Be Your Own Boss - Fall 2000
Chris Smiley hasn't slept through the night in five years. He has a rambunctious 2-year-old child, but it's not his son who interrupts his sleep every night-it's his baker. Chris and his wife, Janae, are co-owners of one of the top-performing Manhattan Bagels franchises in the nation, located in Lancaster, Pennsylvania. At 2 a.m., the Smileys wake up to a call from their baker, letting them know he got to work as planned.
Chris is often to work by 4 a.m. himself. Five years ago, at the ripe old age of 26, he and Janae elected to give up sleep and security in order to join the growing ranks of Generation X franchisees.
Chris' story is typical of his business-minded peers. "Some people just have that entrepreneurial spirit," he says. "I was constantly looking. When Janae and I traveled, I always noticed what the world had that we didn't have back in Lancaster."
On a trip to New York City, Chris picked up some bagels-the idea for starting a bagel shop occurred to him on the trip home. "I thought, 'This is something we could handle.' It wasn't totally beyond my comprehension."
But Chris didn't consider buying a franchise at first. It was only after he spent some time visiting bagel shops in Philadelphia; Washington, DC; New York City and surrounding areas, and talking to as many owners and workers as possible, that "the idea of doing this on my own became overwhelming," he says. "I didn't know anything about fixing the equipment or mixing the dough. I had never worked in food before. Making a good bagel is not an easy process-there's a low margin of error"
Chris then started researching bagel franchisors, finally picking Manhattan Bagel and lining up financing in the manner typical of Generation Xers- borrowing from family, cashing in personal savings and receiving financing assistance from the franchisor. With little collateral or business history, young adults are usually not ideal candidates for traditional bank loans and financing.
"The bank wanted us to put down 25 to 30 percent of our own money [for the $225,000 total]," says Smiley. "We had just a little townhouse and no assets, but my wife and I had saved up $40,000 to $50,000 in savings, and we borrowed the rest from our parents."
"Many Generation Xers are being financed by their baby-boomer parents," says Andrew J. Sherman, chairman of the franchising department at Katten, Muchin, and Zavis, a Washington, DC, law firm that assists early-stage and rapidly growing franchisors. "[A Gen Xer] graduates from college and is offered a $75,000-a-year job, then has an opportunity to go into business for himself or herself, and the source of capital is there because [the Gen Xer's baby boomer parents] have it. Franchisors often put the parents of the franchisee on the hook financially."
Yet the market isn't open merely to those Gen Xers who get by with a little help from mom and dad. Many other entrepreneur wannabes only have a few grand to invest after they liquidate their 401(k)s, max out their charge cards and beg from family members, and they need structured training programs that compensate for their lack of business experience. There are a whole slew of franchises and business opportunities available to those who don't have a fortune to spend on start-up. One such business opportunity is National Details Systems, an auto-detailing business opportunity based in Thousand Oaks, California. National Details Systems operates like a franchise, providing dealers with on-going tech support, manuals, the use of its logo and name, equipment, marketing, training and an extensive product line. But the cost of entry is lower than many other franchises. For a range of $500 to $10,000, prospective National Details Systems dealers can purchase a detailing business on wheels and set up shop anywhere they choose, with no ongoing franchise fee.
Greg Dumond, the company's founder, has put 600 entrepreneurs into the auto-detailing business since 1984. Opportunities like his are attractive to Gen Xers who can't cough up the kind of capital that the Smileys needed to purchase a Manhattan Bagel franchise.
Azriela Jaffe is the author of eight books, including Starting From No: Ten Strategies to Overcome Your Fear of Rejection and Succeed in Business (Dearborn), and a nationally syndicated columnist ("Advice from A-Z"). Visit her Web site at www.isquare.com/crlink.htm.