How to build a “frankenbusiness” by copying the best practices from the big players in your space (Ep 46)

Show notes from podcast episode 46.

The great thing about entering an existing market is that the moving parts are already out there ready for us to study. The customers are there. The competitors are one click and one phone call away.

There are three factors in business on which we can choose to compete. The first is speed and responsiveness – getting the service to the customer faster. The second is quality – offering a superior service. And the third is price – offering the service at a lower price.

Generally we don’t want to be the cheapest option on the market. We want to be the fastest and the highest quality so customers are happy to pay us 2x more than our competitors because the value is there.

So for now let’s think about price in terms of efficiency and cost. If you spend unlimited money within your business it’s easy to offer a service both fast and the best. But that’s not an option. So let’s think of competing on price as being able to offer a very low cost service because our costs are relatively low.

So if we improve our speed and quality we increase value and can charge more for our services and if we improve efficiency and reduce costs we generate more profit.

So if we can improve any of the three factors over our local competitors we will have a competitive advantage.

Now let’s talk about how we can do that by being a copycat.

Remember the market study?

We can use this same strategy to learn our competitors and use that information to design our website, pricing structure, marketing strategy, customer service approach and more.

What we are going to do is build a franken-business. Take what we love about several different businesses and build the ultimate beast of a business that can thrive on a local level by doing all three competitive factors well.

Emulating success is the best way to succeed.

In school we are taught that copying is bad. Looking up answers online is bad. But in every other area of life that is the best way to get ahead.

Want to get better at sports? Emulate the superstar in your field. Want to get better at guitar? Emulate the best guitar player you know. Want to get better at business? Emulate the businesses that are successful.

The place to start is by studying big franchised companies that offer services in several cities. None of them compete on price. They all charge more and (sometimes) offer faster and better service.

These companies thrive with their online presence, branding and sales oriented customer service. They answer the phone every time with a smile and follow up 30 minutes after you reach out and keep following up every day.

They have hiring and training systems in place. They simplify the job so average employees can deliver a consistent service to the customer.

The big players have a proven scalable model.

So get on the horn and find the largest looking and most highest volume company in the entire country and call them up. Devour their website content. Write down their sales lines on the phone. Ask them about their volume. Ask them about the way it all works from the viewpoint of the customer.

We ask them about the quality. We ask them about the speed and responsiveness (turn around time). We ask them about the price. We ask about volume. We ask about experience. We ask about crew size.

This is a really uncomfortable thing to do at first for a lot of people. It feels almost as if you are spying or stealing from your competitors and in a way you are. But rest assured that you likely aren’t going to take much business if any.

Knowing this information we can easily get a feeling for how hard it will be to compete. We’ll likely find a lot of things we don’t like about the competitors. A bad website. A rude customer service rep. Several weeks before we can get an appointment.

Get a quote from each of the top competitors. Its free to do this and gives you a look directly inside the competitor’s business. It can often get you an in person visit to really dive in and ask a bunch of questions and learn a lot.

Make a list of key questions beforehand. Feel out how the conversation with the reps are going and don’t be afraid to ask direct questions about volume and size of the company. How many crews do you have? How many customers do you service each year? Are you generally busy in the winter as well?

As a business owner I get similar questions from legitimate customers all the time – they genuinely want to know about volume because they want a company that has experience and runs a legitimate operation. If other customers trust this company I can trust them too!

Ask the rep if they like their job. You will be very surprised at the doors this will open up in the conversation. Max Maher did exactly this when he did his 500 business connection experiment. Employees really start to open up and vent about what they like and dislike about the company and its inner workings!

Use ahrefs.com to study their local keywords and content marketing strategy. Find out how they title their articles, pages and videos. Digest this information and mimic it!

Look at and call a lot of different companies. Take what you like about each one. Ignore what you don’t like. Before you know it you’ll have a system for customer service, billing, quoting and a website just like the big profitable players. You know there system is working and you now have the same system.

The big kicker is you can do this now at a fraction of the cost.

The one thing we don’t want to copy from the big dogs is the cost/efficiency side of things. You can offer your service much more efficiently and at much lower costs than they can. You don’t need a full time office staff. You don’t even need an office. You don’t need a full time accountant. You don’t need to spend $50k on a website. You get the point.

This is where tech comes into play. 10 years ago we had to have an office. We had to pay big bucks to get custom software built. We had to hire full time employees to take care of a lot of things that we can now outsource. Nowadays we can get software out of the box for $100 per month that is twice as good as what the big franchises spent $500k to have built back in the day.

As a franchise owner of a service business you likely pay 20-30% of your overall revenue in the form of branding and franchise fees. This all goes to the franchise to support the company overhead and generate shareholder earnings.

In some situations you can offer a service right on par with the big dogs without all the overhead and have a much better profit margin.

Even as you grow and years after launching make a habit to study your competitors on a consistent basis. Always keep an open mind about making changes even when things are working. Be the first person to adopt new ideas that other competitors are implementing to offer better and faster services or more efficient, lower cost operations.

I’ve implemented these strategies myself multiple times and it has been incredibly valuable. When we first got into the student storage space there were several competitors already operational. We studied all of them from the mom and pops to the national players and took bits and pieces from each. We found one company that offered free boxes and loved that idea and started doing that. We found another that had pickup stations to make pickups more efficient so we implemented that and so on.

We did the same thing with our self storage model. We loved the rate management, branding and digital marketing strategies of the big players. We loved how a few small operators managed the facilities 100% remotely with no on-site manager. We combined both of these to build our own hybrid strategy to cut costs over the big players but drive revenue faster than the small players.

Overall – this is a step many entrepreneurs skip because they already think they know the best practices and aren’t willing to have an open mind and study what actually works and implement changes based on those findings. Make it happen and you’ll have a huge advantage!

April 29, 2019 6:20 am