If Henry Johnson, multiple-unit Pirtek franchisee, can tell you anything about franchising success, it’s that it’s a patience game.
Johnson, a management accountant by trade, ran a successful engineering business in the mining industry before venturing into franchising. But even then it took time.
“I saw the Pirtek franchise in Australia in 1996 and knew immediately that I wanted to be involved,” recalls Johnson.
“I always wanted to be attached to a specific product and Pirtek offered a very good product for an industry I had experience in.”
But the hydraulic and fluid transfer brand hadn’t reached South Africa yet, and it took another three years before it did.
Even then, Johnson didn’t rush his decision, only approaching the franchisor in late 2006 to negotiate buying a franchise when he had sold his share in his previous business, and opening his first set of doors in early 2007.
Johnson’s background gave him firm footing in setting a good foundation for growth. “The first operation was small – around 100m2 – and we grew organically by investing profits back into the business. Managing cash flow was absolutely critical at this time. To keep costs down, I had only four staff and did a lot of multi-tasking like procurement, admin, business management, sales, seeing clients.”
It’s a far cry from where he is now with five branches averaging 500m2 each and 145 staff.
A time to grow
By 2009, Johnson was ready to add another Pirtek franchise.
“Because of the nature of the industry with heavy machinery in harsh conditions, parts wear down and Pirtek offers high quality replacement parts. I then set about offering a mobile replacement service that minimised down-time for my clients, and the opportunity to grow was too attractive to ignore,” says Johnson. But, once again, cash flow presented a challenge.
“Although my first unit reached break-even in eight months of opening, each time we grew and took bigger and bigger bites, new break-evens got set. Nevertheless, the majority of my business’s growth has been self-funded with only some assistance from the bank because of careful cash flow management, keeping key financial ratios in place, and putting profits back into the business.”
Where in the beginning Johnson was very involved in many aspects of running operations, today he’s stepped back to focus his time on steering his business.
“Where I used to sit and fill out invoices and the like, I now have the right people in the right places and this allows me to work on the business instead of in it – enforcing the main driver of my business which is a simple but challenging goal of seven new customers every month. I wake up at 4am so I’m ready for feedback from my managers. This prepares me for the rest of the day’s work.”
The effects of time
With time, money and staff managed carefully during crucial growth periods, Johnson’s franchise success is undeniable. He now runs five Pirtek branches, and in March 2013 his stores made triple the turnover he achieved in his first year with Pirtek.
At the end of the day though, it comes down to time: “I put a lot of time into understanding the product I wanted to sell, its applications and its place in the market. Without this, I wouldn’t have been able to spot opportunities, strategised to seize them, and enjoy the growth I have.”