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Jan 09
2000

Franchising and Growth

Posted by: Steve Marr

Tagged in: Untagged 

Dane Nealon believes he is great window cleaner. He has a window cleaning system that is fast and effective. He wants to know what it would take to franchise or otherwise expand his successful Green Valley business, Mr. Windo. To gain some perspective, he recently met with Steve Marr, small business consultant and owner of Business Proverbs.

 

Profile

  • The Business: Mr. Windo- (800) 287-2502 or (520) 399-2737 in Green Valley
  • Founded: 1997
  • The Owner: Dane Nealon
  • The Service: Window cleaning
  • Annual Revenue: $175,000
  • The Challenge: Franchising and growth


The story

Dane Nealon grew up in Tucson. His father was in the Air Force and stationed at Davis-Monthan Air Force Base. Despite a B average at Sabino High School, Nealon left high school in 1985 and did not graduate. Until 1990, he worked in fast food restaurants, delivered newspapers and was a waiter for a restaurant at the Doubletree Hotel. When tips declined, Nealon became motivated to do something different. Through his church, Nealon was acquainted with a retiree who cleaned windows. He demonstrated his skills by cleaning a four by six foot pane of glass in about 30 seconds, says Nealon, who tried it himself. While glass cleaning was not as easy as it looked, Nealon was impressed and decided to go into business. He "emptied his change jar" and spent $20 on a squeegee and bucket. By knocking on doors on Speedway Boulevard, Nealon acquired 40 accounts in 30 day. "I was the only window cleaner in a tie," says Nealon. Despite his initial success, Nealon moved to Nogales in 1992 to be with family and help his church. Nealon gave the business to his brother, Jesse Nealon. Jesse's business is now called Clearview Window Cleaning and is a four truck operation, says Nealon. Nogales was a tougher market. To demonstrate his value, Nealon went to every strip mall and cleaned windows at no charge but was unable to sell enough jobs to stay in business.

 

He opened a janitorial business instead and operated it until 1995, when he decided to go into the insurance business. Nealon gave the janitorial business to his brother-in-law, Ruben Reyes. Reyes' business is now called R&T Maintenance. He made a disappointing $30,000 in two years of insurance sales but the experience taught organization, follow-up and selling techniques, says Nealon. In 1997, Nealon packed it in and moved to Green Valley to open another window cleaning business. Green Valley is a place where word of mouth helps customer service oriented businesses, says Nealon. Many of Mr. Windo's customers are on annual agreements that guarantee six window washings per year and referrals generate significant sales. Mr. Windo's superior service is partly based on a unique cleaning compound.

 

Nealon combines two commercial cleaning agents with water and the resulting solution separates dirt from glass, wipes clean faster than soap and water, and provides an invisible residue making the next cleaning easier. Efficiencies created by the cleaning solution allows Nealon to keep prices down and provide a good profit for the contractors performing much of the work.


Annual revenue has grown to $175,000 and Nealon projects 2001 revenue at $250,000. Given the combined annual revenue of businesses that Nealon has helped start, he wonders if franchising is a good idea. He wants guidance on whether to continue use of independent contractors or hire his own staff.


The consultant


Steve Marr, owns Business Proverbs, a business consulting firm. He spent 26 years in international trade and served as president and CEO of a large import/export company. He consults with businesses and non-profit organizations in Tucson and around the country.
The advice


Steve Marr wondered if Nealon's cleaning solution could be patented. He talked with Peter Goldman, a local patent attorney, and outlined the components of the product, method of mixing, and use. Goldman believes the product may qualify for a patent depending on certain factors, says Marr. Goldman has agreed to meet with Nealon for a free consultation to discuss the possibility of a patent application. Marr notes that a patent will protect the product benefits from competitors who do not pay. Nealon might also be able to market the cleaning solution nationally. Franchising would require Nealon to fully develop his business model to attract franchise buyers, says Marr. The model should include every aspect of the business and demonstrate how a franchiser could pay franchise fees, operate the business in accordance with the model, and earn a reasonable return on investment. The cost to develop franchise agreements and documents and market the franchise is high, says Marr.

 

Since Nealon believes the product is more valuable than the business model, franchising may not be the best use of resources at this time. A prerequisite to any discussion of franchising or growth strategies are accurate records. Nealon uses QuickBooks software to keep the books. Nealon is having some difficulty with this, says Marr, and recommends QuickBooks classes.

 

He has referred Nealon to New Horizons Computer Learning Center. Marr reviewed the issues related to use of independent contractors with Gary Repovsch, a local Certified Public Accountant. Contractor status is based upon compliance with guidelines established by the Internal Revenue Service. Nealon's contractors follow IRS guidelines because they establish their own hours of work, furnish their own tools, work off premise, and are not guaranteed a specific number of jobs, says Marr. The IRS could challenge based on non-compete agreements included in the contracts and the training and instruction provided by Nealon. 

 

Based on the work practices and review of contracts that the independent contractors and Mr. Windo enter into, Repovsch believes contractor status is probably appropriate, says Marr. Repovsch is willing to meet with Nealon to discuss this issue at no charge. Nealon recently purchased a window cleaning company in the White Mountains, says Marr, and the accounts are working out well. Nealon should consider the purchase of other window cleaning businesses. By implementing his business model and techniques, Nealon can improve efficiency and profitability, says Marr. Nealon could then enjoy the added profit from either the operations or the sale of the businesses.

Steve Marr, Your Christian Business Coach

 "Franchising and Growth" was a featured article in "Arizona Daily Star" newspaper-If you would like to be the subject of an upcoming makeover, call Star small-business reporter Charlie Rochman at 807-7760 or send email to therock@azstarnet.com.

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