If you’ve never run a business before, no matter how many blogs or books you read, or seminars or classes you attend, you have a lot to learn. There are just too many things to deal with to pick it all up without actually doing it. For that reason, the first business you own should be purchasing an already established franchise.

Until I owned a franchise business I never quite understood why this is so important. Firstly, I’m assuming you’re buying the business to rapidly build it (less than 2 years) and either sell it or keep it for cashflow with minimal input from you, the owner. If you prefer the hardwork and pride of building your own business from the ground up over 20,30, or 40 years, then by all means do that. Based on that assumption, let’s break up your “building” efforts into 2 basic categories: Front-End and Back-End

1. Front-End – This simply means your sales and marketing. What are you doing to generate leads, convert those leads to customers, increase the amount each customer spends with you, increase the number of times those customers come back, and get those customers to tell their friends? That’s a quick summary of the front-end of any business.
2. Back-End – This is talking about what you do once the sale is made. It includes inventory management, delivery of product, servicing customers, dealing with customer service issues, paying billings, billing customers, collecting payments, leading your service team and everything else that isn’t directly associated with your sales efforts.

So when looking for a business to buy, the ideal situation would be to find one with a strong “Back-end” system but weak “Front-End” system. That means when they make a sale they do so consistently, accurately, and predictably. Every customer knows what to expect. Their inventory is managed well, bills are paid on time, customers are billed accurately, and money is collected efficiently. However the business is not real good at creating or closing leads. It’s even worse at taking advantage of referrals and letting customers know all of the goods and services they offer. They have a great, well-maintained, database of current customers, however they fail to know how to utilize it. Why is this the ideal situation? Because if you’re developing guarantees, Unique Selling Propositions, and other direct and specific marketing to set you apart from your competition, you better be able to back it up. For that reason, if you have a weak back-end that MUST be addressed first. If however you have a strong back-end, the only thing left to do is grow the business through improvements in your front-end sales machine. You can put in less effort building the front-end then the back and reap 2-3 times the reward in less time. It’s very difficult to grow a business while improving the back-end, however the whole point of improving the front-end is to increase sales and profits.

Ok, so let’s get back to a franchise. Why is it helpful to cut your teeth on business with a franchise? Well the reality of business is that it’s impossible to only work on back-end or front-end alone. You’re constantly working on improving both and that’s where a franchise comes in. Generally a franchise, through much testing and measuring, will tell you how to run your back-end very precisely. They’ll tell you what to say, what to wear, how to produce, order, install, and/or service your product. You’ll have a large support system of people to help you address problems when they arise. In other words, most of your back-end is already setup.

Moreover, a good franchise, is also providing the necessary resources for the front-end. They provide marketing materials such as radio and TV ads along with direct mail pieces or newspaper ads. They’ll tell you what to put on sale when and while you’re too busy working on your business to come up with new ideas they’re producing new and exciting products for you to present to your customers. Sure you may pay 2%, 4%, 6%, 8% or more in gross revenue to your franchisor but in most instances that investment in learning is well worth it. And that’s exactly how I would view it – an investment in your education. Where else can you make good money and learn all the ins and outs of a well run organization? In fact, if I had the choice between attending business school or just using that money to buy a well-managed franchised business, I’d buy the business every day of the week. They’ll provide me with the tools and certainly the experiences I need to learn about business. After 4 years of running a business do you think you’d be more prepared for the “real-world” than your counterparts with a business degree?

Obviously, that was a rhetorical question. Their is one last important reason to make your first (and maybe second and third) business(es) franchises – Name Recognition. As Brad Sugars says, the most expensive thing in business is buying your customers. That’s right, your marketing dollars are simply you buying customers. If you’re buying a franchise, someone has already been marketing to your future customers for 10, 20, 40, or 60 years. They know and recognize the name. If you’re buying an established franchise in your area (versus bringing one in for the first time) that investment of someone else into your customers and area will ultimately make your cost for acquiring new customers less. Does that make sense? All well-established, professionaly run franchises will provide that benefit. Don’t underestimate it’s power. In my personal situation, without that name recognition my business would be a LOT smaller then it currently is.

To your success, Bryan

Let’s face it, few of us are going to come up with a business model to rival Bill Gates (Microsoft), Mark Zuckerberg (Facebook), Tom Anderson (Myspace), or Larry Page and Sergey Brin (Google). Even fewer of us, given that brilliant idea, have the resources, connections, and outright talent to make our first business a multi-billion dollar enterprise over night. Yes it’s possible. However so is winning the lottery, getting attacked by a shark, and getting struck by lightning. The old fashioned way of creating an income of $1,000,000 per year is a bit different. The most common path requires you to own your own business. So your goal should obviously be to own your own business. That million bucks per year will be nice, however the true blessing of being a business owner is control over your most valuable asset – your time.

Now let’s clarify our goals by answering a few questions:

1. How much money do you want to make?
2. How much time do you want to spend working once your business is done?
3. How much time are you willing to spend building a business?

1. How much money do you want to make? Let’s say you want to make a million dollars per year. That’s over $83,000 per month, $19,230 per week, and $2740 per day. Would that satisfy you? If not, add your number in here. It helps to figure out and visualize EXACTLY how you’re going to spend your $2740 per day. The mind doesn’t know the difference between dreams and reality so start conditioning your mind now for that lifestyle and it’ll be a lot easier to get there.

Now that you have a target, here’s how you’re going to get it. Become a master at business and start searching for great businesses to buy and grow. If you want a million dollars, all you need to do is own a business that does $5 million in sales per year with a net profit of 20%. Twenty percent of $5 million is $1 million. Or find a business that does $10 million in sales with a net profit of 10%. Ten percent of $10 million is again $1 million.  I wouldn’t look for a business that can’t accomplish at least a 10% net profit.

2. How much time do you want to spend working once the business is done? – Some people like to work and there’s nothing wrong with that. I work extremely hard right now, but it’s not because I have an unhealthy infatuation with it. If I had a trust fund I’m sure I’d be investing in businesses but I’d also be traveling, racing, engineering, and spending a lot less time working… Eventually I’d like to work less than 10 hours a week without ever coming into the office. How about you? If you’re going to buy a business and be the service leader, sales leader, and customer service representative then you’re never going to get out from under it. The only things that can truly be done remotely are marketing and communications…  If you’re an owner taking on more then marketing and communication with your leaders then either plan to delegate or find another business. The other option is to sell your business once completed and live off of interest or rental properties…

3. How much time are you willing spend to build a business? Let’s face it, if you want to make a million dollars per year, it will probably take a bit longer than if you’re happy with $100,000. So if you’ve educated yourself, have some money saved up, have some decent connections, and already know how to negotiate, you can probably be making $100,000 per year within 2-3 years. Less if you’re really good. To turn that into a million per year will probably take another 5-7. Michael Masterson even wrote a book called Seven Years to Seven Figures: The Fast-Track Plan to Becoming a Millionaire which is worth a read. Realistically if you can do what you want with $10,000 per month, then why keep on working to make that $80,000 per month? Do you really need that much to enjoy life? If so, go for it.

There’s really only one trick to this… If you HATE business then forget about it. You’ll never be an expert at something you hate and obviously to achieve these goals you have to become an expert. If you only kinda like business then go for it. You’ll be amazed at how much more you’ll enjoy it when you start making regular deposits into your bank account.   Keep in mind, the business building doesn’t have to be your life – it’s just a means to an end if that’s what you want it to be. Determine what you want right now, though, before you get started!

Now that you have your clearly defined plan, you need to put it into action. Sell your PS3 and X-box, get rid of your television, and get to work. If you aren’t willing to make the sacrifices that provide you with the knowledge you need to make this goal a reality it’ll never happen anyway. The old fashioned way isn’t easy. It’s real work but with a real payoff. In my mind I’d rather work 80 hours per week when I’m in my 20′s so I can have some freedom later in life then work 40 hours per week for the next 40 years and have “nice” stuff all along the way. If you’re not willing to make that sacrifice, then just stop now and enjoy your 40 years in the work force. That doesn’t make you better or worse then me – just different. Granted, in my first 9 months at the businesses I’ve purchased I’ve spent over a month out of the office on trips. Some were business trips and some were vacation. I worked during all of them with the help of some technology, however I also had a lot of freedom to do other things. So, though I work really hard when I’m in town, I haven’t exactly given up my youth for the promise of a bright future. Life’s too short for all that. I have more freedom and time to enjoy life now then I have ever had while working for someone else.

Just today when I was coaching 1st and 2nd graders basketball, Andrew walked up to me and said “Coach, you should get a job like my dad.” “Oh really who does he work for?” “I don’t know but he can work whenever he wants he just has to let his boss know.” “Wow, that’s awesome Andrew, but I don’t have a boss.” His eyes got real big like only a 7 year old’s can – “So you can work whenever you want?” Laughing, I responded simply, “Sure.”  A 7 year old understands the greatest part of being your own boss is your freedom – do you?

To your success, Bryan

As a business builder, the goal of every business you buy should be one of 2 things:

1. Resell it quickly (within 12 months) for a substantial profit.
2. Keep it as a great cash producer with minimal work on your part.

This blog is going to focus on one of the most important parts of achieving step 2 above – getting your office used to running without you! For this to happen, you MUST set a goal of being out of the office for at least a few days (preferrably a week) per quarter. If you’ve never done that before, choose a week in the next 3 months and write it on the calendar right now! Seriously, if you don’t make the commitment to be out of the office right now you may never do it. Don’t worry. You will not be 100% prepared for the office to run by itself the first time. Or the second time. Or maybe even the third time. However, each time you’ll learn what your team relies on you for. As you learn more and more what items they just HAVE to call you to take care of, you will immediately know which items you need to create procedures for to replace you. If procedures won’t cut it, you need to pay someone else to make those decisions for you.

Now let’s look at what’s necessary for you to leave the office while your business keeps making money. Firstly and most importantly, you cannot be the one responsible for direct customer interaction. Whether that means taking care of customer service issues or selling your product, if you’re the only one capable of that, then you have a problem. You need to learn how to replace yourself right away. OK, so you’re not looking to retire so what are you allowed to do? Anything that doesn’t require you to actually be in the office. In other words, all of the tasks that can be done or maintained remotely.

A few of those items that I work on regularly when I’m out of the office are the following:

1. Paying bills – I do this with Quickbooks Pro and Wells Fargo Online Bill-Pay. I can pay my bills electronically from anywhere. My office administrators put all the bills into Quickbooks and scan all of the bills onto my server so I can actually look at every Purchase Order, Order Confirmation, Packing Slip, and finally the Invoice before I pay anything.
2. Working on marketing - whether it’s updating the website or working on new direct mail campaigns all I need is internet access and my laptop to work on almost any marketing our company might be doing.
3. Reading and responding to emails – This can always slow down your “productivity” when you’re in the office so a few quick minutes in an airport or in the morning before you hit the beach can help you remain “productive” all day as people are reading and responding to all of the emails you’ve sent out.
4. Keeping an eye on daily, weekly, or monthly tasks – Since I’m the Team Leader at my business there is no one else to take over management functions while I’m not there. For that reason, all of the girls who work in my office email me their “To-Do” list every evening before they leave. That way I can review and update it at my leisure. I also review our service schedule, inventory, receivables, payables, customer complaints, new leads, and a host of other things remotely. One girl in my office compiles the reports weekly and emails it to me so all I do is read them and make decisions – No matter where I might be sitting when I read those reports. Check out the “Know your numbers” section of my blog on weathering the economy for a better idea of what numbers I watch.
5. Staying in touch with team members – Whether that means calling, emailing, or reviewing performance there’s a whole lot you can do to make sure everything is “business-as-usual” when you’re not around.
6. Finding new business opportunities – If you aren’t ready to retire with all the money you have in the bank, you should always be researching new opportunities. As a matter of fact, the number one reason you need your cashflow business to run without you is so you have time to invest buying, building, and selling other businesses.

How to make sure your business is “running without you”.

1. Leave the office – But don’t just stay at home. If you’re in close proximity to the office both you and your team member’s will be too reliant upon you.
2. Try not to answer your phone – Let it go to voicemail, listen to the voicemail and respond appropriately. If possible, respond via email or text.
3. Make yourself available via email (IM if necessary) – I prefer written communication because it’s short and to the point (no time for small talk) and because it’s all tracked. Someone can’t tell you you never told them to do X or Y.
4. Have access to important information on your server – Whether that means having your invoices, inventory, schedule, or incoming leads on the computer. Whatever is important to you, you need to make sure you have access to at all times. If you can’t get to your important information from anywhere at anytime you’ll never be able to work remotely.

Have you ever had one of those days where you have a list of things to accomplish and at the end of the day the list hasn’t gotten any shorter? You just worked on “little things” all day. It’s amazing to me how many of those “little things” take care of themselves when I’m not around… In my experience if I leave the office for 2 days or 2 weeks, if I’m keeping up on things day-to-day while I’m gone, my list of “catch-up” work when I return is the same length. The list is limited to the items only I can handle. There are no “little things” on my list to catch up on… Every time my list consists simply of the things only I can do. (With the goal being to shrink that list with every trip.)

Since I track customer complaints AND testimonials if there were problems created by me not taking care of those “little things” I’d know about it, too.

So make a commitment to be out of the office!

To your “remote management” success, Bryan

P.S. When you go to sell your business do you think it’s going to be worth more or less when you show the buyer that it can be managed, to a large degree, while sipping red wine on the balcony of your hotel in Italy?