I spent my career managing large distribution centers for Fortune 500 companies and came to a point in life that I wanted to start a business. To prepare I took an intensive ten week class, covering all aspects of starting and owning a business with a strong emphasis on finance.
Initially I did not want to start a business from scratch, as many did not survive long so I looked at existing businesses. What I found is that most of those for sale were not as presented and it was difficult to determine their true value. Next I looked at franchises and their success rate was much better. I contacted a franchise broker and he suggested some options, one of which was a maid franchise.
I liked the house cleaning business and the maid franchise the broker presented was one of the best ones, with a high rate of success for the franchisees. I developed a business plan and pro forma and everything looked good. I visited the franchise headquarters for a “Discovery Day” and was very impressed with the management staff and franchisee support. However I had some concerns:
- The franchise agreement was very restrictive; the franchisor has to provide training, marketing expertise and guarantee a territory, the rest of the 48-page agreement was restrictions and obligations for the franchisee.
- The franchise contract was for 20 years and the business could not be sold without the franchiser’s approval.
- The only territory available was 20 miles from my home.
- The territory and license fees were substantial and so were the ongoing fees.
- Marketing costs were high with a large yellow page ad required in each directory covering the franchise territory.
- I enjoy working with customers and employees, but did not want another boss, the franchisor.
While I had many concerns, I was ready to write the big check, but I was not excited about it. I had a meeting with my business class instructor and he suggested that I determine what it would take to start a house cleaning business on my own and compare that with a franchise startup.
I identified what I would have to do for myself and what the franchise would do for me. The franchisor would be most helpful with the following:
- The startup would be much quicker as they have a good plan, timetable and support.
- The training would be great with two weeks at headquarters and proven methods. Although a good part of that time is spent learning how to comply with their requirements.
- The marketing would be very well done and no work for me. Just pay the bills.
- The software would be provided.
The following I would have to do if I went on my own or with the franchise:
- Find and set up a location.
- Hire and train employees.
- All the business start-up items: corporation, DBA, bank account, phone, insurance, utilities and office set up.
- Purchase vehicles
It was pretty clear that I would be doing most everything myself. The franchise organization would provide a proven plan, but I was taking all the risks and they would share in the rewards. To sum it up, the franchise organization is very helpful during start-up and the first year in operation, but after that they are just an annoyance and drain on the business. If I was to start my own business, I need help with marketing, training and the software to run the business.
I decided to start my own business and so far I feel I made the right decision. It took a little longer, but was much less expensive and I have more satisfaction in having done it myself. This is what I did; I was familiar with the House Cleaning Alliance website and had read all the articles and learned much from the website so I used it as a guide.
- I purchased a subscription and studied all the articles.
- I went through all the training myself
- Purchased all my start-up supplies from HCA
- Purchased website design and hosting
- Purchased the banner advertising service
- In lieu of purchasing the industry standard maid service software, I chose to become a beta tester of the Ripple software and plan to purchase it.
- I visited Denver Concierge for two days to see how a successful house cleaning operation works.
So far everything has not been easy and I am not a marketing wiz. For instance, it was a struggle just to come up with a business name, but I got it done and it is a good name. It took a while to hire a training and quality supervisor, but I am pleased with my choice. Hiring employees has gone well and we are developing a pool of quality applicants. I have a few paying customers and the staff is getting great training. Hopefully the marketing will kick in soon and business will come.
One of the most rewarding things I did in preparation for the startup was to visit the franchise headquarters and Denver Concierge. The franchise shared a wealth of knowledge about the business in general and provided some very good metrics necessary for a pro forma. The management at Denver Concierge was most helpful and my visit saved me many mistakes I might have made. In addition to seeing the software work first hand in an ongoing operation, I learned too many ideas to list. In addition I contacted a business owner who was an HCA member had recently started a house cleaning business and he was a wealth of knowledge and gave me some great ideas. Don’t reinvent the wheel learn from others.
I feel very comfortable with my choice of starting my own business rather than signing up with a franchise. Either way I could be successful, but in the long run, going on my own will be much more profitable. The proof will be our performance a year from now.