From Struggling Franchise to Money Making Machine in 3 Steps

You may not like to hear this; however, the cold hard truth is; if you have a business that is not performing to the level you want it to or worse yet actually failing and hemorrhaging money it’s your fault.

We are where we are because of the actions we take. We can have all the goals we like, however if we aren’t taking the appropriate actions to reach those goals they are really just dreams.

When I first started in business my main goal was to build something up from nothing that was a market leader in its field. Right below that was creating a company where the people actually looked forward to coming to work. Delving into that wish a bit further I wanted everyone who I ever employed to stay with the company for life. I read all the books I could and went to every seminar I possibly could about leadership, building your company, achieving goals, you name it, I went on it.

Building My Empire

I got all the advice I could and set about building my empire.  About four years into it things were going really well. Everything I touched seemed to turn to gold and I could do no wrong. My ego was through the roof. In my wisdom I decided to open a branch in another city which was some distance away – it was going to be easy; after all I’d gone from nothing to having a very successful business in no time flat. I knew what I was doing, sure I’d seen and heard of other businesses that had failed but, hey, I was a winner, look at what I’d achieved already, how could I possibly fail…..I knew everything!

So I opened up and I’d done everything right, made sure any customers I already had in my existing business would support me in the new location, I also hired the ex-manager of one of my competitors. I knew the market and already had contacts, got a great lease on the perfect building. Did all my forecasting and projections, from the projected growth (which was about a quarter of what I’d achieved in the existing) the break-even point was only about 3 months away from opening date, I was set.

Things took off with a hiss and a roar….backwards. The first month sales were well under 25% of what I thought they would be, one of my larger customers lost more than half their business the month before we opened.  My suppliers were a little hesitant to say the least, one of them was even told by one of my competitors that if they supply me they would loose the business they had with them, and they had been around for 20 years and were big. Stupidly I wasn’t put off in the least at this stage.

By month 4 things hadn’t improved at all and I was spending a week in the new site and a week in existing doing neither branch any justice. I always do monthly profit and loss statements so I know where I am and I’d gone from the previous four years making good net profits every month to making a loss for the last four month in a row. Now I was concerned, but hey, I still knew everything at this stage so I just kept trucking on doing what I was doing.

Thing’s Kept Getting Worse

6 months into it and this whole ‘open another branch’ idea had become my worst nightmare. We were absolutely hemorrhaging money. The company didn’t just graze its knee, we’d loss an eye two legs and our right arm (yes a six million dollar man referral). We were loosing so much money I was literally wondering if we could ‘re-build’ let alone be better than we were..you know, stronger and faster (sorry I’m still on the six million dollar man theme).

Anyway, month 6 was crunch month. Overnight my wife and I realized we had to make changes, drastic changes. My accountant still laughs when she recalls me telling her that I was moving to where the new business was; We’d decided this was our only course of action on the Wednesday, Thursday when my accountant arrived I told her of the decision, her reply was ‘oh Ok so we’ll need to get a few things done are you planning to move there in a couple of months?’ My reply was “Ah Julie, I don’t think you quite understand, I’m going this weekend”, and I did.

Things were that drastic, the company was failing….I was failing, I couldn’t even afford the airfares to and from that city so I was driving there one weekend and driving home the next.

I had to cut costs to the bear minimum, unfortunately that meant making the new Manager and our delivery guy redundant and doing it myself. My dream of having staff never leave was shattered, and worse yet, through shear necessity and desperation I was the one shattering it.

I also made a rushed decision and promoted one of my original guys, who wasn’t ready to take the job on, to be branch manager in our first location.

So, now I was at the newer under performing business doing everything myself. For the first week or so I pretty much just panicked. Ran around in circles thinking the sky was falling. I was going broke fast and blaming everyone else for it.

Everyone loves you and is there for you when things are going right, it’s a lonely place when things are going wrong…and things were going wrong and getting worse. It didn’t take long before my successful branch was slipping backwards and we were starting to make losses there as well. I was running in circles hoping and praying that something would change or that someone would magically come along and fix all my worldly problems; no-one showed up.

The cold hard light of reality started to dawn on me… I had to change… My primary goal was to build something up from nothing that was a market leader in its field. My actions were leading me in the opposite direction. I woke up, or should I say after lying in bed panicking since 2am I got up one morning and made the decision to change what I was doing.

Failure in our second site wasn’t an option however the first thing to fix was our main and first location so we could at least survive. I put together an action plan for that manager to follow which I knew would turn things around. He didn’t follow it so he left, and my dream of having people stay forever had long since disappeared. His replacement did follow it and things started to improve. I also set about finding someone who could replace me in this second underperforming site. So amongst hiring someone to do all the deliveries, going out and bringing on as many new customers as possible and keeping a close watch on the main branch there were several candidates to take over the management of the newest branch. I couldn’t afford to make any mistakes so I was fussy and held off until I found someone who I knew could do the job. That person eventually came along and 24 months after my move from the original location, the second site was now contributing to the company instead of bleeding money and I finally moved back to home base which, by this time had shown slow but steady growth for about 8 months. As a side note, within 10 months of me leaving ‘the problem site’ my manager had doubled sales.

What I Learnt

I can only speak to what I have done to turn a failing business around and the main lessons I learnt are:

1/ Get yourself right, concentrate on your main goal, if you are not moving towards it the only reason is the actions you are taking so change your actions. I heard a definition of insanity that I always keep in mind; Insanity is doing the same thing day after day and expecting a different result. If you want a different result, change the way you are doing things

2/ You can’t do everything, delegate to competent people. Don’t focus so much on how they get the job done (so long as it is done morally, legally and timely) concentrate on the result you want, and monitor it, tie your people’s bonuses into that result, make them your KPI’s. Go as far as letting them know what the desired result is and then let them tell you how they’re going to achieve it. They may not choose the same path you would however, more than anything you want the result don’t you? So long as it’s legal, morally sound and in an appropriate time frame the method is secondary. Besides, sometimes they’ll come up with a way of doing things that is faster and more economical than the way you would have done it.

3/ No-one likes change, the challenge is that change is the only constant in life. Things are always changing.  Take calculated risks but never be afraid to change. Change is growth.

One last thing I’d like to leave you with: Brian Dyson is a former Vice President of Coca Cola. In 1996 at the Georgia Tech commencement address this was part of his speech and it is soooo true, ‘Imagine life as a game in which you are juggling five balls in the air. You name them work, family, health, friends and spirit. You will soon understand that work is a rubber ball. If you drop it, it will bounce back. But the other four balls – Family, health, friends and spirit – are made of glass. If you drop any of these they will be irrevocably scuffed, marked, nicked, damaged or even shattered. They will never be the same. You must understand that and strive for balance in your life.’

Through my experience opening that branch far away from home base I can say with absolute certainty that yes, work is a rubber ball and it does bounce back however you’re the one in control and only you can bounce it.

Vaughan Tombs

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