SMB Technology Franchises (Reprint from Issue 1-2)

Happy holiday wekend everyone – here is a reprint from days of olde! I was really excited to write this article two years ago on small business technology franchises and I really need to update it since much has change over the past two year. For example – CMIT and Expetec, two franchises not even discussed in this article – are both proud sponsors at our SMB Nation fall conference in early october! CMIT is giving away a totally cool prize that I can not announce until late next week! (check back). Last year Expetec gave away a complete franchise!

 

enjoy…harrybbbb

Harry Brelsford, CEO at smb nation www.smbnation.com

Microsoft Small Business Specialist SBSC, MBA, MCSE, MCT, MCP, CNE, CLSE, CNP

PS – did u know I host an annual conference in Seattle each october for SBSers and SMB consultants? This year we help launch SBS 2008 and Essential Business Server (EBS) between October 4-6!

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Holy shifting supply curves! The SMB consulting

marketplace is growing up and maturing. You and

I are chronologically aging and many of us have

joined the “no hair or gray hair” class of SMB consultants.

Microsoft Windows Small Business Server 2003 is merely

weeks away from starting its tenth year of life. At the same

time, the SMB consulting field is growing rapidly with new

entrants who encounter little or low barriers to entry in this

profession. Microsoft’s capable Small Business Specialist

Community is driving many of the fundamental factors

spurring SMB consulting growth.

Something easily realized and recognized by business

professionals is the concept of maturity matching;

investment durations are “matched.” For example, longterm

debt is used for long-term capital investments. And

you would never use a second home mortgage to finance a

frivolous vacation. You likely get the point, but how does

this relate to a consulting practice operated by a Small

Business Specialist? Because the SBS 2003 product is mature,

there is an important need to align your business practices

as a Small Business Specialist. Mature software = mature

solutions mindset. Read On.

Winging It: Startup Phase

Typically, when you first start out in small business

technology consulting, you will do anything for any

customer to keep the doors open and the lights on. But

because your practice is immature, perhaps you are caught

up in an endless installation cycle, going from one customer

to the next. But these green business practices lead to an

experience base that allows you to build an ongoing concern

that is ultimately viable (or else you are likely not reading

this magazine). But you are still relatively “immature” in

your ways.

So you can naturally and organically go and grow to the

next stage (foundation) and create your own policies,

procedures and standardization. Now we’re talking

increased business maturity and likely increased

profitability. But you could have taken a shorter path to get

to the same location – that of being a franchisee.

That begs the question – so why would you consider a

franchise in the world of SMB technology consulting? To

find out, we visited with a franchise expert in Castle Rock,

Colorado USA. “For one thing, a franchise is a safety net.”

shared Tamyra Wallace, a franchise consultant with

FranChoice. “Franchises have a much higher success rate

than simple startups.” Wallace also observed that the

franchise construct provides the ability to grow quickly and

open offices in different locations – the business model can

easily be replicated.

Electronic E-mything

What do Dean, Dana and Michael have in common? The

answer is a love for pie shops! What? Notable SMB

consultants and Microsoft MVPs Dean Calvert (Small

Business Specialist, Australia) and Dana Epp (Canada) have

passionately embraced Michael Gerber’s “The E-Myth

Revisited” book that profiles an overworked pie shop owner

who needs to “re-boot” her professional life to achieve

increased profitability and pride. Gerber’s book takes the

pie shop owner through the world of franchise thinking,

resulting in a mature, sustainable business with a happy

owner. The lessons learned are simple yet can be applied to

any form of small business, including the Small Business

Specialist serving small business customers.

Dana Epp shared that E-myth “…taught me to work ON

my business, and not IN it. To make the business serve me,

rather than me being a slave to it. And it finally made me

realize that to receive the WINs I want in life to meet my

primary aim, I have to look at my business as the product,

not the commodity I am selling.” Okay – so do you “buy

into” the franchise thinking? “Yes – I buy into the Business

Franchise Prototyping method. That building measurable

systems and reproducible workflow serve a purpose to

allow ordinary people to create extraordinary results, each

and every time. And that is extremely valuable. However, in

my business, I do not believe I can, or want, to franchise the

business. But that doesn’t mean I can’t benefit from the

Business Franchise Prototyping that most successful

franchises use in their own business model.” Epp

passionately proffered.

When asked whether the franchise concept was right for

each and every Small Business Specialist – Epp hedged with

the following response. “Depends. Most Small Business

Specialist community members really are not business owners.

They are JOB owners. They are “technicians” who are slaves to

their business, and not really ‘entrepreneurs.’ They have

settled on the fact that they can make a living in a break/fix

world, when that world is passing them by. Some are very

successful at that. Yet I believe Small Business Specialist

Community members want more out of their relationships and

their business. If they were to apply E-myth principles and

build systems to create reproducible results each and every

time someone from the company went on site …they would

finally have the chance to get more out of their business.” We

left Dana on his Vancouver BC house deck savoring a bottle of

Gewürztraminer, he must be doing something right.

 

 

What Do You Get With A Franchise?

A“franchise” means different things to different people.

For some, it’s a legal concept where one is the franchisee and

the other party is the franchisor. For others, it’s a way of

thinking. For everyone involved, it’s a “business model.”

So exactly what do you get with a franchise?

•Home office support. Having a corporate headquarters

to support you is certainly a franchise benefit.

Affiliating with an organization allows you, the small

business technology consultant, to enjoy the

efficiencies of larger organizations (without having to

belong to a large organization yourself!). Two examples

of home office support include business and technical

support. Perhaps you have a perplexing business

situation and you’re interested in receiving business

advice – this is a reasonable support expectation. Or

possibly you are stuck with an “I can’t print” on a new

USB printer and need home office technical support.

•Training. Something nearly all franchises provide is

training. In the SMB technology world, this training

would typically be technical but can also include

business education.

•Advertising. So why wouldn’t you just go it alone and

avoid the fees associated with a franchise (See chart on

page 8). Because a franchise organization can

accomplish something that is difficult for the

individual to effectively achieve: image advertising.

Think of it this way. If you owned a Subway sandwich

franchise, you would look to the home office to run

advertising during the Super Bowl football game to

promote your individual store.

•Branding. The power of branding is not to be

underestimated. Trying to create a recognizable brand

identity as an individual is exceedingly difficult.

A franchise organization can do this with much

greater ease.

•Quality Assurance. In theory, the SBS2003 deployment

in San Diego should be exactly the “same” high

quality as one in Singapore. That’s what customers

expect from a franchise (e.g. fast food). The good news

is that the SBS 2003 product, along with other mature

SMB applications, lends itself to successful setups

irrespective of geographic locations.

SDIEBAR:

Patents, Copyrights and Protected Territory!

Investors like irrefutable rights that protect their financial

investments. In the USA legal system, this takes the form

of, but is not limited to:

•Patents on inventions

•Copyrights on works

•Protected territory for your business

•Deeds on real property

It’s long been widely considered that much of the USA’s

historic economic success relates to its protections for

private business from pirating, takeover and theft.

Emerging countries, where this magazine has many

readers, are trying to implement such protections

END SIDE BAR 

 

•Instant Business Model. Time for the good stuff – the real

reason a Small Business Specialist would consider

joining a franchise organization. It concerns risk

reduction by employing an instant business model.

Theoretically, a franchise should be a “de-bugged”

business model that allows you to avoid the pitfalls and

bumps of starting your own business. Practically

speaking – folks who take the franchise approach have a

much greater success rate than standalone counterparts.

•Standardization and Replication. The lay person

considering a franchise organization is typically

looking towards the “best practices” developed by the

franchise founders that allow the business model to

“leverage up” standard procedures and a proven

replication. I’ve personally also felt the 42 steps in the

SBS 2003 setup process (Standard Edition) was handin-

glove with the franchise concept.

•Peer-to-peer interaction. A hidden jewel in the

franchise model is the business and professional

friendships that develop and foster positive peer-topeer

interaction. Here is what I mean. Our surveys at

SMB Nation show that you, the Small Business

Specialist reading this article, are a sole proprietor

with roughly two dozen small business customers.

You are lonely because you work alone and you’re

seeking some sort of affiliation group of peers to

celebrate the highs and mourn the lows with. Some

find this in taverns, pubs and bars. Others in user

groups and franchise organizations.

•Protected Geography. Your mileage will vary here

depending on the type of franchise organization you

connect with. But the concept

is simple. You purchase a

franchise that includes a

territory that affords you

some protective borders.

Think of this as a moat

surrounding your business

customers from other

competitors. I am exaggerating

to make a point but

don’t forget that protected

geography could very well be

one of the primary benefits to

holding a franchise.

•Requirements. Traditionally

a franchise requires an

individual to meet certain

net worth requirements or

otherwise be a “sophisticated

investor.” The idea is that

an already accomplished

individual from one industry (e.g. dentist) will be

successful as a restaurant owner (pick any popular

fast food franchise to complete your mental image).

SMB technology franchises, which are profiled below,

are not as strict in financial screening but can very

well insist you meet other quality bars such as being

a Small Business Specialist!

•Cost Sharing. During the course of my worldwide

workshops last year, several attendees brought forth a

franchise concept worth noting. When you belong to

an organization such as a franchise group, you can

save on your costs with bulk purchases, vendor

discounts and the like. Think of this as a 1960s food coop

frequented by hippies and you’ve got the concept

accurately visioned. At some level, this is one of the

qualities of organizations such as ASCII and SMBTN

which secure price breaks from hardware and

software vendors in the SMB space.

Having purposefully painted a rosy picture of

franchises, it’s now time for journalistic balance. Are

franchises a free good without cost? (No.) So what does a

franchise cost? Different franchise organizations charge

differing fee amounts and in different ways. Essentially two

cost components are at play: down payment and ongoing

fees. You might expect to pay something like $20,000 USD to

purchase a SMB franchise for your home town plus pay the

franchisor 15 percent of gross revenues as an ongoing fee.

Your mileage (kilometers) may vary here.

Tamyra Wallace, the franchising expert, created the

following table that sums up the franchise opportunity:

 

 

 

Ownership

Comparisons

Potential Risk Factor

Cost

Training

Proven Operating System

Ongoing Support

Royalty Payments

Up-front Fee

Brand Name Recognition

National Marketing Fund

Marketing Help

Group Buying Power

Your Own SMB

Technology Consulting

Business

High

Whatever You

Want to Spend

None

No

No

No

No

No

No

No

No

Business

Opportunity

(purchasing an

existing SMB

consultancy)

Moderate

Usually

Moderate

Possibly

Yes

No

No

Yes

Maybe

No

Maybe

Maybe

SMB Technology

Franchise

Lower

Moderate to

High

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Source: Tamyra Wallace, FranChoice

Objections

When delivering worldwide Small Business Specialist

workshops and discussing the franchise concept, the

following attendee objections were noted:

•I don’t want to be a sandwich making robot. Some

small business technology consultants took offence to

being replicators and pride themselves on being

creative innovators.

•You can’t “franchise” computer troubleshooting

scenarios. This objection correctly observes that

technology maladies are often solved with thought

and decision tree analysis\branching and aren’t the

same every time. See Resources at the end of this

article for the URL to SMB Nation TV where a Portland

Oregon workshop attendee objected to the franchise

concept on these grounds.

•I want my own identity. This independent maverick

entrepreneur spirit is fundamentally at odds with the

affinity group affiliation and identification assets

inherent in franchise organizations.

Small Business Specialist Community

friendly franchises

Private Sectorisms

SMB PC magazine interviewed several leading SMB

computer franchise organizations that embrace the Small

Business Specialist Community.

Q: When we chatted recently – you spoke of “mega

trends” affecting small business technology service

providers and, in the future, these people will align

themselves with some type of affinity groups like

franchises….can you expand on that?

A: In the SOHO market, which is where most of the independent

self-startups focus, there are some fundamental shifts happening

that’s making it harder to compete. For the last six to seven years

there has been a substantial amount of “easy money”(relatively

speaking) in this market from things like virus & spyware

cleanup and basic hardware repair, but we’re seeing this part of

our market starting to shrink. It’s still substantial, but the

improvements in virus/spyware defense plus the incredibly low

price of replacement computers nowadays means that this side of

the business will continue to decrease. On top of that we’re

seeing increased competition from both national chains (Best

Buy’s Geek Squad primarily) and from online services such as

Windows Live One Care.

The key to surviving and thriving in today’s SOHO market

is in giving customers what they want – fewer problems and more

productivity from their technology. Many of the strategies for

doing this are new to today’s technology service providers, so this

is where the combined group expertise of a franchise or

association can really help. For example, a consultant might

decide that Voice-over-IP is an area that their customers can

benefit from. If they are part of a franchise or association they can

leverage their group of “partners”to research the best solution and

then negotiate a group buying deal that can save them a

considerable amount on their costs from the chosen vendor(s).

Q: What is your take on Gerber’s e-myth…how is it

playing out at ComputerTroubleshooters?

A: Like a lot of good ideas, I first heard about the E-Myth from

some other Computer Troubleshooters talking about it on our

forums.They were so positive about it that I bought my own copy

from Amazon.com that same day. After reading it I ordered two

cases of the books from a local book shop, and started passing

them out to any Computer Troubleshooter who asked. Since then

we’ve also partnered with E-Myth worldwide to provide training

at our annual conferences as well as some other materials.

The E-Myth concepts have been incredibly well received

within Computer Troubleshooters, I think because they are a

direct antidote for a problem in our industry we call “Nice Guy

Syndrome.” The challenge with our industry is that most folks

who start a technology service business are coming from a

corporate IT environment, and they start their own business

because they enjoy working for themselves and helping others.

But business operations is not usually our (speaking as a

technician) strongpoint, and so often the “helping others” part

results in not charging for all your time and just generally not

taking the time to structure your business to make money. In

essence they’ve built a job, not a business, and often not a great

paying job, so the typical lifespan of an independent technology

service provider is less than three years. The E-Myth principles

teach us how to work ON our business as much (or more) than

working IN our business – how to structure what we do so that we

are fairly compensated, the customer gets great service, and the

whole business is sustainable long-term. This not only benefits

the tech, it benefits their customers too since they aren’t going to

have to find a new service provider every three to four years.

Q: Today – where does most of the business come from for

your franchisees? Home office? Small office?

A: According to our last surveys, over 60% of our overall

business comes from home offices, with about 30% from small

business and 10% from our national accounts program. Some

locations are 90% small business, others are 90% home office,

but those are the national averages. Even though many of our

most profitable franchisees are making a surprising amount of

money from the home market, our main focus is on attracting

more small business customers as we see these as more

sustainable and profitable in the long term.

Q: What is your take on Microsoft’s Small Business

Specialist program?

A: I like it – to be honest it’s the first Microsoft program that

addresses the needs of the SOHO market. Previously the MCSE

was too enterprise-oriented, and the MCP was too vague (too

many areas an MCP could be focused on). The System Builder

program was popular with many of our franchisees, but since we

sell Dell or other systems more often than we build our own it

doesn’t really fit us. The SBSC program comes closest to

providing tools and training that fit with what we do.

Q: For those who don’t know about CMIT, please

introduce yourself properly!

A: CM IT Solutions is a franchise providing IT services and

support to small and mid-size businesses. Currently we have 100

locations in 32 states. Our customers depend on us for ongoing

technology advice and look to us to recommend strategies that

will increase security, enhance productivity, maximize efficiency

and most importantly – boost revenue!

Q; Sources in the industry brought to our attention your

commitment to Microsoft’s Small Business Specialist

Community. Why?

A: CMIT is taking the unusual step as each franchise is working to

become Microsoft Small Business Specialist certified.We believe

the certification will be a key success ingredient for our system.

Q: You sound like a “learning and earning” organization.

A: It is very important that each CMIT team continuously builds

their knowledge and skills so they can provide businesses with

the best possible technology services and information, which in

turn helps their business get better results. CM IT Solutions is

dedicated to meeting a business’s every IT need. Earning the

Microsoft Small Business Specialist certification allows us to

accomplish this goal.

Q: What small and medium technology niches does

Concerto Networks, Inc. serve as a franchise organization?

A: Any business, small or large, needs technology in order to

achieve business goals and obtain operational efficiency.

However, small businesses are often unable to employ their own

internal technology staff or aren’t sure where to turn for help

despite their ever growing technology needs. That’s where a

technology partner like Concerto Networks, who can provide

solutions for all of their client’s business technology needs, is

invaluable to SMBs. And SMBs are indeed spending money on

technology. Current SMB technology spending is a multi-billion

dollar industry worldwide and it represents nearly all types of

SMB industries. Our franchise owners have clients ranging from

a one-person office to larger enterprises of 50 employees or more,

and in a variety of industries from medical and real estate to

advertising and manufacturing. We seek to create the simple

office for every type of client we service, so they can focus on

their business and not their technology worries.

Q: Is the franchise concept for everyone in the small

business technology consulting space? Why\why not?

A: The exploding demand for nationally-branded, expertoutsourced

support provides an exciting business opportunity for

seasoned professionals ready to run their own technology

franchises. Concerto Networks is not the ordinary “computer

service” franchise. Concerto Networks is a business technology

solutions franchise that provides its franchisees the benefits of

multi-national branding, state-of-the-art systems and processes,

and the collaboration and support of an international network of

Concerto Networks franchisees, area developers and master

franchise owners. Despite the advantages of owning a franchise,

however, it may not be for everyone. When awarding franchises

we seek candidates that desire to provide professional, proactive

solutions to their customers and who are interested in

participating in an “entrepreneurial teamwork” environment in

which processes are followed in order to support the growth of

our international brand. By building consistency across our

franchise network we all grow the brand together.

When it comes to deciding whether to join a franchise or go

it alone, we encourage our franchise candidates to do their due

diligence and to evaluate their own goals. There are certainly

plenty of businesses in need of support out there; the question is

where are you today and where do you want to be tomorrow?

 

 

 

The power of the franchise brand can represent great growth

potential, support and equity in your business. Since our initial

franchise offering in January 2004, already Concerto Networks

has established the foundation to build and support an

international franchise network to provide services beyond

computer repair for the small-medium sized business

marketplace. Concerto Networks orchestrates the different

technologies for our customers, creating the Simple Office™.

Q: Why are SMBs looking for more than just hourly rates

for computer repair and how is Concerto Networks, Inc.

answering that need?

A: Concerto Networks goes well beyond traditional

troubleshooting and repair of computers and networks,

providing a comprehensive solution designed to help SMBs

plan, manage and optimize their technology to get the maximum

benefit from their investment. Instead of reacting to technology

when problems arise, which could mean downtime or increased

costs, we seek to provide a more proactive solution for our

clients, for several reasons. We use a holistic and proactive

approach to IT support and management, including integrating

computers, voice and data, wired and wireless communications,

Website services, Internet connectivity, security safeguards and

other hardware and software to create the optimal solution for

each individual business’ needs. This holistic approach

maximizes return on investment, minimizes downtime, and

boosts productivity, providing savings and value to customers far

beyond the typical “break/fix” approach. Now, not only do the

solutions that our providers bring to business make their clients’

lives easier, they also make good financial sense for the bottom

line and for business resource management.

And then there is Geeks On Call

with its solutions approach. “We are

completely committed to deleting

customer downtime.” CEO Richard

Cole passionately shares. “We

accomplish this in a couple of ways.

First, we have a very high-quality bar

with our franchises. Technicians are

certified, trained and tested before ever going to a customer

site in the field. Second, our solutions focus is a customer

focus. Technicians are made to understand that it’s all about

making the customer productive and profitable with IT.”

Keep up the good work Richard!

This firm, with 13 offices and plans for 60+, views IT service

delivery as a craft. In fact, its name means IT craftsman. With

over 3,000 SOHO customers, this firm enjoys organizational

economies of scale that allow it to charge customers a

significantly lower rate (we heard around 35 Euros or 1/3

the going rate) for services. Very cute company cars. More

on this firm in a future issue.

Summary

Asub-theme running across this article is the need to elevate

yourself as a professional holding the Small Business

Specialist title. Often we immerse ourselves so profoundly

in the-day-to-day operations that we literally get tunnel

vision. While being caught up in running the business, it is

easy to lose sight of

original goals. Taking a

step back and

entertaining different

business models that

you might not have

previously considered

will allow you to better

chart your course across

the small business

technology consulting

map. Good luck!

 

 

RESOURCES

Visit SMB Nation TV

(www.smbnation.tv) for

video blog (VLOG)

interviews related to

this article.

 

 

 

 

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