What makes the difference between a good business and a great business? There are so many good businesses out there, why do most of them level off at “good” and never transition to “great”. In our experience working with businesses and helping determine whether a brand should expand through franchising, this discussion and the dynamics of this scenario are reviewed many times over. Really, any business that is even considering franchising tends to be a “good” business. They have proven their model has some merit, their value proposition has some unique differentiation from the rest of the market and the leadership behind the brand has vision for growth and scale. Most of these businesses don’t have what it takes to franchise, but certainly would be considered good businesses by most. These factors are some of the key indicators from our perspective which delineate good from great:
- Great businesses have great systems. Generally good “systems” means overall processes, technology and duplicatable processes. A business with good systems operates using numbers and ratios and although the brand may instill emotion, the business operates with very little feeling or thought, it just functions. Evidence of great systems can be found in a business by how technology is used to manage the day to day business. Is there an online ordering system? How does the customer interact with the brand via digital mediums? What sorts of accounting and bookkeeping systems are in place and how accurate are the financial records? What about transaction and customer management technology, is there a system in place that the leadership stands behind and the employees embrace? I once met a successful investor who told me he made a mistake investing in a business one time because he found that they had great technology and state of the art systems, his mistake was not realizing that no one was using the technology. Great businesses leverage systems and use technology to make their processes consistent, customer experiences great and be able to duplicate the business model in it’s entirety.
- Great Businesses Have a Brand. “Brand” is so overused that it gets tiring to talk about and hear the word so often, but it does mean something and it does carry weight when considering what makes a business Great. Good businesses have a logo, a website, a brochure and a tagline. Great businesses have an energy that instills emotion and creates a feeling. It is a complete strategy that combines all marketing tools and strategies which unite to send a message to the customer without speaking. A great brand is often confused with something that more people know of or have heard about. In reality, a great brand could be known in a very small market and a no-so-great brand could have more exposure. To build a great brand, there needs to be time, energy and focus put into what the company stands for and understanding what is the true mission of the business. Once the brand is developed, then there needs to be execution to bring the brand to reality and build the tools that appropriately convey this brand to the consumer. What’s the power of a strong Brand? Look at Shinola – a brand developed by extremely brand-conscious and intelligent businessman Tom Kartsotis, who also is the founder of the Fossil brand. Fossil makes a watch that sells for $100 – $150, Shinola makes a watch that sells for $750-$1,000, both are technically manufactured in the same factories using many of the same parts. Shinola has created a brand that instills a feeling and passion in people which in turn gets people to pay 8-10 times more for the same product.
- Great Businesses have Great People. Having great people in an organization is positive for the obvious reasons such as more able-bodied leaders and hands on deck pushing the business forward. But what having great people also indicates is that the business and leadership are developing people and supporting the empowerment of the staff. There is a great book by John C. Maxwell called “How Successful People Lead” that references solid leaders as people who develop others and support their success as one of the stages of leadership development. This is not only a skill, but also a willingness to share intellectual property and help others which is ultimately one of the most important characteristics in determining whether a business is Great. Certainly, this plays an enormous role when considering whether to franchise a business as franchisees are the epitome of people looking for support in being developed.
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