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Growth by Combining Independent and Franchise Businesses with Gus Iurillo · Budget Your Business

• 0:00
  Gus Iurillo: Yeah, I I think it certainly can be done.
• 0:02
  Gus Iurillo: I've seen it mostly done in two ways, but I think there are a myriad of ways that it could be done.
• 0:07
  Gus Iurillo: I've seen clients of mine that have gotten into a franchise, and maybe two, three, four years down the road, they see an opportunity, they're providing these services for the consumer, and they're asking for something else that the franchise doesn't provide provide and doesn't plan to provide.
• 0:24
  Scott Geller: Hello, and welcome to budget your business, the podcast for small business owners who want to learn how to financially plan for every aspect of their business.
• 0:34
  Scott Geller: I'm your host, Scott Geller.
• 0:35
  Scott Geller: Today I'm joined by Gus Urillo of the Entrepreneur Source.
• 0:40
  Scott Geller: Hello, Gus.
• 0:42
  Speaker 1: Hey, good morning, Scott.
• 0:43
  Speaker 1: How are you?
• 0:44
  Scott Geller: I'm doing well.
• 0:45
  Scott Geller: Thanks for joining me.
• 0:46
  Speaker 1: Yeah, thanks for having me.
• 0:49
  Scott Geller: Gus is the, from what how I know him, is the franchise expert.
• 0:53
  Scott Geller: But that's a kind of a crude way of introducing you, Gus.
• 0:56
  Scott Geller: So why don't you do our listeners a favor by uh telling us a little bit about yourself?
• 1:01
  Gus Iurillo: So, Scott, thanks for asking.
• 1:03
  Gus Iurillo: So, I'm actually a franchise owner myself.
• 1:06
  Gus Iurillo: The entrepreneur source is a franchise, and I've been a franchise owner uh for the last 24 years or so.
• 1:12
  Gus Iurillo: And basically what we do is we work with folks that are at a crossroad in their career, whether that means they've been downsized from their job, they're just not happy in their job, or maybe even looking to diversify uh their income streams beyond just the job.
• 1:28
  Gus Iurillo: Uh we help people better understand and in some cases explore the franchise landscape, almost a cross between a career coach and a franchise matchmaker, a coach in that most people have never done this before, so they don't even know where to start, or they need somebody to hold their hand through the learning journey.
• 1:45
  Gus Iurillo: And the matchmaker, you know, we have my company has relationships with hundreds of different franchise organizations that run the gamut of everything that's out there.
• 1:54
  Gus Iurillo: And my job is to try to match people up with concepts that best align with their skill sets, their personality, and their goals.
• 2:02
  unknown: Okay.
• 2:03
  Scott Geller: And and Gus, you speak from experience, right?
• 2:05
  Scott Geller: I mean, you spent the better part of your career, or or at least uh the the first part of your career as in the corporate world before you went and found your own franchise, right?
• 2:15
  Gus Iurillo: Yeah, that's right.
• 2:15
  Gus Iurillo: I probably almost 20 years in corporate America, mostly in consumer packaged goods marketing, working for a number of different Fortune 500 companies before I decided to leave uh 24 years ago to start this franchise here in Richmond.
• 2:30
  Scott Geller: Great.
• 2:30
  Scott Geller: Well, well, thanks for joining us.
• 2:32
  Scott Geller: And I'd like to take this conversation into a uh a little bit different arc than just your traditional how do I start a franchise.
• 2:39
  Scott Geller: And where I'd like to go with it is, and this might be kind of two different paths, feel free to point me down one of them.
• 2:46
  Scott Geller: But one is let's say I have an existing company and I want to expand my products or services or goods, and how maybe franchising may be an option.
• 2:56
  Scott Geller: Or the flip side of that, I've started a franchise, I'm growing this business, but I see something else in the market that my customers are asking for or needing, and how do I handle that?
• 3:10
  Scott Geller: Whether maybe it's another franchise or maybe it's outside of the franchise.
• 3:13
  Scott Geller: So, what is your experience or what is your opinion around kind of joining a franchise and an outside business together to work together?
• 3:24
  Gus Iurillo: Yeah, I think it certainly can be done.
• 3:26
  Gus Iurillo: I've seen it mostly done in two ways, but I think there are a myriad of ways that it could be done.
• 3:31
  Gus Iurillo: I've seen clients of mine that have gotten into a franchise, and maybe two, three, four years down the road, they see an opportunity, they're providing these services for the consumer, and they're asking for something else that the franchise doesn't provide, provide and doesn't plan to provide.
• 3:48
  Gus Iurillo: You can always set up a separate entity.
• 3:51
  Gus Iurillo: You know, you'd want to set up a different LLC because you want to pay royalties if you're providing a different product or service, and you can actually cross-pollinate your customers by servicing them on the one hand with the franchise and on the other hand with the separate business.
• 4:04
  Gus Iurillo: An example, the restoration industry, everybody's probably heard of SurfPro.
• 4:08
  Gus Iurillo: They do a lot of remediation if you're familiar with that, the fire, smoke, water damage, but some of them will then form a separate entity and then do reconstruction work, you know, that's not part of the franchise.
• 4:21
  Gus Iurillo: So you can always bolt on your own independent business after you've set up the franchise.
• 4:27
  Gus Iurillo: And I suppose it could go the other way.
• 4:29
  Gus Iurillo: I haven't seen it as often, but you know, if you've had an existing business and you want to leverage the power of a franchise, whether it's the marketing support, the buying power, etc., you certainly could do that.
• 4:40
  Gus Iurillo: I've even heard, I haven't seen as much of it, but apparently it's fairly common.
• 4:45
  Gus Iurillo: Uh, people that have started out in a particular industry and then realized, boy, I need more support.
• 4:51
  Gus Iurillo: I'm in, I'm in over my head.
• 4:52
  Gus Iurillo: And they'll actually convert to a franchise.
• 4:55
  Gus Iurillo: So they'll take their existing model.
• 4:56
  Gus Iurillo: Uh, I've seen it like in the sign manufacturing industry, because they want the marketing support, the operational support, you know, buying power and efficiencies of a franchise.
• 5:06
  Gus Iurillo: So I've actually seen some people convert their existing independent, you know, in the same category to a franchise.
• 5:12
  Gus Iurillo: Again, not as prevalent, but it happens.
• 5:14
  Gus Iurillo: So there's really nothing to preclude you from doing it.
• 5:18
  Gus Iurillo: I would just say the important thing is, especially on the first and the second, if you're going to do it as a bolt-on, and and you know this because you're a finance guy, you'd want to create separate entities because if you're doing something that's independent and has nothing to do with the franchise, you don't necessarily want to pay royalties on that.
• 5:36
  Gus Iurillo: So you'd want to set it up as a separate entity, you know, and bill your cut you know customers separately for any services that aren't part of the franchise model.
• 5:44
  Scott Geller: Yeah, that that that that's a really good point.
• 5:46
  Scott Geller: And I suppose maybe it depends on the on the franchise or but they're typically, are they typically okay with taking that approach?
• 5:56
  Gus Iurillo: Yeah, I uh you know, in the in the franchise agreement that you sign with them, you know, you do have a non-compete, but it's usually fairly specific to any services that are currently being offered by the franchise or so I've seen clients of mine actually write into their franchise agreements when they're first signing them.
• 6:16
  Gus Iurillo: If I have some other service either they already have or they plan a, you know, and it doesn't compete, you know, you're okay with that.
• 6:24
  Gus Iurillo: So, you know, you might want to put some language in your agreement or you know, get their blessing.
• 6:28
  Gus Iurillo: But by and large, as long as it's not something that the franchise or currently offers or plans to offer in the near future, and it's nothing that would undermine the integrity of the franchise model, right?
• 6:39
  Gus Iurillo: They wouldn't want you to do something like associate with something that was unsavory, but it's probably not gonna happen.
• 6:45
  Gus Iurillo: Then I think as long as you set it up as a separate entity, you'll be fine.
• 6:50
  Scott Geller: So it sounds like it's a pretty key point to make sure you address that up front in what you're calling the franchise agreement.
• 6:57
  Gus Iurillo: Ideally, I mean, if you're gonna start as a franchise owner first and then add things later, it would be important.
• 7:03
  Gus Iurillo: Like most of my clients typically utilize a franchise attorney to review the agreement.
• 7:07
  Gus Iurillo: And if they have that in the back of their mind, then you know, when they're first starting the franchise, it's always good to get that clarified up front.
• 7:14
  Gus Iurillo: But if you don't and you see an opportunity, you can certainly ask the franchise or just say, hey, I'm I've seen an opportunity in the market, you don't offer it, my agreement says this, I just want to make sure.
• 7:26
  Gus Iurillo: So it's it's always good to be transparent, but by and large, my experience is as long as it doesn't undermine the integrity of the franchise model, the system, the brand, they're gonna be fine with it.
• 7:38
  Scott Geller: Okay.
• 7:38
  Scott Geller: So I guess regardless of which of those two or three paths you kind of go down, yeah, you have to find the right franchise, right?
• 7:46
  Scott Geller: So I how how do you kind of go through that process?
• 7:49
  Gus Iurillo: Well, that's a lot of what I do with my clients because I find that, and pardon me saying this, most people tend to choose poorly when they choose on their own.
• 7:58
  Gus Iurillo: Because when they're going out there, there's so many different options, you know, and they're trying to narrow down the field.
• 8:03
  Gus Iurillo: They usually try to start with, well, I have an affinity for that product or service.
• 8:08
  Gus Iurillo: I like their pro I like their food, I like their this, I like their that, or you know, or that's what I did in my corporate job.
• 8:15
  Gus Iurillo: I was an IT person, let me find an IT-related franchise.
• 8:18
  Gus Iurillo: And the irony is that's oftentimes often the worst way to choose an option because really they're going to train you up in whatever industry.
• 8:27
  Gus Iurillo: They're not looking for people with industry experience.
• 8:29
  Gus Iurillo: So they're looking for people with the right set of transferable skills.
• 8:33
  Gus Iurillo: Some call more on you know, selling ability, others more managing people, some mix, process improvement, product management.
• 8:42
  Gus Iurillo: So, you know, it's important to get the personality fit right.
• 8:46
  Gus Iurillo: And I think also what I try to do is take a measure of what my clients are good at and like to do and not so good at and don't like to do from their corporate career.
• 8:55
  Gus Iurillo: And then how do we find businesses that both best take advantage of their skill sets and what they like to do and minimize the amount of time they're doing things that they're not good at or don't like to do.
• 9:06
  Gus Iurillo: So I would say role fit is of paramount importance, followed by work-life balance fit, economics, but that's more of a solve for, you know, that's that's more of a either you either provides that opportunity or not.
• 9:19
  Gus Iurillo: And then you obviously have to believe in the product or service, but I think sometimes if you try to optimize around the affinity for the product or service, you wind up sub-optimizing the other factors that may be more important to make it sustainable.
• 9:33
  Scott Geller: Being on the financial side, guess you helped me with the economics.
• 9:37
  Scott Geller: You mean the economics for the individual, the economics for the business?
• 9:42
  Gus Iurillo: Both, right?
• 9:43
  Gus Iurillo: You know, so my experience, you know, when I when I'm speaking with folks, I ask them like, how much did you make in your prior life?
• 9:49
  Gus Iurillo: How much do you want to make?
• 9:50
  Gus Iurillo: Like, what does success look like financially?
• 9:52
  Gus Iurillo: Both from an income perspective, right, for themselves personally, because that's how they're thinking, but they're not really thinking about the business.
• 9:58
  Gus Iurillo: They want to know how much of that flows down to me, right?
• 10:01
  Gus Iurillo: And how quickly can I get there.
• 10:03
  Gus Iurillo: And then, of course, equity building as well.
• 10:05
  Gus Iurillo: And the reason I sort of put economics third is my experience is there are plenty of models that can probably get almost anybody where they need to be financially.
• 10:15
  Gus Iurillo: But if you don't get role fit right, and I'll call work-life balance fit right, then the economic piece is very hard to achieve, right?
• 10:24
  Gus Iurillo: Because if you put a really smart person in the wrong franchise for them, they're really gonna struggle in it.
• 10:31
  Gus Iurillo: Whereas if it's a good temperamental fit and you really, you know, thrive in the role of the owner in that business, you can't but help but achieve your economic goals.
• 10:40
  Gus Iurillo: So sometimes people get it backwards, they're like, which business can make me the most money?
• 10:44
  Gus Iurillo: It's like, no, let's figure out which business you're gonna do best at.
• 10:47
  Gus Iurillo: And in that case, you're gonna generate as much income as you want.
• 10:50
  Gus Iurillo: You know, it's kind of putting the cart before the horse.
• 10:53
  Gus Iurillo: Got it.
• 10:54
  Scott Geller: That makes sense.
• 10:55
  Scott Geller: So so getting down, staying on the economics path of this, yeah.
• 10:59
  Scott Geller: I look at businesses as needing businesses as needing two things.
• 11:03
  Scott Geller: You don't have a business without revenue, right?
• 11:06
  Scott Geller: And you don't maintain a business without cash.
• 11:09
  Speaker 1: Right.
• 11:10
  Scott Geller: How long does it take to kind of start generating revenue in and I I I know it probably varies, but if maybe you can give us an idea, if if we're trying this franchise model, yeah, how long can I expect to before I can generate revenue?
• 11:25
  Gus Iurillo: Well, I and I do want to make the distinction between revenue for the business and income for the owner, right?
• 11:30
  Gus Iurillo: So I'll talk about that.
• 11:31
  Scott Geller: Correct, yes.
• 11:32
  Gus Iurillo: Um I typically, when I'm working with my clients, I tend to direct them more towards lower startup, lower overhead businesses, so typically not retail, because retail can take a long time.
• 11:44
  Gus Iurillo: Like people typically hear the word franchise and they think of a retail concept, right?
• 11:48
  Gus Iurillo: It's human nature.
• 11:49
  Gus Iurillo: But I'm not a fan of them, not as a consumer, I'm a fan of them, but as a business owner, because I think they do tend to be higher investment, higher overhead, and they can take longer.
• 11:58
  Gus Iurillo: They may generate revenue day one from opening the doors, but it could be a year or more before you actually are able to take money out for yourself.
• 12:05
  Gus Iurillo: A lot of the concepts that I direct my clients to, quite frankly, they can be generating revenue almost from the time they come out of training.
• 12:14
  Gus Iurillo: That's revenue.
• 12:15
  Gus Iurillo: But they're gonna have some fixed expenses, some marketing expenses and whatnot.
• 12:19
  Gus Iurillo: So I usually try to do, and it's and you're right, it is gonna vary by individual, but a lot of the concepts to which I direct my clients, they're oftentimes starting to generate cash flow in their second six months, like money they can put in their pocket.
• 12:35
  Gus Iurillo: So that I often tell them you may not replicate your past income in your first year, but you're probably gonna generate some positive cash flow that you you as the owner can take for yourself in the second six months of the business.
• 12:49
  Gus Iurillo: And it's possible that by their second year, depending on how much they were making and how ambitious they are, they might even be replicating their baseline income.
• 12:58
  Scott Geller: Okay.
• 12:59
  Gus Iurillo: But it does depend.
• 13:00
  Scott Geller: Got it.
• 13:01
  Scott Geller: And as far as the profitability within the business, and especially if I have a franchise and a secondary business, how will I know how it impacts the profitability and the business between those two functions or entities?
• 13:18
  Gus Iurillo: Yeah, that's a good question.
• 13:19
  Gus Iurillo: I'm not sure I have a definitive answer for you.
• 13:21
  Gus Iurillo: You know, again, because you're gonna keep the two entities separate, probably, but it's interesting if you're using the same customer base.
• 13:29
  Gus Iurillo: Let's say you start with the franchise and then you add another business, you know, and you're you're the finance guy, I'm not.
• 13:35
  Gus Iurillo: How do you allocate the marketing dollars towards the add-on business, right?
• 13:40
  Gus Iurillo: Because if you've already invested it in the franchise, you know, do you split it between the two?
• 13:44
  Gus Iurillo: You know, if you're just cross-pollinating, you may have no marketing expense to speak of for the secondary business because you're cross-pollinating with your existing customer base, unless you allocate it somehow, you know, to the other business, right?
• 13:57
  Gus Iurillo: So I guess it really depends on the interplay.
• 14:00
  Gus Iurillo: That's probably where I would refer to my CPA and say, help me make sure I'm doing this the right way, you know, in terms of how do I allocate my expenses appropriately.
• 14:09
  Scott Geller: Right.
• 14:10
  Scott Geller: Or maybe using, let's say, QuickBooks.
• 14:12
  Scott Geller: Most most everybody uses QuickBooks.
• 14:14
  Scott Geller: Sure.
• 14:15
  Scott Geller: Uh you you know, kind of tracking it in QuickBooks differently.
• 14:18
  Scott Geller: You mean to me, I feel like that would be, I don't know if you've seen that or not, uh either maybe it's two different QuickBooks sessions or instances, which I don't think would have to be necessary, but maybe it is for tax purposes, or you're tracking within QuickBooks using the classifications, the products, uh within the QuickBooks that it allows.
• 14:40
  Gus Iurillo: Yeah, to be honest with you, above my pay grade.
• 14:42
  Gus Iurillo: That's why I have a good CPA and good bookkeeper, Scott.
• 14:45
  Gus Iurillo: I would say so I don't have a definitive answer because I, you know, part of what I love about running my business is I can delegate those activities to my bookkeeper and my CPA.
• 14:55
  Gus Iurillo: I would just say the most important thing is to delineate between if you're gonna have two businesses, one being a franchise, one being an independent, keep them separate, right?
• 15:06
  Gus Iurillo: And the most important reason, besides budgeting, tax purposes, and all that, is I don't want to pay royalty.
• 15:13
  Gus Iurillo: Like if I have a separate business, I don't want to pay that five, six, seven percent royalty on my independent business.
• 15:19
  Gus Iurillo: So you'd want to set it up as a separate entity so the franchise or can't come back and say, hey, that that you know, we're entitled to royalties on this other product or service.
• 15:29
  Gus Iurillo: Because if you just try to wrap it in the franchise, then you could get into trouble.
• 15:33
  Scott Geller: Right.
• 15:34
  Scott Geller: I I see what you're saying.
• 15:35
  Scott Geller: You you've got to you've got to pay that constant on this annuity back to, or I guess you the royalty back to the to the franchise or company.
• 15:43
  Scott Geller: So you want to keep that separate.
• 15:46
  Gus Iurillo: Yeah, I mean, you get a lot for the royalty, so I don't want to minimize it.
• 15:49
  Gus Iurillo: I pay a royalty, I'm happy to pay it.
• 15:50
  Gus Iurillo: But if I were to create a separate entity, let's say I just hung up a shingle and did you know business coaching unrelated to entrepreneurs, I would set it up as a separate entity because it really has nothing to do with my core franchise.
• 16:03
  Gus Iurillo: So why would I pay royalties on that to my franchise worker?
• 16:07
  Gus Iurillo: Got it.
• 16:08
  Scott Geller: Okay.
• 16:08
  Scott Geller: Well, I wonder, I was wondering if you can maybe walk us through an example um of where a type of business where this might be able to work in any direction, right?
• 16:17
  Scott Geller: Of if it's you might be a franchise and and you kind of go out and and find other services and in a separate legal entity.
• 16:25
  Scott Geller: But did you have an example you could share with us?
• 16:28
  Gus Iurillo: Yeah, I'll give you two, um, you know, because they're different types of industries.
• 16:32
  Gus Iurillo: You see, you can see it a fair amount in like the home services industry.
• 16:37
  Gus Iurillo: So let's say, uh and I know I had a client who did it, she did it with two franchises, but she could have easily done it with an add-on.
• 16:43
  Gus Iurillo: She owned a handyman franchise here in town and then decided to add uh a plumbing franchise separately.
• 16:50
  Gus Iurillo: But let's say she just decided, hey, my clients are asking me for plumbing services, and my you know, my handyman franchise doesn't offer that as part of our service offering.
• 17:00
  Gus Iurillo: I guess she could have brought on board some plumbers, you know, licensed plumbers and whatnot, and set up a separate entity, and you're targeting the same customer base.
• 17:09
  Gus Iurillo: So I'd say in that case, you know, looking for a complementary customer base to do that.
• 17:15
  Gus Iurillo: So that's where I think you could see that that you're you go into a home service franchise, maybe with the intention of just focusing on the franchise, and then you get a lot of customers clamoring for something else that your franchise doesn't offer.
• 17:28
  Gus Iurillo: That might be the impetus to say, okay, I'm gonna figure out how to do that, you know, and hire the right people to do that, but I need to set it up as a separate entity.
• 17:37
  Gus Iurillo: But I'm gonna cross-pollinate that customer base that I've established with the franchise.
• 17:41
  Gus Iurillo: I had another client out on the West Coast, and he got into a leadership training franchise, but he was also already doing a lot of work in the nonprofit space, raising money, um, you know, NGOs and whatnot, that he didn't want to give up.
• 17:58
  Gus Iurillo: And so when he was speaking with the franchise or he said, Look, I'm already doing this, I want to make sure that that's okay.
• 18:03
  Gus Iurillo: And they were totally unrelated to one another.
• 18:06
  Gus Iurillo: So those were two different entities.
• 18:08
  Gus Iurillo: And in some cases, what I'll see is like with him, he said, that work is more of a passion of his, but from a monetary perspective, he's like, I don't know how long, you know, I don't know how to monetize that, how long it's gonna take.
• 18:22
  Gus Iurillo: So in that, in that situation, the franchise was more of a sure thing.
• 18:27
  Gus Iurillo: Like, so he was thinking, hey, I need the franchise as my means of replicating my six-figure income because I know that it has a higher potential for getting me there that allows me more time to figure out this other independent business model, so I'm not dependent on the income from it.
• 18:45
  Gus Iurillo: So that's why I'm saying it could work a myriad of different ways.
• 18:49
  Gus Iurillo: Again, the franchise or is not going to care unless A, it undermines the integrity of the brand, or they feel like you're taking your eye off the ball with the core franchise.
• 18:59
  Gus Iurillo: Like if you wind up doing something else and your franchise model was suffering, but that doesn't happen a lot.
• 19:06
  Gus Iurillo: But you know, they'd want you'd want to be mindful of that.
• 19:08
  Scott Geller: Okay.
• 19:09
  Scott Geller: So my next question, Gus, you've touched on this a few times, but I I want to really kind of lay this out for our listeners, and that is the advantages of going the franchise route is that it's kind of like a plan set up for you, right?
• 19:24
  Scott Geller: You're not starting from scratch.
• 19:26
  Speaker 1: Right.
• 19:27
  Scott Geller: Can you walk us through a little bit of those advantages of what does that exactly mean?
• 19:32
  Scott Geller: Like what are you really getting and and how is that in this for some people, I guess, how is that better than me going out from starting from scratch?
• 19:42
  Gus Iurillo: Yeah, I I I think the key word I would use, Scott, is predictability.
• 19:45
  Gus Iurillo: Right?
• 19:46
  Gus Iurillo: And I'll use my own experience.
• 19:47
  Gus Iurillo: 24 years ago, I walked away from a corporate job making six figures, and my spouse wasn't working outside the home.
• 19:53
  Gus Iurillo: I needed something that was pretty much a sure thing.
• 19:56
  Gus Iurillo: You know, as long as I held up my end of the bargain.
• 19:59
  Gus Iurillo: You know, and you probably know the stats on this, but you know, independent businesses, I think maybe less than 20% of them make it over five years.
• 20:06
  Gus Iurillo: You know, it's sort of a high risk and you know, whatever kind of reward, depending on how it hits, because you're having to figure it out as you go.
• 20:15
  Gus Iurillo: It's not like is it a good idea or not, but it just takes a while to figure out the model.
• 20:19
  Gus Iurillo: And a lot of people run out of stamina or money before they, you know, systematize their idea.
• 20:26
  Gus Iurillo: With a franchise, you're buying the system already fully baked.
• 20:29
  Gus Iurillo: So the roadmap is there.
• 20:31
  Gus Iurillo: There's still a possibility it doesn't work if you don't follow the system, right?
• 20:36
  Gus Iurillo: So part of what I try to do is help somebody figure out are you cut out to run your own business, franchise or otherwise, and you know, making sure they understand what their role needs to be to make that business successful, like the business owner's the catalyst.
• 20:47
  Gus Iurillo: But I would dare say if you find the right franchise for you and you execute appropriately according to their plan, you have an extremely high probability of success and predictability in that if you've done your due diligence and spoken to other people in that franchise already, you should have a pretty good idea of how much you can reasonably make year one, year two, year three.
• 21:10
  Gus Iurillo: If you're a top performer, how high is up and what does that trajectory look like?
• 21:14
  Gus Iurillo: You can even speak to people that have struggled or not made it and find out what did they do or not do, you know, that you know, to generate those results.
• 21:22
  Gus Iurillo: So I think there's the predictability of it, right?
• 21:24
  Gus Iurillo: If you're looking for more of a sure thing, you want your own business, but you want the predictability of a proven model.
• 21:31
  Gus Iurillo: And then there's the force multiplier effect of, you know, if they're doing the marketing for you, uh, you're paying for it, but they they may be able to do it more efficiently at a corporate level, digital marketing, call center, operational support, helping you attract and retain the right people, best practice sharing amongst franchise owners.
• 21:50
  Gus Iurillo: You know, there's a lot of franchise can bring to bear.
• 21:53
  Gus Iurillo: The only caveat I would say is you have to be willing to follow somebody else's proven system, which sounds obvious, but there are some people that just can't, you know, they're madworks.
• 22:02
  Gus Iurillo: Like, you know, I would never dissuade anybody who really wants to go do their own thing.
• 22:06
  Gus Iurillo: If, like, hey, you're prepared that it might not work and you're okay with that.
• 22:10
  Gus Iurillo: You know, every franchise at some point started out somebody developing an independent business that evolved into a franchise that other people bought into.
• 22:19
  Gus Iurillo: So I would never dissuade anybody.
• 22:21
  Gus Iurillo: It really depends on what you're looking for.
• 22:24
  Gus Iurillo: I just think there's a higher probability it can go off the rails with an independent business.
• 22:30
  Gus Iurillo: And a franchise is a little bit more of a sure thing.
• 22:33
  Gus Iurillo: So it just depends.
• 22:34
  Gus Iurillo: A lot of my clients, if they're coming out of corporate America, they want that sure thing because hey, I've got a replica, I've got a family to support.
• 22:42
  Gus Iurillo: You know, I can't just bet it all on black.
• 22:44
  Gus Iurillo: I need something with some predictability.
• 22:47
  Scott Geller: Right.
• 22:47
  Scott Geller: And that's a little different than than your traditional startup where, hey, I'm figuring this out, I'm I'm being creative.
• 22:55
  unknown: Yeah.
• 22:57
  Scott Geller: On the far end of the entrepreneurial ship scale of everything's got to be kind of my way, or or figuring out this is this is more of, hey, can you follow directions and maybe can you follow directions and and succeed with it?
• 23:12
  Gus Iurillo: Yeah, and you can still be creative within a franchise.
• 23:14
  Gus Iurillo: As you know, Scott, most of my business comes from referrals, which is different than a lot of my colleagues.
• 23:19
  Gus Iurillo: So you can still be creative in the context of a franchise, but there's some core tenets that you have to adhere to, right, to maintain the integrity of the brand.
• 23:28
  Gus Iurillo: So I think you you know, because that's one of the concerns I often hear from people.
• 23:32
  Gus Iurillo: Well, if I go in a franchise, they're just going to tell me what to do.
• 23:34
  Gus Iurillo: And I said, no, they're going to give you the roadmap.
• 23:36
  Gus Iurillo: You still have degrees of freedom, but you know, if there's certain things that they say are sacrosanct, you pretty much want to adhere to that because they've tried all the other ways and they don't work, right?
• 23:46
  Gus Iurillo: So if they can show you the most efficient way, you know, to make money and be successful, why do you want to reinvent that wheel?
• 23:52
  Gus Iurillo: Be creative somewhere else in it.
• 23:54
  Gus Iurillo: And then I've also worked with people to your point that it turned out really they were more the maverick, you know, and they were like, uh, and I'm like, okay, then go do your own independent thing.
• 24:03
  Gus Iurillo: That's fine, right?
• 24:04
  Gus Iurillo: There's there's no right or wrong answer.
• 24:05
  Gus Iurillo: It really just depends on the individual.
• 24:07
  Scott Geller: Okay.
• 24:08
  Scott Geller: And and how how much financially should an individual or going back to my original idea for this, uh, a business owner, how much financially should they be prepared to invest to get it up and running?
• 24:22
  Gus Iurillo: Yeah, I mean, I'm gonna put a big it depends in front of it.
• 24:25
  Gus Iurillo: But again, I typically direct people towards lower investment opportunities, non-brick and mortar.
• 24:31
  Gus Iurillo: So I would say good rule of thumb for a single territory, because you know, franchises, you can often acquire multiple territories.
• 24:38
  Gus Iurillo: A single territory, the franchise fee might be, let's say, $50,000, which is amortizable over 10 years.
• 24:44
  Gus Iurillo: And then you might have another $50,000 in expenses, $50 to $75,000.
• 24:48
  Gus Iurillo: So maybe $100,000, $125,000.
• 24:50
  Gus Iurillo: That doesn't include paying yourself.
• 24:52
  Gus Iurillo: That's the to get it up and running.
• 24:54
  Gus Iurillo: And then there are a myriad of ways to fund that that I help people with.
• 24:57
  Gus Iurillo: They can typically get SBA loans for that, and there are other ways that you can fund it.
• 25:01
  Gus Iurillo: But you know, I would say if in the back of your mind you think $100 to $150, that's probably a good number.
• 25:07
  Gus Iurillo: And like I said, you don't have to have that money available.
• 25:10
  Gus Iurillo: There are ways that you can fund up to 90% of that through an SBA loan.
• 25:14
  Gus Iurillo: Got it.
• 25:14
  Scott Geller: Okay.
• 25:15
  Scott Geller: Well, Gus, I appreciate you uh being patient with me as I kind of wander down a random path here of being uh creative myself uh around franchises, but I appreciate you jumping on and joining us here.
• 25:28
  Scott Geller: I'd like to, we like to wrap up every show before I go down another path of just me being creative with how you can use franchises.
• 25:37
  Scott Geller: We usually wrap up every show with one to three immediate takeaways that our listeners can literally put into action when they turn off the podcast.
• 25:46
  Scott Geller: Typically, we asked it to be around budgeting or planning.
• 25:49
  Scott Geller: It might be something you already mentioned, might be around franchising, might be around just running a business in general.
• 25:54
  Scott Geller: But what can you share with us today?
• 25:56
  Gus Iurillo: Sure.
• 25:56
  Gus Iurillo: I I think as it relates to if you're going to go the franchise route, you might want to utilize someone like me to help you navigate it so you don't waste a lot of time looking in the wrong places or uh getting stuck.
• 26:07
  Gus Iurillo: I see a lot of people get stuck because they don't know where to go to get the information, or they kind of get inside their own heads.
• 26:14
  Gus Iurillo: So it's always good to get some outside coaching or advice to help you explore.
• 26:19
  Gus Iurillo: I know when I talk to my clients, you mentioned like, you know, what the investment might look like.
• 26:24
  Gus Iurillo: I always try to help them, you know, in a sense, figure out how might we fund this or how might you fund this before we go down the path.
• 26:32
  Gus Iurillo: Almost like, you know, if you go to buy real estate, you know, you get typically get pre-qualified for mortgage.
• 26:38
  Gus Iurillo: Not quite the same, but I try to help people understand the difference between SBA funding.
• 26:43
  Gus Iurillo: There's ways that you can utilize a portion of your 401k to fund the business, which I've had a lot of clients do.
• 26:48
  Gus Iurillo: So there are a myriad of ways to do it.
• 26:50
  Gus Iurillo: But before you go too far down the trail of doing it, it's always good to identify at least one potential funding source and what that might look like for two reasons.
• 27:00
  Gus Iurillo: One, so you don't waste your time going through all the due diligence and then find out, okay, I can't do this.
• 27:05
  Gus Iurillo: And then two, I find that alleviates a lot of the stress, you know, for my clients.
• 27:10
  Gus Iurillo: If they know, okay, I know how I could potentially fund it.
• 27:14
  Gus Iurillo: Now let me go explore.
• 27:15
  Gus Iurillo: And then they're more confident in their exploration journey because they've kind of pre-figured out the funding piece of it.
• 27:22
  Gus Iurillo: And then I think you'd probably agree, getting a good CPA on your team, they're worth their weight in gold.
• 27:29
  Gus Iurillo: You know, I know mine helps me navigate, not just keeping me honest, but you know, there's so many ways that you can legally, ethically minimize your tax expenses as a business owner that people that work for big companies or any company don't have.
• 27:48
  Gus Iurillo: And so it's important to know that up front.
• 27:50
  Gus Iurillo: You know, I remember my you know, my CPA talking to me about, okay, now it's time for you to upgrade to an S corporation.
• 27:56
  Gus Iurillo: I'm like, why do I want to do that?
• 27:57
  Gus Iurillo: When he explained it, I'm like, oh yeah, I want to do that.
• 27:59
  Gus Iurillo: Uh, but I wouldn't have known to do that myself.
• 28:02
  Gus Iurillo: So, you know, you should never feel like you have to do it all on your own.
• 28:06
  Gus Iurillo: You know, I I think successful business owners figure out what they're good at and what they like to do and focus on that, and then learn to delegate the things they're not as good at, or somebody else can do it more efficiently and effectively, like a CPA, like a bookkeeper, like the people that work for you, you know, so that you can focus on the you know higher leverage, higher value added activities.
• 28:27
  Scott Geller: Yeah, I like that guess.
• 28:28
  Scott Geller: It's it's the dangers of you don't know what you don't know, right?
• 28:32
  unknown: Right.
• 28:32
  Speaker 1: Yeah.
• 28:33
  Scott Geller: Okay.
• 28:33
  Scott Geller: Well, how about uh we also asked our guests for a favorite book or podcast?
• 28:39
  Gus Iurillo: Yeah, I I'm gonna go with a book right now.
• 28:41
  Gus Iurillo: My podcasts tend to lean more towards funny, so that's probably not relevant from a business perspective.
• 28:46
  Gus Iurillo: But I'm reading a book now called Give and Take by Adam Grant.
• 28:50
  Gus Iurillo: He's uh I think he's a Harvard professor.
• 28:52
  Gus Iurillo: It's a really interesting book, and the the whole premise of it is you know uh the importance of being a giver and you know, like putting you know, doing favors for other people, connecting other people, and how that benefits you in manifold ways, even if you're not it's not a quid pro quo type of thing.
• 29:08
  Gus Iurillo: It's really almost like karma, like doing good things for other people and how that comes back to you in spades.
• 29:15
  Gus Iurillo: And I just find it fascinating.
• 29:17
  Gus Iurillo: And he's done a lot of research on the importance of doing that.
• 29:20
  Gus Iurillo: And then Scott, you know you and I are both pretty actively involved in the community and you know, connecting people, and sometimes you don't know how that that might benefit you five or ten years down the road, but it was just a good reminder for me the importance of being a giver, especially as a business owner, you know, and especially if you can help other business owners in your community.
• 29:40
  Scott Geller: Oh, nice.
• 29:40
  Scott Geller: We would not have gotten that one.
• 29:41
  Scott Geller: So I'm glad to I'll always you know sometimes you have enough people on, you kind of get the same books, but that yeah, that that's a new one.
• 29:47
  Scott Geller: So thank you, Gus.
• 29:48
  Scott Geller: Yeah.
• 29:49
  Scott Geller: Well, Gus, I really enjoyed this.
• 29:51
  Scott Geller: Thank you for for joining us today.
• 29:54
  Gus Iurillo: Yeah, thanks for having me, Scott.
• 29:57
  Scott Geller: All right, folks, that's it for today.
• 29:59
  Scott Geller: If you like The show or found something useful, do me a favor and reach out to some other business owner or someone that could benefit from it and share the show.
• 30:07
  Scott Geller: Tell them to listen.
• 30:09
  Scott Geller: I'm Scott Keller and I hope you'll join me next time for budget your business.