How to know how your business is really doing
2007-06-07 15:36:05 -
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Founder of O’Briens Sandwich Bars, BRODY SWEENEY, continues his series on how to cope with the stresses and strains of starting a new enterprise 

I’ve often been asked when O’Briens turned the corner and I knew things were going to be okay and the company would have a viable future. Bear in mind that I lost money for the first six years – longer than most business start-ups do. For me, the change came when Tom Cunningham, our first-ever franchise partner, asked me whether he could open a second O’Briens store.

Tom is an accountant from Mayo, and it had taken a fair bit of persuasion on our part to get him to become our first franchise partner. At the time, I had a small number of stores already set up which I was running myself. I had written my franchise manual but was finding it hard to interest anybody in becoming a guinea pig for the idea and opening the first store. I decided that in order to get the business off the ground, probably the smartest thing for me to do was to sell one of the existing stores – one which had a proven track record of sales and profitability.

The store I decided on was my best one, in the St Stephen’s Green Shopping Centre. This store had a newsagent attached to it. (I had no interest in running the newsagent, but at the time it was probably the most valuable part of the business.) I advertised to sell, and Tom, who was interested in buying the newsagent, came to talk to me. I explained that I was trying to start a franchise business built around a sandwich bar but that the newsagent didn’t really fit into my plan. I asked Tom if he’d be interested in becoming the first O’Briens franchise partner. To sweeten the deal, I said I wouldn’t charge him any royalties (a percentage of sales the franchisee pays us for using the O’Briens name) unless I could sell three more franchises, and I wouldn’t charge him any royalties at all on the newsagent.

From Tom’s point of view, this wasn’t an unattractive proposition. He got to buy the newsagent business outright with no strings attached and had somebody working with him to develop the food side of the business, where the profit was. As well as that, if the O’Briens business couldn’t be developed, he wouldn’t have to pay anything by way of royalty, as we had agreed.

Tom eventually agreed, and that crucial first sale got the business off the ground and gave other people the confidence to make similar investments. It wasn’t long before three franchises had been sold, and Tom, true to his word, started paying his royalties. When he came to me sometime later and said that he wanted to open a second store, I knew that the business had great possibilities.

It can be relatively easy to sell a store to somebody who doesn’t know much about a business, but an intelligent man like Tom wouldn’t go ahead and buy a second business if he wasn’t reasonably happy with the way the first one was going. Tom went on to open another three O’Brien’s stores before eventually scaling the business back to one, which he runs successfully to this day – more than 10 years after we got into bed together, as it were.

The Manchester United manager Alex Ferguson said that “great teams don’t just win trophies; great teams retain their trophies”. It’s possible to win a trophy once or make a sale through a fluke or through good salesmanship. Being able to do so more than once takes the strength and depth that only a great team has.

Don’t believe your own PR
We at O’Briens have always worked hard to create in the minds of our staff and the public a positive vibe abut the business. This has involved us creating and distributing very positive PR.

This PR hasn’t always been strictly true. There were periods when the business wasn’t doing particularly well and we were still pumping out the positive stories. I couldn’t share with our team all the trouble we were in at various times.

A leader’s job is to inspire confidence; if I’d let the rest of the team know the real story about the business, they would probably have started looking for new jobs. You always have to be optimistic, even when everyone around you is telling you you’re mad. But it’s a fatal mistake to believe the hype you yourself have created.
 
Next week: Always be optimistic, even when things aren’t going well


n Taken from Making Bread – The Real Way To Start Up and Stay Up in Business by Brody Sweeney, published by Liberties Press – buy at www.libertiespress.com and get a 10 per cent discount
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