When economists use the term “creative destruction,” it can often sound callous and cold. After all, what they’re often really talking about is “job destruction.” And though glimmers of hope have recently started appearing on the economic horizon, many people are still feeling the sting of one of the most “creative” eras since the Great Depression.
But if it’s true that a sick economy – once recovered from its excesses – can blossom anew, it’s also true that the hard work and innovation of small-business owners are sure to be its lifeblood. But small-business start-ups come in many forms, and in economic parlance, “creating” often simply means “building.” And because starting a small business from the ground up can often seem daunting, many people these days are looking into building their own businesses through franchising.
It’s easy to see why. Buying a franchise means buying into a proven concept and a support system that could ultimately mean the difference between sinking and swimming. And some franchises are actually well within the financial reach of people whose stock portfolios could never be confused with Warren Buffett’s.
Getting started
When Michelle Ames moved to the Madison area with her husband, who had taken a job with Epic Systems, she was looking for a new career path. She had worked in franchising “on the other side of the table,” starting as a paralegal for a franchise company and later doing business development. She had become frustrated with corporate America and began exploring other options.
“[My husband] said, ‘One of the reasons why you’re so frustrated is you definitely have an independent thought process – you’re constantly coming up with ideas of how to do things a little different, and all in the vein of improving the business,’” said Ames. “And he said, ‘Why don’t you look into doing something where you’re in business for yourself?’”
From that point on, making the decision to buy a franchise was easy:
“I had never been in business for myself, so again, following that cherished model of franchising, I was like, ‘That’s probably the way to go because they give you some guidance and you don’t have to come up with all the systems yourself,’ but finding the right franchise where you can say, ‘This is great, I love the training and I love what you’ve done and I like being part of a brand’ and you can give suggestions on how to improve things was definitely something that I was going to need to do. I knew I wasn’t going to be able to figure out a business all by myself from scratch, right off the bat.”
Ultimately, Ames decided to pursue a franchise agreement with 360clean, a specialized janitorial franchise that offers cleaning services to various industries.
With an initial investment of $8,500, Ames was able to get her franchise up and running, and because 360clean works with its franchisees on financing, Ames only needed to come up with half the capital from her own pocket. That’s a far cry, says Ames, from the cost of starting many other franchises.
“Most franchises are quite expensive,” said Ames. “You’re looking at six-figure investments, easily, and that’s just your start-up costs. And a lot of times that’s your build-out and your franchise fee and everything. … [My husband and I] actually talked about looking at the possibility of doing restaurants, but we just weren’t in the position to do that large of an investment.”
Of course, while some franchises can be had for a low initial investment – and there are plenty of resources online to help you find out what those are – “buyer beware” still applies.
The American Franchisee Association, a national association of franchisees and dealers, has a laundry list of problems on its website that franchisees can potentially face. But despite the potential hurdles, franchisees who build successful businesses contribute significantly to the economy. According to the International Franchise Association, franchises across the country provide more than 11 million jobs (which make up roughly 8% of all private-sector jobs) and produce goods and services worth $880.9 billion per year. And in Wisconsin, franchises employ more than 216,000 workers.
A strong support system
Of course, just because a franchise may rely on a well-worn concept doesn’t necessarily mean that it won’t be cutting-edge or require its owners to be innovative thinkers. And it definitely doesn’t mean that its owners won’t have to work hard at making it successful.
Bill Avery owns a Wireless Zone franchise in Fitchburg that he runs with his wife, Patty, and his stepson Dave Grey. Avery says that Wireless Zone, a Verizon retailer, offers its franchisees an exceptional training program and lots of support, which includes help with advertising. And because the 75-year-old entrepreneur worked for more than 50 years as a milk distributor, going into the cell phone business by himself probably wasn’t an option.
“You come back [from the training] feeling pretty confident that you know a little something about the wireless business,” said Avery. “That being said, since we’ve been in this business about two and a half years, the business just changes so fast, it really does, and the good news is that our son is a really bright young man and he just soaks up this stuff like a sponge.”
But even though much of the groundwork may be laid for franchisees, any business depends on the ingenuity, hard work, and personal touch of its owners – and franchises are no different.
“We like to take care of our customers,” said Avery. “When we sell a phone, we probably spend the best part of an hour or so showing a new customer how to use that piece of equipment.”
Luckily, as the economy starts to show signs that it’s becoming a bit more creative and a bit less destructive, Ames and Avery believe that they’re finding an edge in what’s still a pretty challenging economic climate.
“The problem you have when you open up a store in any place is getting people to come through the door,” said Avery, “so we could stand a few more, as we say in the business, door swings, but when someone comes in, they usually walk out with a phone in their hand.”
“I know that the word’s getting out,” said Ames, who started her business in November, “and I know that in the next couple of months, hopefully we’re at that stage where we say, ‘Oh my God, we’re too busy.’”
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