… In which we see the benefits of a professional approach, and we dissect our enterprise and use the example of Fred to find which bits work and which don’t.

A PROPER HAIRDRESSER

Years ago, on one of my courses – a self-employment seminar – I had a woman who was a truly fabulous hairdresser who had worked in the capital’s top salons. For various reasons, she had found herself without a job and also without much money. The solution was to take the tools (scissors and a hairdryer) and go round to peoples’ homes where she did a great job. What great job is that, then? “Why,” I hear you reply, “doing peoples’ hair, of course.” Ah, but here’s the rub. One day, one of her customers said, “Don’t come next month, come the month after.” When she did go back it looked like the woman’s head had been set on fire! “What happened?” the hairdresser asked. “Oh, it was my boy’s wedding and I thought I should go to a proper hairdresser.” A proper hairdresser! Reflect on that statement for a moment. If you do accountancy from home, will clients be tempted to go to a ‘proper accountant’ rather than you?

Paid on Appearance

OK, you don’t want, or can’t afford, to pay franchise fees, but you can’t let your standards of presentation fall below what they offer; tattiness costs money. What could the hairdresser have done?

Take two women who do beauty treatments from home. The first one you visit meets you at the door with a smile. She is in a pair of comfy jeans and slaps a big mug of coffee in your hands. She leads the way up the stairs to her back bedroom, booting the kids’ toys out of the way. The cat is slung off the bed before you lie on it for your facial. Actually, apart from a few flea bites, she does a great job and could become your ‘little treasure’ but … the other woman meets you at the front door in a white, mandarin-collared medical coat with, and get this, a gold name badge. She is the only one there and you know her name. She carries a big black appointment book in which your name, time and agreed treatments have been written. You are led to the back bedroom, only it’s not a back bedroom, it’s a proper consulting room with a treatment couch, venetian blinds, spot lights, shelves displaying complementary products and potions, and leaflet dispensers with professional leaflets and price lists of the various options. FACT – she will make more money than the other woman.

Invest in Your Image

The whole point of being self-employed is that you can kick back, chill out and make good money without, in some cases, even setting foot outside your front door, but that does not mean you can afford to be rubbish. When people spend on a car, a computer and a hat stand, they somehow feel that it’s not so important to invest in the image of their enterprise – which brings us neatly to the subject of leaflets, catalogues and other publicity. Leaflets are a weird thing and you may not even need them, but if you feel that you do, they had better be good or you will advertise that you are crap and a bit of an amateur.

Good design is very expensive and when you spend a few thousand on your logo, image and publicity material when you haven’t even got a car, it hurts. What I used to do is to offer a good prize like a mountain bike or a TV to design students – I would get thirty or so good designs and use the winner for the price of a mountain bike. Whatever you do, don’t let the computer do it – it stands out like the balls on a dog and just shouts ‘back bedroom’, ‘wet behind the ears’, ‘amateur halfwit’.

Again, pause for thought: the cheap paper, home-printed flyer drops through the door with the inevitable little clip-art figure clutching a megaphone and shouting, “You’ve tried the rest now try the best!” Does that float your boat? Does it get your juices flowing. Do you rush to the phone to do business with them? No, of course not, so don’t even think of doing it yourself, it just makes you look like a loser.

THE IMAGINARY FRANCHISE

Whatever enterprise you choose, a great exercise for testing it is to imagine that you will turn it into a franchise. It doesn’t matter what enterprise you have chosen, any one could be a franchise, from accountancy to business skills training, to house painting, or even party food. So let’s pick party food as an example.

You have been told by your friends that your vol-au-vents are to die for, your nibbles take them to another place, and your small jellies provoke a rapture of pure delight. “You should cater for parties,” they tell you. OK, you have ignored the warning about twee names and you start ‘Party Time’, the fun food company for any party. Small adverts, leaflets, cards in shop windows, the website and word of mouth lead you to a reasonable amount of work. In a way, businesses like this one are the most disappointing for me because they do well for a bit and then they just sort of peter out. They are like spring flowers which pop up all colours, perfumes and busy bees, only to disappear a few days later because they fail to have deep roots. But while the enterprise survives, people suggest that they would like to open a ‘Party Time’ in their town.

A Kit of Parts

Now here’s the thing to think about; how do you put ‘Party Time’ into a reproducible package, a replicable kit of parts? I am not asking you to do this because you are likely to franchise your business, but because it will help you to focus, professionalize and become established.

The potential franchisee will ask how much it costs to set up, how much they can expect to make, where they will find the business, and how hard it is to master the skills required. Well, can you answer those questions about your enterprise?

Let’s have a look at the ‘Party Time’ franchise. How will the food be distributed to the parties – currently it’s put in the back of the odd car or taxi. OK, it gets a bit battered and warm on hot days but would you invest in a special vehicle? Maybe a small chilled van painted in the franchise’s pink candy stripe and logo … well, it’s not my business so don’t look at me.

The question is: what would you advise your franchisee to do? Vehicles like that don’t come cheap. Where do they find the work? Oh yes, that’s right, leaflets, small adverts, cards in shops, the website and word of mouth – which one works the best? Out of the small ads, which designs brought the most responses, which are the best publications to go in, how well does the website score, which part of it elicits the best response? The cards in the shops are, of course, professionally designed so they, and not just ghastly scrappy bits of paper, can be handed out in packs to the franchisee. You will have formalized the word of mouth thing, won’t you, by giving out bundles of recommendation cards that earn discounts or prizes for recommendation. Don’t worry, you won’t have to remember all that, because you are going to put it into a precise and easy-to-read manual.

How would you like the franchisees to look? Nice, smart, pink candy stripe jackets, jaunty paper hats, proper food handling gloves, no jewellery, and all clean and fragrant. The food should be consistently prepared to the laminated recipe card and presented on special trays, linen with logoed napkins with all the correct garnishes – just like you do now and every other time with no slip or reduction in quality.

Even things like suppliers should be consistent. Can you see that by analyzing and formalizing your enterprise in this way, it gives you the opportunity to analyze it in a detached objective manner?

Remember those tatty fast food outlets – you could see trouble brewing but the owners couldn’t. There is a very, very old business joke that says, “When you are up to your arse in alligators, it is very hard to remember that you set out to drain a swamp.” Just climb up on the bank once in a while to count your alligators and to see where the sluice gate is.

FRED’S GARAGE

Now you have dealt with all this, let me explain the problem of Fred’s Garage and ask you to help me with it. As an adviser to small enterprises, this and similar situations are constant problems that I come across and are hard to solve. The thing with the main authorized dealers of cars is that they have a workshop full of engineers, and the work as it comes is distributed to the engineers by relating difficulty to skill. You buy your shiny new car and a few months into ownership it is in either for its first service or to tidy up a few niggles. This thing is your pride and joy so, of course, you take it to the main dealer in order for the correct people to set to work on your treasured vehicle. Routine service – who do you think that is given to? Of course, the least experienced person there, probably the apprentice.

These garages often have someone called Fred. Fred is a brilliant intuitive engineer who knows, through experience, every aspect of your particular vehicle – he may even be the shop foreman. The hourly rate charged by garages is eye-watering, say, £120 per hour plus a big juicy mark-up on any spare parts used. It stands to reason that if the apprentice does the job at £10 per hour, a lot more money can be made than if Fred does it for £20 per hour. The only little drawback is that the apprentice is a clumsy, inexperienced gibbon, so anything complex or difficult should be given to Fred. There is also another matter to consider: when you tell them your brakes or whatever need fixing, they can quote a price for the job. How do they know how long the job is going to take? Do you think it is experience? No, it isn’t. They use a book that sets down the hours for each job. The book is generous in its estimates (generous to the garage, not you) and that is what you will be charged. This is how it works in the garage’s favour. Say your car needs a clutch; the book says six hours labour. Someone like Fred could do that in three. You pay £720 for three hours work; Fred gets £60. The Freds of this world kick up at this so they are paid a modest bonus for speed – sometimes even their hourly rate. For example, the book says six hours, Fred earns £120 for three hours work. The apprentice shouldn’t even be allowed near jobs like that but on simple routine jobs the gap narrows and so does the profit. On oil changes, it’s half an hour; that is how long it takes, no matter who does it.

Pastures New

The Freds of this world eventually tire of this and look for pastures new. To them the arithmetic is simple: if they open their own garage and charge even half price, they would be ahead of the game. A clutch would cost £360 – a bargain for you and a bonus for Fred. Despite the exorbitant charges, main dealers go bust with monotonous regularity so we have to understand why that happens. The answer is overheads. The new cars you see in their huge glittering showrooms have to be bought on borrowed money and there is that huge glittering showroom itself – loads of staff, managers and salespeople all conspire to cost a fortune. Fred, therefore, when opening his enterprise, must avoid these overheads, so when choosing premises he must be careful. A great area is found underneath some railway arches, loads of room for a modest rent. There we have it, ‘Fred’s Garage’, not even a twee name, a perfect enterprise; you can take your pride and joy to this place and the best engineer in the whole world for your model of car will work on it with obsessive diligence for half the price, without the gibbon of an apprentice being allowed anywhere near it – even for routine jobs. It’s like having a world-famous brain surgeon syringing your ears … and yet you are still not tempted to use the services of Fred. A few clever people realize that Fred is a ‘little treasure’ but the rest of us are frightened to do it.

In Fred’s Shoes

As I have already said, this is a thinking exercise. Using your intelligence, and perhaps some of the ideas in this book, put yourself in Fred’s position and plan the launch and establishment of Fred’s Garage. Remember, like the rest of us, Fred is a one-person start-up and funds are limited. He possesses a beautiful professional tool kit but he must invest in the special tools and computer that every modern car needs before he can fix it. You are in a weird position here because for this exercise you are playing the part of Fred, but you are really one of Fred’s potential customers. Setting aside all the warranty issues – in fact, let’s imagine your car is just out of warranty – why won’t you take it to Fred? Picture the premises in your mind and tell me what’s putting you off. Is there anything about Fred’s demeanor or attitude that is a deal breaker?

While you think how you would change Fred and his garage, let’s consider the big thing that’s holding you back from doing business with him. It is fear. It is the risk you take. Tell me, what risk is that? You see this backstreet garage and you feel that you would be taking a risk by leaving your car there. Write a list of those risks is he going to treat your car with respect; will he be driving about in it; is the place secure and insured; and most of all, is he competent? But hang on a minute, the whole point and pivot of this tale hangs on the fact that Fred is super competent. What did you say? Oh, Fred didn’t tell you that! Most small backstreet repair shops have a story. If you speak to that oily guy with the cigarette dangling out of his mouth, you will get a life history that speaks of long apprenticeships, college certificates and race mechanics. True, there are chancers who have no qualifications at all and may well wreck your car or even steal it, but we’re working with Fred and we know that he is good, so how do we communicate that to the customers?

Prestige Presentation

While you consider that, have a think about how you will communicate your professionalism to your customers.

For some reasons that are too tiresome to explain, I found myself driving a prestige German car for a while and my experience of the dealership is worth recounting. When I arrived, a smiling receptionist who was expecting me took my keys and tagged them with a big bold tag with the garage’s logo on one side and all my details on the other. They also took all my contact details and neatly wrote them down. They told me when they expected to have the car ready but always pleased me by ringing much earlier than predicted and telling me it was ready ahead of schedule. Through a special window I could see the workshop, which had a polished tiled floor so clean that you would gladly eat your dinner off it. The engineers wore spotless overalls in the company’s colours, all with the logo embroidered on the pocket and the engineer’s name also embroidered on (badges scratch paintwork). When I came to collect the car, a custom dust cover was removed with a flourish from the seat and hanging from the mirror was a card with the engineer’s name, picture and his comments about the work. The bill was presented in a small folder with a list of services and special offers – and another thing was that, whatever the quote for the job had been, the bill would always be just a little bit less (a nice touch). The reception was immaculate, there was coffee, a tidy waiting area, and a large neat board with the cost of the fixed price services on it. A prestige dealership for prestige cars.

Do the Same

There is nothing here that Fred cannot do at modest cost (except that he will have to play the part of receptionist as well). On the other hand, he must lose the grubby overall, the bills written out on the backs of envelopes, the ‘no idea when it will be ready’ attitude, the piles of old tyres kicking around the place, the cigarettes and empty oil cans. Fred would argue that this is all flim flam and his skill is all that matters. Well, my answer to that is, “Fred, give me that old flim flam, but then back it up with information, assurances, and guarantees.”

To return to the start of this exercise, one of the puzzles that it poses is that Fred is a brilliant and highly qualified technician, and probably, in your own field, so are you. The problem is that the potential customer doesn’t know this.