20 Jan Love them or hate them Jim’s Franchises are an Australian Success Story
If you’ve ever contemplated buying a franchise or indeed franchising your own business then it’s well worth reading some of the books written by Jim Penman. Jim transformed a simple mowing round turn into a global empire. The question is how?
It all began in 1982 as a humble lawn mowing business with a starting capital of $24.00. Jim needed part time work while he was undertaking his PHD in History. So he started a part-time gardening business which became full time in 1982 and was franchised in 1989. Today Jim’s Group has more than 2900 Franchisees in four countries, and is growing at the rate of around 200 per year.
Jim is a true entrepreneur when it comes to business because he thinks outside the square and pursues his vision relentlessly. He has done a number of simple things but which have had a huge impact on the growth of his initial mowing business and then subsequently his empire. Here are a few examples
Ready Made Customer Base
Instead of going door to door trying to drum up new business he cleverly realised that if he could buy some existing mowing rounds then he would have a ready-made customer base – which is exactly what he did. In franchising if you can build up the business and then sell that area as a going concern, the sale process will be easier and the amount you sell it for higher. One way to do this is to set up your initial site as a corporately owned franchise. This way it has all the same systems and procedures, it’s just that initially you own it and then you sell it to a franchisee.
Selling by not selling
Jim Penman has many talents but selling skills did not come to Jim naturally. In his book “What will they Franchise Next” The Story of Jim’s Group (2003) he says
“I had never been able to sell. One of my first ‘jobs’ after leaving school was selling encyclopaedias door to door. I was hopeless at it. I tried canvassing for a paint company, and failed. I telemarketer for another business, and failed. I had no people skills. I couldn’t take rejection. I absolutely hated selling. I was a thoroughly awful salesman. But now, for my business to succeed, I had to sell mowing rounds consistently, month after month”
While he tried many ways to improve his selling skills, even outsourcing that role to professional sales people it was actually in another context that he has his sales epiphany. When seeking advice about advertising and marketing his advisor gave him a wealth of valuable information without once trying to sell his services to Jim. Being the analytical person that he is Jim realised that if you genuinely give without expecting a return you are much more likely to get what you want too.
Early on in the mowing business Jim found that sometimes when he sold his mowing rounds the new owner would have existing customers drop out from that round. The effect this has was that the new owners had less income then they were first lead to believe. So Jim introduced a six week period of income guarantee – which then became the cornerstone of his business.
The income guarantee was a fundamental game changer and to date is still used by many franchise systems. Franchisees by nature have a lower risk threshold than the person who is has a vision and turns that vision into a reality (or in this case a business). So by offering a guaranteed income Jim was helping to gap that person’s uncertainty and give them piece of mind. The guarantee doesn’t last forever but long enough to enable the franchisee to get their feet on the ground and establish their business.
No doubt there are many other aspects that have made Jim’s Group the second largest franchise in Australia. I am also well aware that not everybody is a fan of Jim’s. With any success story of course, criticism is often inevitable.
Jim has been accused of being too controlling and out of his depth in regards to running this enormous empire. However my role here is not to judge and nor do I have enough first-hand experience to separate the fact from the fiction. But what I do know from my decade plus experience as a franchise consultant is that Jim Penman is one astute entrepreneur who is driven, passionate about his business and knows a thing or two when it comes to franchising.
For more information on how to start a franchise, contact us and we can explore your options with you. And if you do decide to set up a franchise, we can provide ongoing support to help you get the best out of it, both now and into the future.
Thanks for reading,
The Franchise Institute Team
1300 855 435