Gaining Smarts from Stumbling Starts

Almost all pathways to success in businesses are littered with early mistakes and missteps. The most successful entrepreneurs are those who embrace those areas of rocky terrain and chart an improved course as a result.

Specifically in franchising, with a variety of unique factors impacting the fate of new entrepreneurs working to launch and expand a concept, it’s imperative to turn early negative moments into positive learning experiences for future growth.

While learning from one’s own mistakes is key, taking the time to learn from the mistakes of others’ is just as important – which is why 1851 spoke with three successful heads of franchise brands from three very different segments of the industry to hear the lessons learned early on in their brands’ history.

ARCpoint Labs CEO Felix Mirando

Lesson Learned: Invest the Right Amount in Launching Your Concept

ARCpoint Labs has become a powerhouse in the drug and alcohol testing segment of the franchise industry. However, a little over ten years ago when Felix Mirando decided to franchise the concept, a recipe for success simply did not exist.

“We were the first to franchise in the drug and alcohol testing business, so there was no blueprint in place for what a concept should look like in this segment,” Mirando said. “In the early stages of a franchise concept’s lifeline, you rely heavily on franchise sales. Looking back, we should have invested more into that department.”

Mirando counts those early bumps in the road as valuable lessons for the eventual model that emerged, and the strategy that he put in place to grow the brand.

“The amount of capital you start with can dictate from that point on how successful you will be when you’re just getting up and running. I found out early on that if you don’t have the proper capital, you’re going to be boot-strapping quite a bit. What that did for us, was that it didn’t allow us to hire the right people in the right positions in the early days,” Mirando said.

He added that the key drivers in franchising are to find someone who not only knows the industry you’re in, but has experience in the franchise industry as well. ARCpoint Labs relied on a home-grown sales system and development agent, before bringing on franchise industry veteran Randy Loeb, who was able to put processes and an approach in place that helped grow the business that is set to reach 100 unit in 2017.

“We should have raised significantly more capital to launch the franchise business,” Mirando said.

Toppers Pizza* Founder & President Scott Gittrich

Lesson Learned: Stay True to the Brand You Want to Be

“My biggest mistake by far was that I opened up and I got aggressive with my pricing. I did rock my market and got sales right out of the gate – but I had turned Toppers Pizza into a cheap pizza place. The most important lesson I learned was that I didn’t want to be the cheap guy. I wanted to be the one who did it right—and that continues today,” Scott Gittrich, founder and president of Toppers Pizza, said.

Today, more than two decades later, the Toppers Pizza name is synonymous with a better pizza experience. But when Gittrich left Domino’s to create a brand with a higher respect for pizza, it was easy to fall into a trap of focusing simply on beating the competition on price point.

“Those early issues had a lot to do with not understanding cash flow,” Gittrich said. “The money that was coming in was all money that I owed to someone. I got to the place where I was robbing Peter to pay Paul. I didn’t understand that just because a bank account was going up, I wasn’t making money.”

Gittrich said it took nearly a year and a half before he realized that he wasn’t running the business—and creating the quality product and service experience—he set out to establish.

“We opened our second store and were charging more, but it was better pizza. I was running two different companies at that point – the cheap pizza place, and the Toppers Pizza that I had envisioned originally. So, opening that second location gave me a chance to restart the company the way that I really wanted to do it,” Gittrich said.

Eventually, he sold the original location, but the base established in the second Toppers Pizza became the foundation of the Toppers Pizza that exists today.

Famous Toastery Co-Founder & CEO Robert Maynard

Lesson Learned: Invest the Time in Learning Your Own Business Before Turning to Others

“Be careful what you wish for,” Robert Maynard, co-founder and CEO of better breakfast franchise Famous Toastery said, recalling how quickly his concept took off in popularity and in interest from prospective franchisee during the early days.

Maynard said he didn’t anticipate how much activity would come after opening the first three locations, and the overwhelming nature of the ramp up caused him to rely on others to grow the business – a lesson he now wishes he would have known then.

“We lost a little of the control, but mainly we lost the educational piece to a certain extent. We took back a lot of the process that we had outsourced – speaking to candidates, driving the sales. Looking back, we probably wouldn’t have hired a sales guy to start out. But then again, you don’t really know what you’re doing at the beginning. It’s a catch 22. It’s better to figure it out yourself,” Maynard said.

Maynard decided to invest his time into learning the ins and outs of the franchise industry – which he admitted is an entirely different breed of business model than his previous successful business ventures. Today, he feels that knowledge is key to the rapid growth Famous Toastery is enjoying.

“You have to know how it works so you can teach it. It’s important to learn about it and how it’s done instead of hiring different people. At the end of the day, it’s your business. People will come and go. So, it’s important to know what’s going on in your franchise,” Maynard said.

However, Maynard, like many successful entrepreneurs, knows the value of learning from mistakes.

“I wouldn’t change anything. You learn by doing. The alternative is learning from not doing – and in those cases, you almost always fail.”