Franchise Radio Show 180 “Why Diversification Is A MUST with Scott Challen”

Speaker A: Good morning. I uh, should say good morning just because it's good morning today and good morning here. Of course it may be good night or whatever, wherever you are. So welcome to another franchise radio show. Brian Keane here. Franchise. Simply delighted to bring you another installment. Uh, I know I said before I'm excited to have this particular guest this week, but I am because I have a, a very interesting history uh, with Scott Channen who I'm going to introduce you to. Scott is the founder of QHI National Home Improvements and Smart Kits Australia, all part of the QHI Group. He, he's very entrepreneurial. I met him several years ago, we worked together, um, and uh, we called this episode why Diversification uh, is a Must. Um, and I think you'll find out why as we go through this. But the reality is a lot of businesses are dependent on one sector or one, one supplier or one customer. What we're saying here is you need to be creative in making, in developing alternatives to give yourself sustainability when bumps in the road come along. So Scott as I say is the founder of QHI National Home Improvements. Um, and uh, he's what I really admired about, about him and his background was he's really le charging tech driven automatic systems in the home improvement industry. An area which you may be aware, I have a background in being a registered builder and had a construction business, did a bit of property development many, many years ago. And I used to look at it and say this is something you can never franchise. Well, wrong. It goes to show how things have changed. So what I like with regards to uh, Scott is that uh, he's got a background in construction at E Commerce, he's brought them together to marry them. He's bought a really scalable sort of automation powered range of models that help his franchisees thrive and build a sustainable model for him and his team at their support office. So uh, he really is passionate about technology. Don't you have to be today? Um, also efficiency and cutting through industry red tape and you have to if you're in business today. We were just chatting off air Scott and I about the level of uh, I suppose compliance needed these days and uh, it can be quite crippling. So but I encourage people to push on uh, and handle it because it does mean you've got I think greater opportunities today in some respects if you are well at the top of that pile. So he streamlined many elements of his business. Project management, compliance, um, brought in and say this, this automation, um, and really made technology a key element to his business to the point where QHI is a national disruptor in the building industry, and that's something that always appeals to me, someone who's out there stirring it a little bit. I think that's always good for everyone. Um, but beyond franchising, Scott's a great content creator, an industry spokesperson, so he's quite happy to share his thoughts. He's very unselfish in that point of view. He does share his insights on politics. Don't we all? Um, but also business growth, tech innovation, the challenges of regulation. And he does this through his own radio, podcast and online news and so forth. So, Scott, welcome to have you along today. Lovely to be talking to you again.

Speaker B: Thank you very much, Brian. It's an absolute pleasure to be here. And as I said earlier, I really love your content, love the show, and, um, a big fan. Right. And, uh, we wouldn't be here without your part in our journey as well, so thank you very much.

Speaker A: Oh, it's a pleasure. And look, that's why we do it, I suppose, isn't it? So working together and helping people and we all get a share of the pie, I think. So I thought let's start where we start. I mean, your background. Actually, I'd like a little snippet of that. Before you got into, you know, building QHI national as a franchise, what got you into the building industry? Because I think that's an interesting background.

Speaker B: Well, look, um, I'm, um, about to turn 53, so I'm no spring chicken anymore. But in the late 80s, I did year 11 and 12 at an agricultural college in WA out in the wheat belt. And from there I worked on stations and farms around Western Australia as a jackaroo and a stockhand. And. And he, uh, really enjoyed the, uh, the country, country boy life for a number of years. And, um, a real affinity style in the bush. Playing football on the weekends, working hard all week. And it was really good. But I, uh, found myself at a loose end at the end of a, uh, a summer and got a job as an offsider to a shed builder. And so I assisted him with building sheds for the next six months. And I really enjoyed building things. I've always been crafty, and I think agriculture lends itself into being one of those jack of all trades. So worked with him for six months and then had a really unusual opportunity present itself to go to West Africa and build some big sheds over there. This was in the mid-90s for a mining company. And so I went to West Africa for six months and built these big Sheds in the middle of nowhere. And then came back to WA and started my own shed building crew. And that was great. Until about 1999. Um, was plenty of work, plenty of business on. You didn't need to be licensed to install, you just needed a rigorous ticket to stand still back then. And it was really simple. So I didn't have any formal qualifications in the building industry. But then one day I'm reading the newspaper and they had an ad there that said you want to play real life skirmish for nine months. And it was an army reserve bad and it was actually an Air Force role. And so I ended up joining the Air Force. East Timor happened and so they offered us all full time contracts. Next thing you know I do five years in the Air Force without really intending to. And so I had a little bit of a, you know, a country boy background, building background, did five years in the raf and uh, I, I got out of the Air Force and I was at a bit of a loose end again. And I was 31, 32 at that point. And I, I saw an ad for a company that was selling patios. They were looking for a patio salesperson. And uh, this company was based out of North Queensland up in Townsville where I was living at the time. And I'm condensing all of this into a really short space here. But uh, I essentially got a sales role with those guys and Townsville was booming back in the early 2000s. It was a great place to be. This is 2004, 2005 and uh, so I got into sales. So it's one of those things that uh, I've learned over the years that if you can build and you can sell, you're basically unstoppable. Because if you know how to put things together and make things and then you can sell those things, that becomes a powerhouse of skill sets. And so I, ah, I really took that and in 2009 I started my own building company. I uh, got my formal qualifications as a carpenter and got uh, my builder's license and uh, and you know, progressively added skills and qualifications to that. And the QHI Queensland uh, home improvements QHI was started in 09 and 16 years later, we're still here. Here we are.

Speaker A: That's fantastic. So yeah, you're a testimony to, I suppose to that, that breadth of experience. My goodness, you've done quite a few, you've done quite a few things. So it just goes to show it doesn't matter what your background is, you know, there's opportunities in business. You just got to Find the suite that suits you at a particular time. I think uh, that's what it comes down to. So um, from, from that point of view. So that's interesting to hear the journey. But yes, things have changed a lot since 2000 wherever it was you started there. So how's technology automation transform, transforms your, your franchise model I suppose and a little bit beyond that because we've all got some involvement with bit of tech these days. What, what key systems drive the efficiency and scalability you've managed to build into your business there? Scott?

Speaker B: Well I think I was really lucky to start the business owner in 09 because if you recall around about 2007 when the first Apple, Apple uh, iPhone3 came out, social media really kicked off with Facebook. Excuse me. And so my business was built on the back of social media digital advertising website Google AdWords and 2009 was a really exciting time for all of that because a lot of us were making the transition, a lot of businesses were still transitioning from the yellow Pages, remember two volumes that were this thick to digital content and digital platforms to be able to promote our businesses on. And you remember this well Brian, you know one of those full page ads in the yellow pages that was 20 to 30 thousand dollars back then. And so you've got this choice to make that are you going to put an ad in the yellow pages or are you going to invest in digital uh, digital platforms? So we just went down the route of okay, let's build a Good website. This is 09. Good website, good social media presence on Facebook. It was really simple back then when I think about it and, and some, and some really simple Google AdWords campaigns and that's how we, we grew the business Queensland home improvements and so I've been a part of a digital Jo digital transition for that 16 years now, which has been really exciting. Also horrifying at times because I've seen how you can pour money into it and say no result come out. And I've also seen how quickly it's all changed. And now I'm passionate about digital processes and obviously our online stuff because I feel that that's the cheapest and best way to get eyeballs on you. But also within the business and its operations itself, we do everything in our company based out of a CRM M called HubSpot and I'm not trying to plug HubSpot here because they don't do me any favors on pricing. Trust me they charge like $100. But automation processes and digitization of the business, we've grown with it, so we've been lucky. Uh, but I keep saying to people it's never too late to transition and get the ball rolling on it. The best time was yesterday. The second best time is today. And so get yourself a basic subscription and start understanding how this stuff works. Because a lot of the stuff that we work with now has so much AI, uh, powered, um, you know, substructure behind it that it really helps us build a lot more and expand and magnify what we do. So we're a completely paperless building company which is almost impossibly rare these days. And we also linked all of our. We built some E commerce businesses that link into that so it becomes a group of companies, not just one single building company entity.

Speaker A: Right. So I can, I've got a bit of a, I suppose with a theme here. It's interesting you say how different it is. Pru built our first websites back in 2011, 12, that sort of thing. She did the majority of it and then worked on it for quite some time. And then we expanded and we got people in to do it recently. Starting a new business herself. And she's building the website and she's using Square. Uh, yep, just a little plug there. But she said it's amazing, so much of it is automated there now that she had to spend so long working on. It's taken her a while now because learning actually what it can do for you, it's just changing things. She knows what she wants. It's how you do it. But now you're quite right, it's become so much more simple.

Speaker B: It definitely has because we used to have to spend a lot of time building that kind of content and those platforms and those bases for it. But now you're right, the tools are there and especially I know we're going to touch on E commerce. But there's brands like Shopify now that have created these really simple to use platforms that you can literally in minutes, in a few hours, build yourself, uh, an E commerce brand. What scares me the most, Brian, and you know, there's so much changing so quickly now is that, you know, I heard this example the other day that you'll have an idea for a product that you could sell in Indonesia, for example, and using AI and some of the capacities to build and code now you, you'll literally just plug that idea in. It'll build the website for you in the correct language, create your listings for you, build up the back end, plug in a, um, payment option and all you've got to do is sort out your logistics network and boom, you've got an E commerce brand in another and uh, when you get your head around that, we are this uh, close now to that's my zoom camera zooming out. But we're that close now to everything just changing in the way we do business. And I think it's time, and I promote this heavily, is that you, you need to get on the, on the train and get on the bandwagon mate, because uh, everyone's heading in that direction and if you're not, you're going to find yourself left behind pretty quickly.

Speaker A: Yes. And look that's where I suppose that's, that's the bible I'm preaching these days and have been for a while, certainly since pre Covid and particularly since COVID it as really was, I think the engine that powered a lot of this change we're getting because people became more, more open to it, more exposed and happier to accept it. But as you say moving to that E commerce area, so many businesses and we're not limiting it to franchises or standalone or bricks and mortar buildings businesses. The reality is everybody needs to get that E commerce up and running. And so that's where you need bit different to needing a team of people to build everything. What you need are some really highly uh, highly intelligent experts to point you the way. And I suppose that's what we were focused on getting the last two or three years is people are on top of these different Systems, these different CRMs. And you know, just knowing what you can do with Shopify now has come a heck of a long way. So from that point of view I suppose, um, what are the biggest challenges that you see that franchisees face in the home improvement industry particularly? Ah, and how does your model that you developed help overcome those? Scott?

Speaker B: Well, as you know franchising isn't getting any easier, but neither's business anywhere. We don't live in an environment in Australia where we're encouraged to grow um, our businesses. We're very much, we live in a capacity constrained environment. They only want us to go so far. Uh, so franchising in my mind was a, was a natural fit for business growth but once again the same, same regulatory challenges and we need to find ourselves and align ourselves with people that are like minded, that think like us. We've got to get out there and hunt for those entrepreneurs that want to build their own, their own empire as well. And you know I've hit those uh, payroll tax walls, I've hit those boundaries with regards to limitations on my builder's license. I keep, we keep running into these obstacles that stop us from moving to that next step. Excuse me. Franchising, in my mind was a natural way for us to grow the building company without having all of that heavy burden that comes from having a large company. Uh, if you established yourself 50 years ago and you've managed to build yourself into a tier one builder, you're ahead of the curve because you've got the contacts in the government, you're already ahead of the regulation. But if you're a small builder in the, in the 1 to 5 million range and you're trying to break out of that, they make it very, very hard for you to climb out of that hole. So franchising was a natural fit. It's just a matter of finding the right people to go with it. But franchising, as you know, and everyone listening to the show that's done it, it's a, it sucks up money. It true, it chews up your cash. You know, you're putting all this time and effort into building these processes and these systems and the building industry in particular because it's so heavily regulated. Um, you've got other layers of regulation on top of the franchising compliance. So I think, is it easier to set up a fast food chicken shop? Possibly. Uh, but this is what I know, I know building and I know people really well and I know e commerce. And so we started smart kits. That's the shirt I'm wearing here now, this brand to complement the building company. We started selling building products because builders, it's uh, a roller coaster of revenue. We have good months, we have bad months, we have wet seasons, we have, you know, we have fires, we have droughts, we have all sorts of things that can kick in and cause problems for our, for our money. So we started an online business thinking, well, let's just sell some building materials, the same building materials that we're building with, and see if we can't even out those cash flow issues that the company had. And so before we franchised, we, before we went down the franchise journey, we started the e commerce journey with smart kits and built our first website. Just really, it was just a landing page with a phone number just asking people to contact us if they wanted to buy a roof kit or a deck kit or a home improvement kit for their, for their home to do, to do a DIY solution. That website then turned into a, uh, website that had 300 downloadable PDF quotes. So it wasn't a proper e commerce platform. We wrote 300 PDFs and we plugged them into the backlit back end. You could download your quote and then ring us and buy it. And so that was, that was really the birth of E commerce for us. And that was in 2014. And so then the progression, uh, over, over that time we saw, uh, brands like Shopify emerge. And then we built our first Shopify platform using, with smart kits. And that's website number three for Smart Kits now, where we have 20,000 different variants of home improvement products on there. And that's been the real, the real juice that's kept us going since 2020 while we spent money investing on the franchise model, was our online sales with smart kids. Now that comes at a price as well, because although we have 20,000 different products that you can buy directly through the website, you're also going to generate leads from that. So, uh, because not everyone wants to buy through a website, they want to get a price, but then they want to put an inquiry through and talk to a real person. So then I had to build a sales team and a design team and have an office full of staff to deal with. We were getting a thousand leads a month, you know, at our peak, um, just after, you know, during the 21 and 22 years before the interest rates started going up. So a thousand inquiries a month for home improvement products is incredible amount of lead generation. And most of those leads were at around about four to five dollars each. Um, so it was, you know, ridiculously cheap leads. We had Double. We had 13 salespeople at one point to deal just with the lead volume that was coming through as well as the online sales. And so that revenue as well as the building company really got us through in being able to build a franchise system. And you know, Brian, we took a long time before we launched the franchise. It was like a good two and a half years for us before we felt that we had a product that was, um, that was ready to go to market. And I haven't been rapid on the growth. It's not like we've added 20 in a year. You know, we're conservatively growing one piece at a time. Because the key thing that I picked up from your show and the books I've read is that finding the right people to partner with is absolutely crucial. And so we, uh, we've been very selective and very cautious about who we've brought in for that reason.

Speaker A: You know, would you like to share with me a little bit of the issue you had with a franchisee that put you under pressure and which was where your diversification really, I suppose, came to your defense and why you sort of preach that. And I suppose that's why we've ended up chatting today. I might just mention I was speaking to. To Scott Challen, by the way. Scott is, uh, the founder of the QHI Group, Queensland Home Improvements. And he's really leading the edge, I think, in the building and the franchise sector with what he's doing with his business innovation and with his E Commerce. So just to fall back to that question there, say you had some issues which were very disruptive. Um, could you just give us a little bit of outline? No names, no pack drill, so.

Speaker B: No, of course, yeah.

Speaker A: Of. Of what helped you survive through that? What could have been, my understanding is really for you, it could have been. Could have been, you know, curtains.

Speaker B: It could have been curtains, absolutely. Um, we take big risks in business. I don't think the powers that be and the people that write the rules and regulations understand what us entrepreneurs go at night time don't do at night time. M. We lie there staring at the ceiling, staring into the abyss a lot, as you all know. And, uh, one of the first franchisees that I bought on was a guy who had been a contractor for our building company for a number of years. I thought I knew him well. I thought that we had a strong enough working relationship for him to be our beta test for our very first franchisee. And for about eight months it seemed to be working okay. He was certainly hitting his sales targets, revenue targets, meeting those milestones. But, uh, I. And I realize this from my own perspective now because I'm all about personal ownership. If something's gone wrong, it's because I've allowed it to go wrong, is that I even should have been looking even further and closer. And so he was not finishing building projects. He, uh, was taking deposits from customers and then not returning calls back to customers. So he was doing some pretty shady. The type of that. So excuse the language, the type of stuff that that building is. Builders in the building industry is notorious for that. I'm absolutely abhorrent about, like complete and utterly hate the way people act like that. Um, he was doing some of those things and, um, we. And then he disappeared with a bunch of money and, uh, left a trail of destruction behind him. And so it fell back on me to rectify those issues. And this was interstate. It was. It, uh, wasn't Queensland, so where I'm based. So it left me a bunch of building projects that I had to recover and Rectify and find more people and people down and move resources and stuff around and pour a lot of money into solving and rectifying. But at the end of the day, these were good, honest people who had, in good faith worked with our brand and our brand had let them down. And it wasn't me personally, but it was a representative of the brand. And if that was a defining moment for us because we were at a crossroads and we could have gone, well, we didn't cause the problem, old mate caused the problem. We can put our hands up, but the reality is you can't. You only get one shot. Your name is only one shot. And so we, we had to spend many hundreds of thousands of dollars, uh, rectifying those issues. Now that along with, you know, we got a really significant payroll tax bill and all the other things that you get running a business. Last year we, we, it felt like all we did was tip money out all year out of a bucket. But Smart Kits and uh, our other online e commerce businesses underpinned the business. We had revenue streams coming through that gave us the ability to be able to weather that storm. And you know, it's not been an easy run in this economy for the last few years now. Thirteen interest rate rises, impact. It doesn't matter what sector you're in, you might be selling coffees, you might be selling burrito wraps, you might, you might be selling home improvements like us, but everyone feels it. And so I'm very proud of the fact that we recovered and solved that for those customers and rectified that situation. But I'm extremely grateful for the foresight I had many years ago to start those e commerce businesses to try and keep the revenue model consistent because that's really what saved us at the end of the day.

Speaker A: Yeah, look, and thanks for sharing that. I really appreciate that. That's very humble, um, of you because that's what led us to be talking today, because that struck me is such an important point. And I think the more we get into E commerce with AI coming in, the more vulnerable we are in a number of ways. In the same way, whilst it's fantastic, can be of amazing benefit, give us access to all sorts of things. There is that vulnerability because the tech can just change so quickly and I suppose you have less control over it.

Speaker B: So one thing, but also on the other side of that, Brian, it gives you way more data points that you can work with. And in hindsight now I should have been able to see through those data points of what was going wrong earlier. But What a great lesson to learn. Like, what a great and fantastic lesson to learn. And all it did was made us better internally. We changed all of our internal reporting systems better, better information daily information updated constantly. And we recognized where the gap was in the model. But we had to find it, we had to be tested by that to be able to make it happen. So if you're in that phase of your journey, stick with it, learn from it. Just sit back, write the notes and go, what can I learn from this? And make better tomorrow? Because it's, uh, that's how we don't give up and that's how we get ahead and we win.

Speaker A: Yeah, as you were implying, business, you can never sit back in business, particularly the way things are changing so rapidly. You just need to keep creating new opportunities, putting your foot forward and finding out when you move that foot forward what you need to do next. So, uh, you could be very complacent very easily, can't you?

Speaker B: Um, you sure? You sure can. But there's so much good stuff out there now. Your content, Brian, a lot of, um, influencer content around how we promote and run businesses, especially when it comes to getting engagement and eyeballs, because it's never been, it's never been better. Uh, there's never been a better time to work with technology and let it help you, but also to be able to grow your brand and your presence. And, uh, I do get a bit outspoken and I am a little bit political in some of the content that I create, but at the end of the day, that's created a personal brand around me that's also drawn people towards us that want to be a part of our journey because they understand my perspective on it. And we share alignment in many things as well. It's been a real benefit, to be honest with you.

Speaker A: Yeah, you've grown from it. Look, one thing that struck me when I first spoke with you quite some years ago now, and I really admired you for it, because I never had the guts to do this, is that you actually require an initial payment from people before you, before you prepare a quotation.

Speaker B: Yep. We don't do free quotes for customers. So that's the basis of our home improvements building company. Um, if you want one of our franchisees to come out to your place and quote your deck or your roof project or your outdoor sunroom or your pool pavilion or your pergola, we require you to pay us, uh, a fee. $279. And, uh, we stand by that. We stand by that because we, uh, we Know what we are? We are professionals. We're not salespeople. And anyone who comes to your house is a licensed builder or a franchisee that's a licensed builder. And now, because what we did with our building company was we turned it into an e commerce business. This is going to sound a little unusual, but I was very close to winding up the building company in 2019 purely because our online sales from Smart Kits were. I was of the opinion the building company is a hassle. It's too hard to maintain regulation, it's too hard to find builders. And I was, I was this close to wrapping the building company up and just focusing on the online stuff where I thought I could live on a beach in Asia and just run this business. Quite simply, it'd be really good. And then you're at that point where you go, okay, I'm either gonna wrap it up or I'm gonna double down on it. And it was like an epiphany moment one morning when I was at the gym and it was like, well, why don't I just turn the building company into an e commerce site, list exactly the same products that we're selling as home improvement kits, and put a price tag on it, fully supplied and installed. And I pitched the idea to a few people and they went, no, no one's going to buy that. No, no one's going to pay for a site visit. And so we rebuilt the website. I, uh, invested a couple of weeks and some of my people into rebuilding the website. It was really just cloning our existing Smart kits website, changing the prices and the listing descriptions. And so instead of buying a $5,000 kit, you're buying a, uh, $13,000 supplied and install choice. Now, the regulation around the country doesn't allow us to take a $13,000 payment from you. So what we could do, though, was sell you a site visit. That was the $279. So every listing on our website is $279, but this is what the complete project will cost. And people go, well, how do I know the price isn't going to change? When you get out here, send me a photo of your house. I'll have a look at your photo and I'll be able to tell you pretty clearly because we've been around this game for a long time whether we're going to have any issues with it or not. And so when we sold that very first site Visit and we had a customer pay $279, that was the mic drop moment. When in the office we all sat back and went, this can be done. And so what do we do next? So let's prove this model for 12 months. Let's run it for ourselves like this. And then we came to the point of franchising. And when I started looking for franchise coaches, Brian, you're obviously the natural fit for that, mate. So, uh, that's why we ended up where we are, because Smart Kits sells home improvement products all over Australia. And so by default we attract all these customers who want to have it installed. So we're feeding our franchise network with these qualified leads of people that want to get a build job done. So one thing led to another that stacked on top of another, that interconnected and, and that's, that's where it is.

Speaker A: It's a fascinating evolution. I can't wait for the book. I think, I think there'll probably have to be a series of two or three books, Scott, because this isn't going to stop happening. I sort of sense this. So, uh, well, hats off to you anyway, with regards to that quotation. I think it's a lesson for a lot of people, including me. I've never had the nerve to do it. I've always been a bit, a bit reluctant.

Speaker B: But I mean, the building industry is a race to the bottom though, Brian. It's often been that way. That's why 4000 Building Companies has gone broke in the last 18 months, because it's a race to the bottom. And I, I think as an industry, we've never valued ourselves properly and we, we. You know what surprised me, uh, I'm not encouraging anyone to do it is that we've had no competition. No one's tried to mimic m it, no one's tried to copy it, no one's had a crack at it themselves. No one's doing it. So, you know, if you try to. When you, when we're bringing on a franchisee, we're trying to, to get them to understand their own value. And if they don't understand that, then they're not the right fit for us.

Speaker A: It's interesting what you said. You said when you came up with the idea, you spoke to a few people and they all said how this won't fly. It just reiterates. You hear this so often and anybody that's had a number of businesses, I think, or transitions has experienced this, where you sort of hesitate and say, unless I get positive feedback, I'm not going to do this. But at the end of the day, you got to have confidence in your own entrepreneurship and Your own skill, your own determination and commitment and the, uh, the grit you need to actually overcome these challenges and do it. There isn't, um, there isn't another way. You're never going to get endorsement from the market before you do it. I mean, m. It's like the Ford Edsel decades ago, you know, Perfect. Yeah. Ford built it, nobody bought it.

Speaker B: You. Well, you remember, well, the Yellow Pages ads, right? And if you went to the building section that was that fat, you know, you're competing against 10,000 builders in there and every one of them said the same thing. Free quotes. Free quotes. Free quotes. Free quotes. Free quotes. And, and so you can be another free quota you. If you want to waste your time stuck in hours of traffic, burning fuel, you know, grinding your way around town doing free quotes. Now just remember as well that, uh, for me, that was 15 years on the road doing free quotes for people before I, you know, made that transition to going, well, I'm going to pay, I'm going to charge people. Actually, it was longer than 15 years. And in that 15 years, I'd seen everything. I had people literally use me as a taxi service was the only reason they got me to come around so they could get a lift somewhere. You know, um, I've seen everything in the thousands and thousands of houses I've been into people's, uh, you know, in people's homes ranging from 6am M. In the morning to 10pm at night sometimes before I got out of there. So, you know, I've seen it all. And uh, and I realized that I knew a lot and I was very good at what I did. And I went, why am I doing this for free? This, this is ridiculous. And so we really weeded out the time wasters. And so if a customer says, look, I'm not, I'm not paying for a quote. No problem. We're not the company for you. That's fine. It's all, it's all good. Uh, well, why should I pay for a quote? The other company will do it for free. The other company are going to send a salesman and, and you're going to get sold. That's what's going to happen. We're going to send a builder and we're going to offer you a solution. That's the point of difference. And mate, you won't get a plumber to do a call out for free. So why should you get a carpenter or a builder to come out for nothing either?

Speaker A: Yeah, no, exactly. Well, you're positioning yourself as a professional. I think that's the key to it. You know, people don't expect to get a professional consultant, uh, for free. Um, and you're in that, you're in that same category.

Speaker B: And, uh, I think there's so many industries that could also evolve into that place if they just had that leap of faith. And I hope someone listening right now is going, hey, I wonder if I could charge out for my time. I go out to site.

Speaker A: So I, I think so. So the other question, I suppose, and this is one that I'm asked a lot by, people are thinking about franchising their business, and understandably they, they see the bit of media every now and again about a problem with McDonald's or dominoes or somebody, and they say, you, uh, know, how can I maintain consistency across my franchise locations? Um, how can I allow for that flexibility in the different states, the different, different regions where things are slightly different? What's your response to that? How do you manage that? Scott?

Speaker B: Well, especially in the building industry, because every state has its own licensing body and its own set of rules and regulations. Um, and it's especially important for us, what we've done though, through the CRM and through our management, lead management system, and, you know, the way our advertising and the way it's all built into that together is cater a product that' specific to that state. For example, you're not going to sell glass sunrooms in Queensland, but in Melbourne that's a really popular option. So you've just got to make sure that you are offering the right type of products for the right people in the right market. And fortunately for us, our supply network is extensive. We've got great, great manufacturers and suppliers across the whole country, which gives us a great product range. That means that when a franchisee says to me, hey, I think we should do this, this and this, okay, well, who in our network can help us supply that? And how do we add that to our, our offer, uh, to expand what we do as well? Now, you're not going to go to McDonald's and buy a roast chicken. Like there's a backbone of things that McDonald's do and, uh, cheeseburgers and, and Big Macs is that, um, and with us there's a backbone of things that we do, and that's decks, fiber roofs and carports. That's really, that's the hamburgers of our business. And that doesn't change. That's 80% of what we do. It's the same thing. And we, uh, have a lot of other products that cater to that 20% on the side. But you make great margin out of that stuff because that's different, it's unusual and people want it and there's not a lot of competition out there for that. So it's great to have your bread and butter, your stock standard burgers, but it's also good to have your cherries on the cake as well.

Speaker A: Uh, that's interesting. You mentioned a point there about your suppliers and I know from my experience working with you you've got some amazing relationships there. Um, it reminds me to, to uh, consider a good friend John o', Brien, the founder of Pool Works. I remember an ah, example he shared with me donkeys years ago, probably 25 years ago that he built his business on the basis of a three legged stall. And there were three key areas. There was the franchisor, the franchisees or franchise partners and the suppliers. And he said uh, if you didn't have those all balanced, you had a wobbly store, you had a wobbly business. And that's what's got him through times like Covid. It's his suppliers that have come in to step in, step up I suppose to help him through those harder periods and be there. And I get, I get a feeling you're in the same position really they are such a strong part of your relationship.

Speaker B: Um, I've been very, very fortunate but uh, it's also taken a lot of work. It's like a marriage. M My major supplier is Bluescope lysart. It's a 20 year relationship with those guys. Um, I spent a brief period of time before I started the company in 09 working for them. A lot of those same people are there still. Um, so I've got a great relationship within the business and shout out to Australian made steel and so when I pitched them the idea of what I was doing with the online and the E commerce, they were all on board with it because they were always looking for more channels to market and they have done everything they can bends over backwards to support us, you know, including the promotion um, of our great um, I built it smarter photo competitions where we give away $100,000 every year. We um, generate great stories, great content for them and they partner with us in that support and that logistics network and that is our key supplier for 90% of our stuff around Australia. And that's been an integral part of this. And John was 100% correct. That three way relationship is crucial but it also means that the more people we bring on, the more we buy, the better the pricing gets. The Better the uh, relationship gets and they're more prepared to bend over and help us. Now during COVID as you know, when every supply chain in the country was collapsing because we didn't shop the market, I, uh, didn't, uh, I didn't have five different suppliers for our major steel components. I'd uh, maintained this long and steady relationship with these guys even through some very, very tough and testing times. We were a priority customer, we got priority deliveries, priority supply. We're at the top of the food chain. We were in all the right meetings, we knew all the right people. And that was because we'd done the work for 10 years before that. And so I say to people out there is be very careful about jumping ship when it comes to a supplier. If you decide to break that marriage, that relationship, because it is, you're breaking up a marriage, especially if it's been such a long time, you really need to really consider whether the grass is greener on the other side. Because there were plenty of times when I really could have got angry on the phone to them and going, what the heck have you guys done here? Because I've got a customer on the other end of the line who's really upset at me. But it didn't, it's about, okay, what have we got to do to work together to recover this? What's our solution? And unfortunately during COVID as you know, sometimes you recover, recover things two or three times and it would still go wrong. And at the end of the day it's my business that's on the rep on the line here. It's our, with the reviews that we get, it's about us. But their performance is also baked into our business model. And so there's a lot of benefit to long term relationship with those guys. And I'm forever grateful for it because if I went to them tomorrow and said, hey, I've got an idea, they will, they will facilitate that. They will sit in a boardroom with me and they will listen to what I've got to say. Because I've shown them that we've done exactly what we said. People are going to do it.

Speaker A: Um, I'm glad we had that little bit of conversation there because I often spend time and I come from a background, the building industry. In those days we used to negotiate like mad between, you know, Bunnings and whoever was supplying us. They weren't such a dominant factor in the market in those days, but with anything we bought was negotiate, negotiate, squeeze, squeeze, squeeze. And it's actually when I was saying to these customers the other day, it's, it's a mistake. Take. They are, they're doing this in building their business and yeah, they're getting some great prices, but they're not developing relationships because it comes back to bite you. Because the people that they've offended by actually taking them along and literally ghosting them are not going to be there when they go back another time and say, look, oh, can you supply us after all, or can you help us with a bit of extra stock or something. So I think that's the lesson in business, which is a hard one to learn because, because, you know, price being such an essential element or costs in our business model, it's very easy to get tempted to try and squeeze every penny to get the best you can because it goes to your bottom line. But it's actually investing in your suppliers as much as you invest in your team in your support office.

Speaker B: I, uh, think, well, you've also, you've also got to train your team on the, on the, on the, uh, validity of that relationship and how important it is because you could bring in a logistics manager or a contracts manager, for example, and if they have a screaming argument down the phone with that supplier that you've spent 20 years building a relationship with, they'll undermine all the good work you've done too. So it's really important that you bring your team, your family. These are my children in the family. Bring them along on the ride with you. And so when we get invited to golf days, all of my team go to their golf days. When there's a bent on, we go. And when there's free jackets to go around, we're all, we'll put a barbecue on at the office and we'll get everyone in, including the suppliers and we'll. Thank you very much. So we all know each other and that's been crucial, mate. It really is. And there's so much to be gained from good relationships because it gives you the opportunity to then have difficult conversations when you need to. And there's a mutual respect there that allows you to do that. And yes, it's been one of the best things ever.

Speaker A: Yeah. So I suppose getting towards wrapping up. But before we do, there's two or three couple of things I want to get run through. We could talk for hours, by the way, but with the, with the, with the evolution at the moment, you know, AI rolling in so quickly, you know, what's coming next and the way that E commerce is reshaping no end of industries and so on, what do you, what do you see as the future of franchising? Where do you see franchise heading from your experience?

Speaker B: Yeah, M I I, we're moving away from, um, a four printed paper in ring binder folders for operations manuals. Those, those days are definitely behind us. And look, um, I don' grudge anyone that still runs their businesses that way, but everything should be online, everything should be built in with, out now with an AI knowledge base. And this is what we've done now is we've created these tools. And I know I haven't showed them to you yet, Brian, but I'm very excited when I get the chance to is, you know, we've built these AI agent tools now where we have a, a chatbot basically on a landing page where as a franchise you can ask a question about your operations or your systems and the AI will answer that for you. And so these tools are now out there. You can build them out and you can implement them into your business. So, um, I'm really excited about that. And we've built two great chat or three now, sorry, if we include the one on the website, the SmartKids website, three great chatbots where essentially all you're doing is building the back end of it. The tech that runs that platform already exists. All we're putting in is the knowledge base. We're just putting the library in there and then teaching it how to talk to customers and, and then we just, we roll it out and so if you're one of our franchisees and you've got a question about what's the best way for me to approach the 279 sale, great beg, ask that question here. Up comes the answer, up comes the video links, up comes all the information of examples to help you understand that, even to the point now where we've built affirmations and positive vibes into these AI agents. So if you're having a bad day, you can ask it, tell it, tell me something good about myself, you know, and it'll literally do that for you. And I think that's really exciting. I'm, um, I'm not about to say that AI is the new guide, but it's a tool, it's there, it's coming, it's happening, and it's really exciting to be on that, on that train. I've outsourced my development of that to an overseas crew and we do a lot of our tech offshore now because we just simply can't do it affordably in Australia anymore. And that's Given me a lot of creativity from a different perspective as well. So, um, and I was lucky to be able to create a relationship with that team in Colombia to do that. And so that's been good. Yeah. Don't be, don't be afraid to have a crack.

Speaker A: That's interesting. In Colombia. Hey.

Speaker B: Wow. Yeah, well, they reckon they've got the best coders in the world. They're pretty adamant about that. They've got, they've got some pretty big egos, those Colombian guys and they're an integral part of our team. So we've got our fourth version of the Smart Kits website with a lot of this integration built into it that'll be launched in the next month as well. And how that rolls out will, will play into how we roll out the next version of the QHI National Home Improvements website for our franchisees as well. But we've got to be very careful, Brian, because we can only service so many leads. So, you know, a lot of companies have a hard time attracting customers. We don't have a problem attracting customers because we've been around for so long and now there's so much content out there. Now what we have a hard time with is making sure we've got the right people in place to be able to deal with that and not undermine the quality of our finished product.

Speaker A: That's the key, isn't it?

Speaker B: For everything.

Speaker A: So, so just in, in wrapping up for people looking to invest in a franchise, what sort, uh, of the key factors do you think they should consider? What, what red flags should they look out for? I suppose what are the, what are the, the mistakes they should avoid that they can easily fall for for.

Speaker B: In your opinion, if they were going to be a franchise. Mhm. Not, ah, aligning themselves with someone who shares their own values and vision and purpose. And I think that, and this is why married couples make, or you know, couples that are together make great franchisees, as you know and you've seen, you've seen thousands of them over the years, right? Is that uh, that couple have a shared goal and a shared vision. It takes more than one person to carry the weight of a business. I'm only here because of the strength of my wonderful marriage and my excellent, my amazing wife who works every day in the business with me. And we have a shared vision around that. So if I was going to be taking on a franchise and I, I would, if I was in a place now where I wanted to grow a business and get involved with a system that would help me grow wealth and and build my future. I wouldn't be scared to get involved, but I'd be very carefully selecting the, the company that I get, that I decided to partner with based around do we share the same values and the same vision? Do you gu what I can do and can I help you grow? And you help me grow because the last thing you want to do is hook your wagon up to a what you think is a thoroughbred that's going to speed you along to where you want to get to go to and find out it's a donkey. Just be careful about your choices and make sure they align with your values and vision.

Speaker A: I appreciate that. Okay, well, thank you very much indeed, Scott. Um, just about to wrap up. I might just remind you I've been talking to Scott, Scott Challenger, the founder of the QHI Group. And Scott, anything that we've overlooked, you'd just like to add as a, as a tight, as a tale if you like, before we finish off today.

Speaker B: This franchise journey for me started in 2021 and it isn't over yet. We're four years in. We've only got, you know, less than, less than a handful of franchises. And you don't build this type of empire overnight. I'm 52 heading into 53. Have a crack, have a go at it. This system will help you get there. Franchising has been a wonderful experience and a wonderful journey. And uh, and even if I had to wrap up the whole thing tomorrow, I would, I wouldn't have any regrets about it. And I certainly would have learned a heck of a lot more along the way. As a businessman, it's helped me understand business a whole heck of a lot better and relationships. So I've really enjoyed my franchise journey. It's been awesome. I can't wait to see where it goes in the next five years.

Speaker A: Exactly. Well, congratulations to you and Justine. I know Justine had, had just started working with you on I think a more full time basis when we started working. And uh, now it's amazing as you say that part I can't reiterate too much myself. You really need a partner of some sort. You know, it's uh, you need that shared vision and commitment and uh, as Paul Keating said, uh, I think worthy effect that never underestimate the value of a vested interest. The fact that they have a vested interest means people think things through and they make a different level of commitment. I think that's critical and I appreciate the commitment you've made. I hope everyone's enjoyed listening to Scott today. Scott, if people Would like to learn a bit more or get in touch with you or indeed want a smart kit. Um, how should they get in touch?

Speaker B: You can just jump online, search the QHI group on Google, and you'll see us come up on multiple websites. And you can pretty much get me through any of those websites and reach out there, there. You also search my name up and you'll find a whole bunch of social media. I'm, um, all about content. Um, I'm a big fan of Alex Homozy, who, you know, he makes that, uh, that claim that as a new entrepreneur, you should be making four hours of content every single day. Well, I can't get to four hours every day, but I certainly make sure that we post and we get something up every day to continue to build the brand. So you won't have any trouble finding me. If you want to reach out, be a part of our journey, or you think that there's some alignment for us to do some business with you, then we'd certainly, certainly love to talk.

Speaker A: And it was mentioned podcast. You, you do your own podcast as well?

Speaker B: Got a couple, actually. I've got one where we talk about politics and we go down the rabbit hole pretty deeply into how badly this country is being run. And uh, that's called the, the Shallow Chow Cookers podcast. And I've also got one about the building industry called the nuts and bolts. I don't know where I find time to do these things, but I do

Speaker A: somehow most passion, mate. That's passion. Okay, well, I'll pass that information. Thanks very much again, Scott. All the best. Look forward to keeping in touch and learning well your journey as you progress through this amazing, uh, amazing story you're compiling. So. All right, we'll leave it all for everybody there. Thanks very much indeed for listening. Hope you've enjoyed it. Um, I can't wait to listen through this again because it's been a lovely chat with Scott and uh, we look forward to speaking to you all or speaking to you all again with our next franchise radio show. So cheerio everybody.

Speaker B: Mhm.