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Democrat and Chronicle 07/28/2013 Page : E01
Copyright © 2013 Democrat and Chronicle 07/28/2013 August 1, 2013 12:02 am / Powered by TECNAVIA
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ROCHESTERNEXT.COM
Don’t hurry.
Toguardagainst scams,takeyour time. If a sellerwants aquickdecision,take that as awarning.Ingeneral,whenapitchis especially promising,one shouldbeespeciallycautious.
Check thecompetition.
In some sectors,includingmotels, seniorcareandoil changes,thereare toomanybusinesses vying forcustomers.
Inquire about training.
Anewfranchiseemay thinkheorshewill getmore than theydo. Somecompaniesonlyprovideaone-weekcrash course.
Who’s incharge?
Asuccessfulfranchisemaynotbeall thatremunerativefor a franchisee.Some franchisorsoffer applicantsa chance tobetheir ownbossbut controlmostaspects of thebusiness.
Getadvice.
Thesedocumentscanbehard tounderstand.Consult anaccountantorlawyerwithexperience infranchising.
Democrat and Chronicle Sunday, July 28, 2013
Len LaCara Business Editor (585) [email protected]
Len LaCara
It is important to work on the busi-ness, not just in the business.
I had a cup of coffee with Don Goli-ni, manager of the Rochester Instituteof Technology Venture Capital Fundand chair of the Rochester Angel Net-work, and discussed the deadly sins hesees entrepreneurs make as they at-tempt to launch their companies.
The first deadly sin is that entrepre-neurs sometimes neglect to focus onthe customer and believe, “If we buildit they will come.” They spend toomuch time perfecting a product theyhope a customer will buy but don’tspend nearly enough time talking tocustomers to learn what product fea-tures are most important. Stanfordprofessor Steve Blank teaches a class,“Lean Launchpad,” emphasizing theimportance of early customer inter-actions. His methodology has been
widely adopted by business acceleratorprograms throughout the country, in-cluding here in Rochester.
The next deadly sin is confusingraising money, borrowing money, orreceiving government money withsuccess. While these can all be impor-tant milestones, validation of a businessis the profitable sale of products andservices. A successful businessmantold me, “If you have money, you thinkabout spending it; if you don’t, youthink about earning it.” Many compa-nies have wasted valuable time getting
products to market because of easyaccess to money, which allowed them todither on unimportant activities.
The third is not assembling a goodadvisory board. Most entrepreneurshave a dominant “vertical” skill, suchas research, programming or engineer-ing. They fail to recognize their limita-tions when it comes to “horizontal”skills like marketing, sales, finance andadministration. A well-functioningadvisory board can assist the entrepre-neur in recognizing limitations andsuggest methods or people that cancreate the right combination of skillsets for the company. In addition, anadvisory board with considerable busi-ness experience brings an ability I call“pattern recognition.” Good patternrecognition skills allow the business toavoid many operational pitfalls.
The fourth is not retaining highly
qualified and experienced professionallegal and accounting services. Theentrepreneur may not see the value inthese services when starting the com-pany, but a good corporate attorney andaccountant who specialize in earlystage companies can save you thou-sands in the long run. Seasoned busi-ness advisers can steer you clear ofcostly mistakes.
The final deadly sin is what has beenreferred to as the “Founder’s Dilem-ma.” This is when a founder doesn’tappreciate the value of equity andgives away too much stock to the wrongpeople, or unnecessarily dilutes herselfor himself. This can cause all kinds ofdifficulty as the organization grows,and, in many cases, outgrows the initiallaunch team.
So there they are, don’t forget them.So let’s get to work.
Be aware of the five deadly sins of entrepreneurs
PatrickBurkeOUTSIDE INSIGHTS
Starting a business is like cuttinga path through a dense forest in astrange land.
There are perils with every step.You are rarely sure where you’reheaded, or if there is a cliff whereyou hope there is a meadow. You ex-pend your resources without any as-surance that there will be a suitablereturn.
Success is infrequent. About halfof American small businesses fail inthe first five years.
Franchising — basically becom-ing an owner with strings, and mon-ey, attached to amuch larger compa-ny — removes some of those perilsright away. It’s a steady growth sec-
tor in the American economy;757,055 franchise operations cur-rently are in place, up about1.5 per-centover2012.Theygenerateabout$800billion in revenueannually andemploy about 8.2 million people.
There are helping hands every-where in a franchise arrangement.The franchisor — a McDonald’s, aBurger King or aMark’s Pizzeria, alocal chain with roots in Palmyra,Wayne County — provides the dis-tribution network, the advertising,the brand, the employee training,ofttimes the location, the A to Z inretail start-up fundamentals.
Food dominates the franchise in-dustry, but it’s not the only sector tobe involved. Home-based senior
GRAPHIC ILLUSTRATION BY DANI CHERCHIO
Franchisesbring inbucks, butyou’d betterhave somecash first
TO LEARNMOREThere are many sources of in-formation for potential franchi-sees. Here are a few:» The Federal Trade Commissionat www.ftc.gov/bcp/franchise
»www.franchise.org
»www.franchisehelp.com
» FranchisingUSA magazine.
INSIDE» Entrepreneurial Tightropecolumn: Franchising gives man asecond chance, 5E
GAIN FROMTHE CHAIN
Tom TobinStaff writer
See FRANCHISES, Page 5E
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