Grant Bullington is Calgary consultant for FranNet.
What is FranNet and what does it do?
Bullington: FranNet is a franchise system made up of nearly 100 consultants in the U.S. and Canada. It was established in 1987. Each office is independently owned and operated, serving clients within a specific region. This helps us keep tabs on what’s going on in our areas and build a network of local partners (banks, lawyers, professionals) to assist our clients.
FranNet offers two main services. It helps serious prospective franchise owners, one-on-one, with help and guidance to find and research the ideal franchise for them, at a local level. The first step is to help our client construct a comprehensive game plan. This includes their transferable skill set; desired roles as owner; business preferences – aligning with their budget and financial goals, as well as longer term objectives and consideration for family. By doing this first, we then have a specific target in mind, which helps us avoid spending time researching franchises that aren’t ideal. Or worse – buying the wrong one.
We also offer education for folks interested in learning more about franchising in Canada.
What does it take to be a successful entrepreneur?
Bullington: A lot of factors have to align in order for someone to be a successful entrepreneur. At the heart of it all, you’ll find an unwavering passion to be successful and a level of persistence unique to few.
Unfortunately, too many people are naive to the onslaught of challenges that business ownership bring and aren’t prepared to do what’s necessary to overcome them.
Successful owners, on the other hand, have a must-do, failure-is-not-an-option combination. They’ll roll up their sleeves to do what needs to be done: learn new or improve on skills to get an edge, and stay strong in headwinds that otherwise kill off their competition.
I think it’s important to note that passion isn’t really, really liking or loving the product or service they intend to offer. That’s called misplaced passion and can present a huge internal dilemma for some. Passionate about customer services; passionate about becoming a market leader; or passionate about building strong teams can be what separates successful entrepreneurs from their competitors.
What are the biggest challenges facing entrepreneurs these days?
Bullington: It can’t be easy being confident in light of the current status. Not being able to predict the viability of your business venture in the absence of the “if this doesn’t pan out, I will just get another job” safety net, no doubt leaves us with some serious anxiety.
This is where I tip my hat to franchising. Someone new to business can apply the latest version of systems with proven track record of a franchise – they don’t have to invent the wheel. And before they make their choice, they can do as extensive due diligence to appreciate, among other things, how the business/franchisees perform in down economies. Instead of speculation, confidence in franchising comes from investigation.
Cash is always king in business. In peak times, it’s not uncommon to find owners willing to try a wide range of marketing activities, and be okay when the returns are generally okay. In times like we’re seeing now, owners are much more guarded of their cash and fearful of spending it on the wrong type of marketing. The problem with that is there’s always a bit of a gamble with marketing spend. Some spends work, some don’t and you can never predict which is which. If people stop marketing because of worry, they may be slowly killing their business.
The lending market is a little tighter these days as banks stick to more conservative lending. It’s not that banks aren’t lending, they’re just more careful and it can take a little longer to get approval. Being under-capitalized is likely the biggest cause of failures. With franchising, you can trust an ethical franchisor to confirm its prospective owners have the funds to cover the startup and sustain the operation until it gets past the point at which it’s self-sufficient, reliant on cash flow.
On the other hand, the current conditions are easing or eliminating challenges seen in stronger economic cycles. Finding real estate/locations can be easier. The same goes for the construction and trades for the build out. And currently businesses have a much deeper pool of talent to hire from. There are definitely some silver linings out there.
Is entrepreneurship becoming a growing option for people in Calgary who were victims of the recent economic downturn, particularly those in the oilpatch?
Bullington: From my perspective, yes. The desire to take control of one’s career certainly increases in challenging economic times. Franchising can be a safe haven compared to riskier startup options, as it comes with established and sophisticated systems for every aspect of the operation.
The number of folks we’ve been helping in Alberta spiked in 2012 and hasn’t slowed down yet. In fact, it has even increased again over last year (2018-2019). You’ve got some people fed up on relying on such a cyclical and unpredictable industry for their livelihood and exploring other avenues – perhaps for the first time in their careers.
A lot of our clients, have been recently let go and are seriously looking at business ownership instead of going back to corporate – so much that they don’t even bother with putting much, if any, effort in their job search. Other clients tell us that they’ve been looking for work for some time.
But as each month (or year, years in some cases) goes by without success, their interest builds from casually-curious to serious.
And a select group of clients are currently employed, but accept the reality that their job is by no means guaranteed and are investing in manager-run franchises (often referred to as semi-absentee) as a combination investment strategy and safety net.
Clients sometimes refer to themselves as “accidental entrepreneurs.” They’ve never owned a business before, maybe thought about it, but not to this degree and are suddenly taking a hard look at the options out there.
What’s your sense about Calgary’s economy for this year and where it’s headed?
Bullington: Speaking macroeconomics, the economy is expected to grow this year, just not by as much as originally expected. It’s somewhat comforting to know that the decline has possibly abated. But it’s hard to get positive reading about jobs being added when you’re at home without one.
We find that it’s really microeconomics that motivate people to expand their search options to include new ones for the first time. And by micro, I mean: “I don’t have a job, I can’t get one and I need to take a different approach.”
If you talk to owners of some businesses, they’ll surprise you with tales of being busy as ever. But not all businesses are faring well. It’s never advisable to make a decision based on broad market speculations. Instead, get laser specific about the specific industry and opportunity.
Based on our client decisions in recent years, I expect to see people cautiously exploring options and leaning towards ones that don’t require huge investment.
Mario Toneguzzi is a Troy Media business reporter based in Calgary. He writes for Calgary’s Business.