Military Careers, Second Careers - Army Times

Be your own boss

Is it right for you? That may be the first question you ask if you’re thinking about becoming a business owner. But it’s only one of many. Being your own boss means running the show and basking in your success. It also means taking some major risks and shouldering full responsibility for failure.

Franchising takes some of the risk out of business ownership. Buying a business from a company that’s already proven its success allows new business owners to take off with an established name and additional resources to help them manage some of the challenges. And it gets even easier for veterans.

The Veterans Transition Franchise Initiative is sponsored by the International Franchise Association. Originally begun during the Persian Gulf War in 1991 and re-initiated in 2003, the program aims to help veterans get into business ownership. Participating franchise companies — there are more than 200 — offer financial incentives and discounts on franchise fees. Since it was re-initiated, more than 400 veterans have taken advantage of the program and now are running everything from pizza parlors to postal services.

Still, transitioning from the military into business ownership is a big leap. That’s why VetFran encourages veterans to do some serious research, learn about current franchise trends and hear what other veteran business owners have to say about lessons learned. Here, four veterans who already have taken the leap share their thoughts on what it takes to succeed in the world of franchising.

Choosing the right field

According to Rod Reynolds, this is where it begins.

“Choose a franchise to match your personality,” he said. “Probably 75 percent of Americans say they want to own a business because they think they’ll get rich. The truth is, you’ll work harder and worry harder than you ever have and you won’t make much money when you start out. So you have to choose a business that fits you. You do that by taking an honest assessment of yourself. Know yourself and evaluate yourself honestly. Find the kind of business that best suits you and after that, there are all kinds of franchise choices to flirt with.”

Reynolds served in the Army as a veterinary technician and separated in 1980 after four years of service. He used his Montgomery GI Bill benefits to finance his education, was a college professor for 20 years, and also owned and ran several small businesses on the side. One day, he decided to get out of the classroom and into franchising.

“I bought and read as many books about business and franchising as I could,” he said. “Then I read about specific franchises. I learned that being realistic about going into business for myself meant I had to choose something that fit me. I chose the auto-repair business.”

Today, Reynolds owns two locations of the Mr. Transmission franchise in the St. Louis area. He’s been in the franchise business for 3½ years since getting started in Mr. Transmission with the help of the VetFran program.

On paper, his franchise choice might not sound like a match. After all, Reynolds’ background was as an educator, not an automotive technician.

“Education deals with managing a group of people. In the car-repair business, you have to manage a crew,” Reynolds said. “In car repair this is more crucial than in, say, the handyman business. In an auto shop, you have to manage the pipeline of production and time. If you can’t keep them on a clock and motivated and have some sense of fairness, you can’t be in the car-repair business. So choose a business that matches your personality more than your background.”

Counting the cost

No matter what franchise you choose, you’re going to have to come up with money. All franchises require good credit histories, some capital and an initial franchise fee. In the initial stages of considering franchising, VetFran recommends taking a hard look at what you’re worth. This should include your assets, the value of your property, the amount of cash in your possession, the credit line available to you and whether you will need investors or partners.

George Galegor spent 26 years in the Army. He retired as a sergeant major in 1998 and went to work in a series of civilian positions. When he decided to buy a franchise, Galegor didn’t factor in his military career as much as he considered what he’d been doing as a civilian.

“Of the three jobs I held after I retired from the Army, they all involved my doing the start-up work for them,” he said. “I was putting in all the sweat equity required to get them up and running without any of the benefits of owning the business. So I decided to go into business for myself.”

Galegor and his wife carefully considered the initial cost of ownership, then weighed the potential for return on their investment.

“I looked at four or five of the franchises in the VetFran program,” Galegor said. “The UPS Store was ranked by entrepreneur magazines as No. 5 in the nation and No. 1 in business service. I liked that, and the cost was doable. They require that you’re creditworthy and that you have $50,000 in cash reserve. They also have two financial institutions they work with to help you secure a loan through the Small Business Administration.”

Galegor added up what he would need to spend to get a shop and buy equipment and furnishings. After paying the $25,000 discounted franchise fee — a $5,000 savings — he took out a loan for $147,000 for operating costs. He opened the store Sept. 15, 2005, and together, he and his wife work a little less than 40 hours a week at their store in Edmond, Okla.

Although Galegor recognizes that start-up money is a key consideration, he said he believes just as much consideration should go into getting your money back.

“Do your due diligence,” he said. “If you’re thinking about a specific franchise, talk to other franchise store owners. Keep asking them about their business until somebody tells you. Many people don’t want to tell you how they’re doing, so you have to keep asking. I called stores at Fort Bragg [N.C.] and in Arizona. Remember that the franchisor can’t tell you or lead you into buying. But store owners can tell you exactly what the company is like and how they’re doing.”

Settling on the right franchise

You’re buying more than a business: You’re buying a name. Whether you select a regional or a national franchise, you’re more likely to be in business from the get-go if customers already know who you are. Your initial research should include investigating the franchise’s reputation, whether complaints have been registered with the Better Business Bureau, how long it has been in operation and whether it has a trademark. Those are some of the questions Army National Guard Maj. Brett Cooper was asking even while he was stationed in Afghanistan.

“After I was deployed to Afghanistan, I kept dreaming about owning my own business,” Cooper said. “I actually made contact with ... Lawn Doctor from the field. I had talked to them previously, but at the time, I didn’t have the finances to do it.

Cooper has served in the Guard for 17 years and works full time as a representative for a manufacturing company in Booneville, Mo. When he decided to buy a business, he looked for reputation, how the company would fit his lifestyle, the hours he wanted to work, and whether there would be opportunity to start small and grow at his own pace.

“I was trying to find a business that would have recurring revenue,” he said. “I love the outdoors and I like being hands-on with customers. So when I came back from Afghanistan, I made a visit to the Lawn Doctor. I checked up with other franchisees to learn more about the company and the work, and then I went up and rode with a guy for three days while he serviced his customers.”

Cooper selected Lawn Doctor and bought it in December 2005. He took on his first customers the following spring.

“I’m running it as a part-time business with 50 customers after the first year. I really like the fact that I can renew my customer base and not everything is a new sale. It fits my lifestyle,” said Cooper, who works alone and maintains no storefront for his business.

Finding the right location

Location is a critical factor when it comes to buying a home, and it’s no different when buying a business. For John Reid, the issue of location was his top priority. Reid is a full-time staff sergeant and technician with the Army National Guard, attached to a unit in Albany, N.Y. He made the decision to buy a franchise from The Glass Doctor in March 2006, after returning from a deployment to Iraq.

“I went to a franchise expo and learned that with Glass Doctor, I didn’t need a license or certification,” Reid said. “They were helpful and gave me the guidelines for location and average square footage size. And they told me I could operate out of an industrial park and just do mobile work.”

But that wasn’t what Reid had in mind. He wanted visibility. To find the right place, he did his homework.

“I knew middle-aged ladies weren’t going to be comfortable coming into an industrial park, and I also knew that if people couldn’t see me, they couldn’t find me. So I looked at the Census, I contacted the Department of Transportation, I did an analysis of traffic patterns and counted the cars. I found the right location for me in a strip mall. I’m anchored by a Walgreens, and I’m on a street where 55,000 cars pass by daily.”

Reid said he researched the company and also contacted the Small Business Administration for advice and professional development counseling. The SBA referred him to the Service Corps of Retired Executives, a nonprofit organization dedicated to assisting small-business owners in getting started, growing, financing and managing a business.

“The SCORE program has entrepreneurs who’ve already done what you’re doing and been successful at it,” Reid said. “They pair you up with someone who mentors you and assists you along the way.”

Reid said it will cost him more to be in this location. But he believes that by offering both mobile service and drive-up service, he’ll end up being more successful.

“You can’t buy that kind of advertising,” he said. “I figure that if I’m going to be in business, I have to be somewhere that’s visible. Location is the first thing I’d recommend to anyone.”

Profit potential

Think franchise ownership sounds like a good fit for your post-military lifestyle? Before taking that final plunge, you’re probably curious as to how much money you stand to make. Again, as with any business, the income potential for franchisees varies greatly, depending on a number of factors.

Although his Glass Doctor franchise is less than a year old, Reid did his homework upfront, so he knows what he might expect profitwise down the road.

“I did all the income projection models before I made my investment,” he said. “For the first year, the business revenue total was a net loss of $13,000. The second year shows a net profit of $165,000. The third year shows a net profit of $285,333.”

Impressive, yes, but Reid is realistic about how much of that profit will end up in his own pocket. “I pay myself a modest $60,000 a year,” he said. “With the profits, you have to advertise and get people on the road. … You can’t sit in the office and wait for people to find you in the Yellow Pages. You have to be visible to … potential clients.”

Galegor, who runs the UPS Store in Oklahoma, expects to earn about $60,000 a year from his franchise, as well. And, he said, “We figure that by 23 months, we’ll be at the break-even point.”

And Cooper, who runs his Missouri Lawn Doctor business part time, said, “Income projections for ... Lawn Doctor aren’t based on profitability. There are so many factors, like how an individual handles materials, the rates the owner charges in a certain area and a number of other things. The range for gross sales can be what I made — which is $24,000 doing it part-time the first year — all the way to making $250,000 in gross sales in the first few years.”