Brands fail with lack of knowledge, but they can be fixed

By STEVE COOMES There’s no end to the list of great brands that show great potential, but die on the vine. But while owners commonly have myriad reasons for their creation’s demise, Gary Ochiogrosso said the causes are pretty common. That leaves him amazed that time after time, entrepreneurs repeat the same mistakes without studying why others failed before them. “There’s no mystery to a lot of this: it’s often a lack of capital and a lack of a system going forward,” said Ochiogrosso, chief development officer for TRUFOODS, a multi-concept operator of restaurant franchises. At the core often is a person with a great idea, but one who lacks the ability to step away from the production process. “Many times these people are typically technicians who know how to make their specific widget: their particular muffler or brakes, their pancakes or chicken. They view work as their business, but successful entrepreneurs know that the work is not the business.” Money, money, money: Millions of ideas for great brands are born daily, but just a few secure the funding to help those ideas become viable businesses for the long term. Ochiogrosso said too few brand operators “accurately anticipate the amount of money it takes to properly promote and build a brand, much less get it in shape to franchise.” Those that do emerge beyond that stage still face the financial challenges of “building an infrastructure within that company to solicit and service franchisees, to market the brand and expand sensibly.” Growing smartly includes acquiring and managing capital smartly, which he said many don’t do. The brand either starves from a lack of capital, or is smothered by unwisely acquired debt. Location, location, location: “One of the most common mistakes made by an inexperienced business owner attempting to expand is not having experienced real estate people who can quantify good and bad locations,” Ochiogrosso said. He said that’s especially common for undercapitalized franchisors who, in their desperation for revenue, accept unqualified franchisees into the system and approve sites unscientifically. “You get a franchisor who drives around the neighborhood with the prospect and says, ‘There! That looks like a good location! We’ll approve that.’” But often it’s not a good spot because rent is too high or the site has visibility and access problems—lethal mistakes, he added. The damage is in the details: Ochiogrosso said great brands also perish when their creators can’t step back from the actual labor. “They’re great widget makers, but not business builders,” he said. So often such entrepreneurs want to grow the business, but they can’t divorce themselves touching and approving “every product they’re making.” Such personalities also think “they know every aspect of their business, when they really don’t. They think they’re a marketer or know how to design the best package for their products. They’re not willing to take others’ input and let go of the details of the business.” Analyze what’s not working: Michael Shepherd had two successful pizzerias in south-central Ohio and a highly recognizable face earned through aggressive and creative marketing as a competitive pizza maker. But when his Michael Angelo’s brand began struggling financially five years ago, Shepherd performed a rigorous analysis of both pizzerias to find the problem. It didn’t take long to discover that his pizza delivery service was costing him more than it brought in. “You just assume that delivery is what everyone does in this business, so you do it without giving it much thought,” said Shepherd, whose company is based in Kettering, Ohio. “The fact is the numbers didn’t work because it was costing us more than it brought in. We needed to be in areas where population density was better, and we had too many semi-rural customers. So the cost per delivery was way higher than it would be in a city.” Shepherd eliminated delivery except for within a 1-mile radius of his stores and disposed of his fleet of delivery cars. But perhaps more importantly, Shepherd learned delivery was hurting the Michael Angelo’s brand because product quality suffered. As the winner of several prestigious contests for his high-end pizzas, Shepherd’s customers expected top quality, which “declines no matter what you do when you eat it away from the shop. That was part of why it tasted so good here, and coming here was also part of the experience.” The solution was to overhaul his two pizzerias to make them more accommodating for dine-in customers. That included better décor, extended bar programs and improved table service. When he opened his latest pizzeria, Six Hundred Downtown, in Bellfontaine, Ohio, in late 2011, his improved brand formula had been working so well that “by the time we got it open, people were waiting,” he said. “Now we’re overwhelmed—literally. My staff is working overtime all the time just to keep up. That’s a great problem to have.” Shepherd admitted that had he not wrestled with fixing his other two operations, he might not have launched Six Hundred Downtown correctly. “That helped me see exactly what we needed to do for this market,” he said. “The whole brand and concept worked from the start. It’s cool when that happens.”