Wednesday, March 24, 2010

FACILITY LEASING - Selecting a Broker

clip_image002[1]This article was written by Dennis Wright, SCORE Orange County Management Counselor

In recent articles I have said that business owners should not attempt to lease new office, retail or facility space, or renew an existing lease, without engaging a qualified real estate professional - an experienced commercial real estate broker - and it makes sense at this point to offer a few thoughts on doing so…

National or regional firms may have more information in their data bases and amongst their generally larger staffs that could, in some cases, “level the playing field” during negotiations. In addition, if they also represent local landlords the opportunity to earn larger commissions by representing both parties can be a real motivator. On the other hand local firms and those who represent only tenants, may provide more personalized service without bias. So this decision is largely a matter of opinion or preference.

When you reach out to any of them, however, you should first talk with the office manager about your needs (be it office space, retail space, etc.) and ask that he / she assign an appropriately experienced broker to your project. Brokers with the title Associate are often newer staff members, a Vice President or Director is more experienced and a Senior Vice President or Executive Director even more so. The size of your project though, and therefore the potential commission, may influence who it is assigned to. So don’t be reluctant to say “no thanks” and look elsewhere for representation.

Don’t engage someone who, after you have outlined your needs and wants, starts off by telling you that you can’t get this or that in today’s economy, or in the particular market you wish to locate. You want a “can do” broker; one who is willing to try. In addition, I recommend dropping any broker who you have trouble reaching during the business day, one who frequently returns your calls after business hours. Unfortunately this practice is not uncommon, and it says much about the value he / she has placed on your project.

Insist that you be provided with regular updates as the search for space progresses, as well as copies of all related correspondence in a timely way. It’s very important that you stay involved throughout the entire process because only you know what’s best for your business and some change in direction may be beneficial.

Never tell your broker everything. He / she should believe, just as you are trying to make the landlord understand, that you are willing to go elsewhere ( even if the property is clearly your first choice ) if the terms and conditions of the lease don’t meet your needs and most, if not all, of your wants… and you should be. Tenants frequently accept leases containing undesirable terms because they are enamored with a particular space, but down the road there could be a price to be paid for doing so.

And above all else keep in mind the value of the lease you eventually sign - in net total dollars - generally determines the amount of commission the landlord pays out to the brokers involved… to his and to yours. Brokers may have fiduciary responsibilities, but at the end of the day - experienced or not - your role (and title) is “Decision Maker” and it will be your lease to live with in the months and years ahead.

Growing a Business via a Franchise Operation

image This article was written by John Lafare, SCORE Orange County Management Counselor

Several clients have expressed to me the desire of growing a successful business without making it a seven-days-a-week proposition, for years without any vacation time. Growing via franchise is one of the options, for the right business operation. Others believe they have an outstanding value proposition and want to launch immediately into a franchise operation. For both, the questions are about what it takes and how much it will cost.

Below is a summary of what it takes to set up a franchise operation:

· First and foremost, you have to have more than just an idea, there has to be an existing pilot operation in place, with a solid track record of revenues generation and profitability, to be used as a basis to design the franchise program.

· From the early stages, I personally recommended the use of franchise consultants or advisors to make sure the franchise program is properly constructed.

· The funds required to be in a position to sell a franchise and meet the basic requirements of a franchisor are typically around $75,000. It may be done for less, but this should be the budget, for planning purposes.

· The key initial steps have to do with the definition of the key components of the franchise program:

- Franchise fee

- Ongoing royalties (which is where franchisors really make their money)

- Territories and territory size

- Key management and operational processes

- Advertising funds

- Ongoing support of the franchisees

- Launch / grand opening programs

- Anything else that has to be part of the franchise agreement

· The financials and the operations of the existing business will be the basis for this.

· Then, the services of a franchise attorney are required to develop what’s called the Uniform Franchise Offering Circular and the Franchise Agreement. The cost for that is typically around $20,000, give or take a few thousands.

· As those documents are developed, on a parallel track, the would-be franchisor has to write the Operations Manual and design the training program for the franchisees. This information has to be referenced in the Franchise Agreement, and the franchise Operations Manual has to have a specific format. That’s where advisors / consultants can help.

· After all that, one is ready to start selling the franchise. A brochure and package of information have to be available, to be sent to or downloaded by prospective franchisees. These days, a Web site is also an integral part of the presentation of the franchise opportunity.

· Funds will need to be allocated for the generation of leads via:

- Optimization to increase traffic to the Website

- Listings on franchise internet sites

- Participation at seminars / Webinars

- Franchise directories / handbooks

· A franchise sales process is required to keep track of leads, qualify prospects, and to work with candidates up to the point where a franchise agreement is executed

There are quite a few additional details, but the outline above gives you a pretty good idea of what it takes. As to what it all costs? It’s fairly typical for people to spend up to $150,000-200,000 to start a new franchise operation.

Role Playing for a Winning Result

image This article was written by Barry McKinley, SCORE Orange County Management Counselor

Every year in early February professional baseball players head out to Spring Training. Most of these players have been playing baseball almost year round since the time they were 8 years old. They have risen above the millions of kids who start out playing baseball to the 2,000 highest paid professionals in the world.

Ever wonder why these outstanding players have to go back to basic training every year? Because the coaches and management realize that the players may get sloppy or take short cuts. Spring training is designed to take them back to the fundamentals.

That is what “Role Playing” in business is all about. Like a baseball player, you may get only one chance! The best business managers and sales people constantly strive to improve their communication skills and “sales pitch” through “Role Playing.”

For many years I presented products and made “sales pitches” all over the United States from groups of a 100+ plus to a single individual. Making a sales presentation is no different than the performance of a skilled actor you see on the stage or TV. They have practiced over and over until their role becomes second nature. This should be exactly the same for you when you are making a presentation.

You’ve probably seen an infomercial where the product demonstrated performs great and it’s so cheap you order it? I have done that, but I could never get the gadget to operate the same as it did on TV. The difference was that the presenter probably practiced for two days before that 60 second commercial was shot.

Every business owner should work on these skills. You may not have to present your product to100 people but you certainly need to be effective in conveying your product features, company & services in an exciting matter and with creditability to potential customers. In staff training meetings ALL your employees, from the person answering the phone to employees dealing with upset customers, should go through “Role Playing Sessions”.

Basic Guide to “Role Playing 101”

1. Make a outline of what makes your company and its services unique.

(reduce this down to four to six sentences.)

2. Know your competition and be prepared to compare your company to theirs.

(create an outline of your strengths and weakness and your competitions strength and weaknesses. Focus on your strengths and their weaknesses!)

3. Create a list of probing questions.

(the more you know about your customer the easier it is to present to them and create excitement and desire!)

4. Make a list of “If they say this or ask that” I will “respond with . . . . . . . . . ”!

(to make an effective presentation it must be directed at the customers’ NEEDS!)

5. Now the most important part – put it all together in a brief presentation and then practice it until you can say it in your sleep.

At this point I would go out and present my “Pitch” to my toughest customer knowing that they would say no, but listening to their comments. I would then redo my presentation incorporating any ideas that I got from #1 toughest customer and go to my second toughest customer. Once again I would take their input and revise my presentation. One of the most important key factors in this process is to listen to the questions your customers ask. If you are hearing the same questions over and over that’s a cue that you need to redo you presentation to cover the questions more thoroughly. Remember, it doesn’t matter if you think you covered that point, it is what your customers heard and understood that counts!

When your presentation has been tried, perfected and proven you are ready to go out in the real world and start looking for business. This same technique is effective whether I was looking for a business loan, investor, or more business!

The Increasing Popularity of Peer Forums: Five Tips to Selecting the Right Forum Program

image This article was written by Larry Tucker, Chairman of the SCORE114 CEO Forum Program

You are a small business owner and perhaps you’ve been trained, coached and mentored. But there is still something missing. You feel lonely at the top. You need to share problems, ideas and solutions with a group of peers who are “in the trenches” with you, who have similar challenges with getting financing, using social media marketing, hiring the right employees, and addressing the myriad other problems that crop up day to day….a group of peers who would provide an independent, unbiased opinion of your vision, products and strategic plan…a group of peers who are understanding and empathetic, but honest and, at times, blunt.

This gap is being filled for business owners throughout the country through peer forums, groups of similarly situated business owners who meet monthly to solve specific issues and support each other in achieving business and personal goals. There are for-profit and nonprofit businesses running these forums. Some industry groups and associations offer them. The Orange County Chapter of SCORE offers a CEO Forum Program for small business owners with at least $1 million in annual revenue.

If you are considering signing up for a peer forum program, here are some characteristics of successful forums:

1. There is a “process” for discussions. The most common fault of a forum is that it degenerates into a series of stories and random thoughts, with few real solutions. The forum should have a specific process led by the facilitator and followed by the members to achieve, in a set pattern, a thorough vetting of each issue and a practical set of ideas and solutions that the member can immediately use.

2. The facilitator “balances” the discussions. The facilitator should manage the process in a way that is helpful and empathetic, yet moves each issue to an efficient and thorough conclusion.

3. The members are truly peers. No two members should be in the same industry to avoid any concern about revealing competitive secrets. Sole practitioners probably don’t belong in a group with business owners with employees. Fortune 1000 business leaders have different issues than small business owners. But, recognizing those parameters, business owners from different industries with different revenue levels can comprise excellent forums with shared issues and thoughtful, creative resolutions.

4. Confidentiality is key. Members must agree that the forum conversations not be shared with anyone from the outside. Most forums require a signed confidentiality agreement. Confidentiality is the foundation of trust necessary for a successful forum.

5. External Perspectives are helpful. Introducing outside speakers on a regular basis is helpful in providing fresh perspectives to the group. These should not be technical training sessions, but rather presentations or workshops on more strategic topics that encourage members to view their businesses, products, and practices from a different, maybe broader perspective.

If you’d like to learn more about how peer forums help their members become more successful, and specifically about the SCORE114 CEO Forums for small businesses, refer to our website

Do you have the “Right Stuff” to become a Consultant?

image This article was written by Jack James, SCORE Orange County Management Counselor

Many employees think they can become consultants if they happen to be laid off. Not so fast! It’s a tough business to get into and get sufficient work to maintain enough projects to be profitable.

Here are a few questions to ask yourself:

What are 5 services you can provide that clients would pay for? Who would buy your services? Do you have a marketing niche for services? You may think what you service offerings are great but if nobody has a need, you’re wasting your time. Market research is necessary to verity your services are marketable, in demand, and not already being provided by your competitors.

Can you market yourself? Do you have the confidence to sit across from a client and convince him/her that they need your services? If a client perceives a weak presentation, no work will be forthcoming. Can you handle marketing rejection?

I recommend you prepare a 3 fold brochure which briefly describes your services, lists your credentials and how to reach you. Sign up for a low cost web site.

Develop a marketing plan. How specifically are you going to market you services? Networking gets 90% of project work, so describe exactly how you are going to network.

If at all possible, try to moonlight your services for a year, and don’t quit your day job. Purchase a copy of “Consulting for Dummies”. It’s a great book for start-up consulting practices, and study it.

These observations are not meant to scare you away from consulting. They are meant to pose the tough questions to ask yourself before you commit to this business. Preparation of a good solid business plan is the best way to expose risks and form realistic expectations as to what you can expect from your new business. If you need assistance with a Business Plan, you can schedule face-to-face counseling with a SCORE professional and/or attend a SCORE workshop on Business Planning. For more details, visit our website at

Consulting offers you an opportunity to perform the work you love, make a good living, and be your own boss.