Tag Archives: postal connections

The History of Postal Connections of America

Today, you know your Postal Connections of America (PCA) store as a one-stop shop for many useful items and services for businesses and consumers. The stores offer anywhere pack and ship, printing, copying, shredding, mailbox rentals, office supplies, computer rentals, notary services and much more. In addition, to maintain the local flavor of the stores and because so many are community driven, several stores offer other items. These have included stocking greeting cards, gifts, local craft merchandise and selling media like games and DVDs.

The History of Postal Connections of America

Postal Connections of America started in 1995, 21 years in business in 2016, an enduring accomplishment by any standards. The company originally built and furnished postal, packing and shipping stores for independent operators. The very next year, 1996, PCA started franchising by providing franchisees a support system for daily operations, marketing and preferred vendors.

In 2000, a holding company bought the franchisor as an adjunct to a collection of businesses, operating Postal Connections as a subsidiary. In 2002, the current owners, C. “Andy” Thompson and Fred Morache, joined Postal Connections as experienced managers to develop the franchise business.

New Franchisors

Andy and Fred ended up buying the franchise in 2007 and made it a privately held company dedicated to expanding franchise stores across the US. Their concept was to update the version of the original postal, shipping and business services concept they helped create at Mail Boxes Etc. which was based on providing community-oriented products and services, stellar customer service and competitive pricing.

Franchisees are encouraged to add new services and hard-to-find products unique to the community. The Postal Connections staff and area franchisees dedicate themselves to assisting and guiding franchisees to grow their shops.

We love this business!

Note: All stores do not provide all services. Contact the store in your area to inquire about a particular product or service.

Four Business Skills Needed to be a Successful Franchisee

Every American has the right and opportunity to become a business owner. It’s a huge part of the American Dream and if you have the drive and desire to own a business and create income you can do it, too. It’s a dream that people from other parts of the world continue to risk life and limb to acquire.

The benefits of the franchise model are reduced risks to achieving that dream. Postal Connection offers a proven business model and systems in place to help franchisees become as successful as their dream requires.

Skills Needed to be a Good Business Owner
However, It helps to understand a few of the basic tenets of business when embarking on business ownership whether it be an independent business or a venture with an established franchise. While attaching yourself to a franchise can help, you still want know the basics of the following four areas:

Sales: Learning basic salesmanship is essential since sales is what makes any business run. This means knowing how to satisfy your customers, creating appealing offerings and knowing what people respond to in relation to what you offer.

Marketing: This is related to sales but it’s more about understanding where your customers and prospects come from and figuring out how to attract them to your business. A good franchise system can help enormously with this.

Accounting: Basic knowledge of your revenue streams (where they come from and how you can get more), your expenses (and how can you reduce them) and how revenue minus expenses equals profit which every business needs to survive.

Strategic Planning: Usually, when running a business, you find yourself planning 3 to 6 months ahead under an umbrella of a 1 to 5-year overarching strategy. You create these strategies and plans. You also have to be flexible in your thinking and know when to stick with, alter or even jettison a strategy/plan if it’s not working.

A strategy would be something like this: The goal is to increase revenue by 10% in 2016. A plan to achieve that might be that you will introduce high margin products into your mix of offering in 2016.

You don’t have to be an expert in each one of these areas but acquiring some basic knowledge of them will help your business run smoothly. Many community colleges offer useful workshops in these and other business disciplines.

A Veteran Discovers the American Dream in Franchising

What do you do if you’re a veteran who is reentering the workforce? You might get a traditional job. However, after serving in the military and coming out with a set of impressive skills like humility, a service mentality, discipline and most importantly, the ability to see any situation all the way through, you might consider owning a business. These skills and others acquired in military service makes you a perfect candidate for entrepreneurship.

FM Marc RichardMarc Richard- Franchisee of the Year

That’s what happened with Marc Richard. He bought a Postal Connections franchise in Vero Beach, FL in 2010 and proceeded to thrive in the franchise environment. So much so, that in 2011, he was named Franchisee of the Year.

He also will be a forum presenter at the Military Officers Association of America Career Fair held the week of May, 12th, 2014. He transitioned from graduating from West Point to serving as a US Army infantry captain to joining the workforce to becoming an entrepreneur which is the topic of his speech at the Career Fair. Marc is uniquely qualified to speak about his experiences which may help other veterans seeking a path after their honorable service to our country.

Veterans in Business for Themselves

One of the paths for veterans is business ownership. According to the Small Business Association and US Census Bureau stats. many veterans are doing just that. Consider these statistics from a survey conducted by the Census Bureau:

  • In 2007 (the latest year figures are available for), there were 2.45 million businesses with majority ownership by veterans, representing 9% of all US firms.
  • 8.3 percent of the respondents had service related disabilities.
  • California, Texas, Florida, New York and Georgia had the largest number of veteran-owned businesses.
  • 75.1 percent were 55 years and older and tended to be better educated than other business owners.
  • Finance, insurance, transportation, construction and scientific and technical services were among the industries that veterans were involved in.
  • The largest capital source (reported by 61.7% of the respondents) was personal or family savings followed by business loans (9.8%) from commercial financial institutions.

Often, veterans who go into business for themselves, especially in franchising, can take advantage of favorable offerings to ease the transition. For example, currently, Postal Connections is offering 50% off the franchise fee for veterans.

In addition, the turnkey nature along with the built in support system (In Business for Yourself but not by Yourself) features of a franchise can make it a very attractive option for veterans seeking their hard earned slice of the American Dream.

What Does a Franchise Cost and What is the Money For?

FM logo 3As one who offers franchise opportunities, typically the first question asked by interested people is how much does it cost to become a franchisee and what does this include? To answer this question it needs to be understood that a franchise is a system—usually including proprietary methods, training, a brand name and support from experts—for operating a proven business concept.

With franchising, no matter what your initial buy-in is, you should be able to make money. The franchise cost of entry and how fast you reach an ROI, greatly depends on what franchise you choose, what you can afford and the ongoing cost for operating the business. But where the initial investment money goes is similar for most franchises.

Below are the main initial costs:

Franchise Fee- This is what must be paid to become part of the franchise system. It is for the tried and true business concept, the expertise of the franchisor and the chance to become part of a money-making opportunity. This fee can run from a few thousand dollars to more than $100,000 for greater opportunities of revenue and for the higher end, well known franchises. It usually includes the rights to use proprietary materials and systems as well as the cost of training, initial marketing packages, software and website access.

The franchise fee also can be based on the size of the territory (population) that you will service and how much support will be provided by the franchisor. For example, the iSold It franchisor offers both an at-home and a brick and mortar location franchise system. The franchise fees are different due to territories defined and training.

Build Out and/or Business Set-Up Expenses- These are expenses needed to make any modifications to the physical space to conform to the franchise standards. They include equipment, software (if needed), branding décor, sales materials, supplies, freight to deliver items, training, and other expenses the franchisor might incur to set-up your business.

For example, if you are opening a retail business, it would be flooring, cabinets, counters, sales inventory, equipment, signage, etc. It also includes construction costs, fees for any local licenses and materials needed to bring the store up to standard.

For a home based business it typically includes equipment needed to market and sell things, products, business supplies, and branding materials (whether online or printed). Typically, the franchisor is heavily involved in assisting you in this important process.

Liquidity or Operating Reserve- It will take some time before the franchise turns a profit so franchisors usually require new franchises to have cash-on-hand to take them through that period. This could be needed for as little as six months to over a year. It is the money needed to keep the business going until you pass a breakeven point. This is the financial number, often called fixed cost of the business, that you need to “keep the doors open” whether or not one sale is made.

Once you become a franchisee, your franchisor should spend time with you determining exactly what your breakeven point is. He should also help you plan several years out about how much sales revenue will come to you as wages or profit distribution.

These categories of cost, called Total Initial Investment, are the amount you should expect to invest in the new franchise. Every franchisor is required by the Federal Trade Commission to accurately report the Total Initial Investment to people considering purchase of the franchise in their Franchise Disclosure Document [FDD] and in any advertising stating the initial cost.

Example: Postal Connections Initial Investment

FM Chart 2

Click on this chart to enlarge it

But there is another potential expense for start-up not part of the initial investment that we encourage every franchise prospect to consider:

Professional Costs- In making a life-changing purchase like buying a franchise, you may want to hire an attorney to help you make a sound decision. The attorney will review all of the franchise documents to make sure they comply with local and state laws as well as to ensure you understand the franchisor’s and your obligations stated in the language of the franchise agreement.

If you need to set up a corporation and need help setting up your books, you may need to hire an accountant also.

Hire professionals who are familiar with the way franchises work.

Obviously, it’s important to understand what you will initially pay out and be comfortable about where that money is going and how it will come back to you with a profit. Never be too embarrassed to ask as many questions as it takes for you to fully understand what you’re paying for.

Small vs Big Franchises

FM Franchises on StreetFranchising is a uniquely American business model. In fact, the entire idea of selling a proven business formula to others with support over a period of years in return for royalties became popular in the US just after WWII. Since then, franchises have grown to account for a third of the businesses in the US There isn’t a small town or busy city street that doesn’t have a store or service truck operated by a franchisee.

An important factor in considering a franchise is deciding if you prefer a big or small franchise system.

Big Franchise Chains

These well-known organizations offer brand recognition that brings people to the business whether online, on the phone or on the street. You pay for the brand recognition in the initial investment as well as to an ongoing fund to continue promotion of the awareness and good image of the company. For example, some of them can cost as much as $500k for the total initial investment and up to 8.5% of your monthly sales.

Also, as a franchisee, you will work with staff operations, business development or marketing departments of these franchisors. Programs are sophisticated and typically originate and are directed from headquarters. Individual face-to-face attention is emphasized less and implementation of standardized programs are the most common solutions to business challenges.

Smaller Franchise Chains

Choosing a lesser known franchise brand, usually smaller but with a proven business model, are ideal for people who have fewer capital resources, seek flexibility in operating the business, and are prepared to do much of the marketing effort locally. The initial investment is less and the ongoing marketing cost, usually, is less. Initial costs may be as little as a few thousand dollars and ongoing royalties are generally low.

Points to Ponder

To help you decide what size & brand development fits your goals, here are three things to consider:

  • Be sure the franchisor is committed to be in business with you. This means the franchisor is “with you” as you set up the business. He thoroughly explains the business formula so you understand the financial model, the best sites to look for and how to work with vendors. Check to see if he can be reached in a timely fashion. Will he come to visit you when needed? Does he demonstrate understanding of your business goals and will he help you achieve them?
  • Be sure to know what resources are available to you through your franchisor. This includes working with you on a step by step basis in organizing the necessary opening resources needed to open your store.

FM logo 3Find out if your franchisor has a non-fiduciary relationship with any funding sources he might be recommending. Check out how the training program is run including the franchisor’s commitment to it.

  • Whether the franchise is large or small, make sure the business model is proven. That’s what you’re paying for. It’s supposed to have all of the bugs worked out of it and be ready to generate a profit assuming you put in the required effort.

One thing that cannot be discounted is how you feel after you meet with the franchisor. Are you getting a good vibe? No matter which route you take, a large or small franchise business, it has to feel right.

(Image from the William Rosenberg International Center of Franchising: guides.business.library.edu)

The Impact of Franchising in America

Periodically, the International Franchise Association Educational Foundation publishes a study developed by PwC that measures the contributions of franchising to the US economy.  The key economics measured in the study were jobs, payroll output and GDP establishments. It’s exhaustive research that even presents the impact on a state by state basis.

Following are some of the findings from that study (2007 data, the latest data available):

More than 828,000 establishments operated out of US franchise systems. They produced the following:

  •  9.1 million jobs
  • $304.4 billion in payroll
  • $802.2 billion of economic output
  • $468.5 billion to the GDP

In addition, franchised businesses were 2.8% of all non-farm business establishments and their output contributed to 3.4% of the total US GDP.

Job Data

Franchising is a prolific employer. This is how jobs generated by franchising stack up compared to other sectors of the economy:

  • Durable goods manufacturing 9,171,500
  • Franchised businesses 9,125,700
  • Financial and insurance 8,801,600
  • Real estate and rental and leasing 7,765,500
  • Wholesale trade 6,582,600
  • Transportation and warehousing 5,949,900
  • Nondurable goods manufacturing 5,300,300
  • Information 3,556,900

Jobs generated by franchising are number two to durable goods manufacturing.

FF pie chartThis pie chart from the report that shows how franchising jobs are distributed among the different businesses.

When you break it down by state the number of people employed because of franchised businesses was the greatest in New York, Illinois, Florida, Texas and California. On total jobs in a state, franchising had the greatest impact in Mississippi with 15.8% of Mississippi’s private sector jobs related to franchising. In fact, in every state franchising ranked over 10% of private sector jobs except in New York, Rhode Island, Massachusetts and the District of Columbia.

This data underscores the considerable contribution franchising systems make to the US economy. You can read a PDF version of the study at http://www.buildingopportunity.com/download/Part1.pdf.

Fred Morache has spent many years in the franchising business and is currently the managing franchisor partner for iSold It and Postal Connections of America franchises

How to Decide Between an Independent or Franchise Business

FF te-deum blogspot.comHow to Decide Between an Independent or Franchise Business

When you decide to buy a business, one of the first decisions you will face is whether to purchase an independent or a franchise business. People succeed in both kinds of enterprises but there are significant differences between the opportunities. A big part of the choice may also be how well either one meshes with your personality. Talk with family, friends and trusted advisors to help get insights to this major career choice. Here are some points to consider:

Business Model

As an independent business you can change, add or eliminate products and services as you assess what works best in your market or even determine what your personal feelings are about what you sell.

A franchisor usually makes those decisions for a franchisee.

However, an independent business owner does not possess the security knowing that product lines and services have already been tested and maximized for the market. Franchisees give up the decision-making independence but reap the benefits of the tried and true.

Costs

In most cases, franchises have lower total investment expenses, especially up front. But, they have to pay ongoing royalties and may have little say in the timing and scope of other investments and renovations.

If an independent business owner is having a cash flow issue, expansion can be delayed. The owner can dictate the terms of any projects they pursue.

Brand

This can be a big advantage for franchise buyers. If the brand is well known and constantly cultivated, they will benefit from that exposure. It’s unlikely that an independent business owner will have the advantage of brand recognition unless it has been proactively marketed.

Resources

Franchisees have the advantage of a business system, a network of suppliers, marketing support and other services. These are especially helpful to those who might be lacking formal business education and experience.

Independent business owners are on their own. They have to develop their own supplier network, set price points and develop marketing strategies, all vital and daunting tasks, particularly for the novice. It can also result in a lot of trial and error to help figure out what works best which costs time and money. The independent business owner, however, retains complete control.

Support

Who can an independent business owner call in times of trouble? Maybe an outside advisor. A franchisee can call other franchise owners knowing they are experiencing the same situation. They can also call the corporate headquarters to get assistance in everything from training to troubleshooting.  That can bring a significant degree of comfort to the entrepreneur taking the business ownership plunge for the first time.

At the end, make sure whichever opportunity you select matches your personality.

Fred Morache has spent many years in the franchising business and is currently the managing franchisor partner for iSold It and Postal Connections of America franchises. 

(Pic from Te-deum blogspot)

Eight Ways to Finance a Franchise

The most important step, if you are seeking financing to buy a franchise, is to create a business plan. Banks, private lenders, and most money sources require a complete, vetted plan to decide on the credit worthiness of your business.

A thorough business plan explains how the money will be used, the state of the industry, a market analysis, the marketing and pricing strategies, your financing sources and costs/sales projections. Many resources are available to help you develop the business plan including the franchisor you are considering.

If you are considering financing a new franchise business, there are many routes you can explore to finance your dream. Below are five of them:

  • Leasing- If your franchise involves equipment, you may want to consider leasing instead of purchasing it. Leasing allows you put your working capital elsewhere and also preserves your lines of credit. This way of financing has been used by franchises where the vast majority of start-up costs include fixtures, equipment, signage, or other tangible assets that can be put on a lease.
  • Securities-based credit lines- Use your stocks, bonds and other securities as collateral to obtain a line of credit (LOC). This is not reported to your credit bureau.
  • Unsecured LOCs- There are programs available that will offer you a business LOC to fund your franchise. You pay a percentage on the loan, very similar to a credit card. No down payment is required and it is not reported to your personal credit.

An important aspect of business is to have controllable and predictable monthly costs so be careful about adjustable rates which can go up dramatically. If you’re making a decision to finance your business with debt, make sure you know what the servicing of the debt each month will be. If your interest cost takes an unexpected jump this could negatively affect the breakeven sales you need, increase pressure to raise prices and/or diminish what you can pay yourself.

  • Secured LOCs- An example of a secured LOC is to take out money against your home equity. If you owe $70,000 on a home worth $200,000, you may be able to get 80% of the difference or $100,400 in this case. Some see this as a risky strategy because if the business fails, it could impact repaying on the equity loan, possibly putting the home in jeopardy.
  • Retirement Funding- You can use your 401k or IRA to fund your business and not incur any taxes or penalties. This is not a loan you have to repay as your 401K or IRA becomes the banker.  But you will need to form a C Corporation to be held in your 401K/IRA as an asset. It is wise to find legal counsel because the C Corporation has to be formed correctly to avoid taxes on the money you use.
  • US SBA (Small Business Administration) Loans- The SBA offers low interest government loans designed to spur business growth. The loan is made by a bank or financial institution and the SBA guarantees the loan. There are numerous qualifying requirements to get an SBA backed loan.  (Note: A recent report co-authored by the International Franchise Association (IFA) stated that lending to franchises from the SBA has increased 60% from the previous year.)
  • Private Angel Lending- These are private investor sources who tend to be pro-franchise. It’s faster and easier to obtain a loan this way than it can be through conventional sources. There also might be more flexibility in terms such as down payment and interest rates. The challenge is finding and inspiring the Angel with a compelling, logical business plan or having a friend or relative who believes in you and your business plan.
  • Crowdfunding- Crowdfunding sites consist of groups of people willing to fund worthy business ventures.  This is internet based and is used in efforts such as disaster relief, political causes and artist support. It is a relatively new phenomenon for businesses.

KIVA is an example of crowdfunding but it focuses on lending to overseas businesses. So, when you go on that site, you might see a food vendor in Uganda who needs $200 to help buy a booth to display his wares. According to the site, most of the loans are repaid.

For US businesses there are different types of crowdfunding and while it can be a good source of money, there may be some pitfalls, one of which is that the process is very public.

There are many financial firms that offer business lending. A broker that specializes in finding funding for franchisees, for example, may have several alternatives for you to peruse. The broker will help explain all of the financing avenues so you can make a good decision. Some of these brokers also assist writing a business plan for a fee. One online company that does this is www.biz2credit.com. Their business plans are detailed and cover the things lenders want to see.

Do your research to find out which funding source is best for you but make sure that before you do anything, prepare a bullet-proof business plan. It will be difficult to obtain most types of financing without one.

Let us know funding experiences you’ve encounter. There is an enormous amount of capital sitting on the sidelines waiting for the right business to lend to.