Since my last column I have traveled to several States to visit clients e.g., New York, Florida, West Virginia, North Carolina and have had numerous enquiries from others in Pennsylvania, Arizona, Iowa, Georgia plus a few others and a common question has been about franchising.

Several repossession companies have been looking at a way to grow their company by buying into a repossession franchise. Yes, definitely a way to grow, and a quicker way than the normal business way BUT there is a price to pay for that growth.

Getting into franchising has it’s pros and cons and I hope that those companies contemplating this avenue of growth have done their homework.

You can make money for sure in being a franchisee, BUT not as much as you probably would were you building your company through normal business practices and growing it YOUR way.

When you are a franchisee you can only do business as the Franchisor directs you and there is no middle ground. You have to pay to buy into the franchise, you have to pay a monthly fee for all kinds of expenses i.e. insurance and a monthly fee just to be a franchisee.

Buying a franchise means you have to take on the identity of the franchise, do business as they do, meet all their requirements, charge fees in accordance to them and run your company THEIR way. Ultimately you own your company, but so do they! Once you pay the monthly fees associated to the franchise, you will be left with a minimal profit margin … and let me tell you….I have two clients at the moment that are EX-franchisees of a repossession franchise and neither could be dragged back by wild horses to become franchisees again.

You might think that franchising is an easier option, it is for the most part, BUT it’s a more costly way to develop and grow your business, and not necessarily the way you might want to grow your company.

Don’t get me wrong, I am not telling you that getting into a franchise is wrong or not a good idea, that is for you to determine. There are many lucrative franchises out there in many differing industry sectors and I know many business owners that have made a good living and made a great deal of money by being a franchisee. The key is to find a franchise that is lucrative and if it is, be warned it will be expensive to buy.

The other option of course, is to concentrate on growing YOUR own business and there is absolutely no reason as to why you cannot do that. I have been working with one of my clients for just twelve months now and since I began working with them, they have quadrupled their business and YES they are making a good profit too!

Good business is about good planning….you have read this in my column many times and if you continue to read it, I will be saying this forever more. BUT there are no short-cuts – it’s all hard work, lots of time and yes, lots of money, but the rewards are there for you if you do it right!

It’s about working smarter not harder, it’s about being open to change (yes that word again! J ), it’s about reaching beyond the elements of your surroundings be it geography, competitors, clients, equipment etc.

And there is no reason….and I mean NO reason as to why you cannot grow your company…..

Well perhaps there is ONE reason…….YOU!

SUSAN A L MARSTON, MBA
BUSINESS EDITOR
The American Repossessor Online Magazine

The companies I work with range from being in the repossession business from 12 months to 15 years plus, but irrespective of age, location and size, their commonality does not waiver at all. The common denominator between them all is most definitely their determination, tenacity, and hunger for success and to probably many people’s surprise, their recognition that they as a company have to change their philosophy on an ongoing basis towards the art of ….yes that wonderful word again…..CHANGE!

The most perceived problem that companies think they have is their want/need for more new clients. More often than not this highlights to me the fact that this is often the symptom of a problem within the company and the actual underlying problem is much more serious/important than they think or even recognize.

Everyone without fail wants to get ‘into bed’ in doing business with corporations such as HSBC and I take them as an example to highlight the need to understand the type of client HSBC will be in doing business with them.

HSBC is one of the largest financial corporations in the world, spreading their corporate tentacles to all corners of the globe and in doing so, this giant demands the need for a corporate structure to support their mammoth business services. So, in recognizing that on a .much more local level, there are reasons as to why HSBC and corporations like them have standards, processes and procedures in place so that they can carry out the day-to-day business activities that demand their attention.

They in turn have expectations of their suppliers and knowing that they can ‘pick and choose’, you as a potential supplier need to get ‘all your ducks in a row’ in every aspect of your business, to have a chance joining their supplier network.

Amongst many things that a company has to get in order, to compete with other repossession companies and gain clients such as HSBC, is to be in control of their finances, the services they deliver and the fees they charge for them.

Having worked with thousands of companies throughout my career, I have seen the resistance that the owner/ president of a company has in charging the right price for their product/service ….and needless to say, the repossession industry is no different.
There is a resistance to charging what is a true market price and instead they charge a price that is so low that it is impossible to make a profit. That means of course, that eventually they will go out of business. Not only that, but large corporations will and do view companies that charge lower than market value fees, irrespective of the industry that they are in, as ‘cowboy’ outfits.

Undercutting your competitors is definitely NOT the way forward and should never be done just to get business. It’s commercial suicide.

There is a variation in prices that clients will pay but that should not stop you from having your own fee schedule and for you to stick with that. There will be clients that offer a price and that is it – no negotiation. Then there are clients that will pay what you ask, and there are those clients that you can negotiate with. If your prices are already low, there is no room for negotiation. Unfortunately many will take the business even if it means that they will lose money.

Controlling your finances is crucial to the continuous growth of your company and that includes when and if you take on more new clients. You have to be prepared to sometimes say NO as growing too fast is just as bad as not growing at all. Each and every time you take on a new client, it eats into your cashflow until you get paid for the services you provide to that new client.. Not having liquid cash, i.e. working capital, provides another stranglehold on your company. And then you multiply that by taking on several clients at the same time or over a short period of time, can stop your business from functioning.

So, would you like to improve your profits? To achieve that you have to do more of the right things. That’s obvious, but which things? One strategy is outstanding in its ability to produce an immediate and dramatic increase in profits. That strategy is to SET AND OBTAIN THE ‘RIGHT’ PRICES.

Many pricing decisions are made arbitrarily, either in the absence of information, or on the basis of cost plus a preconceived mark up. Once pries have been determined, by whatever means, there is a natural reluctance to change them. This is sad. Sad because even if the price was ‘right’ in the first place, it probably won’t be some months later. And it’s unlikely that a price set in that way will be ‘right’ in the first place. Sad too, because price is NOT something to do with costing. It is in fact a key element of marketing and is concerned with VALUE to your clients. It is the one element which unlocks the treasure chest of profits the fastest.

WHAT DOES ‘THE RIGHT PRICE’ MEAN?

Let me ask you this question. Who does it need to be right for? Right for your clients OR Right for you OR Right for you and your clients.

The ‘Right Price’ means that it should be RIGHT FOR YOU ANDYOUR CLIENTS!
‘Right for you’ means that it has to meet your objectives eg., how much profit you want to make, how many sales, how fast you want to grow, which part of the market you want to be in, the image of quality you wish to project etc., etc.

This of course requires that you know what your objectives are. And to achieve your objectives, you will usually have to sell at a price higher than your costs, so you must also know what your costs are.

‘Right for your clients’ means what they are prepared to pay – their ‘demand’.

There is a 3-step way to help determine your best price and give you a break-even and profit figure –

1. Add up business costs for the year
2. Divide the total by your estimated number of sales over the year and you get a cost per repossession
3. Add on the desired profit per repossession to give you a price per repossession activity

THAT IS: COST + PROFIT = PRICE

This is just one of the major factors that you should be aware of when growing your company, but not only that, it will differentiate you away from your competition.

So when you are looking to gain more clients, just bear in mind that they can ‘make or break you!’

SUSAN A L MARSTON, MBA
BUSINESS EDITOR
The American Repossessor Online Magazine