Tiered Franchise Models Offer Business Ownership Opportunities at Lower Cost

The number of small business owners who feel now is the time to expand their companies is on the rise as is the numbers of owners who expect business conditions to improve in six months.  This is according to a recent study conducted by the National Federation of Independent Businesses.  If you think business ownership might be right for you, now is a great time to schedule a FREE CONSULTATION with Kensington Company & Affilates! We will help you discover if business ownership is a good match for you as well as determine the type of business that will be the best match.

Starting off small may help some people take their first step into business ownership and fortunately, many franchisors are providing this opportunity. In response to the weak economy and the difficulty investors may have in securing large loans, many corporations are offering a number of business models at varying price points. Rather than offering full store options only, a franchisee may be able to choose a small kiosk in a mall or a cart they can wheel to different events.

Feedback from franchisees has been positive. Many cite the opportunity to test the waters of a new business on a smaller scale and the opportunity to gradually ramp up business as reasons they like the tiered models offered.

Kensington Company & Affiliates has the knowledge and expertise to help you choose the best model for YOUR SUCCESS.  Give us a call and schedule your free consultation today!

Attitude is Contagious! Positive Attitude Can Produce Successful Sales!

Being successful in sales as in most things, requires two key ingredients-. a good attitude and positive energy. We have all heard the expression attitude is everything. That saying could not be more true then when engaging a prospect in a sales process. No one likes working with people who have a negative attitude. Attitude is contagious; if you are upbeat and positive this will help create positive, upbeat relationships with your prospects.

It is, however,  difficult  to be positive and upbeat day after day when you are in sales. After all sales is rejection and hearing ”NO” all day can wear on even the broadest shoulders. 

If you are a telephone sales warrior, there are ways to help keep your energy and attitude upbeat and positive throughout  the day. Here are three tips to help keep your head in the game: 

1. Make your difficult calls first:   If you have challenging or difficult calls that you need to make, make them early in the day. I think of those calls much like the dreaded visit to the dentist. Or, If you have a dentist appointment in the afternoon, you spend most of the morning feeling anxious and unfocused.) Make those challenging calls early in the day when you’re full of positive energy and then you can quickly put them behind you and move on with your day. 
2. Break up your cold calling:  The law of numbers says you are going to hear more “No’s” then ““Yes’s” when calling. And that’s only when you actually get someone on the other end of line vs. the endless voicemails you leave all day.…. Break up the cold calling,  and reach out to prospects that you know are tracking in your process so you can get some engaging conversations into the mix. You will have rejuvenated energy after speaking with a live voice that is appreciative of the information that you are passing along. 
3. Motion creates emotion:  Stand up, get out of your chair, pace the floor,  do what ever you need to do to get your blood flowing. No one wants to speak to someone who has no pulse, no energy and no passion.. If you are half dead on the phone, you are creating a situation for the prospect on the other end of the line to reciprocate e that low energy. Be upbeat, it is contagious and your prospect will instantly feel that energy. 

You have the power to change your attitude and energy. They are easy simple steps that can be embraced and bought into your sales process that will help keep momentum moving!

-Stuart Levenberg

 Kensington Company & Affiliates 

Returning Veterans Make Excellent Franchise Owners

Economic times are difficult, layoffs are common, and unemployment is high. People with jobs worry about losing them and those without jobs are fervently searching for one.  Times are difficult and especially so for the brave men and women who left our job market to fight for our country.  They sacrificed income and time with their families only to return home to a new fight.  The fight for employment.


Kensington Company & Affiliates may be able to help find the solution for veterans returning home by educating them on franchise opportunities. The same skill set that makes a good soldier is often the same skill set thats make a franchisee.


What makes a good franchisee?

• Passion
• Drive
• Self-motivation
• Work well within a team environment
• Work well with detailed systems

Franchisors recognize the value in working with veterans and many times will offer incentives to help a veteran get started in the business.  Call us to schedule a FREE consultation and learn if franchising may be the solution for you!

What to Plan for in a Buy Sell Agreement to Prevent Loss of Business & Litigation.

The Kensington Company & Affiliates would like to thank Jeanne Brutman, LUTCF, CBFS, CFS for submitting this informative article.

 

What to Plan for in a Buy Sell Agreement to Prevent Loss of Business & Litigation.

The Goal:  Transfer of Business shares in a life event to those who wish to keep the business and cash to those that need to be bought out due to the following circumstances:

• Death:  The premature passing of a shareholder.  Usually Funded with Life Buyout Insurance, assuming all involved are insurable.

• Disability:  The Unplanned accident or illness of shareholder.  Usually Funded with Disability Buyout Insurance, assuming all involved are insurable.

• Divorce:  Prevention of spouse of shareholder from causing undue stress on other business partners during separation or divorce proceedings.

• Discontent:  The inability of partners to co-exist in one corporation for any reason not related to legal or ethical violations.

• Marriage:  Prevention of future spouses of shareholders from making claim to partial ownership of business in future.

• Retirement:  The ability for any shareholder to leave at agreed upon time amicably.  Usually funded through combination of cash value life insurance, corporate retirement plans and possibly installment payments from Annuity products or ongoing business revenue (least practical).

• Felony:  The removal of shareholder that has legally or ethically endangered the company through their inappropriate actions. 

It is usually recommended to go through some level of third party business evaluation of  your business (not done by your cpa) every two to three years to substantiate the value of the business for IRS taxation purposes.   Business valuation can be done from 3 different perspectives. sale of business to outside parties, estimation of estate taxes or internal buy sell agreement. This should be done as soon as possible to get a base line of the business value as it hits profitability.  Flat value amounts can be used, but run the risk of out-dating rapidly and increased scrutiny from the IRS upon business transfer.  Business valuation formula’s are more useful, but also have to be reviewed and possibly revised as the business changes structure over time.  As mentioned above ,it is considered in good form to review the entire buy sell agreement and it’s formula’s or stated business value every 2-3 years, but. if the business is expanding or shrinking more rapidly, perhaps more often is advisable.

Why Corporate Executives Make Good Franchise Owners

Today's economy has caused fear and stress to become a part of our daily routine.  People are worried about finding jobs, keeping jobs, and pay cuts.  We worry about providing for ourselves and our families and watch our quality of life diminish.  It is even more difficult when we feel a lack of control over our financial future.

For some, taking control is a real option. How?  By becoming your own boss and making the decisions which directly affect your finances.  Purchasing a franchise allows you to take the risk of owning your business with the benefits of a built in support system and proven successful business model.

Corporate executives make especially good franchisees because of their business background.  Franchisors typically do not look for candidates that are skilled in their service, but rather look for candidates with good business acumen.   

So what traits make corporate executives good franchisees?

• Long term vision for the business.  

• Good leadership skills

• Quality decision making skills

• Reliable

• Good at delegating

• Hard working

• Financial savvy

 Kensington Company & Affiliates offers FREE consultations which can help you determine if franchise ownership is right for you.  Call us today to set your appointment!

Stress Management for Busy People

In honor of National Stress Awareness Day, which falls on April 16th, Kensington Company & Affiliates would like to share a relevant article written by Donna S. Stein, LCSW, RYT, Psychotherapist.

Stress Management for Busy People

Merely mention the topic of stress management and people grimace.  The word “stress” conjures up a variety of unpleasant images: workaholism, neck and back muscle pain, high blood pressure, irritability, agitation or restlessness, exhaustion, sleeplessness, a sense of dread, anxiety, depression and a suppressed immune system, to name a few.  There’s a sense that although most of us easily acknowledge carrying way too much of it in our daily lives, that there’s little that can be done to lessen it’s negative effects. Wrong! The question you may have to ask yourself is, “how bad does it have to get before you begin to put your health first?”. Fortunately for our bodies and psyches, relaxation practices, and coping skills can be learned and used to relieve chronic stress and lessen the dangerous cascade of stress hormones (adrenaline and cortisol) that keep us feeling on edge. Relaxing and shutting down an overactive stress response is one of the most important commitments we can make to our health and our sanity. We’ve all heard the professionals warn of the dangerous physical, emotional, and spiritual downside to a fast paced overloaded life.  The reasons to pay attention to the symptoms of stress are significant.  Simply put, your health and life may depend on it. 

Stress itself is not bad; in fact it’s normal. Life is full of positive and negative stressors (events that exert physical or emotional pressure), and the good news is that our bodies are well equipped to handle it.  In a perfect world, we deal with a short-term stressful event, it passes, and we return to business as usual.  Unfortunately, for most of us that is simply not the case.  Today’s stressors are often chronic rather than short term, direct and subtle, and subjective. Issues such as job insecurity, health, finances, childcare, eldercare, juggling the demands of work and family life, information overload and even our homeland security often have no clear conclusion or resolution. Concerns, worries, and fear lurk in people’s minds leaving people in a “wired and tired” state of overwhelmed bewilderment.  “Stress is not just something in your head,” advises Harold Bloomfield, M.D., Ph.D., noted author, psychotherapist, and psychiatrist. “It brings about profound physiological responses that lead to disease and disorder.” In other words, today’s tension headache or insomnia can contribute to tomorrow’s major illness.  It is an important preventive measure to heed our body’ signals early. We may not be able to change our world, however we can adjust or reaction to it, and potentially both lessen the harmful effects of stress and increase our sense of wellbeing now and down the road.

The following are simple lifestyle adjustments that may help your body-mind become more stress resilient, rebalance your overwhelmed nervous system allowing your battery to recharge and repair itself.  Taking charge of the things that make you stressed is not always easy, but it is always productive and will yield enormous physical and emotional payoffs.

1) Get enough deep sleep- One of the most common symptoms of too much stress is poor quality sleep.  Since sleep is a form of surrender, or letting go, it cannot be generated or forced.  The last thing a stressed hyper aroused mind wants to do is let go. Many of the suggestions below will assist this process. Learn what helps your mind and body let go of the day and slip into necessary, health promoting, deeply restorative sleep.

2) Basic R and R- This is nature’s way of recharging our energy reserves. Without proper relaxation the body and mind become overworked and inefficient, good health and peace of mind suffer. Take a break from high-stimulation, plugged-in environments to do something that you enjoy…garden, read, be outdoors in nature, sing, play with your pet, get a massage, tap your creative juices, listen to soothing music, take a power nap or a warm bath.

3) Establish a regular exercise routine- This is without question the best stress reduction tool available, loaded with physical and emotional side benefits. It will help facilitate easier restorative sleep, reduce the buildup of muscle tension and stress hormones, and help maintain good health.

4) Eat a wholesome nutrient rich diet- What, where, and how you eat will all have an important bearing on the state of your mind and body. Be mindful of the effects of caffeine and sugar on your particular physiology. Focus on health maintenance, weight loss can come later.

5) Certain vitamins help lessen stress’s effects by helping the brain produce more of the “feel good” hormones.  Nutrients and supplements also support a healthy lifestyle.  You really don’t want to add a nutrient deficiency on top of an already overloaded stress response.  Life is challenging enough.

6) Relaxation Techniques/Yoga Breathing/Meditation-These ancient mindfulness practices may seem esoteric, however they are simple, easy to learn, and can be incorporated into a modern and busy lifestyle with little effort or special equipment. Slow deep abdominal breathing interrupts the stress cycle and can help maintain a clear head that can more effectively problem solve and concentrate. These practices reliably increase the production of the calming hormones prolactin, melatonin, and serotonin, while decreasing stress hormone levels. Regular practice produces a wealth of positive results in mind, body, and spirit. Try taking a few long slow deep breaths followed by even longer, slower complete exhales next time you feel pressured.  It works!

7) Social Support- Supportive close relationships can offer emotional buoyancy and a place to let off steam while reigning in negative thinking.  If friends or family can’t offer the unconditional sounding board needed, consider seeing an empathic professional who can offer tremendous service if the burden feels too severe.

8)Cultivate A Positive Attitude/Spiritual Practice- Optimism and positive thinking are well worth cultivating even if you’re not the religious type.  The ability to find positive meaning in the inevitable adversity may be one of the reasons why actively spiritually oriented people cope better with challenge, and why they more often describe themselves as happier than those who do not engage in spiritual practices. When we cultivate an attitude that is not driven by approval or results we are better able to move with equanimity through frustration, fear and emotional pain. We become more skillful at dealing with stressful situations, rather than our own emotional reactions to them.

9) Goal Setting- Beyond acquisition and achievements, materialism and consumption, explore and strengthen qualities that bring enduring happiness: Loving-kindness, courage, composure, tenacity, generosity, insight and humor. When we operate from a place that embraces these qualities we experience liberation from the limited world of desiring “things”.

The above suggestions are most beneficial when practiced regularly. They quickly become self-reinforcing as we feel better when we apply them in our lives.  Their effects are cumulative and allow us to better cultivate the emotional resiliency necessary to more skillfully ride the waves of the inevitable stressful challenges we will face throughout life, allowing the possibility of experiencing more of the joy and happiness that is our birthright.

Qestions for the Francisors

Kensington Company & Affiliates will hold a "Meet the Franchisor" seminar on April 26th.  The seminar will provide a great opportunity to learn about a number of franchises and to speak directly with one of their representatives.  With this in mind, we are pleased to share the following helpful tips.

Strong and successful franchise systems don't sell franchises, they award them.  It is important to show the franchisor that you are a smart and capable prospect who is serious about their business opportunity and are motivated to be successful.  As much as you are evaluating the franchisor to see if they have a successful model and are a fit for your goals, they are evaluating you to make sure that you are somebody they want to work with and have in business using their name and system.

When speaking with franchisors it is very important to keep scheduled appointments and be interactive with the franchisor.  Remember that researching a business or franchise is a process.  You are not going to make your decision in one phone call, or one meeting.  You do not need to bombard the franchisor with all of your questions on one call.

It is a best practice to have specific goals and topics that you wish to cover with each scheduled contact with the franchisor.  Below is a list of suggested questions that should be discussed with the franchisor.  It is very important to take the information that you receive from the franchisor and discuss it with their franchisees to make sure there is no disconnect.

Here is a list of questions to bring with you when you meet with a Franchisor:

• How long have you been with the company and what is your background?
• Describe the industry you are in and the competition.
• Is this a growing industry?
• How sensitive is the industry to technological changes?
• Who are the competitors and what are the barriers to entry?
• How do you differentiate yourself from the competition?
• Make sure you understand the fees associated with the franchise.
• Is there a marketing fund and if so, how are the dollars collected and spent?
• How long have you been franchising?
• How many corporate units does the company own?
• Have any changes been made to the business model or system in the recent past?
• What are the costs to opening the business?
• What is your grand opening support? Have you had any failures in your system? WHY?
• How many units do you wish to award in the next year, three years, five years.
• Do I get a protected territory?
• What is the role of the owner in the business?
• Can you recommend some successful franchisees to speak with?
• Do you have an earnings claim? Please describe.
• What training and ongoing support do you offer?  Describe the experience of the management team.
• Does the franchisor have any plans to sell?  Go public?

Meet the Franchisor Workshop on 4/26/12

 

MEET WITH 7 TOP NATIONAL FRANCHISORS ON THE SPOT !

Don’t miss this popular workshop. Find out what it takes to purchase and operate your own franchise.. 

• Complimentary LUNCH.
• One-On-One time with TOP NATIONAL FRANCHISE REPRESENTATIVES.
• LEARN HOW TO FINANCE YOUR BUSINESS IN TODAY’S LENDING ENVIRONMENT.
• Learn how to find a business that is right for you.

Get up close and personal with the development teams of 7 Top-Rated Franchise Companies looking to grow on Long Island. These carefully pre-screened companies are searching for business professionals that are looking for the right opportunity to be their own boss.

Featured Franchise Resales
Kensington Company represents exclusive business resale opportunities. Whether you are looking for a Million Dollar facility or a home-based business visit us at our resale table.

If...

• You are in a career transition or considering one
• You want the freedom and control of owning your own business
• You have been or might be downsized or outplaced
• You are looking for financial security and independence
• You have always dreamed of owning your own business

Then this Workshop is for YOU!!!

You will...

• Learn how to find a business that is right for YOU
• Learn how to finance your business
• Have one on one time with Top National Franchise Executives

Thursday, April 26, 2012 from 5:30 PM to 8:30 PM (ET) FREE DINNER

 

Thursday, April 26, 2012 from 10:30 AM to 1:30 PM (ET) FREE LUNCH

Master Franchising, The Best Kept Secret

One of the BEST kept SECRETS in franchising is MASTER FRANCHISING, which is sometimes known as Regional Developers. Everyone understands that franchising is about duplication and consistency. Everyone is looking for the next McDonalds. But did you ever ask yourself if YOU own the next McDonalds, WHY would you franchise? Kensington Affiliates & Associates is happy to answer this for you.

Company’s franchise for two basic reasons, an excellent source of capital and the ability to help insure consistency by owners having a vested interest in the success of their operation. As John Paul Getty once said: “I would rather have 1% of 100 good men, then 100% of just myself.”

Master Franchising allows you to strategically partner with the Franchisor and share in the growth of the concept by managing and growing a region. The KEY word is “Managing.” The Master Franchisee owns the rights from the Franchisor to develop and manage a defined territory, which can be a large metropolitan area, an entire state, an entire region or even an entire country. As the owner of your territory you grow the concept by selling franchises within your region. The reward is sharing with the franchise company the royalty revenue and franchise fees that are generated from the operations within your defined region. LIKE the Franchisor you do not have to be involved with the daily operations of each franchise, but instead Support, Assist and Manage your franchisees.

If you are fortunate enough to own the Master Franchise rights to an exciting concept that is growing you will be able to generate consistent residual revenue from sharing in the royalties that the franchisees pay. The best kept secret of Master Franchising is that you are able to generate all these benefits without the upfront expense that the franchise company had to spend to develop the concept. Master Franchising is the ultimate EMPIRE BUILDING Business.

Master Franchising or Regional Developers usually have numerous revenue streams. Each company is unique, but usually the following are some basic parameters:

Company owned site: The Master Franchise or Regional Developer usually operates at least one unit within their defined region. There are tremendous economies of scale for the Master Franchisee is able to operate their corporate office from their operating unit. In addition, their franchise fees are usually half of what a franchisee pays, which results in more profits to the bottom line.

Franchise Fees: Usually the Master Franchise or Regional Developer share equally the up front franchise fees. Typical franchise fees range from $20,000 to $50,000, and therefore the portion of the fee that a Master Franchisee earns would be $10,000 to $25,000.

Monthly Royalties: This is the GOLD. This is why you purchase the rights to develop a territory. As the Master Franchise or Regional Developer you share in the on going royalties with the franchise company. Typically you will receive between 2.5% to 5% of your franchisee’s revenue every month. This is a tremendous wealth creation vehicle for you and your heirs.

Additional Sources of Revenue: Depending upon the concept and your personal situation, some franchise companies allow for you to share in the profits from the sale of products and services.

Benefits of Master Franchising

Own an Entire Territory for many times less than the price of building one Fast Food Restaurant

Own an Exclusive Territory which will produce Residual Income that YOU are able to control

Excellent Life Style Business

Tremendous Freedom to create an Empire Building Business

Work ON your business INSTEAD of just in the business

Ability to develop sites within your territory with the added bonus of being able to then sell them as an on going business, AND still keep your share of the monthly royalties.

Acquire under performing units and turn them around with the option of  either keeping them within your portfolio or selling them and receive your share of the monthly royalties, WITHOUT worrying about the daily operations of the unit.

Minimum Customers, for the franchisees are your customers. The primary job is to help support and guide them. Remember you also have the support and help of the franchise company. Basically a Master Franchisee is a coach to their franchisees.

Minimal Employees, the primary role is to develop the territory and provide assistance to the franchisees. Until market penetration is developed, very few employees are required; in fact many Master Franchises have at the most an administrative assistant and a trainer. Once the territory is developed a number of Master Franchisees or Area Developers are able to semi-retire and enjoy their monthly residual income which is created by the successful development of their franchise territory.

Equity is built in the business as your territory is developed. As new franchisees join the system the value of the Master Franchise business should be greatly affected in a positive manner. This is what most buyers of companies are looking for; GROWTH and RESIDUAL Income.

Industry specific experience is not usually required, it is more important to have excellent communication and people skills to be a successful Master Franchisee. Remember you are NOT running each unit, you are instead overseeing all of your franchisees.

If you believe that you have the necessary skill set to help grow a company, and desire to build a large empire with consistent residual income then Master Franchising might be just right for you. At Kensington Franchise Sales, we can help navigate the many choices that you have with our professional Master Franchise Experts.

Get the Word Out- Using Public Relations to Promote Your Business

Bill Corbett Jr., President of Corbett Public Relations, Inc. wrote the following article for Kensington Comapny & Affiliates.  We are happy to share the article with you.

Few business owners want their businesses’ to be known as “the best kept secret” in their industry.  If you own a business or manage one the goal is simple, grow and make a profit.  To grow businesses owners need to communicate regularly with their customers, prospects and referral sources who can impact the bottom line. 

Does your company have the best product in your sector?  Does your business offer industry leading services with innovative approaches?  Do clients benefit more when they choose to work with your firm versus engaging your competition?

If you answered “yes” to any of these questions or perhaps all of them your marketing program should contain a public relations component.  Marketing a business can be done in many ways, all have their benefits and drawbacks.  E-mail and direct mail campaigns bring customized messages directly to specific individuals.  The problem is that direct mail is expensive and yields low results.  Marketing via e-mail is less costly but must be personalized and reach many prospects to be effective.  While, advertising brings messages to millions, the cost is very high and consumers often mistrust advertising claims.  For professionals, speaking at seminars and networking both offer the chance to communicate directly with prospects.  The drawback is that audiences are often very small.  

This brings us to public relations, the process of working with the media to get your message out to key audiences.  Public relations program objectives are to build name recognition for a company, product or service, educate prospective customers and inform referral sources.  All of these efforts support a company’s overall marketing goal, which is to create more leads, support sales teams and drive sales.

What is public relations?  Public relations is a systematic approach of placing stories about companies, products or individuals in the media.  Examples include a review of a new electronics product in a magazine, an interview with a labor attorney in a newspaper about a sexual harassment case or a live television broadcast at a music festival.  In each case the media is used to attract attention to a specific business. Whether it is selling a product, promoting a service or seeking to bring consumers to an event, each of these vehicles will accomplish the objective.  Although being in the newspaper one time or doing a radio interview is helpful, a public relations program seeks to position a company in a mix of media outlets over time.  Programs will include different messages designed to reach key audiences.  Over time, prospective customers will become more familiar with products and services as well as the company’s name.  When prospects are comfortable with a company or brand name they are more likely to be receptive to choosing the company’s products or services when it comes down to making a decision for a purchase or entering into an agreement.
 

Media relations programs lead to publicity in newspapers, magazines, on television and on the web.  With the explosion of the internet, opportunities for publicity have become almost limitless.  The internet is where most people start looking for products and services.   Failure to have a web presence beyond your own website in today’s business world is a competitive disadvantage.  Media relations is one of the best and most cost effective ways to get your company name out on the web and spread it around the world.  The more websites, blogs or online communities where articles, interviews and information about your business can be found, the more likely potential customers will be able to find your business.

The value of media coverage should not be overlooked.  Because media coverage comes from independent third parties it is often regarded highly by customers and prospects.  When reporters offer their independent views on products or services, consumers perceive this as a tacit endorsement.  This type of coverage carries a significant value and strengthens corporate credibility.  When competing for a contract or a customer, having a sales package that includes articles that have appeared in the media can be a significant advantage.  

Today media coverage comes in many forms; regardless of the vehicle, having been covered by the media provides the recipient with tremendous value which will positively impact the bottom line. 

This article was provided by Bill Corbett, Jr. President of Corbett Public Relations, Inc., an award winning public relations and marketing firm based in New York.  Mr. Corbett has developed hundreds of publicity campaigns for clients over the past 20 years.  He can be reached at wjcorbett@corbettpr.com or visit his website www.corbettpr.com.

Financing in Today’s Economy, Beauty is in the Eyes of the Beholder!

Beauty is in the eyes of the Beholder!!!  What looks bad in the eyes of one institution may look good to other companies that have the flexibility to be more creative. 

Due to regulatory requirements banks must be conservative and generally do not lend to companies with consecutive years losses, capital deficiencies and those that are too highly leveraged.  The good news is that there are many non-traditional financing sources that are very creative and flexible and specialize in distressed and special situations.  These Beholders see beauty in a Company’s collateral.  These lenders include asset-based lenders, real estate lenders, inventory lenders and leasing companies.  Other Beholders see beauty in the credit worthiness of a Company’s customers.  These lenders include factors, and companies that specialize in purchase order financing, trade finance and inventory financing.  There are even finance companies that will advance funds against streams of periodic and balloon payments one expects to receive over time or in the distant future.  Examples of these payment streams include; lottery winnings, tax refunds, structured court or insurance settlements, inheritances, annuities and royalty payments.

There are also many Beholders that will make equity investments in a company.  Venture Capitalists (VC’s) like to invest in start-up companies with a new proven product or service that has demonstrated customer acceptance.  VC’s look for unique products/services with huge market potential.  They frown on “me too” products that lack barriers of entry and protection of intellectual property.  There is a group of Beholders often referred to as “Angel Investors”.  These Angels tend to be very wealthy individuals who seek to invest seed money in start-up companies often overlooked by VC’s.  Angels often like to invest in companies that are in industries in which they have experience.  Angels will generally invest less money than VC’s.

Other Beholders that make equity investments are groups that specialize in buying or investing in “troubled companies”.  To these Beholders or “Opportunistic Investors”, the more troubled and the more problems the better, as a small investment can result in a significant ownership percentage in this scenario.  A troubled company with few remaining problems may not be as attractive as a company that still has numerous problems as there is less upside potential after fixing the few problems that may still remain.

While Opportunistic Investors take risks with troubled companies, there are still other types of  Beholders that prefer successful companies that require additional assistance to get to the next level.  These Beholders are referred to as either “Equity” or “Buy-Out” groups.  These Groups seek companies that operate under constraints that often hamper their growth.  These constraints may include, lack of adequate capital for expansion and growth, limitations on managerial or operating resources, excessive financial leverage or poor capital structures, or neglect from parent companies that no longer deem a division or subsidiary important.
This Beholder’s goal is to identify these constraints, alleviate them, and fund the opportunity to unlock its potential value. Thus, the goals of these Groups is to take an already "good" company, limited by financial or operational constraints, and make it a "great" company. 

There is another group of Beholders called “Mezzanine” lenders.  Mezzanine lenders are riskier than commercial banks and asset based lenders as they are not the “senior” lender and therefore are not in the first position with respect to a company’s collateral.  In the case of a liquidation, a Mezzanine lender would only be entitled to collateral after the senior lender is made whole.  To compensate for this risk, these Beholders charge very high interest rates and are often given warrants to purchase equity in the companies they invest in.  Mezzanine lenders will give a company the right to buy back equity at a hefty price.  These Beholders are expensive due to the additional risks they take. 

The process of raising capital is very complex and time consuming.   When company personnel devote too much time to this process they often take their eyes off of running the business.  Companies should consider using financial consultants to assist in managing this process for their company from start to finish. Remember, Beauty is in the eyes of the Beholder!  An experienced financial consultant will know where to find the appropriate Beholders for the appropriate situation.

__________________________________________________________________________________________
Kensington Company & Affiliates would like to thank Neil A. Seiden for contributing this informative article.

Neil A. Seiden, Managing Director, Asset Enhancement Solutions, LLC
neil.seiden@assetenhancement.com - 516-767-0100 – www.assetenhancement.com

Startups Need Defined Goals. And Deadlines.

Startups Need Defined Goals.  And Deadlines.
Contributors:
Lucille Wesnofske, Director
Small Business Development Center at
Farmingdale State College
Doug Boyce, Director,
Small Business Development Center at Binghamton University

Sitting on the fence is not living on the edge.  For start-up businesses, the clock begins to tick as the idea begins to form.  One of the most difficult processes for any start-up businessperson is turning an imaginary concept into an action plan.  “How do I get from A to B?” is the common question.  And, by the time a would-be entrepreneur has made the decision to go for it; the dream may have become obsolete either through technological advances or even new local competition.  If the decision is to proceed, there are goals that must be defined.

In the United States, about 675,000 new businesses are created each year.  Unfortunately, more than 80% of start-up businesses do not make it to the fifth year.  The primary reason is lack of planning.  Dreams evolve into goals with the development of a business plan.  This concept of business plan can not be overly stressed.  It is a road map, a timeline and a deadline.  It is a feasibility study in which dreams are broken down to nuts and bolts.  It is a working document which requires periodic review and revision as the business progresses.  Too many entrepreneurs fail to develop and follow specific short and long term realistic goals – the business plan. 

Most successful entrepreneurs are self-motivated, energetic, creative, visionary, profit–oriented, above average in communication skills and controlling.  Although these characteristics have a positive impact during the conception and birth phases of development, several can become negatives if not recognized for what they are.  Entrepreneurs have a tendency to need to be in control and many have difficulty in delegating.  They go into business and quickly lose focus as they become all things rather than concentrating on core competencies. It is important that a full self assessment of skills be done to help recognize what areas are weak and will need outside help.  i.e.  The entrepreneur may be strong in marketing and weak in finance.   Staffing needs should be identified.

Competition is always underestimated.  A startup businessperson may not realize how difficult it is to convince customers to change vendors or how deeply entrenched competitors are in the marketplace.  An analysis of the market will help determine if there is sufficient unfulfilled need.  A product or service must have a “unique selling proposition” that differentiates it from the competition.  The startup businessperson must answer the question “Why should I do business with you rather than your competitors?” 

Other considerations in setting realistic goals should be: prior experience in the type of business being started; family requirements and expected support; the economic outlook for the industry as a whole, and the personal sacrifices the startup businessperson is willing to make.

Finally, of all other things considered, cash flow is the most vital component of any startup.  Few new businesses are properly capitalized and most do not realize a profit through the first or even second years.  Capital sources can vary from personal equity, to friends and family, to lending institutions.  Lack of oversight or sloppy control of expenses can choke any startup business and prior to raising outside capital, an accurate assessment of capital needs is required.  Planning cash flow needs and sources should warrant a separate section of any startup businessperson’s plan.

Wesnofske is Director of the Small Business Development Center at
Farmingdale State College and can be reached at
SBDC@farmingdale.edu or 631-420-2765


Boyce is Director of the Small Business Development Center at Binghamton University and can be reached at sbdc@binghamton.edu or 607 777-4024

Control, Don't Cut Costs

 Control, Don’t Cut Costs
By Gregory Bavaro

In these times of economic woe, controlling costs is essential to the survival of your business.  When sales are down and expenses are up, we as entrepreneurs are forced to take a closer look at how we can run our businesses more efficiently.  This simple analysis can do so much more than get you through this recession; it can create a windfall of profits when the economy rebounds.

Many “old school” business owners, all too often, focus on cutting costs.  This can be detrimental to your business, and it is important to know and understand the difference between cutting costs and controlling them.  When costs are cut, quality and service are sacrificed and your customers suffer.  As a result, you lose customers.  Loss of customers equals loss of sales forcing you to cut more costs and creating a vicious downward spiral ending in another store available for rent.  However, if costs are simply controlled, you are able to maintain the same service and quality your customers know and expect while spending less to do so.

Easier said than done, right?  Wrong!  It’s simple.  Open up your checkbook or general ledger, whether you use Quickbooks or a composition notebook; take a look at your expenses.  Start with your biggest numbers.  If you are in a service business it will probably be your payroll, utilities, and rent.  What can you do about these?  You’re already short-handed, and neither the local utilities nor your landlord want to negotiate. 

First, stop letting your business run you for a moment and take a look around.  Is your business really short-handed or is it just you?  Look at your staff.  Are all of your hourly employees really necessary at all times they are present or can their shifts be staggered so they only overlap during peak hours?  What about your salaried personnel?  Are they managing their time properly or are they robbing you blind?  (I could virtually guarantee that time is the most pilfered asset in your business.)  Take a look at their computers (hint: check their internet history).  I’m sure there are plenty of more productive tasks they could have been performing instead of all that online shopping and personal emailing.  In addition, this might not be the right time to dole out raises.  You’d be surprised at how well you staff will handle a pay freeze when tens of thousands of jobs a month are being cut nationwide.
Concerning utilities, rates may not be negotiable, but you’d be surprised how helpful the local gas or electric company can be when you express interest in an onsite consultation on preserving energy.  They will send an expert out to your location and inform you as to how your energy costs can be drastically reduced.  In addition to the money you will save, your customers will be thrilled to hear you’ve “gone green” to help save the environment! (Make sure you capitalize on that one too!)  With regard to your rent, contrary to popular belief, most landlords are reasonable businesspeople.  They would much rather renegotiate a lease to retain a reliable tenant and continue receiving rent than sit with a vacant space.

If you’re a seller of products as opposed to services, take a look at your suppliers.  If you can buy from other suppliers, through co-ops or direct from manufacturers, do it!  There is no doubt that keeping your suppliers honest will save you more than any volume discount.  It doesn’t matter how many “rebates” and “discounts” you’re receiving, that is just your suppliers’ way of saying, “thanks for paying too much for the products you’ve been buying.”  It is important that the products you are purchasing are less expensive, not cheaper.  Also, eliminate items that aren’t selling. 

Simplify your operation and trim the fat, too.  In every business there are some luxuries you just don’t need and now is the time to find them.  If it doesn’t generate income or improve your service, you don’t need it.  Assess the services you pay for.  Can any of them be performed by your employees?  Some people enjoy cleaning, landscaping, and even doing repairs.  If there is someone in your organization who can help out with some of these tasks, not only can it save your business money, but it can also make employees feel more secure in their position.  If an employee can pick up a couple of extra hours performing a task they enjoy, it can break up the monotony and boost morale. 

The list goes on and on, and controlling costs becomes addictive.  Stay in discount hotels while traveling and compare airfares and car rentals.  Join business associations to receive group discounts on insurance.  Sublet any unused space you may have.  Cater meetings in-house instead of in fancy restaurants.  Shop shipping rates, webhosting, etc.

Controlling just your top three or four expenses can keep you out of the red and in the black right now.  As your competition falls by the wayside and your business grows, you will soon be rolling in the green. 

What You Should Know About Buying a Food Franchise

What You Should Know About Buying a Food Franchise
By DAVID STEIN

If you have the capital, there is no better time to buy a franchise than right now. While many potential franchisees dream of owning their own restaurant franchise, there are a few things to note prior to venturing down the path of franchising.

IS RESTAURANT EXPERIENCE NECESSARY?
My experience says yes, especially for those wanting to buy into the major brands. Some lesser known concepts may be willing to overlook this, specifically if you have extensive experience in corporate America on the management side. But major brands, especially the ones seeking multi-unit candidates, are looking for some type of restaurant managerial experience.

The food business is a management business. Having management experience is important, especially in dealing with unskilled labor (vast majority). If you have mastered management at some point in your career, you have an edge in opening your concept. Your hands-on education will also be valuable in your selection of the right manager to operate your location and future locations.

These days many major brands only want multi-unit operators. This means you, and your management staff, will be responsible for potentially hundreds of employees (based on owning 3-5 units). You must have the ability to improvise when someone calls in sick or quits. These are headaches business owners face daily. Understanding how restaurants operate will ease the execution of your team, which will become much smoother as you become a more established franchisee and restaurateur.

IS MULIT-UNIT OWNERSHIP THE BEST ROUTE?
Multi-unit operators strike franchisors as their top option when looking for franchisee candidates. For franchisees, taking the multi-unit road is also the most financially sound. When you become a single-unit franchisee, it will take longer to reach financial freedom (if that is what you are looking for).

This brings me back to my first point – the need for restaurant experience. With restaurant experience, and a good manager in your first location, you will be set up for continued success, as that manager can become a part of your multi-unit development team. That manager can then manage two locations as you focus on finding your new real estate, extended financing options, and marketing your business.

Multi-unit goals will impress franchisors and will set you up, if done right, for better success and a better exit strategy.

WITH THE DOWN ECONOMY, IS FINANCING STILL AVAILABLE?
Financing is more difficult to come by than it was a year ago, but for the major brands, banks are still somewhat friendly. If you are joining a lesser established restaurant concept, you should be prepared for a longer fight for financing. Banks will look at your plans similar to how franchisors will. Banks want to see restaurant experience. They want to see long-term goals. They want to make sure you are set up for success so that you will eventually have the best chance of returning their loan.

DO I NEED REAL ESTATE EXPERIENCE?
If you have it, it will help you to understand location and lease negotiations. Experience is the key word in venturing into restaurant franchising. The more you have, the easier business operations and growth will be. In my days at Dunkin’ Donuts, we found that the best candidates for new development were the ones who understood at least the basics of real estate and construction. We also found that the best candidates were the ones who had good partners. It was always attractive to us, the franchisor, to see two sides of a team: one that understood real estate and construction, and one that understood operations.

If you have limited real estate experience, franchisors, in most situations, will hold your hand throughout the real estate process, but you will have to rely on your own skills to make the best real estate decisions. And the good thing about today’s economy is that landlords are hurting too. They are coming down to reality and are bending over backwards to have major brands fill their spaces. Think about that when you start your brand search.

EVENTUALLY I WILL SELL MY CONCEPT, HOW DO I PREPARE FOR THE END?
Every good beginning has a great end. Your plan should include an exit strategy. Sure, you will want to build your 3-5 units to the top, but then what? Think about the end sale. Think about setting your franchise empire up for the end.

Keep in mind it is much easier to sell a franchise that has brand awareness and name recognition. You will have a much bigger pool of applicants when selling an established concept. However, if you choose to go with a relatively new brand, remember, if you use your experience and your success and continue to connect with your consumers through strong local store marketing, you can be influential in taking your younger brand to an established brand. This will be big as you eventually look to mature your concept portfolio by becoming a multi-unit/multi-concept franchisee.

Tips For Successful Cold Calling

Being successful in sales as in most things, requires two key ingredients- a good attitude and positive energy. We have all heard the expression attitude is everything. That saying could not be more true then when engaging a prospect in a sales process. No one likes working with people who have a negative attitude. Attitude is contagious; if you are upbeat and positive this will help create positive, upbeat relationships with your prospects.

 It is, however,  difficult  to be positive and upbeat day after day when you are in sales. After all sales is rejection and hearing ”NO” all day can wear on even the broadest shoulders.

If you are a telephone sales warrior, there are ways to help keep your energy and attitude upbeat and positive throughout  the day. Kensington Company & Affiliates offers these three tips to help keep your head in the game:

Make your difficult calls first:   If you have challenging or difficult calls that you need to make, make them early in the day. I think of those calls much like the dreaded visit to the dentist. If you have a dentist appointment in the afternoon, you spend most of the morning feeling anxious and unfocused. Make those challenging calls early in the day when you’re full of positive energy and then you can quickly put them behind you and move on with your day. . 

Break up your cold calling:  The law of numbers says you are going to hear more “No’s” then ““Yes’s” when calling. And that’s only when you actually get someone on the other end of line vs. the endless voicemails you leave all day.…. Break up the cold calling,  and reach out to prospects that you know are tracking in your process so you can get some engaging conversations into the mix. You will have rejuvenated energy after speaking with a live voice that is appreciative of the information that you are passing along.

Motion creates emotion: Stand up, get out of your chair, pace the floor,  do what ever you need to do to get your blood flowing. No one wants to speak to someone who has no pulse, no energy and no passion. If you are half dead on the phone, you are creating a situation for the prospect on the other end of the line to reciprocate that low energy. Be upbeat, it is contagious and your prospect will instantly feel that energy.

You have the power to change your attitude and energy. They are easy simple steps that can be embraced and brought into your sales process that will help keep momentum moving.

Displaced Corporate Executives Find Solutions To Their Career Transition

Everyday in the news we hear about the high rate of unemployment and see segments on people who have been struggling for years to find work.  We see people who at one time earned six figures, but now are grateful for a minimum wage job.  Job fairs are crowded as people desperately try to set up interviews in the hopes that someone will hire them.

Instead of searching for someone to hire them the answer may be to hire themselves! There are many people for whom owning their own business may be the perfect opportunity to change their lives.  For them, buying a franchise may be the answer.

Most people think of  businesses like McDonalds or Dunkin Donuts when they think about a franchise. These are great opportunities for some, but there are so many more options available. Displaced executives have a plethora of opportunities to sort through to find one which will match their skill set as well as their optimal work week.

Franchises such as McDonalds or Dunkin Donuts require large start up capital and will require managing a staff who works seven days per week.  There are other franchise opportunities that will allow the owner to work regular business hours and perhaps manage just a small staff.  Opportunities are available in diverse industry's.  There are franchises who do taxes, paint homes/offices, clean homes/offices, education,  or child care. The list goes on and on.

has been in the franchising business for over 15 years. Our free consultation is designed to help you answer the questions which will help guide you to the best franchise choice.  The process of choosing and buying a franchise can be long, arduous, and confusing.  Kensington Company and Affiliates allows you to gain from their experience and remove the headaches.

If you are unemployed, underemployed, or just wanting a change, you owe it to yourself to learn about franchising from the franchise experts at Kensington Company and Affiliates.  This may be the start to the best life you never knew you wanted!