Second
Shop?
I picked
up my phone, “Welcome to Bare Bones Biz…ready
to make more money?”
That’s our standard greeting.
“Yes,
I am.
I called you because you may be able to help me achieve my goal.”
“Why,
I would be happy to help you reach your goal,” I replied. Then,
we introduced ourselves and visited for a few minutes about
life and weather.
“OK,
what’s your goal?” I asked.
“To
be the biggest plumbing company in the world,” he replied.
“Great.
Good for you. How many employees do you have now?” I
asked.
“It’s
just me. My wife helps with the bookkeeping.”
“It’s
a start. Let’s set up a time to visit for a half
hour. I’ll send over a brief Questionnaire. Just
fill it out and fax it back and that will help me get an understanding
of your business as it stands now. Please, send over
your financial reports, too, and we can hit the ground running
when we visit on our next call.” I do this so that
I don’t get caught up in the heat of the moment. If
he is committed to his goal, he’ll do this much.
He did as
requested and I was excited to visit with him when our half
hour phone meeting time arrived. He shared his hopes
and dreams and ideas for branding and world dominance. It
seemed like an aggressive plan, however, I am not one to rain
on a man’s parade.
I shared
a bit of what I knew about creating a multi-shop organization. And,
I presented the truth about his financial situation.
“You
are going to need money to grow this empire. There are
three ways to get it. One – put your own money
into the company. Two – take on investors…in
the form of venture capital or banking partners.
Three – grow through profits. Right now, you have
no money. You can find the money. Pick a path and
take action.”
That’s
when he blinked.
“Well,
I think you have to move slowly. If this is meant to
be, it will be. Slow and steady wins the race.”
Sigh. It’s
not going to happen for this fellow. He is not going
to create the world’s largest plumbing company by being
slow or steady.
Now, this
is not a judgmental statement. There are all kinds of
paths to success. You can choose to be a small shop and
enjoy all the success that you imagine and
create for yourself. This industry provides opportunities
to match your dreams…big, small, diversified, specialized,
multiple-shop or expert services delivered by one talented
craftsman. You get to pick. However, if you want
to be a BIG shop, you are going to need a special set of skills
and a full bucket of courage. And you are going to have
to move fast.
Scores of
people have told me that they have a dream of creating a multi-shop
empire. I can count on my fingers the folks I know who
have successfully pulled it off. Even within franchise
systems, there are very few owners who have successfully launched
the Second Shop.
It’s
not my job to tell you what to be when you grow up or tell
you why you should launch the Second Shop. It’s
your job to craft your own vision. If you are drooling
to go go grow, I can help you.
What’s
to love about the Second Shop…
There are
a lot of cool reasons to expand to the next location. First,
it makes sense from a financial standpoint. You can spin
off a satellite location with a team of plumbers and a field
supervisor. Keep the administrative, financial and marketing
functions based at the “Mother Ship” location. When
you crunch the numbers, they get downright delicious with the
Second Shop.
Second, the
Second Shop provides life-enhancing opportunities for the ambitious,
entrepreneurial people at the First Shop. Have you ever
had an employee leave your shop to start a business of his
own? The Second Shop can be a win-win alternative. Consider
a profit sharing or stock opportunity for a successful Second
Shop launch.
One more
consideration…“Line extension” is a popular
approach to business growth. I am not a big fan of expanding
your offerings to the same customer base. For each trade,
you’ll need operations manuals, training center, marketing
and branding strategy, financial models, etc. Whew. If
you are located in an area with small population, you may be
well served to diversify. However, if you have a hefty
market area (200,000 population) consider the Second Shop to
expand your core competency. Even as a franchisee, consider
what would make more sense for your expansion…a different
franchise or another location with the same franchise? With
a Second Shop, you can take your established systems and replicate
them. Your brightest and best team members can train,
or become, the new team at the Second Shop. Easy. At
least, relatively easy.
So why do
so few Second Shops exist?
Here’s
what I can share about why very few pull it off and how to
beat the odds.
The pull
of the river…
There is
a river of inertia in this industry. Most shops are small. I
guesstimate that 80% of all shops have 3 or fewer trucks. Of
that 80%, most are one person outfits. Should you put
your boat in the river of this industry, that’s where
inertia will take you.
Should you decide to grow a multi-shop company, you’ll
have turn your boat around and paddle up-river. Unfortunately,
you’ll have to bear the taunts of your fellow plumbers. They
may call you a gouger or a sell out. It may be easier to
go with the flow.
The success
of the First Shop…
Suppose you
succeed at growing the First Shop to 5-7 trucks. That
would mean that you have systems and good people willing to
use those systems. That requires that you delegate and
manage and work on your business…instead of
in your business every day. You may be enjoying
your hard-earned success. You don’t have to go
into the office every day. You’ve got some money
socked away. Life is pretty darn good at this point and
you may just lose the fizz to tackle that Second Shop. There’s
nothing wrong with this scenario. You may lose interest
as your current level of success eclipses anything you thought
you would achieve in this lifetime. A Second Shop could
get your juices flowing again. Especially when you consider
the opportunities you would be creating for your wonderful,
hardworking team members.
The lure
of Perfection…
Author Jim
Collins says, “Good is the enemy of Great.” He
suggests you fight being just good enough and pursue greatness. Makes
sense. I would add…
“Perfect
is another enemy of Great.”
So often,
with a really kickin’ 5-7 truck outfit, the lure of Perfection
starts to complicate the company. Simple systems that
can be easily trained and duplicated crumble under the development
of even-better systems. Basic, functional financial statements
become 30 page affairs with each account sliced into a dozen
sub-accounts. Simple Sales tracking (a check if you sold
it, a zero if you didn’t) become multi-page spreadsheets
that require a CPA and an audit before the results can be posted
on the
“Jumbo-tron” in the break room. If you want
to expand, you have got to keep it simple. Ask ask ask
these questions every time you or a team member is tempted to
get fancy with your current, working systems…
“If
I didn’t have this detail of information, what would
I lose?”
“Could
I easily replicate this system at a remote location?”
“What
decision will I make with this new information?” If
it is only interesting, but not leading to a better, faster,
more profitable decision…skip it. You’ll
have to fight fancy every step of the way to your Second Shop.
If you want
to, you could create the Second Shop. And the Third,
Fourth, etc. You could apply a sound strategy that includes
Business Planning, Financial Management, Marketing, Acquisition,
Operating Manuals…a Customer Service and Sales-focused
culture…and an undaunted determinism. Does this
idea get your attention?
What
do you think? Ready to expand to the Second Shop? Let
me know. I’d love to help you pull it off.
Ellen
Rohr, president and founder of Bare
Bones Biz, a business training and consulting company,
teaches you how to turn your big ideas into a successful
business. Ellen teaches the basics,
the few things that make all the difference to your success…bare
bones business basics. |
