Confessions of a Former Independent Tanning Salon Owner.

Once upon a time, a girl in the Midwest, sick of working hard for everyone else, tired of leaving her kids at home to be raised by everyone but her, who decided to go into business for herself. Here’s her (er—my) story.

I stated the why of wanting to own my own business. This was followed by a whole series of questions regarding business ownership—everything from what type of business I desired to embark upon, to whether or not I had enough capital, to did I need (or want) business partners?

Deciding to open a tanning salon wasn’t a stretch. I was a misplaced Floridian who missed the rosy, healthy-looking glow of a sun-splashed body. One of my dearest Florida friends owned and operated her own tanning salon and hanging around her place, I got a taste of what was involved as far as licensing, costs, upkeep, employees, etc. I felt that the decision to open a tanning salon was a practical choice that wouldn’t require a ton of research on my part. I certainly didn’t want to wander blindly into business ownership. I only wish that the decisions beyond what kind of business to open had come with such great ease.

I briefly explored buying into a tanning salon franchise, but balked at the prices on those things. I remember thinking it would take me ten years to recoup my investment and I’d have to share a percentage of my profits still after that! Convinced that I could do it myself for a fraction of the cost, I ordered a tanning bed catalogue and set about planning and spending.

I used a personal savings/loan combination to open Tropical Tan North—yes, I actually went into the experience with dreams of a South someday. I rented a premium location near major businesses and a huge local college, two distinct advantages over the other tanning salons currently in local operation. I also played secret shopper to those salons to see what worked or didn’t work for their businesses. I got the proper permits and paid (through the nose) to have the place renovated to accommodate half a dozen beds to start with and for wiring to city code. None of this came cheap. In fact, I had to forgo one of my initially intended bed purchases (each one cost as much as a compact car) just to offset costs, then I had to justify this decision to my banker with whom I’d taken out the loan—bankers understand collateral, not ideas. I opened Tropical Tan North and it was wildly successful, and I closed it four years later. Here’s why:

1) I wasn’t making tons of money. Oh, I was making money, but not nearly enough given the outrageous clientele numbers we were enjoying. The salon had a great location, was always open, had the newest bulbs, the cleanest beds and the lowest cost lotions, so we had the numbers. But, for example, I barely profited off of tanning lotions, which I underestimated to be such a huge part of salon business. I’d mistakenly figured it to be “bonus” money instead of realizing that lotion was a staple to almost every tanner who entered the salon. By neglecting to realize this and seriously under-pricing the competition, I literally walked away from profit.

2) The cost of salon upkeep was insane. Because we had higher traffic than other salons, the beds were constantly in operation, which naturally spelled out the need to replace bulbs and acrylics more often, not to mention those occasional mishaps that result in bed damage. This probably wouldn’t have been such an issue had I made better pricing decisions on tanning packages and, as mentioned, the lotions.

3) I was dead-tired. In my case, superior customer service became a curse. Because our salon had become known for its courtesy, I was personally in attendance for at least 14 hours a day, every day, to deliver. I did have two part time employees, but because they weren’t enjoying competitive wages (read miniscule profit margin), I was getting sub-par reviews for their courtesy, and on occasion, I suffered profit loss through missing lotion or freebie sessions they’d “sampled” to their friends and family. I couldn’t be the only eyes/ears of the salon, couldn’t risk further shrinking my tiny profit margin, and couldn’t take it any longer. I paid my bills and closed up shop.

For four years my intended American Dream of being an independent business owner bordered an all-out nightmare. Analyzing the situation now, I can see that I had many assets: the desire, the knowledge and some cash and/or ability to get a loan. Had I invested that time, talent and money into a franchise tanning salon chain, I might still be in business today.

When you buy into a franchise, you’re buying patented knowledge. When making the decision to go independent, I seriously undervalued the benefit of guidance and tools of those who have gone before us. You see, when you’re buying into a franchise, you’re not just purchasing the rights to a name, some equipment and a business manual. You’re purchasing a wealth of experience from business pros who stand make a handsome living from, in part, your business success.

When you buy into a franchise, you’re buying into a reputation. My independent operation had a well-earned reputation that cost me only 14 hours a day, seven days a week, with minimal profit to show for it.

When you buy into a franchise, you’re buying a tried and true business plan. It works, or there would be no need for franchising whatsoever. You’re buying into pricing, scheduling, and other valuable operational information, which means you eventually stand to have some semblance of life outside of your business. As an independent owner/operator, I couldn’t even slip home to shower or read a bedtime story to my kid without fear that everything was going wacky back at the ranch.

There’s some serious benefit to the trust that comes with owning part of something bigger than you are. Not to say that you won’t still work hard or that you don’t have to have any of your own business sense to decide to buy into a franchise, there’s just no such thing. But along with the franchise price tag comes the power of a network and access to solid business knowledge, and that is priceless.

Alternate Supply Chains

I have a friend who used to own and operate a small video rental store, the type you would safely refer to as a "mom and pop" operation. There was only one location with a small, but loyal, customer base. The store was profitable, but slight shifts in the business could spoil the bottom line from month to month.

If you don't know anything about the DVD distribution pipeline, don't worry, it's actually pretty simple. The major studios sell the DVDs to a few distributors with warehouses across the country who in turn supply stores with the movies. Obviously, the more volume a store does, the more discount the distributor gives. Since my friend's store was so small, she obviously didn't net that much of a discount.

One day she was thumbing through the Sunday paper and saw an ad for one of the major electronic chains, the kind that sells everything -- including DVDs. Their advertised price for that week's major release was less than her distributor had charged her per unit of that title by approximately five dollars. It might not seem like much, but when she checked the previous sale prices at this retailer over the last month, at the volume she dealt in, the difference over all the units she purchased that month was astounding. In fact, the savings would approximately equal the monthly salary of one of her part-time employees.

On Monday, she called her distributor and asked if she could negotiate a better discount to help her compete in her market. Based on her volume, she couldn't get a better deal. She would have had to order around ten times the amounts she currently dealt in to achieve the next discount plateau.

So, she negotiated a deal with the manager of the local electronics store, and began purchasing her copies of movies directly from them at their weekly discount prices. She dealt in such small volume (about eight copies of a major release) that it didn't negatively impact the electronics store's bottom line, and since she was renting rather than selling she really wasn't competing. Her meager profits started looking up.

I guess you couldn't say she thought "out of the box" on that one since she was buying from a big box retailer, but she certainly didn't allow preconceived notions about an industry' supply chain keep her from turning a profit.

Purchasing goods from local farmer and growers, materials that don't need to be shipped from the other side of the country, and other little savings throughout your business (which is why it's so important to not allow the franchisor lock you into a singular supply chain) can be the difference between living in the red and living in the black.

Franchise "Creature Feature" Writer

Plan Your Store Layout Carefully

Upon entering my local grocery the other day, I noticed a weight scale placed directly at the entrance. I figured what the hey and hopped on. The red needle sprung to life and bounced back and forth for a few seconds before finally settling on a number. Needless to say I slinked off the scale with far less hubris than I had jumping on to it and prayed no one was standing behind me who saw that number.

Believe me when I say that little red needle adversely affected my shopping experience. When staring down the sale on 24 pack sodas, I decided tap water might be better. I figured my baked potatoes didn't need sour cream, so that didn't get purchased on this trip. And although I love cheese, I skipped that aisle completely.

All in all I spent less this week at the grocery store than I normally do by making those, and many similar, decisions.

So, the question the grocery store needs to ask is whether or not placing that weight scale directly at the entrance was the best decision for their store?

I've run a store before. I know that you need to add something to the store so other things get pushed around and everything gets shuffled up -- and you eventually wind up with a weight scale by the door.

Every now and then it's a good idea to take a step back and look at the store layout as a whole. What's the store's traffic? How does it flow? What can be put there to maximize sales? And most importantly, what shouldn't be put there because it will drive sales down?

It's like that old saying, don't lose sight of the forest for the trees. And the new saying I'm gonna try and spread across the nation, don't tell me I'm fat when you want me to buy food. Sure, it doesn't have the same ring as the first, but it's still very true.

Franchise "Creature Feature" Writer

I Love Chinese Food

I was a picky eater as a kid. I wouldn't eat much of anything my mother placed in front of me at the dinner table. When I got to college, I finally realized why that perception dogged me my entire upbringing; my mother was a picky eater and didn't expose me to a lot of great foods. The only time we ventured from Midwestern cuisine was for Italian.

One night I had friends take me to a Chinese buffet, and feeling adventurous, I tried it. AND LOVED IT!

After that, I tried lots of different types of food. But, I think my favorite is still Chinese. I love a type of food that can mix sweet sauces with meat.

The trick is, I would never want to open a Chinese restaurant. Besides the fact I have no earthly idea how to actually prepare it, I mostly just don't want to lose my love for it.

I've held it as a pretty good rule to never try and earn money at the things I love. I'm pretty sure it would wear that love down to the point I no longer have any feelings for it. And who wants that?

When choosing a business to start, pick something you're interested in, but not one of your true passions. You'll need that passion to help distract you when the stresses pile up. And believe me, they will.

Franchise "Creature Feature" Writer

Niche vs Broad

A common mistake made by potential franchisees in their determination process is that a general, more broad franchise is the way to go. No one is quite sure why this route is so well traveled. Perhaps their quest for great wealth has clouded their vision. Nevertheless, the niche franchise road could be a smoother ride.

Don’t get me wrong. There are still plenty of tricky bridges to cross when choosing a more specific audience. Less name brand appeal is one obstacle, for example. But on the flip side there is also less competition. Big name franchises appeal to the masses, yes. But by finding a franchise with a specific market you will ultimately shrink both your audience and your competition simultaneously.

With a more specific audience, advertising and marketing your franchise will be that much easier. You can spend more time promoting yourself instead of desperately trying to showcase how you are better than the big guys. As your core audience becomes more enticed, word of mouth will spread, and your business will grow.

And of course there is the expertise factor. Chew on this: as a consumer would you rather approach a person who knows everything about one topic or someone who has more extensive broad knowledge? Probably the former; you wouldn’t go to your local walk in clinic for a painful tooth ache just like you wouldn’t go to a widespread fast food restaurant for your anniversary dinner.

Beep-Beep, Beep-Beep, Yeah!

What drives you? This may seem like a silly question in a blog about franchises, and you may be thinking that I’m off my rocker. Yet, I pose the question to you again. What drives you?

It’s an important question for you to ask yourself before buying a franchise or starting any small business. You see, not everyone is driven by the same ambitions in life. We all may reach a point in our careers where we want more independence and financial freedom, and we might think that starting a small business will grant us those things as well as endowing us with a lifetime of happiness. That’s only true for some, though.

To decide if you truly will be happy and comfortable as the corporate titan at the helm of your own company ship, you need to first ask yourself where your life’s passions lay. Or to be gleefully redundant, I’ll ask it again: What drives you?

I know that I would not be a good person to own a small business. I’m not overly ambitious; I don’t want a big house, big car, big boat; and I’m not particularly interested in power. I’m not driven by money. I’m thankful that there are people out there in the world who are, since they create a job for me and allow me to pursue my passions. But I have to be honest with myself and admit I’m not one of them. I don’t have the drive to make the decisions that will bring in more money to the business.

What drives me, to answer my own question, are ideas and words. It’s what I love. What brings me joy is a big new idea or a real clever turn of phrase. Therefore I know I will always be working for someone else in some capacity. The secret is I’m comfortable with that fact.

For others, the drive may be to build something, something tangible like a house or a table. That physical accomplishment may be everything that person needs to fill up his soul and make him complete. Or he may also have the drive to make money with his work and therefore should start his own business. You can be driven by many things.

But since earning lots of money is probably at the bottom of the list of things that drive me, I shouldn’t try and be a business owner. That’s not to say I can’t offer you stellar advice on franchises, because I’m still in the business of businesses even if I’m not the spokesperson and boss.

That’s why it’s important to ask yourself this question before buying a franchise. Figuring out if you’re really the personality type to hop out of bed each morning and get excited over the prospect of making tons of money, is the most important conclusion you can make.

Franchise "Creature Feature" Writer

Location of Shattered Dreams

The little chicken wing joint near my house (see here) had a U-Haul backed up to the door this weekend. It was a terribly gloomy day; overcast with not a lick of sunshine to be seen. Sullenly, they loaded up the truck with their tables, chairs and appliances. A woman was very carefully folding table cloths and placing them mournfully into boxes. The whole scene really wrenched my heart.

Every time I see a small business go out, especially after only a few months, I can’t help but think of the people whose dream it was to own their own business – and how that dream is being shattered. I imagine that it’s a couple who have worked diligently at back-breaking jobs, and for years plotted and planned the business that would be their savior from the daily grind. They waited until they had just enough money and jumped at the cheapest location they could afford so that they could jump-start that dream a little sooner. I can imagine it so clearly because I know I would be the same way.

What I really wish, is that I could hop back in time and give them a tip about starting a business – location, location, location. It’s a cliché, but obviously one that needs to be trotted out again and again. The primary reason this new venture failed is because they wanted to open a lunchtime restaurant far away from the business district. For such a place to succeed, it needs to be nestled near dozens of businesses so that hundreds of hungry workers can get in and out of it during their arbitrarily set lunch hours.

If the couple starting the business had explored the idea of a franchise rather than going it alone, they might have done a bit better with regard to location. One of the selling points for many franchises is that the franchisor – the company selling you the brand – will assist you in choosing a location. At first, this may seem like too much control on their part, but it’s really in your best self-interest.

Choosing a location can be far more difficult than you might first think. There’s more to analyzing traffic patterns then sitting in front of a location and counting the numbers of cars that pass by. You’ll want to know the quality of that traffic and the demographics. What you’re hoping to discern is if that traffic will actually stop and become patrons. This requires a degree of research that is beyond most people. The franchisor will have the resources to do it properly and you’ll welcome them in the long run.

I just wish that the little wing place had tried signing on with a franchise or at least done some simple research on the location they chose. Perhaps then their dreams wouldn’t be folded neatly into a cardboard box and stored away for the rest of their lives.

Franchise "Creature Feature" Writer

UFOC Negotiation

Humans are born negotiators. It’s natural. After all, before paper money the only way to acquire goods and services was to barter. Even in present day, it is possible to negotiate prices for things as small as a bushel of tomatoes at your local farmer’s market to the more significant haggle process of purchasing a new car. Why, just yesterday I negotiated the security deposit for my new apartment.

We try to alter situations so that we can feel as if we are getting the best possible deal. Saving money makes us feel good. And the bigger the purchase, the bigger the haggle, the better we feel.

So it is only natural that many potential franchisees would attempt to negotiate the UFOC for the particular franchise they are interested in purchasing. Why not? You have a lawyer (hopefully) and that is what lawyers do, alter contracts. But in a case such as this it is necessary to turn off your primal instincts and continue reading.

There are several states which require franchisors to register their franchise agreements with them. And if the UFOC on file varies at all from the one you are trying to sign chances are the state won’t allow it and the franchisor won’t jeopardize their relationship with the state just to satisfy you.

In some cases, the fact that a franchisor is willing to budge at all with their agreement terms might be a sign of a failing franchise, one that is desperate for money. And the last place you want your investment is in a franchise standing on shaky ground.

Of course there are exceptions to every rule. Younger franchises might be more willing to negotiate. And with any franchise, site location should be primarily up to the franchisee. If it isn’t that is one clause that should be altered.

Will your business be your primary source of income?

I love people who throw out statistics in a conversation. You know, the type of person that can miraculously spout off the percentage of how many Yaks migrate from the African Serengeti to Iceland each year. If challenged on the validity of said statistic, they invariably say that they read it in a magazine.

Since I’m not one of those people, I won’t bore you with some vague memory of an outdated statistic on the failure rate of new businesses. Instead, I’ll talk from personal experience.

During college I worked at this great little video store that had very few customers. This made it very easy to study and/or write papers. Very seldom would I be interrupted to do any actual work. Great for me, but I’m sure you’re wondering how the place stayed in business without customers.

The owners did not rely on the store as their primary source of income. In fact, they kept their jobs for the first five years the business was open. It took that long for the store to build up a reliable customer base and start becoming profitable. Even then, only one of the owners could quit her job to run the business full-time.

This was a business they started from the ground up, so obviously buying the brand associated with a franchise will have a better start. However, careful consideration should be made as to whether your new business will be your primary source of income or not.

It can take several years for a new business to start reliably turning a profit. Will you be able to survive that time financially with just what the business brings in? What are your financial goals for your business? Would it make sense for your spouse to keep his/her job until the business can support your entire family?

There are many benefits to keeping one steady earner in your household. Health insurance for a small business can be cost prohibitive. You might be able to have a better, cheaper plan through your spouse’s job. A steady paycheck can make it easier to plan your household budget rather than the erratic nature of your small business.

Before taking the plunge on a new franchise, be certain that the franchise you are buying will be consistent with your goals of being a small business owner. Be ready to endure the painful teething years all new businesses require to become an eventual success!

Franchise "Creature Feature" Writer

Who Sets the Hours?

When I was growing up, I would hear with clockwork regularity my Dad complain about the local lawnmower parts store. It wasn’t that they were under-stocked on the parts he needed. His biggest issue with the store was its hours; it was open Monday through Friday, nine to five.

As my Dad loved to argue, people don’t mow their lawns during banker’s hours. They tend to perform that chore in the evenings or on weekends. For a store that deals in lawnmower parts to be closed during those prime hours, when people would be most likely to need their services, was ludicrous in his opinion. The store eventually went out of business, although not soon enough for my Dad, and a chain hardware store opened in its place where he now obtains the parts he needs for his mower.

I was relating this story to my wife right after I noticed the brand new Wing Joint that had opened near our house was closed on Sunday. Apparently, the new restaurant was only open for lunch during the week, and dinner on Saturday. I used past tense in the previous sentence because the place had already gone under after little more than a month. It’s not located in the business district, but rather near dozens of residential communities; which means they chose their hours poorly. To be successful in that location, they needed to cater to the suburbanites which encircled them and be open for dinner and weekend lunches.

One of the primary reasons employees cite for wanting to be their own boss is the ability to set their own hours. But, does the small business owner really set his or her own hours, or does the business set it for them?

Before you start your first small business or purchase a franchise, you need to carefully consider the hours your business will be running you – because it will, especially if you will be the person staffing it. If your budget doesn’t allow you to hire enough employees to run your business, then you’ll be the owner/operator. If you want to be successful, you’ll have to work your schedule around the business’s needs, not those of your private or family life.

If your primary concern about becoming your own boss is to spend more time with the kids, then be sure the business you are starting will allow you to do that and still run smoothly. It’s the first thing you should consider when deciding which business to own.

By the way, if there are any bankers reading this blog, I suggest you reconsider the whole notion of Banker’s Hours, at least for your tellers. Like the lawn mower store, I’m more available to do banking at nights and on weekends and am typically met with a locked door. There’s no pressure, I’m just throwing that out there.

Franchise "Creature Feature" Writer

Franchise Trade Shows

The hard part is over. You’ve assessed your finances, determined what industry you are interested in, and now you’re ready to narrow it down to the chosen one. The best way to examine your options is to attend a trade show.

First things first -- more research. If possible, obtain a list of participating franchises and narrow them down to the ones in your interest and price range. Then do a little investigating. Google the franchisors and see what you can find. Start a list of any possible questions or comments you might have. A good short list would be the initial investment required, a typical day in the franchise, and product supply information.

The day of the show it is important to keep a few things in mind. The franchises that are at the trade show only make up a very small percentage of those that are available for you. It is also essential to remember that you are selling yourself to these companies as well. You want to be taken seriously as a prospect so wear a suit and bring extra business cards.

Be sure to collect any handouts supplied by the franchises that interest you the most. Leave your contact information and get theirs. After the show organize any materials and set up meetings with representatives from those you feel most serious about.

Franchise trade shows are a great way for shoppers to examine the market and get a lot of information up front. And the best part of trade shows? They happen often and in most major cities.

-- Lady McFranchise