Lean Thinking – The Low Cost Route to Franchising for Some?


Ten years ago I was in the market to franchise my cleaning business. I had read some American books on how to franchise a business but none of them approached franchising from an angle of keeping expenditure to a minimum or running an efficient franchised operation from a lean perspective thereafter.

Having traded my own operation for the previous decade and having grown it year on year, some 400 cleaners worked for the brand and I had to get it on the franchise market somehow. I did what many franchisors in the same position would do and approached the consultants to the industry.

Being naïve I didn’t even know who to contact for advice. I wasn’t aware of the bfa. There were many people calling themselves consultants even in those days. There were no discounts offered for businesses such as mine that wanted to enter the market around under the £10k level. The consultants I approached seemed to view franchise development from the communist perspective – all franchisors must pay the same. One of the well-known ones who told me “To get your brand to pass the bfa accreditation process with us it will cost you £30,000.” Of course this was not true but I did not know that.

After recovering from apoplectic fit at this news and the cold reality of not having a budget of £30k to play with it dawned on me that franchising my business was not going to be a walk in the park after all. All I had was a strong desire to franchise and a willingness to apply my own effort and knowledge of lean and six-sigma wherever necessary.

After much jargon busting (people still use words like Franchise Information Memorandum) I declined the consultant’s kind offer to ‘help’ franchise my business and decided to find a flexible consultant who was happy to offer advice and leave me to do the donkey work. This was the start of my lean-thinking journey into franchising.

My limited budget forced the need to question every penny spent whilst developing my business. I recognised franchising my business would be a personal learning journey unique in some aspects to my business alone but there would also be parts that would be common to all franchisors alike. A lean franchise plan was created and the approach I used is shown below.

Getting the right advice at key stages at the right price would be another critical aspect. How could I do this from a lean perspective with a very limited budget? I quickly realised that some of this advice could be gained for free by networking and talking to those successful franchisors that had done it before me.
It also became apparent that not every corner could be cut nor all advice could be relied on. Neither could all good advice be acquired for free (e.g. legal agreements from a bfa approved solicitor, territory mapping demographics, cost models, marketing brochures etc.) but a great majority could be if I was prepared to put in the effort to turn the information into tangible deliverables myself.
I unashamedly asked for discounts from every supplier I approached and moved to an alternative if I met with inflexibility. After 24 months of hard work I finally brought the franchise to market but that was only the start of the business. As territories began to sell my core focus became how to operate the franchise operation as efficiently as possible whilst being as lean as possible.
In franchising there are dozens of ways to reduce costs whilst not adversely impacting the franchise operation. Finding these avenues is an on-going process. Some quick examples of how lean thinking cost reductions can be deployed in daily operation are shown below.

Seven years after launch, when Maid2Clean passed the 100 franchisee mark, I knew I wanted to share the experience I had learned with others in the industry. I’m hoping there is a market for a book that is focused on franchising done from a lean thinking perspective. Over a two-year period I wrote “The Lean Thinker – A guide to franchising your business on a shoestring budget.” I hope it will be a help and positively influence those that wish to take a similar approach.

Learn more at http://theleanthinker.co.uk/


Maid2Clean Launches www.leafleter.com


Maid2Clean has proudly launched another website ( www.leafleter.com )to complement the existing brand portfolio sites presently utilised by Maid2Clean Franchisees.

As placing orders for Royal Mail distributions is becoming less and less attractive due to both cost and returns, Maid2Clean intends to help franchisees source more local distribution partnership with other businesses in their areas.

Franchisor Mike Hanrahan commented “Markets are changing and we need to be sensitive to that. At one time we could rely on a return of one call per 200 leaflets distributed. As Royal Mail have hiked up prices, added VAT and now put out several other leaflets with ours the responses have plummeted to the extent that one enquiry per 1500 distributed is not uncommon.

Maid2Clean franchisees utilise the power of leaflet distributions as a major part of their marketing mix. The purpose of this site is to provide a platform for our franchisees to articulate to other businesses in their local markets what they can do for (or what they need from) them with respect to leaflet distributions. If strategic local partnerships can be formed then this could add significant value for our franchisees bottom line.

Continuous improvement is one of the key principles of Maid2Clean. Mai2clean continues to strive to improve the business model for franchisees as well as the customer cleaner experiences.

Further details can be obtained from the contact details below.

www.maid2clean.co.uk
Mike Hanrahan on 0845 2570677 or sales@maid2clean.co.uk


Maid2Clean Launches www.maid2cleaninternational.com


 

Maid2Clean has proudly launched an international website this month. MD Mike Hanrahan stated “The new site has been set-up to deal with the level of international interest that is being shown in our brand. As the UK market diminishes in the numbers we have left to sell, our focus will be to develop Maid2Clean into new markets.

Every week we get hundreds of visits from 25 countries as our brand name converts from a national to international one. We will be looking at exploiting the international commonwealth English speaking countries in the first instance. Our main thrust will be to find Master Licensees or Area Developer franchisees rather than singular traders.”

Further details can be obtained from the contact details below.

www.maid2clean.co.uk
Mike Hanrahan on 0845 2570677 or sales@maid2clean.co.uk

 


Maid2Clean MD Becomes MMU Ambassador


Maid2Clean is proud to announce that MD Mike Hanrahan has accepted the title of Business Ambassador for Manchester Metropolitan University.

Maid2Clean is now an international brand and provides work for some 14,500 people. The university likes to recognise business success from its alumni and very few are awarded the honour of Business Ambassador.

Mike stated “It’s a great honour to be recognised by the university and it’s wonderful to be able to give something back to the University. I will now be speaking to Masters and under-graduate students to share knowledge and experience in franchising, small-business and start-ups.

Mike was also interviewed for the MMU Success Magazine (read the article here) in the same month.

Further details can be obtained from the contact details below.

www.maid2clean.co.uk

Kerry Adams on 0845 2570677 or sales@maid2clean.co.uk


Maid2Clean MD Marketing Boost for Supreme Home Care

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Supreme Home Care Franchising have appointed a new Director of Marketing.

Mike Hanrahan, founder of well-established franchise Maid2Clean, has joined the Shropshire-based business which offers high quality and dependable home care.

With his infectious enthusiasm and expertise in marketing, Mike will be tasked with accelerating the development of a national franchise network.

He said: “I am delighted to be joining forces with such a clinically excellent, ethical franchisor and I am looking forward to working with founders Jacky Earnshaw and Sue Robson to improve the way Supreme Home Care positions its product in the market place.”

“I’ve discovered that Supreme Home Care has a real gem of a franchising model that is structured to help franchisees serve the home care market.”

Supreme Home Care was established in October 2006 by Jacky Earnshaw and Sue Robson after identifying the need for high quality home care in Shropshire and the surrounding area.

Three years later they established Supreme Home Care Franchising to take the successful service model and offer it as a fully supported franchise.

Sue Robson said: “We were introduced to Mike and it was immediately obvious that his skills and experience were exactly what we needed. We are so excited that he has agreed to join the Board and lead on marketing for us.”

Before venturing into the franchising arena, Mike held a number of senior management roles for Shell UK, EDS and Getronics. In 1993 he set up Maid2Clean, which offers high quality domestic housekeeping, cleaning and ironing services to private households. The business proved so successful it has now been rolled out across the country through a hugely successful franchise model.

For more information about Supreme Home Care Franchising, visit www.supremehomecarefranchise.com or call 01952 216 700.


Wealth Potential in 5 Career Stages – which stage are you at?


Have you ever wondered how the wealthiest self-made people did it? They did it in 5 or less stages. This is not something that taught in schools and perhaps the world would be a better place if it was. Your children would benefit from knowing this right now.

People should know about the five stages so they could do something about it if they wanted. Whilst there are no hard and fast rules here is a basic explanation of how the system generally works.

The following explanations are generalisations and do not apply in all instances as there will always be exceptions to the rule.

Stage 1 Individual – Students, Unemployed or those on Government Benefits

Most people start off as stage 1 individuals. These include college & university students, the unemployed and even those living on benefits. The primary focus of these people is fulfilling their basic needs (food, shelter and heat etc).

Students take out loans and are expected to pay them back. The unemployed often receive monies from the government to barely survive. Many people in Stage 1 are in debt.

Stage 2 Individual – Job workers

Becoming employed helps people to move up the financial security chain. At stage 2 their focus is on surviving, paying their basic bills and surviving month to month. Due to the career choice of becoming an employee, they are statistically very unlikely to become wealthy – many are in debt.

Stage 3 Individual – Self Employed

Stage 3 people have taken the bold step of becoming self-employed. These people should be congratulated for their courage. If their chosen profession is a good one, they can earn considerably more than those people in Stages 1 & 2.

Advantages that stage 3 individuals have over stage 2 counterparts are that they are their own boss and can choose the hours they work. A disadvantage is that in reality they actually have a ‘job’ but the difference is they are working for themselves.

Generally speaking, as they exchange their time for money they don’t get paid when they are not working and unlikely to create considerable wealth for themselves – this is a huge weakness. Some are in debt.

Stage 4 Individual – Business Owner

The biggest wealth potential dividing line is shown between stages 3 and 4!

A huge leap in wealth potential is made moving to a stage 4 individual. Here the business owner creates a business whereby people work for them to make them more money. Yes the risks are higher when depending on individuals but so are the rewards if you get it right. Effort is required but a residual income is offered.

The Maid2clean logo is shown here because Maid2Clean offers the potential to move from the left hand side of the wealth potential line to the right hand side where a ‘real business system’ offers residual income to the owner.

*(“A real business is defined as one that will pay the owner whether they are present in it or not in the long term” – Mike Hanrahan 2003)

 

 

Stage 5 Individuals – The Passive Income Earner

Stage 5 individuals use money (not people) in the form of investments to get a return that makes them more money. Many people would love to earn a living entirely from investors and very few make it. To become a self-made passive income earner you have to accumulate monies from the other stages.

Notes

You can jump wealth potential stages but it is unlikely that you will get to the right hand side of the big divide without some learning about business in stages 1-3. It can take months, years or decades.  Most people will never make it!

You can have feet in more than one of the stages at once. Many Maid2Clean franchisees remain at Stage 2 (to keep the wolves from the door) whilst they grow their businesses to a certain level before moving entirely to stage 4.


10 Ideas for Financing or Part-Funding your Franchise Investment


More often than not, Maid2Clean franchisees don’t require assistance with seed capital to finance their franchise purchase. This is most likely because Maid2clean is an under £10k investment. That said there are instances where prospect franchisees do ask about ways they can finance their investment or the working capital they will need to see their business reach break-even or longer.

There is no hard and fast rule for every franchise prospect looking to finance their venture I’m afraid.

Being the author of “Franchising on a shoe string,” I thought I’d share some low cost creative ways of financing your franchise with Maid2Clean. Even if you are looking at an alternative franchise business some of these ideas may be of benefit to you.

There are a number of ways you can finance a franchise. These are not as difficult as you might imagine particularly with a little discipline and time. The ideas are listed below.

  1. Ask for some of your future inheritance now.
  2. Borrow it from a relative
  3. Save by reducing your expenditure
  4. Sell things that are no longer any use to you.
  5. Wait until one of your investments matures
  6. Remove Funds from a poorly performing investment vehicle
  7. Rob your coin jars and bank accounts
  8. Work more hours than you do now
  9. Borrow the franchise fee by extending your mortgage with the bank
  10. Borrow the franchise fee from a bank

Let’s look at these individually.

Ask for some of your future inheritance now

Parents (bank of mum & dad) and relatives can be great sources of finance for setting up a Maid2Clean Franchise. In fact, if you were really fortunate, some parents would not expect to be paid back at all. When you ask them though, go prepared with your Maid2Clean business plan to demonstrate you have thought about this properly. Give them the same degree of respect that you would a Bank Manager.

Borrow it from a relative

In similar fashion, relatives may be a likely cheap source for financing your franchise business too. In certain instances, you may be lucky enough to strike a deal that involves little or no interest payments. This option largely will depend on how close you are tot the relative concerned. Use the business plan and cash flow illustration as a guide in terms of when you can expect to pay them back.

Save by reducing your expenditure

This may take a while but you could consider leaving the consumer train we have all been indoctrinated to believe as the ‘norm’ as best as you can. Governments don’t want you to do this as a growing economy is essential consumerism to keeping the financial system afloat.

From an early age, many of us have been programmed to be heavy consumers of the latest fads and gadgets that in reality turn out to be poor investments or worthless junk in a few months’  time. In fact many people sadly go into debt for such rubbish. I hope you are not one of them. Generally speaking, smart, business savvy people buy assets that may appreciate or keep their value. As you are looking at purchasing a franchise business I would consider this to be much smarter purchase than buying the consumer junk out there in the shopping malls. Such stuff is frequently worthless in a few months.

Another piece of advice that many people do not wish to hear is that if they could cut down on their outgoings they could save towards their franchise purchase. Most people could save money if they put their minds to it.

I’m not suggesting that you live as a monk but there must be ways you can spend less. Smokers, drinkers, clothes shoppers and regular diners at expensive restaurants can be cited as the tip of the iceberg as opportunities for cutting back. Applied properly tidy sums could be saved over a few months by simply changing your consumer lifestyle.

Sell things that are no longer any use to you.

There are probably few people in the UK or elsewhere that couldn’t release some capital by selling stuff that they no longer use. Look around your house and loft today and get it sold. E-bay may or may not be the right place to sell it. I bet there are a number of unwanted/unused items that you could sell if you put your mind to it and de-clutter at the same time.

Wait until one of your investments matures

Frequently franchise prospect may have business investments or shareholdings that could help to fund their franchise business purchase. It may take a while to wait for investments to mature but if that’s what you need to do then consider doing it. It may be that you consider putting a non-refundable deposit on the trading area you desire to take the territory off the market whilst this happens.

Remove Funds from a poorly performing investment vehicle

If you have ISAs or other poorly performing investments (measured when tax and inflation are added into the equation) you may consider cashing them in. A business venture should out-perform such mediocre investments in the long term.

Rob your coin jars and bank accounts

If you looked at your penny jars you might be pleasantly surprised in the value of the money in there. These are guaranteed to be worth less each year with inflation. Worth a look anyhow.

Similarly, many people have old bank accounts with monies earning derisory interest rates. In fact, they don’t realise that once you have factored in inflation and taxation they are losing money in real terms each year. If members of the public offered such a deal in the market place they would be thrown into jail. Consider a clear out of all underperforming counts.

Work more hours than you do now

Probably something you don’t wish to hear but putting in a few more hours/shifts at your present place of work can work wonders in enabling you to finance your franchise. Plan it, discuss with your boss and make it happen. If this is not possible take on a part time job to fund your franchise.

Borrow the franchise fee by extending your mortgage with the bank

One of the cheapest ways of financing your business if you draw a blank with the above ideas is to extend or put the finance into your mortgage. Banks like lending against bricks and mortar assets and you will note that the interest rate will be lower than taking out a business loan which is often viewed as being a riskier option.

Borrow the franchise fee from a bank

This is my least favourite option as it’s the most expensive consideration as you’ll be paying premium business interest rates for a while and I don’t need to tell you why that scenario is less than ideal. Banks will generally request you to fund 30% of the investment. They do this because their view is that if you cannot raise 30% of the capital required then why should they lend to you? Hard to argue with that one really.


Richard Farleigh Meets Cheshire Business Owners


Richard Farleighand Mike HanrahanRichard Farleigh of Dragons Den fame recently attended the 2012 Cheshire Business Expo at Portal, Tarporley, giving an inspirational talk about his own journey to success to a packed audience of local business leaders.

Born in Victoria, Australia, Farleigh claimed his ancestors were of criminal descent. As one of eleven children and spent part of his childhood in an orphanage, demonstrating you don’t have to come from a privileged background to be successful.

After studying maths and economics at university he went into investment banking dealing in derivatives and thereafter as a proprietary trading dealer. Risk taking was part of his daily life. At one time he could have been the highest paid hedge fund manager in the world. He retired after making a fortune and went on to represent his country in chess at the Mexico Olympics.

He spoke about the importance of ‘fear’ when starting a business and told the audience of a company called Mega Brands that he started with Pat Cash the tennis player. Here he explained his idea that some businesses must operate at a loss to initially gain market share and that “monetisation happens later.”

He also cited universities as a great source of ideas but went onto explain that ideas themselves were worth nothing and that “execution was everything.”

He was a seed investor for net-a-porter.com an online fashion company that eventually floated for £500m. Farleigh claimed that businesses could be looked at as systems of trial and error, and that from his experience, operating them always costs more than you think. He then spoke about the importance of taking little risk where you can. Maid2clean has always taken the same stance when launching franchisees businesses and franchising is seen as a low-risk entry into business.

“Trade from home if you can” Farleigh claimed, (something else Maid2clean recommends). He cunningly recommended going to trade shows, not as an exhibitor but to sell to the exhibitors.

Farleigh has taken 15 companies to floatation on AIM and cited Scottish manufacturer Wolfson as one of his better investments.

Next his talk moved onto Dragon’s Den and said that the program is probably not the best barometer from which to measure a business by, giving the fictitious example that Alexander Fleming would probably have been missed by the Dragons if he turned up with a petri dish full of mould. He was one of the original backers of Reggae Reggae Sauce and claimed that “Levi Roots, not the Sauce” was a huge USP of the brand and one of the inspirations to invest in that business.”

“Listening to how successful entrepreneurs like Farleigh have made it is truly inspiring. Compared to most of Farleigh’s investments, I’m pleased to say our franchisees see the Maid2Clean franchise as a much lower risk” said Mike Hanrahan.



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