet gone.
At what point did you realise your small pizza business could be franchised and how did you learn to do it?
The main thing that I had to do before determining whether my business could be franchised was to ensure that it was profitable and simple to run. Our business model had basic systems which enabled it to be operated easily, and I felt that it was perfect for a franchise model. Systems are the key to franchising. If you can run your business via a manual, and have everything done in a uniform way throughout every store, then you know that franchising is the next step.
When I began looking at franchising, I quickly realised that I didn’t have the knowledge or skills to make it happen, so I hired a franchise consulting company to help me. If you want to know how to build a franchise, go and speak to someone who has successfully franchised. Take them out to lunch and pick their brain – you can gain a fair amount of knowledge from something as simple as this.
What are the advantages and disadvantages of a franchise model?
I looked carefully at all of the advantages and disadvantages when I was considering whether to franchise or not.
The main advantages of a franchise are that it:
l allows you to grow the business faster, using other people’s capital; and
l it enables you to expand into geographically difficult or regional areas that you may not have been able to manage yourself.
The main disadvantages of a franchise model are:
l that the franchisees may not respect the business and operate it in the way that you expect;
l it can be difficult to rectify or make changes within the business model because you need to retrain all of your franchisees; and
l that franchisees may not do things according to the established system, which means that the processes and product will begin to differ between franchises, which can weaken the brand and may challenge customer expectations.
Have there ever been any times when you wanted to give up?
There have never been times when I wanted to completely give up, but there have been times when I considered selling the business because I was tired. I realised though that this ‘tiredness’ was just an excuse, what I really needed was not to sell the business but to get my balance right and spend a little more time on myself – and after I did that I was fine.
Over the years, I have made many mistakes, which sometimes made me think for a fleeting moment about throwing in the towel, but within a few minutes I’d snap out of it. I think that this is all part of the learning curve.
What are your top tips for becoming a great entrepreneur?
1. Surround yourself with people who will give you unemotional and non-biased feedback.
2. Take plenty of time to write your business plan and research it thoroughly, but know when to stop researching. Don’t procrastinate the start-up of the business as so many people do. Have confidence in yourself.
3. Choose the right people to implement the plan. Even if these people are costly, in the long run you will get value for your money.
4. Have enough capital to go through the highs and lows. Always overestimate your costs.
5. Ensure that your business and business plan have a culture of change and a continuous point of difference.
6. Ensure that you can manage your time and spend a large proportion of it working on the business and staying focused on the big picture.
7. Plan your exit strategy.
Is it true that even today as a multi-millionaire you can still be found in one of your stores taking orders?
Yes, I still work behind the counter as much as I possibly can and because of this we’ve continued to learn and evolve. Listening to customers as well as franchisees is very beneficial. Overall, one of the most enjoyable parts of the business is getting your hands dirty and being at the ‘pointy end’, that’s how my passion for this work grew in the first place. I also think it is important to acknowledge the employees under the Eagle Boy’s brand who do the kind of day-to-day behind the counter work such as washing dishes and taking orders. Without these people, Eagle Boys would not enjoy the success it does today.
Jim Zavos is the founder and CEO of EzyDVD, which now has over 50 specialist retail stores across Australia and another 20-plus coming soon.
How did the idea for EzyDVD come about?
My background was originally owning and operating video stores. It was 1996, and I was operating six video stores when I read about a consortium held by Toshiba. It was about a new video format called Digital Versatile Disc (DVD). At that stage, people wanted to collect movies in the same way that they collected music, but the problem was that the only format available at that time was video tape, which seemed to deteriorate rapidly in quality after you had watched it a couple of times. I knew that CD was a format that people around the world had accepted and adopted. Knowing this, and with my background and expertise in video, I knew that being able to deliver movies on a CD which was virtually indestructible would be an instant success with the consumer. I decided to pioneer the introduction of DVDs into Australia by launching www.ezydvd.com.au as an online business in 1999.
In the beginning, EzyDVD was predominantly an online company. What made you decide to expand via retail stores?
It’s funny, many people comment on the fact that EzyDVD started the ‘wrong’ way around, making the unusual move from being an online company to trading through bricks and mortar retail stores – most businesses do it the other way, starting with retail stores and progressing online. This demonstrates how EzyDVD is a uniquely successful company. During the dot-com era, I knew there was a great opportunity for me to set up a website to sell DVDs in a cost-effective way. The website operated for 18 months and was really built on the momentum of people’s increasing interest in DVDs.
By 2001, EzyDVD had established itself as a serious online destination for information about new releases and to purchase DVDs from an extensive range. However, there was a lot of uncertainty about online security back then, so we had a lot of people wanting to buy but being reluctant to submit their credit card details online. The demand for ‘over the counter’ sales grew rapidly and I quickly realised that a network of specialist retail stores would be more viable.
By the end of 2001, EzyDVD had an online business which was booming and three specialist retail stores which were developing rapidly. What’s more, we were winning the confidence and support of most of the major studios. It became evident that our growth didn’t have to stop there and we wanted to keep our expansion going. We realised that we couldn’t do it all ourselves, so we turned to franchising.
How did you learn about the franchising model and how long did it take to get your business ready?
I had no experience and no idea about franchising. I went out into the market, and through a mutual friend, found an adviser who had previously owned a franchised business. He came on board and worked with me for two years, helping me to put the right systems in place to grow to the next level. He put together the disclosure document and the structure that enabled us to go out and franchise EzyDVD.
The whole process from the initial concept to the first store took about 12 months or so. Our first franchisee opened a store in Sydney in October 2002 and by November we had stores in every state and territory.
How do you market your franchises? Do prospective franchisees approach you or do you actively advertise?
We’re very fortunate in that we’ve already built up a brand across the country, and therefore we usually have people come to us. That doesn’t mean we don’t advertise, we do, but we get more enquiries from people who walk into one of our stores, look around and think it is a great concept.
What are some of the lessons you’ve learnt about branding?
Branding is a really important part of the business. When I was running a smaller business, it was more about advertising and recognition, so at first it was not as important, whereas today, our business is more focused on branding. We use a combination of catalogues and print media marketing to drive people into our stores as well as a number of more subtle branding activities such as sponsoring various events and associations, such as AFL clubs, and using a lot of billboards.
Branding is important because it’s subliminal. It’s about where you want to be 10 or 20 years down the track. At the beginning, I felt like I was wasting money spending on branding. You can literally spend a thousand dollars on intellectual property and wonder where it has gone if you don’t do your branding properly.
At first I didn’t see that it did me any good, however when a new company comes and has a brand and they build trust, people begin to feel comfortable when they see it and pay it respect and loyalty.
What are some of the things you have learnt about running a successful retail business?
Generally speaking, the top tips are:
1. It’s okay to make mistakes, as long as you learn from them.
2. Continue to surround yourself with good people.
3. You have to be enthusiastic and energetic. The minute you lose the plot and start to lose interest, you’re just not going to have a successful business.
I think that the key to success in retail stores specifically is finding and securing the right locations. This is of prime importance to us at EzyDVD. We have a good relationship with companies such as Westfield and Lend Lease, because they know and like our stores and we have proven to be an excellent drawcard for their shopping centres. I have learnt that you need to find out where the demand is and position yourself to take advantage of it.
What do you think are some of the essential characteristics of a successful entrepreneur?
I think the most important quality is vision. You need to have a precise vision of what your objectives are and where you want to go. To carry this out, you also need a strong personality that can motivate the people who will help you.
I’m always thinking or planning where we want the business to be 12 months down the track, because that’s really what it’s all about. So first, have a vision, and second, be able to communicate that vision with your people.
What’s driving you now to run the business and where do you see it going? Do you see yourself doing this for the next 10 to 20 years?
I can see myself doing this for quite a while. Our objective for the next 12 months is to continue our expansion and improvement. We want to have 150 stores by Christmas 2006. That’s my plan and vision at the moment, and I am focusing my energy on that. We are well-positioned to achieve this goal, as many shopping centres are keen to have an EzyDVD store.
Our longer term business plans will include EzyDVD stores in regional areas which could easily take the number of stores to well over 150. We project turnover to be in excess of $100 million.
Eventually, we would like to take the business overseas and we are going to start this by opening up stores in New Zealand. However, nothing is concrete at this stage.
Brad Sugars is the founder of Action International Business Coaching, which operates nineteen countries and has business coaches in more than 700 offices. Currently the world’s 16th fastest growing franchise.
What made you decide to start your business?
In 1993, after consulting with one of his local promoters, I was asked by Robert Kiyosaki to teach marketing at his business school for entrepreneurs in Hawaii. From this experience I discovered a love of teaching and went on to build my own seminar company teaching business courses. Soon enough, we wanted to continue our overseas expansion and we found that we needed to overcome distance, language and cultural differences; the answer to achieving this was franchising.
Franchising also helped me to overcome one of the biggest challenges I was facing in my business. When I first started in business coaching I employed all of the coaches myself, and of course several left and went into competition with me. With the laws being the way they are, I was unable to stop them. Sometimes the biggest threats or challenges can turn into blessings. This experience led me to go into franchising rather than become bitter about the fact that I was losing my employees.
Why did you call your company Action International and what does it do?
‘Action’ is what it’s all about. Many people know what to do but the successful people are the ones that are actually doing it. ‘International’ because I had faith from day one that we would eventually be global. Today Action International is essentially a business coaching company. My coaches work one-on-one with business owners teaching them how to improve their sales, marketing, team building, systems and management. We do this through a simple six-step formula, using a toolbox of 282 profit-building strategies and much more.
I started in 1993 and today Action International is still number-one, with more than 620 coaches. For the past two years we have been listed in the world’s top 100 franchises and we are ranked number-one among business consulting franchises. We have about 200 offices in Australasia and more than 700 offices in the countries we operate in.
For the first four years, Action was a seminar company but there was no leverage in that because I had to be on stage all of the time and I was on the road for more than 200 days a year. For intellectual property protection and international growth franchising was chosen and it’s been the best decision I ever made. I think the other very important factor in franchising is profit margin, and that’s where a service business stands head and shoulders above the rest.
At one point in time you had one of the fastest growing franchises in the world. What were the key ingredients to making that business grow so rapidly?
This year we were ranked as the 16th fastest growing franchise on the planet by Entrepreneur magazine. I believe this is due to four factors:
1. In handling growth, we were decisive and had strong leadership.
2. There are good people on the team, especially the sales and marketing teams.
3. We have a great product or service to sell.
4. We have created ‘raving fans’, so our customers and our franchisees do our selling for us.
On top of that, it’s about realising that there are more people in other parts of the world, so don’t restrict yourself by geography. Too many companies, particularly in Australia, restrict themselves geographically. We have a firm policy of global expansion and aim to add four countries a year to our trading region. This alone allows for massive growth and with franchising, the working capital comes with the new franchisees.
We also have very strong viral or organic growth within the regions that we already trade. We had strong growth in the first three years, with 20 to 40 percent growth each year after that in our existing regions. When you couple this with international expansion, you quickly see how the two multiply to give solid growth both now and into the future.
What are the most important things you have learnt about succeeding in business?
An important thing about business is that those who say it can’t be done will never try, but those who at least try will learn something new. People overestimate what they can achieve in a year but underestimate what they can achieve in 10. They need to stop wishing that their lives were easier and start wishing that they were better. Those who keep learning and growing have businesses that keep growing with them.
Essentially in today’s business world everything is about handling change – it will either happen to you, or preferably, you will make it happen. Too many people live reactive lives and they often live in fear because they don’t know what’s going to happen to them next. Be proactive and know what’s going to happen because you’re the one making it happen.
What do you see as the major business opportunities over the next 10 to 20 years?
Major opportunities will be there, the same as always; find the gold rush and sell pans. With that said, intellectual property is my specialty, so I guess I would have to look there. Leisure is getting bigger and bigger, there is always going to be a big need for distribution, health is and will be huge, and of course there will always be a high demand for the fundamentals – that is, all the day-to-day necessities. The fact is that there are opportunities in everything we do. This is because successful businesses are about more than just the product or service. In fact, you could almost say that it doesn’t matter what you’re selling, it’s the business model that’s important.
What are your top tips for becoming a great entrepreneur?
1. Your jobs should be an apprenticeship for having your own business. You should endeavour to learn as much as you can from each job that you undertake in order to fuel the knowledge that you can use in your own business. By viewing your jobs in this way, you won't get stuck in the rat-race rut like everyone else.
2. Knowledge growth equals profit growth. The more you invest in yourself and in seminars, books, tapes and CDs, the more you will know about producing positive cash flow in your business.
3. You must have a good business coach. When you have the advice of people who have already made the mistakes and proven successful, then you have a blueprint to help you avoid those mistakes.
4. Do the work once and get paid for it forever – that’s leverage.
5. Work harder, faster and longer than anyone else you know, do more, be more and make bigger opportunities for yourself. In other words, bite off more than you can chew and chew like crazy.
6. Test and measure everything. You cannot manage what you do not measure. When you measure things, make sure you have certain quality control levers in order to accurately see if you are staying on track. l
The first book in the new series, Secrets of Male Entrepreneurs Exposed, is being released in all good bookshops on 1 November 2005. Some of the people interviewed for the book include Jim Penman (Jim’s Mowing), Justin Herald (Attitude Clothing & Intimidate), Brad Sugars (Action International), Tom Potter (Eagle Boys Pizza), Jim Zavos (EzyDVD), Phillip Mills (Les Mills International), Tim Pethick (Nudie founder) and many more. The candid format of the books reveal insights into how Australia’s most successful entrepreneurs have achieved their goals. Copies can also be obtained by visiting www.SecretsExposed.com.au.
11-Jan-2006