North Star Franchise Advisors

Common Funding Sources

2007-04-27T07:59:00.000-07:00

Identifying the best funding source for your entrepreneurial endeavors is one that should be approached with great consideration and the guidance of your CPA. Here are the 3 most common funding sources for a franchise purchase.

#1 Home Equity Loans
Pros - Quick and easy application process, flexible repayment terms, typically lower interest rate then other commercial loans, possible tax benefits
Cons - betting the house

#2 SBA Loans
Pros - Access to capital that may not be available from other sources
Cons - Tedious application and approval process, Up to 30% down required, Controlled disbursement of funds, fixed payments (7-10yr terms).

#3 Using Retirement Funds
Pros- Easy process through third parties, No Interest, No financing payments, Starting the business without third party debt.
Cons - Betting your retirement - Be very comfortable you are buying a franchise that has shown to garner strong resale prospects as that is how you will reap the rewards of your investment. Look for opportunities that will build strong recurring revenue and talk to your account before going down this path.

We currently work directly with partners that can assist you with any of the options described above as well as unsecured loans and equipment leasing opportunities. Please contact me directly if you are interested in being referred to one of our partners.

Have a great weekend!

Regards,

Rob

No Short Cuts Here!

2007-04-18T07:44:00.000-07:00

When researching business opportunities fight the urge and do not take short cuts. Not gonna do it you say? Everyday I speak to would be entrepreneurs who are putting off some very important (Required) steps in the business evaluation process. They found an opportunity on their own and are moving through the franchisors review process assuming that is enough.

Let me be clear that it is not. After all, it is never about what you know it is always about what you didn't!

Do not buy a business unless you have....

#1 Consulted an Attorney - Make sure you speak to a Franchise Attorney and make sure you pay to have a UFOC review. Many people skip the review due to the cost but make sure you are not one of those people!

#2 Talked to Your Accountant - Again this one might be obvious but you need the financial guidance of a professional. A few things you will need to engage your accountant in will be.. Reviewing your personal finances, corp. formation, financing guidance (home equity, SBA, 401K financing, etc), review UFOC financials, build pro formas, taxes and many others!

#3 Spent a day with a Franchisee - Walk a mile in their shoes or at least a few steps and see first hand if your dream meets the reality!

#4 Called as many existing and former franchisees as possible - This is an easy one to short cut as making the calls takes a lot of time and can be aggravating. No return call, lots of voice mails and never ending games of phone tag have many people say they have enough information after a couple of calls. Trust me. You don't and you need to keep calling!

Have a great week!

Rob

Support for Internet Marketing Franchises

2007-04-03T08:39:00.000-07:00

Over the past few weeks several articles have been written providing some insight into new opportunities arising from the continued expansion of Internet advertising. I wrote recently about the boon online advertising may play for small businesses as the technology begins to allow more specific local targeting. E-Pizza

The projected growth in this area should have you exploring business opportunities in this field.

While the SMB markets surely will benefit from expanded use of this medium of advertising, what challenges will need to be solved by local Internet advertising professionals?

#1 Current ad agencies serving the SMB audience just do not have the technical expertise to truly guide this audience down the digital path. In fact, most enterprise companies complain that their agencies don't have the needed expertise to guide their journey.
#2 Solution Complexities - Effective Online advertising campaigns are often comprised of many moving parts. Creative development, Targeting, Location, Keywords, Offer, Conversion, SEM, SEO, Email Marketing, Database Marketing, Metrics Reporting and of course Web Development all play a very important part in executing a successful online campaign.
#3 Majority of SMB websites are not built to convert or sell online. These version 1.0 sites are great brochures but are poor at generating the needed visitor actions to create conversion. A new wave of web development is needed to bring first gen sites up to snuff
#4 Understanding these components is important but being able to explain these components to a small business owner is where the rubber will truly meet the road. Being able to simplify a complex solution set will be key to success.

From a recent Red Herring article (Hillary Schneider, VP local Markets at Yahoo! quoted): The untapped “regional local” online ad market consists of 85,000 businesses with an ad spend potential of $48.3 billion, said Ms. Schneider. The “local local” market is estimated at 22 million businesses with a total of $33.6 billion to spend. “I would say we have a long way to go,” Ms. Schneider said.

There are already a a few franchisors looking to take advantage of this opportunity by focusing on both Web Development and Web Marketing for local businesses. Could this be the opportunity you are looking for? Check out the Spotlight Franchises on www.northstarfa.com where one of these concepts ( TruePressence® ) is highlighted!

Have a great week!

Rob

Franchiseoverdosis Strikes!

2007-03-27T05:40:00.000-07:00

Last week I was contacted by a potential client who was suffering the ill effects of Franchiseoverdosis. She was referred to me through a friend and I wanted to share her story so you maybe able to avoid the effects of this dreaded disease!

Sue (not really her name) had always dreamed of owning her own business. She had been climbing the corporate ladder for years and had experienced great success and been blessed with a fantastic income. Recent downsizings, restructurings and new management (sound familiar) had made her decide to start taking action on her business search. She really was not sure what she wanted to do but decided franchising sounded like the best bet for her.

She spent the next week online bouncing to the plethora of franchise listing websites....searching, reading and requesting information on any business that sounded interesting; expecting to get brochures in the mail to peruse at her leisure. A total of 10 requests to franchises spanning 6 different industries (restaurants to car washes). Pleased with the proactive step she had taken she sat back and looked forward to receiving the mailed brochures.

It first began with a few emails, Thanking her for the request but rapidly expanded to continual phone calls. Usually a call within 2 days of the Internet request followed by 2 more calls over the next week from each business. Over that next week she received 27 calls in total, 15 emails (2 with brochures) and one mailed brochure (from the business she was the least interested in). During that week she didn't answer her phone as she was not ready or able to speak to 10 different people. This flurry of activity and information came too fast and was simply too much information to process. She decided in the week following to put her plan on hold and did nothing else for nearly a year. The dreaded Franchiseoverdosis strikes again!

Here are a few tips to avoid the same fate.....

#1 Contact a franchise consultant - Reputable consultants will work to your timeline and provide invaluable service helping you build a profile of your ideal business and then acting as the middle man to gather relevant information on prospective businesses before actually engaging with any opportunity directly.
#2 Use the Internet to gather research and fill your curiosity but fight the urge to submit that information request until you have narrowed on a particular industry or are prepared to invest the time to talk with the business.
#3 Most Franchises do not send media kits immediately - Many business simply get too many requests and can no longer afford to mail marketing material to everyone. Expect to get a phone call before you get packet.
#4 Don't be surprised if the person calling from an online request is a franchise consultant. Many franchises utilize consultants as a means to pre-qualify prospects and consultants know the draw to these information request forms are strong. If you get a call take a few minutes and speak to the consultant. They just might be the remedy you need to realize your frantrepreneurial dream.

Have a great week!

Rob

The Required Skill

2007-03-13T06:09:00.000-07:00

There are many skills business owners must possess or develop in order for their new businesses to succeed but none is more important then the ability to sell.

Just saying the word "sell" is often enough to get the butterflies going and probably one of the questions I am asked most frequently during a business review...ie "How much selling am I going to have to do for this business to succeed?" My typical response... a lot, all the time, non-stop, 24/7 etc. Businesses do not succeed if they are not generating revenue and revenue does get created unless someone is selling a product or service.

There are two types of selling that businesses will require and it is important to match yourself to the style you will be most comfortable performing.

Soft Selling - The activities in a soft selling business are most frequently referred to as PR and Networking. These would include actively participating in local chambers, community groups, church groups, volunteerism and of course participating in networking (leads) groups like AmSpirit Business Connections, BNI, LeTip etc. At these groups you will need to be able to proactively build relationships and trust while effectively promoting the value of your product and service. You most likely will find this type of selling activity when your main customer is local consumers.

Direct Selling - The activities in a direct selling business are most frequently referred to as Face To Face Selling. This type of business would include the soft selling activities above and would add prospecting (cold calling) and direct one on one meetings, presentations and proposals as the means to generate business. You will most frequently find this type of selling activity when your main customer is other local businesses.

Considering the type of selling you are willing to engage in will help you begin to narrow in on the industries you should be considering in your business search.

Looking for some great books to help with your sales skills? Suggested Books

Have a great week!

Rob

More Free Tools For Small Business!

2007-03-09T07:05:00.000-08:00

The SBA and the US Postal Service launched another really good resouce earlier this week. The new tool provides a video on demand service on highly relevant topics for business owners and would be entrepreneurs. Link and part of the press release is below.

A couple of stats mentioned in the release that caught my attention...

* Small businesses make up 99.7% of all employers.
* Small businesses generate more then 50% of the Non-Farm private gross domestic product.
* Over the past decade, small businesses generated 60% - 80% of new jobs in the economy

U.S. Small Business Administration, U.S. Postal Service Announce Internet Tools for Entrepreneurs

WASHINGTON — The U.S. Small Business Administration and the U.S. Postal Service today unveiled a new Internet tool for small business owners, designed to deliver business solutions to entrepreneurs.

Delivering Success, an online video-on-demand resource of successful entrepreneurs, is a nationwide cosponsorship with the Postal Service to provide small business owners with invaluable information through video interviews that are both accessible and convenient for entrepreneurs.

The Delivering Success video interviews, online at www.sba.gov/deliveringsuccess, chronicle the experiences of successful entrepreneurs from around the country, offering guidance and sharing insight on the road to success. The video interviews provide key information on the ingredients of small business success, including an overview of business basics, resources to help with business plan development, small business friendly financing, business promotion, and planning & research.

Assisting Seniors

2007-03-02T12:25:00.000-08:00

In the to the 1/2007 issue of Entrepreneur, Senior Care Services were once again highlighted as a top growth franchise industry (growing by more then 342 units in 2006). With this type of growth pattern, the industry has also seen the number new concepts going to market sky rocket with Home Health Care being the predominant service offered.

The AARP recently released an article on its website discussing another new service trend, Senior Move Manangers. These consultants primary responsibility is providing support and guidance to clients facing the challenge of downsizing or transition to extended care facilities.

One of our senior care franchisors has already built this service into its model and would expect to see others follow shortly.

Senior Move Manager Article on AARP.org

Have a great weekend!

Rob

Demographics

2007-02-27T09:44:00.000-08:00

When exploring businesses it is important to have a strong understanding of the demographic data of the area where your business will be located. Never assume that a national franchise will succeed in your town just because there is not one located there currently.

Determining if there is a market for the proposed business is something that should be taken very seriously and included in your due diligence. Understanding this information will also help you grasp the territory or market the franchise is proposing and what may or may not be the possiblity of expansion down line. But how can you go about finding out this information? Here are a few free websites that provide great information to start you down the path.

#1 ePodunk.com
#2 US Census Bureau
#3 City-Data.com

Have a great week!

Regards,

Rob

E Pizza!

2007-02-23T12:55:00.000-08:00

I am always amazed at the effect the internet is continuing to have on traditional brick and mortar businesses. Just this week it was reported that GM is reducing its advertising budget by $600M for 2007. The direct beneficiary of this reduction is reportedly online media. It is cheaper, provides endless targeting opportunities and results can be tracked very accurately.

The Internet is even changing the pizza business as highlighted in the below article. Domino's Pizza reported this week that 1 in 8 pizzas are being ordered online in the UK. The really good news is that this trend not only helps sales but ultimately allows the local business owners to consider less expensive online advertising to drive orders resulting in a healthier bottom line for the franchisees! Maybe one day the dreaded yellow page bill can be avoided for good!

Have a great weekend!

Rob

Article"
'E-pizzas' bulk up Domino's bottom line

SBA To Host Chat On Virtual Business Start-Up

2007-02-22T09:24:00.000-08:00

I am continually impressed by the quality of the events and resources the SBA is producing for entreprenuers. Be sure to include regular visits to the SBA site for tips, tools and resources. The following was sent over this morning in their Advisory Newsletter. It is an example of one of their ongoing programs.

Have a Great Day!

Rob

****************************************
Advisory Date: February 21, 2007
Contact: Cecelia Taylor (202) 401-3059
Advisory Number: MA07-05
Internet Address: http://www.sba.gov/news

SBA’s Web Chat Series to Highlight Virtual Business Start-up

Victoria Parham, SCORE Business Counselor, to host discussion on Entrepreneurship February 28, 2007 at 1:00 p.m. ET

WHO: Victoria Parham, SCORE counselor and small business owner, will host the February Web chat on "Entrepreneurship: The Essentials for Starting an Online Virtual Business." Parham will share her personal story of growth from active duty soldier and military spouse to self-employed entrepreneur and creator of a thriving business educating clients, including military spouses, on how to do business in the virtual marketplace. Join her for an online dialogue as she shares her business advice and insight.

Parham serves as a distance learning contractor for the Department of Defense Military Spouse Portable Careers Initiative, and was featured as one of Inc. Magazine’s 26 Most Fascinating Entrepreneurs of 2005. Parham has served as a SCORE counselor since 2004, providing small business advice to entrepreneurs.

WHAT: The SBA’s live Web chat series provides business owners the opportunity to have discussions online about relevant business issues with experts, industry leaders, and successful entrepreneurs. Participants have direct, real-time access to the Web chats via questions they submit online in advance and during the session, and receive instant answers.

WHEN: Wednesday, February 28, 2008, from 1 p.m. to 2 p.m., ET. Parham will answer questions for one hour.

HOW: Chat participants can join the live Web chat by going online to www.sba.gov, and clicking the "Online Business Chat" icon. Chat participants may post questions for Parham before February 28th by visiting http://app1.sba.gov/liveMeeting/Feb07/ and posting their questions online.

To review archives of past Web chats, visit online at www.sba.gov/tools/monthlywebchat/index.html.

Would You Do It Again?

2007-02-21T09:34:00.000-08:00

This simple question is probably one of the most important to ask current franchisees of any system you are exploring. It gets straight to the point of everything you are ultimately trying to uncover in your due diligence. ..... having walked in the shoes as an xyz franchisee ,would you do it all over again?

Over the last few years, two new companies have entered the market and conduct "satisfaction" type surveys of their client systems. Franchise Business Review and Fransurvey are the most widely recognized and both provide in-depth reports. Their surveys provide great insights into a system but they should never replace your calls directly to current and former franchisees. Why? Simple. I am always a little skeptical of surveys that are ultimately contracted and paid for by the franchisor. Besides, nothing beats a direct question and an old fashioned direct answer.

If the franchise you are researching is featured on one of these sites, use the reports to identify responses that may be troubling to you (ie hours worked, weekends worked, sufficient working capital etc) and ask franchisees during your calls to expand on the questions.

Have a great week!

Rob

Flipping the Biz Opp

2007-02-16T07:22:00.000-08:00

A few years ago, one of the techniques recruiters used to gain access to corporate employee lists was called flipping a website. This, in brief, involved searching the internet for things in the public domain (Ie a personal website that linked to a project they client was working on) that provided a path (back door) to things that were not in the public domain. This technique has gone the way of the dinosaur due to increased security and firewalls across all sizes of business.

When going through the Due Diligence process with a business opportunity it is very common to receive a very specific list of licensees to contact about their experience with the business. They may have 500 open locations but provide a list of 20 people to call. Those lists are great but make sure you reach several not on the list provided.

So how do you identify those not on the list? Since most Biz Opp Licensees operate under unique names it can be very difficult identifying who is and who is not associated with the company on the internet.

Taking a trick from early internet recruiters, try "flipping" the biz opp to pull related licensee websites. Here is how....

Step #1 - Review the sites of the licensees provided. If you don't have thier websites on the list ask for them when you speak. While on their sites, look for common marketing phrases used, business explanations, form names, common articles, etc and make note.

Step #2 - Head to Google and query by these phrases in quotes to identify unlisted owners of the business and then contact them to continue your due diligence. Looking through the results you will be able to target those that are most like involved in the business.

Step #3 - Call them. Ask is they are affiliated with XYX business and the reason for your call.

Have a great weekend!

Rob

Climbing The Mountain

2007-02-13T11:38:00.000-08:00

I often refer to the process of researching a franchise or business opportunity as “Climbing the Mountain”. This is due to the challenge, perseverance, time, persistence and of course the intestinal fortitude required to start and complete either task successfully.

No one new to mountaineering simply wakes one morning and decides to go climb Mt. Everest. They commit to the goal and invest in the needed training, planning and research to insure the highest probability of a successful climb. Yes probability. No climb can ever be guaranteed to be 100% safe and equal challenge awaits on the ascent as well as the descent.

The same can be said for the would-be business owner. To simply say, “I want to own a business” unfortunately will not make it so. Their “Mountain to climb” is the time, research and planning required to identify their ideal opportunity. Unfortunately, for the business owner, climbing this mountain is not enough. For the climb to be successful they can not climb back down methodically to the flat ground below. They must stand at the top of the mountain and make the decision to jump believing in the preparation that got them to this point and the faith they will grow wings.

When considering a business search it is best to begin with the end in mind. Will you be able to “jump” when the opportunity arises?

Have a great week!

Rob
http://www.northstarfa.com

Gen Y Franchise Boom?

2007-02-09T09:44:00.000-08:00

I was pleased to read a recent article from the Jan. 2007 Franchise World Magazine highlighting the valuable impact young franchisees are bringing into systems across many sectors.

Early last fall while attending an industry seminar, I had an opportunity to speak with a very well respected industry trainer/consultant who suggested I only steer my practice towards the 45+ crowd. He advised younger candidates lacked the seriousness to be effective franchisees. Being in my mid-thirties I took a little exception to his guidance and decided to not take this nugget of advice.

The below article provides some great insight into how some systems not only relish their young franchisees but see Gen Y as a vital component to their future system growth.

http://www.franchise.org/Franchise-Industry-News-Detail.aspx?id=32038

Have a great weekend!

Rob

Loss of Job Security

2007-02-06T17:31:00.000-08:00

Continued discussion from my January Newsletter article “Why Not?”

The phrase “job security” always creates a wonderful picture in my mind. A utopian environment where both employers and employees work together for the others mutual benefit. Where the job you held was always yours to loose. Work hard, be consistent, provide more solutions then problems and you will always have a job.

The reality of “job security” is of course very different. “Employment at Will” seems to paint a more accurate picture.

A few weeks ago, I attended an outplacement event for workers contemplating buyout packages from a few Detroit area employers. During introductions, a gentleman near me stood up and mentioned he had over 25 years with his employer. He had worked hard, been consistent and certainly created more solutions then problems yet his employer was asking him to leave. Unfortunately, this scenario should not be too surprising as it plays out everyday across the country.

This change in the Employer / Employee relationship has lead to significantly reduced employee tenure and tripled the number of employers the average worker will have over a career.

In this day and age, haven’t most already lost their job security while still keeping the job?

Have a great week!

Rob

My Favorite Franchise Mascot

2007-02-02T05:46:00.000-08:00

With the SuperBowl advertising war kicking off Sunday, I thought I would introduce you to my new all time favorite corporate mascot. Sorry Noid, Taco Chihuahua, Mr. Nut, Green Gecko, Sock Puppet, Baby Bob, etc.....

Please meet Mr. Happy Crack! He is the lovable, humorous and very memorable mascot of The Crack Team where he proclaims the slogan, "A dry crack is a happy crack!".

Underneath this amazing branding tool is a growing franchise system. The Crack Team is a foundation repair franchise which is capitalizing on the rapidly growing home services sector. Through providing time tested permanent repair solutions for foundation cracks, you just may see Mr. Happy Crack in a neighborhood near you soon!

Interested in learning more?

Best wishes for a wonderful weekend and GO COLTS!

Rob

Welcome!

2007-01-30T11:51:00.000-08:00

Welcome! This is the official first post for the North Star Franchise Advisors Blog. If I were in your shoes and happened across this blog I would want to know a few things….

1. What is North Star Franchise Advisors, LLC? North Star functions as a “matchmaker” for individuals wanting to identify their ideal franchise. We work with a little over 200 franchises in just about any industry. We also work with clients nationwide. Learn more about North Star at this link http://www.northstarfa.com/whynorthstar.html

2. What can I expect to see in this blog? The goal is quite simple…to provide my thoughts relevant to conducting a franchise search, occasionally highlight specific opportunities and provide random thoughts on franchising and the franchise industry.

3. Why a blog? There certainly is not a lack of content on the internet relating to franchising. Listing Sites, Articles, Newsletters, etc are everywhere you turn. In fact, most of my clients come to me suffering from franchiseoverdosis - Too much information and no real idea how to process through it all to achieve a meaningful result.

Through my blog, I will provide information in smaller chunks and hope to be able to highlight my approach to a franchise search and the values and integrity that guide me in my work.

4. How frequently will I post? I will publish to the blog every Tuesday and Friday at a minimum.

Best Wishes!

Rob