Monthly Archives: August 2017

Who has Skills to be a Boss?

An entrepreneur is a special type of person. Not everyone can be or wants to be independent. But what is the value of an entrepreneur?

By Jens Kügler

When asking employees what makes the difference between them and an entrepreneur, you will often hear the argument that it is the business idea. The brilliant idea. The market gap! Not everyone can be so brilliant! Some people say sentences like, “If I had invented the burger, I would be McDonald’s today”! However, the business idea is not at all essential. You can adapt an already existing, success-tested business concept by franchising. You can buy a company, be a successor or get involved in a company. By the way, the “inventor” of the döner kebab in the form, as we know it today—in a pita bread—was a Turkish immigrant in Berlin. He recently died impoverished. Certainly, he was not an entrepreneur, otherwise he would have at least protected his invention legally.

The most important characteristic of an entrepreneur is the unconditional will to self-employment. It’s better of course if he also has a business idea with a USP. The real performance is to push it on the market. How can the absolute will to self-employment be measured? For example, an entrepreneur is willing to leave the comfort zone of fixed, secure income. Certainly, entrepreneurs are also motivated by a greater merit and a higher standard of living which they hope to achieve one day. However, most people are not ready to leave the comfort zone for that aim and say, “Why should I be successful”?

Instead of becoming “rich” very fast, most start-uppers have to go a serious, risky way. Almost no start-up of a company comes without substantial leverage. The establishment of a company as a low flame system rarely leads to great success. Any future entrepreneur must deal with what other people would call overindebt—and be motivated to do! Half of all foundations in Germany do not survive the first five years. A common cause of failure are mistakes in financial planning. For example, the founder of a business hopes to reach the break-even with the smallest loan possible, forgetting his or her own cost of living. Or he reaches the operating profit threshold but can not cover the growing demand and fails because he lacks the funds for expansion or additional employees. In short: risk-taking is one of the most important entrepreneurial virtues.

But it is not enough to want self-employment and to be your own boss. An entrepreneur must be able to lead and inspire people. Only those can be successful who succeed in convincing their customers and motivating their own employees. And even though typical entrepreneurs are convinced of themselves and their product, they must communicate sensitively. The customer alone is right and an employee is only loyal if he feels he is not being patronized, but involved in the entrepreneur’s decisions.

Another crucial difference between typical employees and entrepreneurs is resilience. Especially in the start-up phase, an entrepreneur must be prepared to invest far more time and energy into his work than any of his employees. For this, not only diligence and possible physical health are necessary. The private environment must also be right. The preconditions are bad if, for example, the partner and the family do not support the founder at least mentally. The family must be loyal to the founder and his plans especially when the time for private life is much more limited. Private problems make it hard to start a business.

Anyone who is not sure whether he has the entrepreneurial abilities or not can face a personality test and think about each of the qualities mentioned above. The personality profiles or checklists from the founder forums on the internet are helpful. Founding and business consultants love to help, too. Last but not least, family and friends should be involved. If they think the same way and trust the potential founder to have the necessary entrepreneurial skills, it is very likely that he actually owns them.

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Solvent but bound to end

Hundreds of thousands of SME’s in Germany are threatened with extinction. Not because they are bankrupt, but their aging owners go to retirement or get sick or die. The “lack of heirs”, however, offers an opportunity for hundreds of thousands of young entrepreneurs. Their alternative is succession instead of start-ups.

By Jens Kügler

Let us call him Helmut Müller, 67 years. For a long time he had hoped in vain that one of his children would be interested in continuing his taxi company. He also lacks an employee who has all the technical and commercial experience and skills to lead a company of 19 vehicles and 50 employees.

Marco Tretter, 28, wants to become self-employed. During his studies in economics, he earned money by taxi driving and discovered his enthusiasm about that. He says he could write novels about all the passengers he’d ride through the city at night. And with his skills for business and technology, he has for a long time thought about plans how to convert a taxi fleet from gasoline to petrol engines. In short, Marco Tretter has the idea to set up his own taxi company. His problem: There are no more concessions available in his county. His only option is a takeover. Speaking to some drivers at taxi stands, he finally heard that Helmut Müller wants to sell his company and licenses.

For Marco Tretter, starting a new company does not make any sense. In other industries without concessions, many founders open their own start-ups without considering the alternative of business acquisition. In Germany, lots of small and medium-sized companies are looking for a successor due to aging owners. And a takeover offers opportunities where a new start-up is particularly risky.

The advantages: A successor makes sales from the very first day on because he takes over the customer base and orders. All equipment and all the machines and staff are already there, which means that the high initial investments are not necessary. The employees are well trained and experienced, they do not have to be recruited and learn. In industry associations, chambers of commerce and chambers of crafts everyone can get information about which companies are looking for new owners. There is only one question remaining, and it’s the most important one. What is the purchase price of a “product” called company?

In order to find out, a due diligence enterprise analysis is required. This assessment is based on the market position, the market share, the competitive situation as well as all other economic, legal and tax issues. Such an analysis is very costly because it needs the cooperation of experts such as lawyers, tax consultants, auditors as well as company consultants. But this is the only way to determine a quite realistic purchase value.

Business consultants can also act as moderators between old and new entrepreneurs. Quite often, there is complete struggle when the “old man” gives up his life’s work and the “new one” wants to change everything. Does that mean everything should remain as it was? Not at all. In order to make the company future safe, the successor must develop a clear corporate concept. Such a convincing business plan with goals, financial planning and future perspectives is just as necessary for a takeover as it is for a start-up. Without it, the banks will barely give any loans.

Helmut Müller and his successor have found first general agreements and a company analysis has been commissioned. Marco Tretter is already negotiating for loans for the purchase. Much remains to be done before the company will be called “Taxi Tretter formerly Müller”. Even if this may take months: building up a company of that size, Marco Tretter would have needed years. By the way: The first thing he wants to buy after the purchase of the taxis are children’s seats. He hopes that one day he may hand his future lifework down to a daughter or a son still to come …

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Are You A Franchise Man?

Franchising means risking less. Instead of facing trial and error, franchisees start with a successful business model. But many people understand something different when speaking of self-fulfillment …

By Jens Kügler

If you want to start your business, you do not necessarily need your own business idea. You can “rent” or “buy” it! The latter includes a possibility which far too little entrepreneurs consider: the succession of companies by purchase. More and more SMEs in Germany are seeking for successors of their owners or managers who want to retire. I would like to dedicate an article in the near future to this aspect of the demographic change and the aging society.

Today it’s about franchising. The franchisees “rent” the complete business model of the franchisor and rights owner for a fee. In other words, they implement the business one by one in their protected sales territory. More precisely, they copy it—from the brand and the corporate design to the products and services up to the plant, shop or establishment furniture. Every Burger King restaurant, Carglass windscreen service or McFit studio looks like a corporate subsidiary to the customers. In reality, each is a separate company, but only under a uniform appearance—provided by the franchiser.

However, the advantages are obvious. A franchisee does not have to reinvent the wheel. He offers all the products or services that already sell successfully at dozens or hundreds of other locations. He does not face any classic starter mistakes. The brand is often well known nationally or internationally, and advertising is provided by the head office. Financing is also much easier. The experience of all the numerous openings find their way into the franchisor’s partner financial planning concept. The investments are clearly assessable. And many banks finance a supposedly safe business rather than a start-up.

The third clear advantage refers to know-how transfer. Franchises usually occupy a specialized niche market. They are, for example, only a car glass service with some unique technology but not a full car repair shop—or just a pure burger restaurant. The very special requirements of a franchise are taught in trainings of days, weeks or months. In addition, the franchisees profit from their network which will help them solving many problems with their experiences. They are not alone for troubleshooting.

But this is also a reason which avoids many form taking the decision for franchising. Entrepreneurs are usually who is a professional in their industry. A professional founder is convinced to do the job better than others, especially the competitors. A franchisor, however, can not be interested in any know-it-all or wise guys. It is unthinkable that, e.g., a star cook opens a burger chain grill and distorts the brand with his own recipes. Also, the all-rounder car master is rather out of place in a car glass service. Franchisees must above all be very good sellers. Sales affinity is more important than expert knowledge, since the central office profits only from revenue-dependent fees. Therefore, franchisors choose their partners among people who are enormously customer-friendly and service-oriented rather than among professionals or inventors.

What else should make you think twice about which way to choose for founding? Legally, a franchisee is an absolute free entrepreneur. He must pay for all the investments himself. He builds up his business all by himself, bears the full entrepreneurial risk and even pays license fees. But in his decisions he is not totally free. He has to subordinate and adapt the system because, as I said, he “copies” it. This is written in the contract between the two parties. Parts of the organization of a franchise network looks like in the relationship between bosses and employees. If you want to be self-employed to be free, the franchise option should not be yours.

Last but not least: It is not your own idea which you realize when you start as a franchisee. It is not your own name which is written on the advert signs. But many founders are just motivated by staging their own ideas, names and dreams. A classic way of entrepreneurship is self-fulfillment.

The great opportunity that franchising offers is a high degree of security, the far lower risk of failing and the close cooperation in the network.

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Just Gain In The Rain And Learn For A Life

An inspiring business idea! … this is what entrepreneurs need, especially start-uppers. Fortunately, such ideas can be found in the virtual franchise fairs. There, hundreds of companies present themselves. They all are looking for partners to implement their concept in a protected sales area.

By Jens Kügler

When opening their own businesses, the sun always shines in the hearts and faces of the founders. However, for Abrella the very opposite is true. The Danish franchise system seeks partners for a business idea that literally fell down from heaven. The founders had observed that the pedestrian zones quickly get empty in the rain and the shops lose their potential customers. How could they make the inner cities more attractive even under grayest skies?

The Danes invented the umbrella exchange system. And this is how it works: The shops place a modern-designed and eye-catching umbrella stand at their doors. Abrella supplies the umbrellas with paid advertising print to the participating retailers. When it starts to rain, people simply borrow the umbrellas—free of charge. They go on shopping and become “walking advertisers” for the stores until the rain stops. When the sun shines again, they leave the umbrellas at the next shop with an Abrella stand (of course not without at least looking at the shop’s display). The local franchise partners acquire the participating retailers. So he earns his money and promotes his local retail.

Okay, franchising … do we not primarily think of the world’s leading burger chain? Sure, because the company has invented modern franchising with its Macs to eat and chips from potatoes instead of silicone. But meanwhile there are many other great food & beverage concepts, constantly reinventing their industry. For example: Chopp & Roll. The first ice in Germany which consists of a liquid mass to freeze crackling on a 30-degree-cold stainless steel plate. Before the eyes of the customers the freshly iced gets mixed with fruit and spectacularly prepared by chopping and coiling with a spatula. But it is not just caterers, fitness studios or help centers that are looking for imitators in protected distribution areas. There are also companies whose business idea needs a real storytelling. See: Fußballfabrik—the soccer factory. This is how the idea was invented.

German soccer fans know Ingo Anderbrügge. After his active career, the former star of German top-flight teams became a professional coach. Before that, he had already run his own a sporting goods business. And as father of several kids, Ingo Anderbrügge had always liked to work with children. Whenever possible, he delivered the articles of his sports shop himself to the small district or village soccer clubs. At these occasions he very often started spontaneous training sessions with the club’s youngsters.

Gradually the business idea for Ingo Anderbrügge’s soccer factory emerged. The ex-professional now organizes soccer camps for children and teenagers at local grounds. They learn a lot of tricks of professionals that they would never learn in their conventional training. In addition, the soccer camps offer workshops on topics such as team spirit, conflict management, sense of responsibility and dealing with defeats. They don’t only learn soccer but learn for their life. The parents like to book it for their kids.

But how should Ingo and his company in the north-west of Germany serve orders from southern or eastern regions? Driving all the way down there would be too much logistical effort. So the ex-star began to look for sports teachers, dedicated sports students or sponsoring agencies to implement his concept in their regions. Today, the network is growing but most regions are still free. The conclusion: In Franchising, a founder can even make sports passion his business – as career changer champion with a top-star’s idea.

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