Franchisee Says: Don't Rush In Like I Did

(Saturday, August 25, 2007) - When James Sparks opened his Servpro, a cleanup and restoration service for homes and businesses after fires, floods and other damage, he was in for some surprises. Mr. Sparks, 35, admits that he didn't do enough research. He bought his franchise three years ago after speaking with two franchisees and didn't consider competitors or other franchises.

Leaving a steady job and its benefits, Mr. Sparks took out a home-equity loan to finance his Servpro in Anaheim, Calif. He says that his wife, who was raising their two young children at home, had some qualms.

"We did some things that were risky," says Mr. Sparks. "There were days I didn't think that we'd make it."

He was able to overcome the initial bumps in the road. He talked to StartupJournal about overcoming those hurdles and his experience so far.

StartupJournal: How did you get started as a franchisee?

Mr. Sparks: In college I was a business major and whenever we had electives I always gravitated to entrepreneurship-type classes. I always wanted my own business and didn't know how to get started. I was a manager of hockey rinks, and I had three water leaks in my building in one year at a rink. On the third leak, I used Servpro, and they helped me out, and I got interested. I spoke to two other owners and got sold on the whole system. I really didn't do enough research, but I guess I got lucky.

Servpro helped me get into an industry that I otherwise wouldn't have been able to do. I had no training in this industry before.

SJ: What was the initial investment?

Mr. Sparks: In the first year, about $200,000, which included a franchise license, initial equipment package, trucks, working capital and office space. Depending on volume, I usually pay around 10% or 11% in royalties.

It was very hard the first two years. However, we grew by 70% last year. I didn't realize how much money I was going to have to invest into the company. It's going to take a little while to pay that off, but we're making progress. I have mostly reinvested almost all the money we made in the business into more equipment, trucks and people. This year I probably will make about $80,000 to $100,000 net profit.

SJ: What's a typical day like?

Mr. Sparks: I start work around 7 a.m., brief the crews on what jobs they will do and send them out. I perform some sales calls and do new estimates. In the afternoon, I double-check on jobs. I generally do paperwork until about 7 p.m.

SJ: What was your biggest surprise when you started?

Mr. Sparks: The biggest surprise is just how hard it is to start a new business, because I had managed other people's businesses before. I'd say for a man, this is the closest thing we have to giving birth. It's been fun, but there are a lot of things you don't know when you start, and you just have to figure them out. For example, I knew we did water damage, but I didn't realize we deal with raw sewage. I didn't think about that part. I referred my first job out to another office, because I didn't want to do it, but now I'm comfortable with it, because I have enough employees to send.

SJ: What are some of the challenges you have faced?

Mr. Sparks: I'd say the money strain is the hardest. It's taxing on your family, but my wife has been very supportive. The amount of hours that you spend can be strenuous. I work twice as hard as I ever had at any other company. There was so much for me to learn in the beginning, so everything was difficult, but now that I have almost three years of experience, it's getting much easier.

Each building is different, and I had to learn a lot of construction, and I didn't have that background.

SJ: What are some of the pitfalls?

Mr. Sparks: There are a lot of restrictions and guidelines you have to follow. There are guidelines on uniform, advertising, maintaining attendance at a certain amount of meetings, and insurance.

SJ: What is the best part?

Mr. Sparks: The best part for me is the potential that it has. In five years, I can have a staff in place, running the business, and I won't have to be quite as involved. It will really be generating high profit margin within five years, and I will have people in place managing the day-to-day operation.

SJ: What advice would you give to those interested in buying a franchise?

Mr. Sparks: I would interview at least five owners. I would also get experience in the field first, for at least six months. If I look back, I should have gone to work with another Servpro part time and gained the job-process experience. If I had more money saved and worked part time, I would be a year ahead of where I am now.

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