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More Isn’t Always Better

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They call us family entertainment centers, or “FECs”. That is the designation they use when they lump centers such as Monkey Bizness, roller skating rinks, rock climbing centers, and ropes courses together. Our specific corner of this is kid’s indoor play centers.

This is the part where I would usually go through a history lesson and tell you where the industry started and where it is today. But, to be honest, I don’t know where things started and given the fragmented state of the industry, I would be leery of anyone who says they do. As far as where we are today, it depends on your view. Part of my view shows that there is an issue of matching required investment with return on investment. Whether it be due to a passion of creating great facilities or a lack of strategy, I see a lot of money spent on new “toys” and ask myself, “why?”.

This spring I sat down with a focus group of Monkey Bizness customers. One of the specific questions I asked the group was “how important is it that we continually update and refresh our equipment?”. Mind you, kiddos that come to our facilities are only “customers” for about a 4-5 year period. The response I received was surprising……they said that kids liked consistency so changing everything too often would actually hurt the experience.

In a way, this makes sense. Researchers and planners at Disney have known this for years. Ever wonder why It’s a Small World and Peter Pan’s Flight are still there? It’s because Disney knows that customers want to feel comfortable about the experience they can expect. Sure, they need to update and add every so often, but there is a reason they don’t do an “extreme home makeover” of the Magic Kingdom every 5 years.

What do Disney and some of the leaders in our industry know that some others don’t? It is about building the customer experience. Researchers are finding out that millennials care more about customer experience than ever. While facility and equipment are important elements to creating a customer experience, so is customer services, marketing, and business processes. I could write pages on each of these individually (don’t worry, I won’t). While facilities are still an important element, entrepreneurs need to think hard about whether the costs are justified or if they are missing a different element of the overall strategy.

Whether looking into a franchise or going out on your own, you need to think long and hard about the customer experience that your business will create. If you are looking to franchise, take a step back and ask yourself what is the franchisor’s strategy? Often when you are going through the process of looking at a franchise, you get engulfed in the details. However, when you take a step back, things become very clear. Taking a minute to look at the franchisor’s overall strategy and your decision will become much easier.

Numerators and Denominators of ROI

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When I talk with prospective franchisees one of the first questions they ask (and rightfully so) has to do with what will their return on investment (ROI) be.  That’s a hard question to answer because it depends on so many factors that are different between each owner and their specific situation.  As the owner of two stores, my ROI might not be anywhere close to what that franchisee’s would be.

With that said, over the past 18 months of running my stores and doing countless hours of analysis on the Monkey Bizness model, I can tell you what in my mind is the single biggest factor in what our franchisees’ ROI will be.  If you are looking for me to discuss something around customer service or customer experience, this isn’t the article (although those are important).  The single biggest factor is real estate.  I tell prospective franchisees that in order to have a high probability of success, they must take the time up front to get their real estate setup correctly.

If you don’t invest the time it takes to research the real estate situation, it is a double whammy.  I say this knowing that the vast majority of people we talk with are looking to lease a facility.  The first problem with not being aware of the real estate aspect is with your upfront costs (the denominator of ROI).  The more you spend, the lower your ROI and hence the longer the timeframe of your payback of your investment will be.  The second problem is your ongoing operating costs (your numerator of ROI).  If you find a facility where rent is even $1-$2/square foot greater than it should be, that will eat into your yearly return.

So, what does getting your real estate setup correctly look like?  Well, that could take hours to talk about (sounds like fun, huh?) but I can give you a couple of bullet points:

  • You want the least amount of space possible to operate your business successfully. This sounds easy, but wait until you start designing your dream business and the scope starts to increase.  In my world, I often have people who worry about storage in their facilities.  I get it, and I understand where they are coming from.  I also know that you can find a lot cheaper options than paying $25 per square foot for that 400 square feet of storage every year.
  • Value Engineering – I love architects, and in another life, I think I may have been one. With that said, architects design beautiful properties, not cost-effective ones.  Doing things like lining up your plumbing can save literally thousands of dollars in your buildout.
  • Location. Location. – There may not be a more universally offered service by franchises than location selection. There also may not be a service that varies more widely than location selection.  Part of this process needs to include finding a property that can limit costs on buildout and has an on-going cost that fits into your model’s budget.  Sure, we all want the building at the corner of 1st and Main or next to the Starbucks, but that doesn’t mean you need it.  Finding a property that is already somewhat setup for your business can save you thousands of dollars up front.  For instance, we have a franchisee who found a property with their bathrooms already built out.  Finding a property that is an appropriate location can save thousands a year.  Do you really need 40,000 people driving by your business every day? Maybe. Maybe not.

These are just the tip of the iceberg and how applicable they are to your situation will differ.  But as you go through the process of determining what your ROI will be, remember that the choices you make day 1 on your real estate will have a material impact on your ROI every day that you own your business.

What’s New at Monkey Bizness?

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If you haven’t heard by now, Monkey Bizness Franchising is under new ownership for the past year now. The new owner, Matt Krieger, has been 100% invested in improving and strengthening the brand, as well as the services offered to all franchisees. Having 3 children of his own, they have been going to open play and birthday parties for years, and he was already loyal to the brand. With his extensive background in accounting, he has made the numbers a priority. How to make money, save money and stay efficient, all while fulfilling the Monkey Bizness mission of creating a happy and healthy place for children and parents.

There is now a centralized Support Center at the heart of Monkey Bizness Franchising which lends support from Day 1 in terms of Opening and Operations, as well as outlining your Grand Opening and Ongoing Marketing Plans, not to mention assistance with setting up a budget and showing you how to manage it for optimal success. These are not just documents that have been thoughtfully written, but also step-by-step, week-by-week guides with space for notes. We also offer weekly calls in the beginning to make sure your plans are executed effectively for your business. We offer monthly support calls, as well as annual franchise meetings to discuss what works and what doesn’t, and to talk about upcoming changes and improvements to the brand and the system.  At Monkey Bizness, franchisees are truly part of the team.

Since this type of business is about children’s entertainment while giving parents a chance to relax, we spend quite a bit of time on the marketing aspect of the business not just to draw new families to our open play and birthday parties, but to keep our current customers coming back month after month, year after year. Of course at most locations, we also offer a café with dozens of hot and cold beverages and snacks, free Wi-Fi, and a community board so parents can stay connected both in person and online. With summer camps, activity showcases, family nights and other events, we are always finding ways to keep things interesting, and keep your revenue up throughout the year.

Our marketing support consists of internal support, as well as contractors, who provide graphic design, campaign messaging, guidance on social media and paid advertising, analytics and insights into your performance and your target market for your area.

With Monkey Bizness Franchising you are getting the full package of support, name recognition and at the end of the day, fulfillment in seeing kids have fun, each and every day.

For more information, please visit http://monkeybiznessfranchising.com/ or skip to contacting us directly at http://monkeybiznessfranchising.com/contact_us/.

Franchising with a Dose of Reality

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It’s been almost 18 months since I purchased Monkey Bizness – both the franchise and a couple of our locations – and the observations and learning that happens regularly amazes me.  My ideas of what a franchise is, and who the perfect owners should be in our system continues to evolve.

At the end of the day, franchising is an opportunity to own a small business.    The operative word in that sentences is “own”.  That’s right, it is your small business.  While franchising sets you up with a proven model and support system, as well as a sales and marketing system to help grow your business, at the end of the day it is your business.  You have control over which employees to hire, what roles they play and how you train them.  You also control how you market yourself in the community, what local businesses you align yourself with, and what daily specials to run. Last, but not least, you control the culture you setup within your business.

I often have talks with potential franchisees who say something to the effect “I can’t believe it costs (insert a number) to start a Monkey Bizness”.  My response is, it costs that much to start any business.  The only difference is a franchisee fee to open a Monkey Bizness, utilizing our brand and infrastructure.  As a potential franchisee, you should analyze whether you think the return on that fee when it comes to opening and ongoing support, sales and marketing support, and our systems are worth it.  The rest of the startup costs will be the same whether it be a Monkey Bizness with name recognition and systems or your own indoor family center.

I talk with many people who have very good paying jobs but are looking for something different… something that lets them be their own boss.  That sounds great, but I can say from experience that you take your paycheck for granted until you don’t get one regularly anymore.  Sometimes I sit here and think (again, from experience) that business owners are crazy.  Why would anyone choose to accept all of this risk?  You can make more money doing other things and you certainly can find other occupations that cause less stress.  So why do so many people do it?  Because being your own boss rocks!  I control my time and destiny.  I could list all the reasons why I did it, but they would be mine, not yours.  It’s a decision that you need to make based on your situation and life goals.

As I stand now, I don’t regret taking the plunge at all.  However, as I continue to talk with others looking to make a similar move, I want to make sure they are armed with all of the knowledge they need to make such a large decision, and we will be there with you ever step of the way.

To learn more about franchising your own Monkey Bizness location, please click here and take the journey with us!

How to Sell a Birthday Party

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“We open the doors and people come.” I have heard that saying from some of my franchisees and franchisees of similar concepts to Monkey Bizness.  While there is no doubt that this business will draw people in purely because their kids will enjoy the environment, imagine the power you could harness by putting sales systems in place on top of this philosophy.

Basic sales systems are well documented and used in most businesses.  I would argue that most successful businesses have some sort of sales system.  At the most basic level, sales systems have leads which they try to convert into sales.  Each system has a process which places prospects into a funnel and a certain percentage are then converted to sales, and along the way there are a number of touch points.  The businesses that are most successful are best at the conversion process.

What does a good conversion process look like?  It has multiple and consistent touch points with the lead and often uses messaging that is powerful, flexible and persuasive.  As businesses continue to refine this process or funnel, they generally start to get a better feel for the close ratio. This can be powerful as businesses then start to ask questions like “If we can close 30% of our leads, how can we get more leads into the system?”

These are the processes that can provide value to franchisees.  At Monkey Bizness we have started to roll out a new sales system to better control a prospect’s birthday purchasing decision.  While many of our weekends operate at high enough capacity, we ask the question, “What if we could do more?”

Through trial, errors, testing and other means, we have put together a sales system which can help drive revenue and customer satisfaction with the right amount of participation from our franchisees.

To learn more, contact us!

Item 19’s Are Important, But Not More than Your Research

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It’s been one year since I purchased and have been the franchisor of the Monkey Bizness concept.  One of the biggest benefits I have seen from this venture is that I get to network with many other aspiring entrepreneurs not just about franchising with us, but about what their ambitions and goals are.

Inevitably, one focus of this conversation is money.  In the franchising world, this conversation often starts with the FDD’s Item 19, Financial Performance Representations.  As a certified public accountant, this is right in my wheel house, but I often cringe when I hear how much reliance is put on these numbers.  In full disclosure, Monkey Bizness did not list figures in Item 19 this year due to not owning the company for the full year in 2015.

The reason I cringe at the over reliance on this is how one of our competitors presents their Item 19.  First, they give you the average sales per unit for all of their stores, approximately $560,000.  Then, they list their average sales for California and the Northeast Region.  These two areas represent approximately 36% of their stores, but 46% of their total sales.  So, if you aren’t lucky enough to live in this 7-state region, your actual average sales are approximately $474,000.

The above example doesn’t even go into the fact there are also approximately 2 pages of disclosures to summarize the data in these supposedly straight-forward 3 tables.  Nor does it relay the fact that you are given an average of store sales that could be wildly different depending on whether you live in Washington or Texas.  There are a lot more questions, but this is a blog post so I need to be somewhat concise….

While this is all perfectly fair and ethical (after all, they do disclose what is actually in the tables), this leads to a bigger point.  While some franchise systems’ Item 19 is pretty straight-forward, more often times than not you end up trying to comprehend what is actually being disclosed.  I am a CPA, and even I get lost in the facts and figures sometimes.  While Item 19 is important, the most imperative analysis is done by you, the prospective franchisee.

This sort of financial analysis often takes the form of a “model”, which is a fancy word for projected financial statements.  A CPA or financial advisor can often help you to build your model.  But the most important step in building your model is determined by your assumptions.  For our business, those major assumptions include the number of birthday parties, the number of open play visitors, rent, etc.  These assumptions will vary depending on the geographic location and the demographics in your area.  This will often give you the clearest sense of how much money you can make in the business.

Monkey Bizness has produced a model template for you to begin with that can be downloaded here.  The model can be updated for your assumptions, that are specific to your given market.  It is meant to be a starting point, not an ending point. We would love to talk more with you about franchising and Item 19 specifically.  You can reach out to us here.

The Value of Values – the Economics Behind Core Values

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I began my career as an accountant and went to work for a large regional firm.   On day 1, I sat in a conference room with twenty or so other new employees, while a partner detailed to us the firm’s core values and mission.  Being right out of college and already knowing everything, I was tired of the talk before it started and just wanted to get to work.  However, over my next 7 years at the firm, a funny thing happened.  The core values and beliefs started to stick, and they started to be a part of my vocabulary.  At a certain point, I wasn’t just a bearer of these values, but I was a teacher of them.

When you are in an environment like that, you don’t see the importance of that culture until it is gone.  I have since been at a couple of other companies which lack this strong set of values, and it was noticeable.  It’s not that these other places aren’t great companies, but the employees lack a common thread that binds them together and points them towards a goal.

Talking to a small businesses about core values can be a tough sell.  There is not a direct economic value that correlates with the implementation of core values.  Or, at least that is the common thought.  I am here to tell you that there is indeed an impact on the bottom line for organizations that have a strong set of core values.

Organizations that implement and live their core values on a daily basis improve effectiveness within the organization and its’ workforce.  This leads to less turnover, better customer retention and satisfaction and a higher degree of ownership from employees.  Now tell me that these qualities don’t impact the bottom line.   That’s not just my opinion, it is also the opinion of people much smarter than me.  For instance, one recent study from Aon Hewitt showed that every incremental percentage point increase in employee engagement resulted in 0.6% sales growth.  I think it is more than that. For small businesses that are essentially starting from very little employee engagement, this could result in huge sales growth.

However, there are some reasons that don’t correlate with the bottom line directly to implement core values of your own.  A while back, I was having a conversation with one of my franchisees about a few customer complaints that I had received related to their store.  We were talking about customer service, and during the conversation I came to the realization that customer service meant something different to them.   Neither of our definitions were right or wrong, they were just different.  Since putting a common set of values in place, we now speak the same vocabulary.  When we talk about expectations, empathy, recovery and trust (our four Laws of the Jungle) we are on the same page.

Monkey Bizness is in the process of implementing our core values.  I have come to learn that it will always be a process.  Our values will grow and change but we will stay with it.  Not just because it helps the bottom line, but because our values will be what define us.

If you have ever thought about franchising with Monkey Bizness, visit our website for a plethora of information about what we have to offer the right franchisee!