Joel Libava
Okay, maybe don’t throw your spreadsheets from a train-because littering. But dispose of them now.
“What Joel?”
I’m not kidding.
Throw them out. Better yet, place them in your recycling receptacle.
You’ll see why in a moment.
But first, it’s story time.
Experience Tells Me…
I (pretty much) knew how it would end.
Not because I’m a genius. Not because of my gift.
But because of my experience with these things.
I’ll explain.
Working With George
A few months back, George visited this website and took my (free) Franchise Compatibility Quiz.
He scored a “46,” which is decent. Based on that score, he’d be a guy who would follow the franchise system as it was laid out. In other words, George is a rule-follower, which is kind of (ahem) important if you want to be a franchisee.
Soon after he received his score he scheduled a complimentary call with me. He wanted to discuss where he was at, and see if it would make sense to work 1:1 with me.
During our call, I determined he was probably on the right track with the franchises he was exploring, and I told him as much. We talked about his goals and I gave him a few suggestions on how he should proceed. He said liked my style, and decided to invest in a month’s worth of my Guaranteed Franchise Ownership Consultations. Smart guy.
Our first couple of calls went well. Then things changed a bit.
George’s Spreadsheets
It’s important for you to know how I work.
In a nutshell, I see my role as a “protector.” That means I do whatever I can to protect my clients. From what?
From making costly mistakes. How? Lots of ways.
For instance, if a client of mine is putting the cart before the horse, and/or not focusing on the right things, I tell them. As you’ll see.
“Joel, when I research things, I like to collect as much data as possible. Especially the numbers. Once I do that, I create spreadsheets, so I can examine the numbers. I’ve been doing that with all the franchises I’ve been looking at. And when I’m done adding all the franchises to my spreadsheets, I’m going to choose the one with the best profits for the owner.”
Me: “I see. But what if you don’t like what the franchisees say?”
“Joel, I’m not planning on talking to any franchisees until I get all my numbers.”
Me: “George, your spreadsheets aren’t going to tell you enough about the franchises you’re investigating. They’re only numbers.” I continued.
“What if, out of all the franchises you’re looking at, you choose the one with ‘the best profit numbers,’ but you find out that your role as a franchisee is way different then you envisioned for yourself?”
“I’m not concerned about that yet. I just want to focus my time on finding the most profitable franchise businesses. I need to make enough money for this to be worth it.”
At this point, my frustration level is approaching the danger zone.
George Needs To Throw Away His Spreadsheets!
Me: “George, you’re paying me to help you make a safe, informed decision on a franchise to own. I understand that your ROI is important to you. I really do. But if you continue analyzing your spreadsheets without looking at the real-life part of owning a franchise business, you’re putting your potential investment at risk.”
At this point I’m out of breath, but I’m not going to let George talk yet.
“You need to put your spreadsheets away, and get on the phone and talk to franchisees who own the franchises you’re potentially interested in buying. You’re too focused on the numbers and not on the actual business. George, you’re not buying the numbers. You’re buying an actual business. One you’re going to own and operate.”
“Joel, I need to do this my way. Again, I’m not going to waste my time calling franchise owners unless the numbers look good.”
Would you like to know what happened next?
Note: spreadsheets, when they’re used correctly, can be a good addition to your franchise due diligence toolkit. Specifically, they can be used for budgeting, financial analysis, and data visualization. Plus they can be linked to other spreadsheets, databases, and external data sources to update data automatically. And more.
A quote from Kenny Guinn:
“We must rely less on spreadsheets and funding formulas and more on common sense.”
George Didn’t Buy A Franchise
George never found a franchise that had the right numbers.
Either the franchisee’s expenses were too high, the profit margins were too low, or the ROI wasn’t where he wanted it to be. But how did he get his numbers?
He got them…he purchased them actually, in one form or another, from websites that specialize in selling franchise data and material you can actually access for free-if you know where to look for it.
Buying A Franchise?
You're Going To Need This!
For example, did you know that the State of Wisconsin’s Department of Financial Institutions provides updated FDD’s for free? Here
That means you have no reason to pay for a Franchise Disclosure Document.
Bottom line?
George wasted his money on things he could’ve have gotten for free. Plus, he wasted hour upon spreadsheet hour doing who knows what types of calculations that didn’t accomplish anything. Hold on. I stand corrected.
By only focusing on “the numbers,” which were only averages anyway, George accomplished something a lot of aspiring franchise owners do.
He quashed his dream of franchise business ownership.
Not (only) because he didn’t take and trust my advice, but by talking himself out of purchasing a franchise before he got ALL the data.
George, George, George
Finally, remember when I told you “I knew how it would end?”
I did.
I knew George wouldn’t buy a franchise.
If only he would’ve combined his spreadsheet ridiculousness with a dozen or so phone conversations with existing franchisees.
If only.
I’ll leave you with this.
“Trust your gut instinct over spreadsheets. There are too many variables in the real world that you simply can’t put into a spreadsheet. Spreadsheets spit out results from your inexact assumptions and give you a false sense of security. In most cases, your heart and gut are still your best guide.”
P.S.
One spreadsheet disposal method I recommend is Mark’s Fireplace Method.
Just throw your franchise profit and expense comparison spreadsheets into a wood burning fireplace and be done.
