What works: Accelerators vs. Franchisors?
It’s the 20-Something Accelerators vs. Franchisors for Mid to Late-Career Entrepreneurs
- Academic or University-based accelerators (e.g., Iowa Venture School a National Science Foundation (NSF) i-Corps Accelerator site with VentureWell)
- City or regional focused accelerators (e.g., Iowa Startup Accelerator)
- Subject-matter specific accelerators (e.g., Des Moines’ Global Insurance Accelerator)
These are just a few examples from our home state. There are more in Iowa and Minnesota and in your state.
Accelerators do wonders with 20-something entrepreneurs by helping to validate business models before launch and make industry and customer connections. The trade-off is the 24-7 intense focus on the startup demanded of the young gun founders, often in a distant city from their home.
Accelerators are for the young
But here’s the dirty little secret. While 20-somethings are a major source of new entrepreneurs, mid to late-career entrepreneurs are another critically important subset of entrepreneurs. And these Baby Boomer entrepreneurs are almost wholly unserved or poorly served by the popular accelerators.
Some interpret this as the young are more innovative. This opinion would be wrong and undervalues experience and wisdom combined with innovation. It’s more a function of stage-of-life.
Why? The accelerator model poorly fits the competing family demands and current jobs of the mid to late-career subject matter expert considering building wealth for him or herself or looking for control beyond the age-discriminating and up-or-out culture of corporate America. Simply put, the older entrepreneurs have competing obligations.
The ideal might be pairing some of the young guns with experienced managers and leaders. It might reduce the number of early-stage companies that crash and burn. But that is the exception, not the rule.
So, if the older entrepreneurs (nee Baby Boomers) are not going the accelerator route, what are they doing?
DIY business building
A significant number still launch their own business model and build the necessary team and systems from scratch. This is the advantage of industry experience. Mature leaders have both market insight to the problems that need solving and market access to the decision-makers who can write the check. Their experience and network are the sources of market validation and the first bullseye target customers.
But what about the mature career switchers or those with technical skills but not a network or the business skills? Or perhaps those that just want to diversify income streams? They still need business model validation to assure there are willing and able customers for the product/service at the planned price point.
Franchisors, the Accelerators for Late-Career Entrepreneurs
It’s this group of career switchers or independence seekers that go the franchise route.
A prospective business owner must build a repeatable and scalable business model. The business model must include systems that assure consistent operations even when people come and go (as they will). With enough time and effort, you can build your own system. (The DIY group.) Or you can buy a proven system from a franchisor. What successful entrepreneurs can’t do is ignore the need for a repeatable system that assures consistent and accountable results.
Nondestructive business model testing
Accelerators test the hypothesis of a business model to assure the proposed system will work as intended. The biggest dangers to new business owners are their false assumptions about:
- How does the market work?
- Who is the customer?
- How and why customers make decisions?
- Who are the competitors?
- How will competitors respond?
- What are problems or passions big enough to compel buyers to change their current habits to give you a try?
Get any of these wrong and you burn money, time, and relationships even if the core technology is great. Customers don’t buy technology, they buy solutions.
You don’t know what you don’t know, so ask someone who does
Accelerators address the problem that entrepreneurs don’t know what they don’t know. Franchisors solve this same problem for older entrepreneurs. A franchise offers a proven business model that repeats and scales by adding local owners, sales and service staff. Franchises tend to focus on high-touch distribution channels. But do your research and work the program and the likelihood of success is high. Why? The Franchisor has already found what works. The what not to dos are already eliminated and the to-dos are reduced to a system. It’s a turn-key business model.
Changing markets, moving targets still a risk
One caveat, neither accelerators nor franchisors are perfect insulation against changing markets. What once worked is not guaranteed to always work. Customers change in numbers. Customers change in their tastes and preferences. Competitors change. Technology changes. Markets change. Even massively successful franchisors like McDonald’s have to change as the market changes.
Franchisor is used here broadly, the legal details may vary from licensed use of a tradename to full-blown franchise agreements and more. It’s the core idea of a proven business model that is the idea captured by the turn-key business model concept. (For more on the need for a business system and the turn-key business model revolution see Michael E. Gerber, The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It
We’ll do a full-blown book review of The E-Myth Revisited. For now, it’s sufficient to share that Michael Gerber’s experience and conclusion as a business coach parallels our own. Being an expert carpenter doesn’t make you great at managing the business of a construction contractor. The technical skill is only part of the business. You ignore the other building blocks of the business at your own risk. Yes, you need a system. Your job as a business owner isn’t to do everything. It is to see that everything gets done. That requires delegation. And a system.
The Pedego Electric Bikes example
One of our favorite peers, Retirepreneur, recently shared a great example from Inc. Magazine of a franchise exploiting changing technology and changing markets that simultaneously leverages mid to late-career Baby Boomers as the local sales and service force. Pedego has a system, not just an electric bicycle.
Your job as a business owner isn’t to do everything. It is to see that everything gets done. That requires delegation. And a system.