Category Archives: Consulting

Looking From The Inside

While you’re busy reading this, I just might be anesthetized. Today’s screed was actually written yesterday while I was preparing for today’s colonoscopy. For those of you under 50 who have yet to enjoy the ride on what my friends and I call “The Silver Stallion”, you’re really not missing much. Anyone who has ever had one will tell you that the prep is worse than the actual procedure. Then again, how could it not be since you’re mostly unconscious during the exam?

The prep involves a day of a liquid-only diet. Clear broth, coffee or tea (NO milk though), sports drinks (nothing red or orange). You get the idea. At some point, you drink some nasty stuff that evacuates your bowels. It’s basically the worst case of diarrhea you can have without a trip to some restaurant with a D health rating.

OK, you get it. So why am I bring this up on a business blog? Well, there are lots of other ways to screen for colon cancer but colonoscopy is by far the best. If you’re over 50 you need to get one and keep getting them every 5-10 years (your doc will tell you how often). The reason it’s so good at detecting a problem is that you’re being examined from the inside out. It’s not looking at symptoms, it’s not guessing. It is a first-hand observation of what’s going on.

That’s something more businesspeople need to keep in mind. Too often we don’t do the first-hand investigation or look directly at what’s going on, preferring to look at data. Sometimes you need to speak to the people who are producing what’s reflected in the data. You need to reach out to customers, partners, suppliers, and employees. You need to get inside the business.

The other thing that goes on during a colonoscopy is that the doctor will remove any polyps that are found. Most of them are benign but can become something that’s problematic. The scope can spot even tiny ones. That’s another advantage of getting inside the business – you can often spot small issues and address them before they become big problems.

Unlike a colonoscopy, getting inside your business isn’t something that can happen every 5-10 years. It needs to occur regularly, with quarterly mini-reviews and annual exams. Like the colonoscopy, prep for that review makes people uncomfortable and unhappy. The good news is that the prep is worse than the exam, and isn’t it nice to know that you’re in good health?

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Filed under Consulting, What's Going On

Another One Bites The Dust

You didn’t think that you were going to escape Foodie Friday without a missive from me, did you? This week our story is a little sad (OK, quite sad for those involved) but instructive as well.

You know that I’m a huge fan of sous vide cooking. In fact, I wrote all about those feelings just about 5 years ago after I received my first immersion circulator. To review, you French scholars out there will recognize that the term means “under vacuum.” You place whatever you’re cooking into a plastic bag, extract the air, and seal it. The bag (or bags) is placed in a water bath. The immersion circulator holds the water at a steady temperature which is the desired end temperature of the food.

All those years ago, immersion circulators cost around $1,000 and were not really marketed to the home cook. I remember watching the Top Chef contestants using them but not fully understanding that this was a tool that could be widely marketed to the home market as well if the cost could be brought down.

Enter our subject today. I’ll let TechCrunch take it from here:

Founded in 2012, Nomiku became a plucky Silicon Valley darling by bringing affordable sous vide cooking to home kitchens…The company was able to bring a cost-prohibitive cooking technology down to an affordable price point, only to see the market flooded by competitors.

This is a perfect case study for businesspeople. First, the company was founded to solve a problem the founders had. Importantly, they realized that many others – home cooks who were aware of sous vide but who couldn’t afford a $1,000 kitchen toy – had the same problem. They raised money (on Kickstarter), solved the engineering and production problems, and produced a beautiful product for $300.

Unfortunately, an immersion circulator isn’t really a defensible idea. Sure, you might be able to protect certain elements but as most computer manufacturers found out during the PC boom, there’s kind of a race to the bottom. I actually have two immersion circulators in my home now and neither costs more than $200. The Nomiku is still listed as costing more.

How does Apple manage to market products that cost significantly more than its competitors? Because they differentiate the bulk of their products. The function differently. They’ve got better security. For the most part, an immersion circulator does what it does. Sure, bells and whistles such as Bluetooth and timers can help justify a higher price, but sadly, not in this case.

Could they have foreseen that a lab products company would migrate into making products for cooks? Who knows, but it does remind us that having a great idea and even great execution isn’t necessarily enough. If the idea is great, competitors will be at your door quite soon. You must always be looking at how to stay one step ahead while building up defensibility on your rear. Easier said than done, I know, but the business world is unforgiving as these folks found out.

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Filed under Consulting, food, Reality checks

We’re Not Stupid

I do quite a bit of headshaking these days. We won’t talk about the political stuff that causes me to do so but there are just as many things outside of politics to trigger the behavior. I’d like to talk about one of them today because it’s instructive for anyone in business.

One term that’s become en vogue is “alternative facts.” You know what I mean – the dissemination of pieces of information that are mostly or completely untrue. Orwell termed them “doublethink“. I term them lies.

What brought this on? I subscribe to a bunch of magazines – golf publications, cooking publications, and several others. This time of year, in particular, I get snail mail with offers to send a gift subscription. Some ask me to renew or extend my existing subscription and offer to send a free gift subscription to someone as a thank you. So far, so good. These offers are usually clear and only mildly annoying.

Then there is one publication that just doesn’t get it. It’s part of a larger family of magazines and I wonder if what I’m about to describe goes on at the other publications as well. An envelope shows up stamped first notice. I’m told my subscription is expiring and I should renew. A few weeks later comes the second notice. Last week, I got some mail marked THIRD NOTICE in large letters outside the envelope. Inside was the same notice I’d already received twice – my subscription was going to expire (aren’t we all?) and I need to renew ASAP for uninterrupted service.

Here’s the problem. I just renewed this subscription last year for several years. Just to be sure, I found the last issue and sure enough, there on the mailing label was the expiration date. It’s January alright. January 2021. I’ve got a year to go. I wanted to confirm this so I logged on to my account on the magazine’s website. My account lets me use the site’s “recipe box” which I do quite a bit but for some inexplicable reason, it’s not linked to my magazine subscription. When I click on the “manage account” link, up pops a new tab asking me to renew. Again, there’s an assumption that you’re dumb and will just renew because a very in-your-face page is telling you that you need to. In order to see your current account, you need to click through on the FAQ link at the foot of the page and scroll until you find a link to “log in to your account”. Of course, when I finally found this and did so, I confirmed that I had a year to go on my subscription.

Putting the awful user experience aside, what’s bugging me is that these publishers think their readers are dumb. They seem to believe that sending out misleading notices with “alternative facts” will lead to renewals. I wish I could say they were unique but they’re not. I’m sure you get the same kinds of “notices” that I get. My home warranty is expiring (I don’t have one), I can have a “free security system” (it’s far from free), and on and on.

Companies that think we’re stupid deserve to be out of business. I’m well aware of Mencken’s statement that “No one in this world, so far as I know … has ever lost money by underestimating the intelligence of the great masses of the plain people”. We need, instead, to think like David Ogilvy: “The customer is not a moron. She’s your wife”. Putting aside that deceptive marketing just might be illegal, doesn’t it bother you to be thought of as an idiot?

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Filed under Consulting, Huh?

Pots And Pans

Happy Foodie Friday! Have you recovered from last week’s massive food fest? If you were the host of the festivities, at some point you hauled out some pots and pans. Cookware is the most basic kitchen equipment besides a great chef’s knife (you have one of those, right?) Other than when you’re outdoors cooking on a grill or smoker, you pretty much need a pan or a pot or several of each to get the job done.

This isn’t going to be a “how to equip your kitchen with cookware” screed. The reality is that my favorite sizes and types of cookware may not be at all appropriate for you. I mean, I cook on a gas cooktop which means that I like cookware that can handle high heat and distribute it evenly. You may cook on an induction stove which means your pots and pans need to be a “ferrous” metal – meaning a magnet needs to cling to them to work properly on an induction cooktop or range.

I often will start something on the stove and then move it to the oven. That means I want pans that have handles that can go in the oven without melting as well as pans that won’t warp in the oven heat. In fact, thin, insubstantial pans may be less costly but single-ply cookware does not heat evenly nor does it retain heat well. This means that you are likely to burn things. Thin pans warp easily as well and if you’ve ever tried to maintain a thin layer of oil or butter for sautéing in a warped pan, you know it’s damn near impossible to get it right in that case.

You might insist on everything being non-stick or you might have concerns about the surface leaching into food. You might love ceramic pans while I don’t like how they discolor over time. To each his own, right? But what’s important is that you THINK about what you cook and how you cook before you invest in cookware. Ideally, it’s something you’re only going to do once for each pot or pan you buy.

The same holds true in business. What’s right for my business may be totally wrong for yours and, like a non-ferrous pan on your induction cooktop, might not work at all. You need to do requirements planning with input from all constituencies (all cooks weigh in!). You need to evaluate all the options and costs, while always important, can’t be the primary criterion. I generally buy my stuff at a restaurant supply place that sells to the public – it’s high-quality, will stand up to my home use since it’s made for much heavier use than I give it, and it’s less expensive than the stuff you find in the “consumer” stores. That is a great guideline for anything you’re doing in business as well. Plan, research, evaluate and buy for the long-term. You’d be surprised where the best solutions can be found!

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Filed under Consulting, food, Helpful Hints

Am I Hot Or Not?

One question that often comes up as I’m discussing franchise opportunities with people is that of what businesses are “hot.” It’s interesting that “hot” comes up at least as often as “profitable”. I can answer the questions for them (and usually do), but I also add a couple of other thoughts. That’s our topic for today.

For those of you that are curious, what’s currently “hot” in the world of franchises falls into a few broad categories. Within the food sector, breakfast places, juice bars, Mexican food, and healthy bowls are doing well. Restoration services – businesses that clean up after accidents or disasters are hot as well. Some of the other categories that are in demand are childcare, pet services, fitness businesses, and some “alternative” health businesses (cryotherapy, etc.), and beauty/grooming. As an aside, I represent businesses in every one of these categories – let me know if you want to learn more!

I’ll review those categories with interested candidates but then I caution them and I’d like to do the same here. Many of the businesses in those categories are “sexy” but several are not particularly profitable.  When you’re thinking about making a huge life change, which is what many of the folks I speak with are doing, you need to take a step back and look at the big picture. It’s not about what’s hot because what’s hot today may be gone tomorrow. Think about businesses that were all the rage a couple of years ago. Yogurt stores (yes, I have some of those too) seem to be fading away. Most of the “daily deal” sites have consolidated or gone away. Same with many of the subscription box services. The tanning bed business has transitioned into a spray-tan business.

My point to them, and to you, is that focusing on what’s hot isn’t a great criterion as you’re looking at new opportunities. Instead, ask yourself what makes you happy. What can you see yourself doing every day that will have you excited about getting out of bed? The odds are that there is a franchise that will allow you to do that. Some folks are equally concerned (or more concerned) with making money. Many of the businesses that do that aren’t “sexy.” They’re things like home repair or remodeling businesses or they’re businesses that might require a higher level of capital like a senior care business where you might need to “float” a payroll until cash flow grows.

Businesses ebb and flow. Categories run hot and cold, but what makes you happy probably doesn’t. Add profitability to the mix and you’re on the right track, whether it’s hot or not.

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Filed under Consulting, Franchises

Concessions

Let’s go to the movies this Foodie Friday. I did the other day. If you’ve been spending time at home streaming your entertainment and none at the theaters, you might not be aware that things have changed dramatically at the old cineplex with respect to food. I happened to go to my local Alamo Drafthouse, which features recliners as well as a large menu of food and beverage.

You are probably aware that theater owners make more money from concessions than they do from admissions. You might have noticed that most movie concessions are high-margin items such as popcorn and soda. Still, I generally didn’t spend much more than $10 on food and beverage. Boy did THAT change at the Alamo. Even factoring in the additional labor costs for the servers bringing the food to my seat, I’m pretty sure that the theater owner netted a heck of a lot more from me than they might have in the past.

The Alamo overall is an interesting model. There are fewer seats in the theater but that really only reduces the take from admissions. My guess is that the concession net more than makes up for the fact that there are fewer bodies in the seats. Of course, my Alamo also has 10 theaters under one roof, ranging from 50 to 100 seats. What I like about this from a business perspective is how they’ve rethought the business model and focused on the part of the business that makes an owner money. The concessions are a significant upgrade. There are craft beers, top-shelf cocktails, and even a vegan menu. Sure there is popcorn but it’s served with real clarified butter. It’s also a bottomless bowl. There is also an herb popcorn that is tossed with that same butter and fresh herbs. Do I give a second thought to paying $8.50 for it? Nope – it’s delicious. So are the sandwiches, pizzas, and salads. $45 on drinks and food? Even at a 20% margin, my concession purchases yield the business owner as much as my previous bill might have been in total.

Any business can learn from what the Alamo and other theaters are doing as they transform their business models in the face of unlimited streaming options. It’s the Wille Sutton Rule – go where the money is.

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Filed under Consulting, food, Thinking Aloud

Why This Brand?

When you have over 500 different brands that you represent, the reality is that you can’t know each and every one of them to the same degree. As I’ve been speaking to people interested in changing their lives for the better, I’ve come to have a list of “go-to” brands in each of the major categories. How these brands got on this list is, I think, instructive for every business.

I was actually speaking about this topic to a development director at one of the brands who reached out. Her first question was about the commission structure. We consultants get paid by the franchisors based on people signing franchise agreements and not by the candidates. I gather that for some consultants that how much of a commission they can make influences their choice of which brands to put forward. Point number one: while it’s obvious that the brands are my customers since they pay me, it’s impossible to work in a situation where the candidate’s interests diverge from the brand’s. In my mind, therefore, the commission is a non-factor. I can’t expect to earn anything in a situation where I hand off an unqualified candidate to a brand. My point is that in any sales situation, every stakeholder’s interests must be considered and subordinating what’s right for one party to a potential higher commission isn’t going to work.

One thing that influences my choice of brands a lot is the amount and quality of information the brand provides. You would not believe how little information I have about some of these franchises, several of which are businesses I don’t quite understand. In some cases, all I have is bare-bones information about costs and royalties and a link to the consumer website – not even a “want a franchise?” page which I have to find on my own. Where some brands give us presentations, folders, one-sheets, and research, others give us nothing. You can guess which brands get pitched. Point number two: don’t send your troops into battle without arming them properly.

The next thing I consider is responsiveness. In many cases, getting the candidate engaged enough to want to speak to a franchisor is a time-consuming effort. Once they are ready to go, I want someone at the franchisor who will be as proactive as I have been to get the candidate this far.  Once I’ve made an introduction, I expect the brand to reach out within a day, hopefully within an hour or two. Point number three: if you’re not going to work as hard on making a sale as others engaged in the process, you need to know that there are other businesses out there who will. Be responsive. Return phone calls and emails in a timely manner.

Finally, I also consider communication. Some brands tell me every time they have an interaction with my candidate. Others have been radio-silent. You can guess which type I prefer. It’s very hard to over-communicate in any business.

Those are things I consider when choosing partners. Anything I’ve missed that you think is critical?

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Filed under Consulting, Franchises, Helpful Hints