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Chapter 1. Franchising as Entrepreneursh... > Resource Marshaling: The Establishme...

Resource Marshaling: The Establishment of the Service Delivery System (SDS)

When it comes to resources, the mantra of the successful entrepreneur is to “minimize and control rather than maximize and own.” Remember, the objective is to create wealth through the exploitation of a defined opportunity. Your goal is not to own resources but rather to use resources to exploit the opportunity. Minimizing the required resources is often a competitive requirement for the startup venture. The well-assessed and well-shaped opportunity is your guide for marshaling the right resources. You must ask yourself, What are the minimum resources I need to exploit the opportunity?

The creative marshaling of resources can be the most challenging part of the entrepreneurial process. Sometimes you can gain flexibility by turning traditionally fixed costs into variable costs. Part-time help, commissioned sales, and facility rent determined as a percentage of sales are examples of making expenses fit better with the revenue they generate. Another mechanism is to outsource or lease underutilized assets. Before buying the Panera Bread franchise rights for New Hampshire, franchisee Mitch Roberts and his partner assessed the cost of land and new building construction. He judged it might exceed $600,000 per outlet. If they had gone to a bank and obtained a mortgage, they would have had to put down between $120,000 and $240,000. Applying the mindset of minimize and control, they went to a landowner and said, “Would you build us this building and lease it to us?” The real estate costs were thereby reduced to $50,000 per year with no cash up front.


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