Grabbing the reins of a rapidly growing brand

By STEVE COOMES All franchisors dream of their new concept taking off and the chance to savor some sweet and speedy success. But then they wake up to face the reality of such situations … the questions of “What do I do next?” … the fear of “Will I have enough money for that?” … the reality that “I can’t be in 12 places at once!” David Povlitz has been there, endured that and now laughs about what he also thought would be heady halcyon days of a surging Anago Cleaning Systems franchise. In the beginning, the growth plan was basic: train the next franchisee to do what he’d already done. But quickly, there were too many franchisees to train with such a small staff. “You can do a lot of stuff off the cuff at the beginning—and then you open the second one!” said Povlitz with a laugh. A system had to be developed to replace sheer human effort, which was expensive to duplicate. “Very quickly we learned you have to have everything manualized and documented, and you had to have training tapes so they get the visual aspect.” More manuals followed along with corporate infrastructure for bookkeeping and marketing and sales—things he knew would come someday, but not necessarily so fast. “And when you think you’re going really well, that’s when the tweaking comes in,” said Povlitz. “Everyone wants to contribute their ideas—things that often need to be added in—so you’re putting together lots of pieces that go to the whole puzzle of the system, the very things that would allow us to grow. Yet it’s difficult to manage.” Povlitz said many franchisors do this stage well: solidify their concept, implement it and see their business grow. But where many make mistakes during that rapid growth spurt is in money management. He said some begin living the high life and draw on current cash flow without planning for future needs. Others borrow too much too quickly and incur an amount of debt that’s difficult to service if the business doesn’t maintain its rapid rate of expansion. Povlitz did neither. He financed the business both crudely and cleverly, only borrowing what he had to and risking only what he already had. “We were this small company that was really growing, and I was continually putting my house up” for home equity loans, he said. “I’d exhaust some credit cards to the $25,000 limit just to get the funds to keep going.” Povlitz’s said his company’s decision to be “deliberately frugal and only spending what we knew we truly earned” kept everyone grounded in the reality that despite rapid expansion, long-term, positive growth happens slowly. “Building a business really is a slow walk to China,” he said, simultaneously laughing and reminiscing about those difficult early days. “But I’d rather take the stairs than the elevator to get where I’m going. I know that one day you could open the elevator doors and get the shaft.” Povlitz also fortified his personal frugality strategy by convincing most of his commercial cleaning customers to pre-pay him for 30 days of services, an idea that provide him the funds to boost operating cash, fund franchisee training and payroll. “Not everyone agreed to that, but we had enough that did and trusted us to deliver,” he said. “So by billing at the beginning of the month instead of the end, we increased cash flow by about one-third.” Once Anago’s system was in place and cash flow was steady and predictable, Povlitz switched to true management mode, watching franchisee progress, coaching and correcting where necessary. “Or let’s call it what it is: enforcement,” said Povlitz, whose company now oversees some 2,000 franchises. “Once you decide who you are as a company, where you’re going and you have a pretty good foundation of five to eight stores, then you’re getting people to follow policy and procedures and helping everyone grow. It’s a function of management at that point.”