276: Scaling Wireless World to Regional Domination | Vince Lubben’s Midwest Empire

Speaker A: So I took them out to eat. After the store closed, probably four, five people. And I went around the table explaining what happened. Said somebody stealing phones. Who is it? Nobody said anything.

Speaker B: Did you say it like that or.

Speaker A: Yeah.

Speaker B: Wait, at what point in dinner is this? I mean, uh, did you order appetizers yet?

Speaker A: I don't even remember.

Speaker B: Did you even order dinner or did you just sit down at a table?

Speaker A: I think I had a beer because I figured I'd need one to get through this conversation.

Speaker B: Well, were you excited about it? Because you don't sound very excited about opening those stores.

Speaker A: I'm excited now. I guess I was trying to put myself back in those days. It's like that was hard work. We thought, you know what, I'm gonna save money on the gas and I work till 9 o' clock tonight. I gotta open at 9 tomorrow and I'll just sleep in my car. I think sometimes people look at Todd and I and my other partner Steve, and say, uh, oh, you guys, you didn't really seem to have that many obstacles or you didn't do anything stupid. I just smile and laugh at him. And I was just overwhelmed with everything going on in my life right there with my family and my son. I just realized that, wow, I need some help. Hello, my name is Vince Lubin. I'm 50 years old and I live in Sioux Falls, South Dakota.

Speaker B: So what's life like there? I don't know if I know anyone from over there.

Speaker A: Yeah, you know, it's a smaller state, probably 700,000 people in the whole state. Where on the other end of the state, the western side, is the Great Faces and Black Hills. So it's a big tourist attraction. Very beautiful part of the state. We're on the eastern side, right next to Minnesota.

Speaker B: And how cold does it get during the winter?

Speaker A: It can get really cold. It can get down to 20 below zero, probably with a wind chill factor of 50 below zero and snow. And then in the summer it can get to 100 degrees. So we have a big fluctuation in temperatures and seasons. But I grew up here, I guess, so I don't know any better. And we love it here.

Speaker B: How, uh, about we talk about you growing up there and talk about your entrepreneurial journey. But first tell us about your company and what you do.

Speaker A: Okay. I started in the cell phone business back in 1995, about 23 years ago as an outside sales rep for a local cellular company called Common Cellular at the time. And I did that and then over the years added some stores, added a Couple partners. And we've grown that now to a total, uh, of 54 stores in the Midwest, the five state area here.

Speaker B: And how many people work for you?

Speaker A: We have a little over 300, about 320 people.

Speaker B: Okay, a little over 300. You have 54 stores. Are all these stores in South Dakota area?

Speaker A: Yeah. So we got South Dakota, Nebraska, Iowa, Minnesota, and one in Wisconsin.

Speaker B: You started this about 25 years ago or so?

Speaker A: Yeah.

Speaker B: Did you grow up wanting to be a, uh, cell phone distribution guy?

Speaker A: You know, I knew I wanted to be in my own business. I had no idea when I was younger what that was going to look like, but grew up on a farm, good work ethic, and I knew that wanted to do something to kind of be on my own. And I love business.

Speaker B: Why don't you talk to us? You said you've always wanted to be in business. Even when you're a kid, kind of own your own business. Why don't you talk about that a little bit more and then how you got to where you are today.

Speaker A: Okay. So when I first started as an outside sales rep was kind of my first step because I figured I need to work for somebody to understand the industry. I really liked the cell phone industry. I saw it as a growing industry.

Speaker B: So you're in your mid-20s, right? Starting off in the cell phone business, sounds like you're only making 30k or so those first couple years, is that right?

Speaker A: Yeah, the first year, 30 some, and then the next year it got up to 50, 60 some, which back then was a really good wage. Yeah, super good wage.

Speaker B: Still solid now, even coming out of the college.

Speaker A: It's very solid now, absolutely. But we were clicking and, uh, I worked my butt off. I was working 60, 70 hours a week just trying to sell as many phones as I could, be in front of many people as I could.

Speaker B: So it sounds like the first couple of years you were pretty successful. And I don't know if there's anything else that you can think of that kept, uh, you going those first couple years. Is there anything else we can learn from as we go into your early 30s and trying to figure out how you were successful.

Speaker A: You know, always keeping a goal in front of your goals. Not just financial goals, but relationship goals, spiritual goals, just different goals that you to achieve and keep those in front of you. Because sometimes crap happens and you need to go back and say, okay, this is why I'm doing it. This is why I'm striving. Believe in yourself that I can do it. Doesn't mean, there's not going to be naysayers along the way, but if we stay focused, work hard, we can make it.

Speaker B: Well, tell us about some of those obstacles early on and those growing years.

Speaker A: Yeah, in the early years, when we opened my second store, actually one second

Speaker B: before, you had always been working for someone, right?

Speaker A: Yeah.

Speaker B: Okay, so.

Speaker A: Yeah, so the first few years, I worked on my own for the local cell phone company as an outside sales rep.

Speaker B: Still, was that Verizon then or.

Speaker A: No, back then it was actually called Comnet Cellular.

Speaker B: Okay. Yeah. I didn't think Verizon was there.

Speaker A: Yeah.

Speaker B: So you worked for a company for a few years, gained some confidence, and you said, hey, I can open up my own store.

Speaker A: Yep. Okay.

Speaker B: Yeah. So let's dive more into that. Cause that's when you have to, especially luckily, coming out of sales, you have that mindset already that you have to work hard. Right. To make money and bring in revenue. At least that's kind of a stepping stone, or at least that's the way I think about it. But when you open up your new store, that's a whole other thing that you have to think about. So just tell us about how you were able to do that.

Speaker A: I had saved some money. I got the opportunity in the fall of 1999 to have my first store in Vermillion, South Dakota. And then in the spring of 2000, Verizon was created from, uh, several different companies. One was Connet Cellular. Other companies across the nation come together and created Verizon as we know it today. When that happened, there was an opportunity in some of these smaller markets, smaller towns, to have somebody like me take over those stores. And I had the one. I was going for three more, got those. And then the week before this was going to take effect, on March 1st of 2000, they called me and said, vince, do you want another store in Sioux City, Iowa? And I said, yes, I'll take it. I had no idea how I was going to do it. I knew I could handle the three additional stores, but I really didn't know how I was going to handle it. My firstborn was in the hospital in intensive care. He's fine now. He just went to college last week. But it was total chaos.

Speaker B: So what made chaos was that fourth store. You already had four stores.

Speaker A: Yeah.

Speaker B: So it'd be your fifth total, right?

Speaker A: Exactly.

Speaker B: And you just got four at the same time. Now you're talking about total chaos with this. So we can keep going or I'd love to hear about still the first store and opening that up the very first store. Yeah, because this is huge. I mean, going from one to three. And then before you jump back into the story with the Verizon thing, I think we kind of just jumped over what's the difference? When you're just a sales guy, that's kind of what you were doing before with the old company.

Speaker A: Yep.

Speaker B: Well, now are you the only one working at your first new store or you have employees? So let's.

Speaker A: Employees, yeah, tell us about that.

Speaker B: Like what you had to do, what worked, what didn't work, and the difference in mindset.

Speaker A: Some of the things I learned about being a boss, I learned from my previous company, Zone. Some things that they did good, but I also learned a lot. Like if I'm ever the boss, I'm not going to do this.

Speaker B: That's important. Yeah, I agree, it was important.

Speaker A: And one of the things I learned that I wasn't going to do is do my absolute best of when we told the employee to do something, we had to give them the why behind it. And so often these bigger corporations I worked for, I would just get a email or direction from a boss that do this. And I didn't understand the why behind it. And that was frustrating. So I always tell myself, I'm not going to do that. We still strive to do that. We're not perfect at it today because the bigger you get, you don't have a time to sit down with all 300 some employees one on one to explain that to them. You try to get other people to explain it and go on down. But it doesn't always get communicated as good as it probably should. But there's always a why that we communicate with it. So when I first started that first door, I had two employees to start with. And then. And I kind of thought of this thing as well. This is a college town and cell phones are still new and the more college kids that could get hired even part time, the more friends they have, they'll go out and sell. So I started setting up this. It's almost like a network marketing thing that would ended up is like, okay, I'll hire you part time, you paid straight commission. And um, I had these college kids that would come and they would sell their friends. I would help do all the paperwork so make sure things got done right. And then they would come in and bring in more of their friends and the friends would bring in friends. And all of a sudden I took that little store that was a corporate owned store, probably doing 30 phones a month all Of a sudden, I was having to do 100 phones a month. They thought, wow, Corporation thought that was awesome. Vince, what are you doing over there? I kind of told them. I did tell them what's going on. And that way, a couple months later, I put myself in position to get four additional stores total five in March of 2000. So that's how that kind of worked.

Speaker B: Oh, yeah. That's smart to think that way, because especially with younger people, you realize that technology they're going to be interested in. But what city was that? Was it still the same city you were in?

Speaker A: Yeah, Vermilion, South Dakota was the very first store. It's home of University of South Dakota.

Speaker B: Oh, South Dakota. Okay. That's what I was going to ask, what university you were talking about. Yep, you do that. So you get interest from. Is it Verizon then to open up these four other stores?

Speaker A: Yes.

Speaker B: Okay, tell us, how much did it cost to open up that first store and then get these other stores as well for you?

Speaker A: You know, first store is about 10,000. And then the other stores probably maybe 50,000, needed some inventory. But Verizon gave me a float of me a line of credit.

Speaker B: 50,000 each for each store.

Speaker A: 50,000 total. So a little more than 10,000 a store.

Speaker B: That doesn't seem very expensive for you. So you're buying into this and then they set everything up for you as well?

Speaker A: Yeah, in these cases, you know, the rents, the leases were set up, had employees. So on, uh, March 1, 2000, for these additional stores, I started taking over the rent payments, utility payments, employee wages, took it all over. They floated me a line of credit for the phone inventory and accessory inventory. So it was pretty tight. My cash flow was very, very tight for the first year, two years. And then as it started to free up, then we had money to add some additional stores. So we never did go into debt as a company. So we've been very blessed that way.

Speaker B: Let's talk about back then we don't talk about yet today. Maybe we can talk about that a little bit later. So, like, what money goes to them? What money goes to you when you're buying into these stores? Just so we get a concept of how this works. Because personally, I don't even understand how it works. I mean, I see Verizon stores around. I'm in Jacksonville, Florida. I'll see all these types of stores just like you owned, where they probably owned maybe 50, 100, whatever stores. But how does that work monetarily? Like, how much goes to Verizon? How Much do you get and what are the liabilities for you and them?

Speaker A: As the, uh, Wireless World, the company I own, part owner of, we have a lease with the landlord, we pay for the utilities, the employees work for us. All that money that we take in, we have to pay those bills. We don't pay Verizon. What happens is Verizon pays us a commission. So we'll get a commission for every phone that we sell from Verizon and then accessories. Well, we get to keep that. Uh, we buy an accessory for $15 and sell it for 20. We get to keep the $5 profit.

Speaker B: They pay for all the inventory that's in there too. You just get commission on whatever phone comes in.

Speaker A: We pay for the inventory and then they pay us back within our commission. That kind of happens about the same time. We have about six 30 to 60 day terms on the inventory and our commission check will come about that same time frame. There's a lot of money moving back and forth at, uh, the end of every month.

Speaker B: Well, can you just walk it through examples? So if I bought a brand new iPhone, it's $1,000 to keep it simple.

Speaker A: Sure.

Speaker B: So how much do you get and how much do they get? And like how does that cash flow go that you're talking about?

Speaker A: Thousand dollar iPhone. Verizon will put that on 24 months payment of around $40 a month. Verizon will pay for that thousand dollars within that same time frame. It will pay us back that thousand dollars once it's activated and then we'll get an extra commission on top of that.

Speaker B: Can you just give us a ballpark? I mean, I don't know, we're talking about like 5 or 10%. I'm just trying to see how the cash flow works on this. You don't have to give us the exact number. We're just trying to get an idea of. We talked to a lot of different founders and you know, a lot of them I don't understand all the time how they actually make money at the end of the day, you know, so I'm just trying to make it as simple as possible. So we get an idea.

Speaker A: So we'll get maybe 7 to 10% commission on that sale.

Speaker B: Okay. And that's because of the wireless contract or whatever that they're buying into. Okay. That's the contract that they're actually giving the commission on, not the actual phone.

Speaker A: Correct.

Speaker B: So you can sell the phone higher if you want, right?

Speaker A: Or no, no, we can't. A lot of that's controlled by the manufacturer, and some of it's controlled by Verizon, but the other part's just controlled by the market.

Speaker B: Right. But I feel like Verizon should almost like, why did you have to pay for the inventory versus why didn't they?

Speaker A: They just set us up as their own business. That's the way they've always done it. Now some other carriers, different way where they'll consign the inventory.

Speaker B: So it just depends carrier to carrier. Okay.

Speaker A: Yes.

Speaker B: So at least we get an idea of how the Verizon model works. They saw how great you're doing in this South Dakota university market. Right. They ask you if you want four other spots, you say, yeah, let me do it. And you're in your mid-30s at this point.

Speaker A: Yep. Young 30s.

Speaker B: Yeah, young 30s. So tell us what happens. I guess you had saved up enough money to buy 50,000 worth of stores.

Speaker A: Yep. Okay, did that. And then I knew I could handle the, uh, three additional stores. But then adding that fifth store in Sioux City, Iowa, that's a big store. It was doing big volume. And I was just overwhelmed with everything going on in my life right there with my family and my son. I just realized that, wow, I need some help. So I knew this guy named Todd and I asked him if you want to be my partner? He said, yeah, let's give it a shot. So we loaded up our cars with phones and landline phones plug in and printers and computers and.

Speaker B: Wait, wait, wait. You said you put landline phones into your car?

Speaker A: Yeah, I know it sounds weird, but I needed something to plug in the wall. So customers called. You know, it was a business. Okay.

Speaker B: Because it is called Wireless World. So I hope you don't have any of them anymore.

Speaker A: It's Wireless World. In our stores, when customers call the store phone, that, uh, is good old fashioned landline phone.

Speaker B: Yeah, I'm, um, joking with you. All right. This guy becomes your partner and then what happens?

Speaker A: The first day we get there around six in the morning, we have a lot of work to do because the previous day it was a Con Net cellular store. And today we were going to open up as a Wireless World Verizon store. So customers have been coming in that store for probably eight years. So they knew that that was a cell phone store. So we opened up at 9:05 or 9:00'. Clock. And then at 9:05 a customer comes in and walks up to the wall and says, I need a car charger for my Motorola phone. And we help him get it. He gives us two twenties and we look at each other and we say, crap, I have nothing. And we're digging out in our, uh, ashtrays of our cars to try to find change. And I think sometimes people look at Todd and I and my other partner Steven said, uh, oh, you guys all just went so well for you. It was all so easy for you. You didn't really seem to have that many obstacles or you didn't do anything stupid. I just smile and laugh at him because I tell them. I could tell you lots of stories and this is just one of them. Like, who would open up a store, open up a retail business, not have a cash drawer? But we did. We worked through it. Customer laughed at us and looked at us kind of weird like, what's going on here? What happened?

Speaker B: I'm here with our past guest, John Austison, and he helps people just like you find the right franchise opportunity and building a business by yourself. As we discussed in episode 270 with John, I mean, it's really difficult to do it with a blank slate. And when you can have a template or something to kind of help make you more successful, I think that's what franchising gives you that opportunity to do.

Speaker C: We've seen a lot. It's our humble belief that there are easier paths to business ownership than many consider out there. And non food franchising is our favorite avenue. And by that I mean all the industries outside of foods, everything from home and property services to health and wellness to categories like kids, pets, seniors. You know, you always hear the term riches in the niches. And that's what we see day in, day out in all different types of business models at different price points, uh, that are allowing people with a variety of backgrounds to step into business ownership where they're in business for themselves but not by themselves. They've got a team on the sideline that's supporting them.

Speaker B: And so could you dive a little bit more in details about how this approach of, uh, buying a franchise or buying into a franchise is different from starting your own business.

Speaker C: And I mean, certainly when you look at the success rates if you start there, you know, franchises are so much higher than a traditional startup. And um, you know, some of the benefits of the franchises, you've got a franchise or on the sidelines, it's like a business coach. The better you do, the better they do as well. So they're aligned, interest, uh, you've got a community of other franchisees live in the same thing thing day in, day out. You're exchanging best practices again, you've got community. You're not in business all by yourself. Certainly you got streamlined supply chain or maybe there's brand recognition. You're able to step in and have a technology stack. Day one, you've got optimized marketing because it's already been proven out in other markets. So there's just so many benefits, especially when you go to sell the business down the line too, you oftentimes get a higher exit value. Based on research out there that has looked at like kind industries of franchises and non franchises. You know, one path Austin that we see a lot of people looking um, to take is that of ETA entrepreneurship through acquisition. You know, there have been books and publications out there on this topic and that could be a great path. You know, an existing business in a market that may have brand awareness and they've got a team in place and maybe they're already profitable. However, over and over again, every single day I have clients reach out, say, hey, we've been looking at existing businesses for the past two years, three years, four years in some cases we've been under loi we've come so close, but then we get outbid or something comes up during the due diligence process or we just haven't found that needle in the haystack. And while there are some good opportunities out there, they're really hard to find. And oftentimes people are better off starting a franchise where instead of an existing business, you've got an existing business model, but you're able to put your thumbprints on it in a new market. You know, one thing that people oftentimes overlook is with an existing business, there's an inherent risk to it. Typically you're paying a premium for that opportunity and you're assuming that everything's going to stay as is you know, on day two, day three, day four. But we all know that whenever you have a change in ownership, oftentimes you lose some some of the key employees. The culture starts to change, people are worried about their jobs, you may lose key customers. So all of a sudden you're in there and what you paid for doesn't look the same m a few weeks after you bought it as what you anticipated. So that's one of the reasons we love the franchise model. And most of those clients end up purchasing a franchise instead. Oftentimes it just wasn't on their radar. But they say, hey, here's a proven model from other markets. And I can get into things like home and property services or health and wellness or kids or pets or seniors all these different niches and really have their choice. And they've got historical financial information. Again, they've got a team on the sidelines supporting them from day one. Proven business model. But you're putting your thumbprints on it. They're in your market from day one. So again, when people start to think about it in those terms, the vast majority end up going with the franchise versus the existing business.

Speaker B: A lot of people just think about starting their business from the ground up. But another level is, hey, why don't I buy a business? But if you're just buying a business and not into a franchise, like, it could be a bit like a, uh, family business. And it's just that one family business. So you're relying on all the details that they have there versus, I guess if they go with you and kind of get a franchise, they do have a network of other people that they can rely on that could help them and kind of mitigate that risk. It sounds like too.

Speaker C: That's exactly right. And we have some acquisitions, you know, that our clients will do within the franchise world. You know, um, eventually people are going to sell their franchises, right? And so that can create opportunities. But the vast majority, once they really dig in and learn more, they like the idea of starting fresh, you know, with putting their team in place, putting their thumbprints on the culture, but with all the support of the franchise system. So, you know, there can be some great acquisition opportunities out there. But what I found is it takes a lot of time to find the right one. And, uh, you really have to have the stars align, whereas you can get going much faster with a franchise.

Speaker B: And if someone wanted to use your services and find out a little bit more about you, John, what's the best way for them to reach you to start a call?

Speaker C: Yeah, the way we work at Franbridge Consulting, we're essentially a real estate broker, but for franchises. And so our clients never pay us a nickel. It's entirely free. We get a referral fee from the brands on the back end and none of that's passed on to our clients. So want to make sure that's clear. It's entirely free to work with us, but I would encourage people to come out to our website, franbridge consulting.com. that's f r a n bridge consulting dot com. Share your email address we'll reach out to you and share a free downloadable copy of our book, either PDF or audio format. But our book, Non Food Franchising, I think can be a great primer to help people get the juices flowing and better understand how franchising works and why so many are jumping into it these days. And simply reply to that email if you'd like to take a next step and book a call. You know, I've been able to help so many of your listeners in the past, Austin, and would love to help even more. We've, uh, never seen so much interest in franchising. So just indicate that you'd like to jump on a call and I'd be more than happy to help.

Speaker B: Well, why did the store switch? Why did they sell it from? Was it still a Verizon store before?

Speaker A: It was a Comnet Cellular store before.

Speaker B: Right. But I didn't know if Comnet cellular was like LLC underneath Verizon wireless or kind of like your wireless world. I mean, do people see wireless world outside or do they just see Verizon? When we're looking at your storefront, they see both.

Speaker A: They'll see the big Verizon sign on the door, it'll say wireless world. Continent cellular was a cell phone carrier, a small one like Verizon and Comet cellular rolled up into another company which rolled up into become part of Verizon.

Speaker B: Okay, that's what I was trying to figure out. I'm like, why'd you move into there? But that's because Connet rolled into Verizon and they needed somebody with Verizon experience. So I'm like, what happened? I mean, because it does sound also easy for you now because everything's been working out pretty well, business wise and personal and financial.

Speaker A: Yeah, we think so. But times were tough. It was just the money was going out faster some months than it was coming in. And uh, Todd, my partner there, he drove, he lived about an hour from there and there'd be nights that, uh, he thought, you know what, I'm going to save money on the gas and I work till 9 o' clock tonight, I got to open at 9 tomorrow and I'll just sleep in my car. So he'd sleep in his car. When we go to different events to try to learn more about the industry and make more connections with vendors, we would share hotel rooms, we would take the red eye flights. We were trying to save every money we could. We were lean and mean and we didn't have many employees. And sometimes it almost burned us. We didn't have enough administrative help to have checks and balances. We almost got burned pretty bad early on.

Speaker B: Well, I mean, these other stores, did they not work as well as your first one? Because they didn't have the same kind of college market that you were used to?

Speaker A: Yeah, that was part of it. And they were just bigger and the cash was going out pretty fast. Um, and we had more employees. And all of a sudden we went from probably four employees to 30 overnight.

Speaker B: So what was your biggest issue? It sounds like maybe you taking over these four stores at the time seemed like maybe a mistake. You didn't have enough money for the fluctuation. Just in case. Is that what happen?

Speaker A: Yeah, I think that was part of the challenge is just having enough money in the bank to feel comfortable.

Speaker B: Well, how about these other stores? So how far away? Usually pretty good at geography, but I don't know about South Dakota, honestly. So how far away are these other stores from your home and where you're working?

Speaker A: About an hour and a half.

Speaker B: Okay, so that's pretty far distance. Are you going to all these stores? Like, I imagine not. Uh, everyone, obviously, every day. But I mean, what's your role like? Because it must be different from running one store to five.

Speaker A: I was trying to get to every store about once a week. And, uh, I was on the schedule lots of times to work on the sales floor. And I would leave early in the morning and lots of nights I wouldn't get home till 7, 8 at night. And then I would work at night with my laptop in front of the TV lots of times just trying to get caught up with email and bookwork and so forth.

Speaker B: It sounds like you're barely making ends meet at this point. After you buy the four extra stores, you're making money, but it doesn't sound like you're making much of a profit from taking on all this extra work.

Speaker A: Yeah, those first year, tough. Just trying to build the infrastructure and build some inventory levels in the stores. We didn't take hardly any money out for our own personal wages.

Speaker B: So if you had to tell someone who is kind of buying into a franchise, because that's basically what we're doing here, what would be your suggestions? Looking back for anyone who was wanting to expand from one store to multiple,

Speaker A: make sure you have some cash set aside or money available to get you through those first six months. For sure, those first six months are tough and it takes more than you expected.

Speaker B: Well, were you excited about it? Because you don't sound very excited about opening those stores.

Speaker A: Well, I'm excited now, I guess. Just I was trying to put myself back in those days. It's like that was hard work. It was worth it, obviously, it turned out, but it was super hard. It was grinding and, uh, it was long hours.

Speaker B: Well, let's put it in perspective again, because I know we mentioned it earlier on how many employees work for you now and how many stores do you have now?

Speaker A: About 320 employees and 54 total stores.

Speaker B: Okay, so we've 10x what you did, but even looking back now, you're thinking that that must have been the hardest jump for you personally, going from one to five.

Speaker A: Yeah, you bet.

Speaker B: Yeah. Because I mean, even then you're learning all these new employees and then you're having to go all these locations.

Speaker A: So yeah, so we had gone from five stores to 20 or what time from the year 2000 to 2010.

Speaker B: Seems like eventually over those five stores, right?

Speaker A: Yep.

Speaker B: Jumping back to that before we get to the 20. I mean, over the 20 was a 10 year period, but first couple of years were difficult, it sounded like. But was there anything that you had a jump that really significantly helped y' all stabilize and be able to grow and buy these other stores?

Speaker A: Yeah, between 2000 and 2010, the market was growing. There was just a need for more stores and different towns. And some of the locations we picked out didn't work. We thought, hey, this is a great location, great population around here. This should work. And sometimes we failed. And then other stores we.

Speaker B: Why would they, though?

Speaker A: You know, in the Minneapolis suburbs, it's trickier than I thought. In South Dakota, we pick an area with 20,000 population and put a store in there. It would be successful, and it was successful time and time again. But then we go into a Minneapolis suburb of a population of maybe 40,000, would be the only store in that suburb, and thought, oh, this is going to work. But we struggled in a lot of those stores. It's just a different retail pattern. It's hard to get a good location with great visibility from the road. People were used to going to other, bigger corporate stores. It's a different market and a different challenge in those big cities that we weren't accustomed to. And now we're better at it.

Speaker B: You were better at the smaller cities in the bigger cities, you're saying?

Speaker A: Yes. Yeah, we were.

Speaker B: So that's just because you can usually get a better spot in the smaller cities.

Speaker A: Yes.

Speaker B: Okay. Because I mean, my background, like I would do mortgages on retail shopping centers. So we'd look at all the things that maybe a normal listener right now who's at least in the US doesn't think about how much stuff goes into a retail location. It's like you said, one of the big things is visibility but you also want to make sure you're somewhere near traffic. Like you see a lot of these stores near Walmart. Right. Or one of those retail shopping centers. But from your viewpoint, what else were you looking for? Like now that you've been doing it enough and have 50 plus stores, what are you looking for when you try to open a retail spot that hopefully we can learn from?

Speaker A: Great visibility is huge. And we just opened up a store in Lincoln, Nebraska. It's right next to the road. We got big signage. It's one, uh, hundred feet from a corner with a stoplight on a busy road.

Speaker B: And you're saying a lot of important things right there. That again, I want to make sure people understand all those things are really, really important. What you just said.

Speaker A: Yeah, so important. Right? Yeah.

Speaker B: People might not think about it. You're like, okay, but being near an intersection. Right. Is very important because everyone's stopping so they see it versus if you were just on one. I don't know what interstate runs through South Dakota, but maybe you're right off there. People just drive by not even seeing it right.

Speaker A: Yeah. A perfect example. We have a store in Minnesota, one of the suburbs close to Minneapolis. It's along a highway, busy highway. We're setting off quite a ways, but people are going 65 miles an hour by that road. And it's like, wow, it's not easy to get in and out. And it struggles. Even though there's a lot of traffic, but traffic that's going slow by a stoplight. Big signage.

Speaker B: Are there any other tricks that you've kind of figured out in selecting these retail locations?

Speaker A: Getting that strip mall closer to the road so important. So often I think people that build strip malls don't understand them or didn't own a retail store. They may be very good at building buildings. They don't stop and think the retailer really, really wants and what's important to them. But getting that building close to the road, put the parking on the side or in the back is critical. Sometimes people build strip malls and they only put two foot section to put the signage. And it's better to have four or five foot section on the top of the windows area to put signage. Because signage is critical. If people don't know you're there, they don't come and then you can't be

Speaker B: successful when selecting location. I guess we're on point on any stoplights, corners and people not driving too fast. Why don't we go ahead and talk about growing from the 5 to 20 stores. What else you Learned during that point

Speaker A: in time, we learned we needed to have good people and great checks and balances. I got a kind of a funny story. It's funny now because we survived it. It was not funny at the time because we had a guy stealing phones from us.

Speaker B: That's not funny at the time.

Speaker A: That's not funny at the time, when cash was tight, we had this manager, we'll call him Bob. So Bob was smart. He's a great sales guy. He was selling a fair amount of phones in this store in Minneapolis. And we thought, as every month, we'd look at the profit and loss statement and we'd say, man, ah, why aren't we making money there? We're selling enough phones. We should be making money. And I go to Todd, and Todd, there's something wrong with this store. Month after month, it's doing good sales, uh, but we're losing money. And he said, yeah, I know, I can't figure it out. I said, I can't figure it out either. We keep looking at it. And then finally Todd figured it out. He says, you know what we're missing phones. I think phones are being ordered, but the guy's not putting them into inventory. He's not putting them into our computer system. And found some examples. We tracked some serial numbers and yeah, okay, here's a box of phone that was ordered. Never got into our computer system. I was in Minneapolis. I took the whole store out to eat. At first I'd gone to Bob. The manager said, I don't know what's going on. So I said, okay, we're gonna have a come to Jesus meeting. We're all going to go out to eat. We're going to get to the bottom of this. So I took him out to eat after the store closed, probably four, five people. And I went around the table explaining what happened. Said, somebody's stealing phones. Who is it? Nobody said anything.

Speaker B: Did you say it like that or.

Speaker A: Yeah.

Speaker B: Wait, at what point in dinner is this? I mean, uh, did he go order appetizers yet?

Speaker A: I don't even remember.

Speaker B: Did you even order dinner or did you just sit down at a table?

Speaker A: I think I had a beer because I figured I'd need one to get through this conversation because I didn't know

Speaker B: if we're just having small talk and then all of a sudden this happens or. Yeah, there's a point in time you want to bring it up if you're breaking up with your girlfriend and, you know, at Thanksgiving is probably not the best time, so.

Speaker A: Exactly. It was early on. And I couldn't get people to break. Nobody broke.

Speaker B: And what do you mean by you try to get them to break? Were you order torturing them or what?

Speaker A: No, I knew somebody was stealing phone. I thought if I kept asking or ah, probing in different ways, I'd get somebody that would not look me in the eye anymore with confidence.

Speaker B: Right.

Speaker A: Nobody gave in. So then I go back to my hotel room. The manager, Bob, calls me and he says, vince, can I come to your room? So yeah, come to room 212 and knock on the door. He comes in the room and he was tougher than me, he was a bigger guy than me. Stands in the doorway and says, I got something to tell you. And I'm kind of cornered in my room, small hotel room in the back. And I'm like, okay, this is kind of weird. This was a, uh, you know, late at night, he had been at the bar drinking. Yeah, I think it's like 11:30, 12 at night. And I was like, okay, and he

Speaker B: knocked on your hotel room because you couldn't get any of them to break at dinner?

Speaker A: Yeah, yeah.

Speaker B: Okay.

Speaker A: Then he comes to my hotel room and says, vince, it is me. I've been doing it. I've been buying these phones. I order them on a Friday, the only one that works. Saturday morning I'll have Saturday delivery. I'll take the box of phones, I bring them to my trunk in my car, and then I go sell them on ebay. I said, oh my gosh, do you know how much you've been doing? He says, I don't, but I've been blowing the money. I've been gambling on different things, buying every gadget possible. One of the things he did over that time frame was took me to a Minnesota Wild hockey game. Front row seats, probably the most expensive seats in this arena, and took me out to eat. And he said, oh yeah, this is just friends of mine. They provided this for me.

Speaker B: You're, uh, his friend?

Speaker A: Yeah. Later I realized it was my own dang money that he was using to take me out and blow hockey game.

Speaker B: What a guy.

Speaker A: Yeah, what a guy. And so $73,000 later, we find him. Yeah, that was a lot of dang money.

Speaker B: This is very important because unfortunately something like this is going to happen to someone who's listening, growing their own business. So what do you do after? Like how do you find out exactly? I guess at least he came to you, right, and said something then. I mean, you're eventually going to figure it out. I think you knew that that's why he did that.

Speaker A: Yeah.

Speaker B: Luckily you just had a get him liquored up to say something. What do you do then? Do you have to sue him or does he say he's going to pay it back? What happens?

Speaker A: It took a few days to figure it out, and we said, okay, you got to pay us back or we're going to the police. And it was a big enough dollar amount that he was probably going to end up in jail. And if you end up in jail, he probably wasn't going to make money to pay us back. So we met with him and his wife. And I, uh, remember that day, we just met in the parking lot of the store. And they come together with a plan. His plan is his parents in law were going to go get a second mortgage in their house. They paid us back. And part of that plan is, I'm going to try to make a productive person out of you. I'm going to try to keep your family together, and I try to get you professional help. Because he was a good guy. He just had an addiction. He was almost a gambling addiction. First you do one phone. Hey, he didn't get caught. So then he did two phones, didn't get caught, and then he did 10 phones. And then it just went on and on, and it kind of become a little bit of a. Well, uh, it was an addiction adrenaline rush for him. Yeah, exactly. And he couldn't control it. So part of the recovery plan for him was that he needed to go to counseling for a year. And every quarter for a year, I had a written report from his counselor signed by his counselor on how he was doing. And he went on become a very successful salesperson in a different industry. As far as I know, he's still doing well today.

Speaker B: Was he still working with y' all through all this?

Speaker A: Oh, no, he was done. That night was his last day.

Speaker B: Yeah. I don't know how you go to the father in law and ask for that, but I mean, that's his fault, right? He was the one stealing the money.

Speaker A: Exactly. Yeah.

Speaker B: From there, I guess at least we got some experience on what can happen, because it's pretty easy to figure out. But maybe most people don't think about it. Obviously you didn't want them going to jail because you want your money back. And if you did that, then you'd have no chance to get it back.

Speaker A: Yep, that was part of it. You bet.

Speaker B: So at least you got that back. And then what year was this now? I mean, this is after expanding to 20 stores.

Speaker A: Yeah, this is probably somewhere between 2005 and 2007, I think. Now I could go talk about the timeframe between 2010 and now.

Speaker B: Okay. Yeah, that's perfect. You had 20 stores at 2010 and then now up to 50 plus.

Speaker A: Yeah, around 2010, we had four partners at one point, and now we have three. And things were not going well with myself and another partner. And that created stress within their ownership group and within the company. And we end, um, up splitting up and split up some of the stores. And we each went our own way. One of the things I learned, even though good people get together, doesn't always mean good things will happen. Whether it's a marriage or a business partnership, that can be for lots of different reasons. Difference in values, ambitions, perspectives, passions, work ethics, gifts, talents. When that happens, when people aren't getting along, it creates stress. So critical relationships is a key to success in business, in life, in all areas.

Speaker B: Earlier you said you had one partner, right?

Speaker A: Yeah, one partner. When we started in 2000 and probably 2001, we added two more partners. So we had a total of four for quite a few years. And now we have total of three of us.

Speaker B: Okay, so now there's a total of three. And we'll talk about that downsizing m real quick. But how about when those people buy into your partnership? Because at first you opened the first store by yourself. So what's it look like when you bring on somebody else? Because this is something we could learn from about bringing on partners, like how you give up equity and whatnot.

Speaker A: I don't know if we did it all right, but based on the situation, I just needed help. So some of the partners we added on lived in different parts. Two of the partners we added on lived in Iowa. And I just need help to cover that area.

Speaker B: Many would be entrepreneurs are, uh, unsure where to start. But John Austensen of Franbridge Consulting can help you. And luckily for you, I've got him right here. So I know we had talked about John maybe talking about the top 10 benefits of the franchise model. Could you go ahead and share those with us?

Speaker C: Yeah. Thanks, Austin.

Speaker D: Appreciate you having me back. And I'm passionate about franchising. I've just seen firsthand how it's a better path to business ownership for so many out there.

Speaker C: I will say this, though.

Speaker D: Uh, you know, franchising is not right for everyone. Some of the trade offs to franchising versus maybe starting your own thing with the franchise system, you do have to stay within the lines. Now, most good franchisors will let you have some leeway there, but in my experience, you know, following the playbook and the franchise order leads to success. But you do have stay within the line, so it's not right for everybody. Also, you're paying a royalty. You know, oftentimes this is in the 6 to 8% of revenue range back to the franchisor. And the question you want to ask as you go through the exploratory process is what am I getting support wise for that are these dollars that I would be spending on my own anyway elsewhere? So it's just something to keep in mind and we can talk more about that. But that being said, I feel the trade offs are far stronger and I, uh, put Together a top 10 list here and we'll kind of run through this quickly. With a franchise, you're starting on third base versus first base. Just to be cliche on you, Austin, on day one, you know the roadmap to profitability and you can start executing against it. Secondly, you're not questioning product market fit. It's already been established in similar markets. There's someone out there that's willing to pay for the service or product that you're providing. Third, it's synonymous with franchising. But you've got a playbook that's been proven out again in other markets. And this oftentimes includes things like marketing and operations. The franchisors put together the best practices, steps you take to standing up that business in the beginning and then how to execute from there. A lot of templates as well. Fourth, franchise systems provide extensive marketing support to their franchisees. They don't expect you to have a marketing background. Oftentimes this is done for you. And that can be digital print, any number of different mediums. Oftentimes they also have preferred vendors that have learned the business well. And as a result, on day one, you're not trying to optimize your marketing because it's largely been optimized because they've been running the same marketing in other markets and they know what's working and what's not. So you're able to get an increased return on your ad spend. And I think oftentimes that goes overlooked. Fifth, you've got a technology stack. You're not having to go out there and piecemeal different systems together. They've already got everything selected and customized for you to step into. The heavy lifting has really been done on the technology side. Number six, you've got a coach on the sidelines in that franchisor. You know you're not in business ownership alone. Again, to be cliche, you're in business for yourself, but you're not by yourself. Number seven, again, this is oftentimes overlooked, but you've got other franchise owners across the country in similar markets. They're living the same thing day in, day out. So you're constantly sharing best practices and learnings with them. You're testing different marketing vehicles, you're finding different pools to fish in to find the best employees. And again, just helps you move faster than you would be on your own having that community. Number eight, franchising doesn't totally de risk the proposition. Granted, the numbers are a whole lot stronger from a success rate than a traditional startup. But at the onset, you know, you get to talk to other franchise owners as you're exploring the opportunity before you ever sign on the dotted line. We call that the validation process. You also get to see past financials represented in what we call the Item 19 of the franchisor's FDD, the Franchise Disclosure document, which every franchise system has. So you get some really good visibility. You're not just building a proforma on the back of a napkin. You know, going into it, you really do go in eyes wide open. Number nine, again, oftentimes overlooked. But you have collective buying power. Now of course this could be for products and equipment, but it can also be for services. It could be as small as, hey, we've got an arrangement with a bookkeeping firm or with the marketing agency or with the healthcare provider where you're able to group together with other franchisees and get lower cost for your ongoing business. So again, when you think about paying that royalty, you have to really weigh each of these against it and say, wait a minute, I'm also getting a lot of savings over here as a result of that. And then finally, this is eye opening. Austin, the exit value. So the Rinker School of Business recently conducted a study looking at over 2,000 businesses, their transactions over the past 10 years. And what they did was they compared businesses that were franchised and non franchise in like kind industries and what they found is that franchise businesses, when they go to sell them down the line, trade at a multiple 1 1/2 times your average non franchise business in a like kind industry. So really eye opening to a lot of people when this research came out, because end of the day we all know this as business owners, we're not just building for cash flow, but we're also building for exit value. And then the third trifecta is of course, you know, you get tax Benefits by being a business owner. All of which apply in franchising, but as it would in a startup, but you get a higher exit on average. So that would be my top 10 right there in David Letterman fashion. I, uh, certainly would love to help any of your listeners. We've helped so many in the past. But if people want to come out to our website, franbridge consulting.com they can sign up for a free copy of our book, Non food Franchising. I would love to send that over to you. We have different digital versions you can download. And then if you're interested in taking a next step and feel like this is something that the timing may be right to explore franchises, I'd be happy to get on a call with your listeners and have that conversation. And again, if you come out to franbridgeconsulting.com, we can make that happen.

Speaker A: Yeah.

Speaker B: Uh, well, thank you again for joining us on this franchise segment, John. And just one more time, in case anyone didn't hear it, it's franbridge consulting.com all one word. And, John, I just want to say thank you for doing these segments with me. It, uh, helps all of our listeners of the podcast. They get to listen to it for free while you're supporting it financially, but they also get to learn about these cool business opportunities. So thank you for the support, John, and thank you all for listening. Well, tell us about, like, did they give you money to buy into that? Because do you own the first store? 100%. Then once you buy the other four, your partner and you've split it 50. 50. How's that work out?

Speaker A: Yeah, so what we did is those first four stores that I have, I own still today, 100% by myself. And then we have about six different corporations under one big umbrella corporation. And within those six different corporations, there'll be different states and different ownership percentages. Some. My partner, Todd, he owns three stores by himself. I own those four original stores by myself. And then the other some of the areas it's just Todd and I, But a lot of the other areas, it's Todd, Steve and I that, uh, own those stores.

Speaker B: Yeah. Because this might sound complicated to some people, but this is how a lot of real estate structures work as well, that you have one parent company. Right. You can almost think of Verizon. They're not quote, unquote, your parent company. But then when someone's buying into a real estate deal, they could have 12 different partners. And then five partners own 100% of one LLC. The other seven, three might own 25%. The other four might own 25%. So it sounds kind of complicated, but usually if you draw it out in a map form, it makes it much easier to understand.

Speaker A: Exactly.

Speaker B: Okay. And that makes more sense because I'm like, there's no reason for you to give up ownership on those first ones when you did everything, but then you are still basically partners on certain stores and not certain stores and have a good working relationship. It sounded like, as we're kind of closing in on the end of the story here, what have you learned over these last couple of years? What's your work life like now and your role versus when you started selling cell phones back in 94?

Speaker A: Well, I needed better work life balance. I realized I need to hire more district managers and Todd, Steve and I realized we needed to hire more leadership folks at a higher level. And that helped give a work life balance for me. It helped get a better company culture, helped my life. It helped the whole company. We come up with our mission and vision statement, core values, and we focused on those. And that has helped us create a great company culture and has helped us create a very loyal base of employees. Our employee turnover rate is about one third of most other retailers in our industry and something we've maintained for quite a few years. And I think we've got something special. And I can talk a little bit more about that if we have time.

Speaker B: Yeah. Compared to your stores, to other stores, you have a third of the turnover.

Speaker A: Yeah.

Speaker B: What's the difference between your store and being able to keep people versus other competitive wireless stores?

Speaker A: Commission scale is part of it. How the boss treats the employee is a big part of it. But if you can get the right people in place and they treat the other people how they should be treated, then people will stay. People will be more loyal to them. If you care about them, once you care about them, then they care how much you know and hopefully be willing to be more coachable and humble and hungry, motivated and be willing to help the company. If the bosses are likable and caring, employees are more likely to stay. Now, of course, commission is part of it. You got to pay a competitive salary, competitive commission rate. But this other non tangible stuff, it's real. And it's hard to put a number to it. It's hard to put a spreadsheet to it. It's hard to figure it all out. But I truly believe it helped us have a lot less turnover than our peers.

Speaker B: I could see, especially in that sales role where you have a manager who thinks he's Mr. Know It all and they're at another wireless store. Like I wouldn't want to work with him, even the same commission structure. But if you have someone who's actually caring enough and you can tell that they actually care about you as an employee, say I'm a sales guy, my manager above me, who's got like seven stores is likable and cares about me, then that makes a huge difference to them. They just want to be acknowledged.

Speaker A: Mhm, very true.

Speaker B: Maybe getting those people because you kept saying you kept growing your staff so you have to do less. So hopefully when you have these people who are running five or six different stores for you, they're more energized than maybe you used to be. If you're running around doing everything yourself. And hopefully I think the attitude of gratitude is a very important thing if you preach that to them. I think once people start realizing that more, that really changed a lot of perspectives. So hopefully that's one that they definitely remember.

Speaker A: Yeah, I believe they're keystone core values. If you can get attitude of gratitude and guest experience down, the other 11 core values will fall into place pretty quickly. And you know, it's easy to complain about the things we don't have, but we need to be thankful for the things we do have and we generally find what we're looking for. And I sometimes tell my folks, Oprah Winfrey once said, the more I count my blessings, the more blessings I have to count. It's very true. And ah, we can be thankful that we have a inside job and a hot day, or we can complain about the customer that's coming in complaining about their bill. But what you focus on, more than likely you'll get over time.

Speaker B: So you're a big Oprah Winfrey fan?

Speaker A: Not huge, but she's got some good points.

Speaker B: That was a good quote. I hadn't heard that one, so I'll give you that one. Those are the two most important things I think people like. The more you think about that, you can say how hot it is outside, but at least you get to be outside. Maybe you're not in jail, right?

Speaker A: Yeah.

Speaker B: Uh, get that ability. So maybe, you know, even if wasn't your quote unquote your fault, you could go to jail or prison if you didn't commit something. At least you have freedom.

Speaker A: As Americans, we're blessed to be born in America. I go to Haiti quite often and the first time I went to Haiti in 2014, I just remember I was on this mission trip and stay at this property and had an outhouse. It had a bucket shower and had a bunk bed. It was hot. There was no wind. It's humid. And the first day went up into the mountains to go visit the others and come back home that evening to our property. And I remember to sit there and being thankful for an outhouse because the folks in the mountains didn't even have an outhouse. And that's when it clicked on me that, uh, it's perspective. The word that I use is perspective. And perspective can help you understand, have an attitude of gratitude, because so many of these Haitian folks are so happy, so happy just to see us. My wife will come with me and go to the dollar store ahead of time, pack it up with backpacks with bubbles and yo yos and little race cars and dolls, and she'll just give these out. And it's like the kids won the lottery, you know, and we are so much here in America, and we forget to be thankful. So, uh, having that perspective has been a game changer for me. We've taken employees on two different trips. Next April, we're going to take another group of employees on a trip down there to Haiti and help serve our, uh, friends, our, uh, brothers and sisters down in Haiti. And it's just amazing. They have so little but so often are more happy than we are. And when I get my people to understand that it's a game changer for them, just like it was a game changer for me.

Speaker B: Well, the problem is we're all on your phones too much.

Speaker A: Yeah, that's my fault.

Speaker B: Because of you, Vince.

Speaker D: Uh.

Speaker A: Oh, shoot.

Speaker B: We appreciate you telling your story and telling us what it's like to be in South Dakota. And I think there's a lot of little different tidbits we can learn from. Growing from that one store to where you are today. Think about it. Now, for you, when you opened that one store, did you ever think you'd get to this size? Do you have dreams of that?

Speaker A: As I go through life, I would say I was at 1. I could see myself at 4 when I was at 5, then would jump to 5 right away. And when I was at 5, I could see myself at 10. And we're at 10. I could kind of see myself going to 20. I didn't start at 1 and say, hey, I want to get to 54. I just couldn't see that far right or wrong. That was just kind of way it was for me. And, you know, now that we're at, I can see that we can add another 10 or 20 and maybe 30. And then we get to that point we'll go see further down the road. It's kind of like that journey, you know, once you're five miles down the road, you get to see the next whatever is in front of you and see it more clearly.

Speaker B: Absolutely. Yeah. No, I think it's important to have kind of those small M steps as you go along. We appreciate you sharing your story, Vince, and, uh, thank you for coming on the show.

Speaker A: Yeah, thank you very much, M. Austin. Appreciate it.

Speaker B: Hey there, one special announcement for you. Are you or your company interested in reaching an audience of entrepreneurs? Our network and I are always on the lookout for businesses that we can partner with. Over the past year, we've been lucky enough to work with sponsors like Gusto, StartEngine and Skillshare. And we've been able to help them grow their businesses by reaching our podcast audience of high earning professionals, business founders and successful solopreneurs. Well, over this next year, we're looking for three to five new sponsors to partner with. So if your business could benefit by reaching the thousands of entrepreneurs listening right now and you're actually serious about sponsoring our show, then shoot me an email@austinillionaire.ah-interviews.com the first three listeners to place an order with us will receive a five minute spotlight on their business that will air after one of our episodes. So again, if you're interested in growing your business as we grow this podcast, then shoot me a personal email at Ah, Austin Millionaire. Ah-interviews.com.

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