4 Paths to Financial Freedom: Which Is Right for You?

This is a transcript from Episode 15 of The Franchise Champion Show. Listen to the full episode on Apple Podcasts, Spotify, or YouTube.

 Alan Regala: Well, thank you all for joining us today. We've got the first of two workshops—From Corporate to Owner. And today is career transition options for greater wealth, autonomy, and purpose.

I'm Alan Regala for those of you who don't know me, and I'll tell you a little bit about my history and how I got to this point as it is today. So my background is technical—mechanical engineering is what I studied. I had a couple of internships at Hewlett Packard, so I got the feel of the really giant corporate environment. When I graduated, I spent a full 30 days in the corporate world working at a large medical device company before I decided I'm just not ready for life outside of school.

So I ended up going back to school the following year. I spent that year full time and got a master's in mechanical engineering at Stanford. I had a couple of really great internships, had great jobs, and found a really great position at a design consultancy firm called IDEO outside of school. And it was a great company. Lots of people wanted to work there. But still, I felt a little bit like something wasn't right for me.

And one day a guy from the accounting department came up to me and gave me a Rich Dad Poor Dad book by Robert Kiyosaki, for those of you who are familiar with that. And after reading that, I was like, "Man, I need to own a business." The wealthiest people in the world always seem to own businesses or real estate or whatever.

I decided that that's what I wanted to do. This guy tried to get me into a multi-level marketing opportunity—that did not work out. But what I did figure out was, I'm young. I was 28 at the time and decided, "I'm going to give it a shot." And so I had an idea, an invention. It's called the PicoPad Wallet Notes, which I had manufactured overseas and wrote my own patents. I marketed this all across the country. I got into stores all over the country and sold it online. It seemed like a great idea—sticky notes and a little pen that fit in your wallet so you have notes on the go everywhere you go.

It actually did pretty well for what it was, this little $4 product. It's a promotional item—companies can put their logos on it and stuff. But at the end of the day, the iPhone came out. And I was like, "Ooh, I'm gonna start not needing this." And what I learned at the end of the day was starting my own business was great. I learned a ton. And this was like a single or double, right? It was not a home run. It was not the multi-million dollar "I'm gonna retire" product which I was hoping it would be. And so I realized that this isn't my path. I don't have a whole bunch of other products that I'm going to feed into this and have a real business.

So I continued to do consulting. And when we moved to Seattle for my wife's work, that's when I was like, "You know what? I've got to do something different." It was just me doing that, and I was like, "This doesn't feel like a real business. I want to do something bigger than me. Let's have a team of people." And so I started looking at franchising.

Five years earlier, I was like, "Entrepreneurs do not go into franchising. Real entrepreneurs make their own decisions." But then I realized, wow, they have a business model. They have a business model that's already set with systems and processes in place. And I just need to execute. And so you're in business for yourself, but not by yourself. And that was the whole thing that really attracted me to that realm.

And I worked with a franchise coach, which is what I do now. And this person—they did a really long interview with me. I was able to provide my skill sets and interest levels and goals and all those fun things. And they ended up providing a couple different options for me. I was looking at a disaster restoration company, a kitchen hood cleaning business, a senior care business. And I ended up going with ShelfGenie, which is a home improvement brand. And that is the company I ended up running for the next 14 years.

I ended up with 12 territories, ended up being the top performer in my system. I was grossing over four, four and a half million dollars in sales. And it was an amazing business with a team of over 20 people. I got kind of bored and ready to just move on and do something else with my life. And so I ended up selling it last year. And now I've come full circle—I help other people that are interested in business ownership get into business.

So today's workshop is not about selling franchises. It's all about education and looking at different options that there are for anyone that's looking at a transition in their career.

Four Career Options

All right, so we've got four different career options that we're going to be looking at. We're going to look at all these different attributes for each of these four career options. And it's going to be interactive. We're going to just build this out together and kind of learn as we go, right?

So advancing in your career—the first thing we got here is just money, right? Cash flow, which would be income. And if you are working in a corporate environment, really just as an employee, then typically it's like a salary, right? Salary plus whatever—you have a bonus, equity, whatever.

Now for you, you're gonna have to write down—the purpose here is to figure out, what can I achieve going down this route? And so I'll use examples. If I were still in my engineering role, how I would fill this out. You guys can determine for yourselves, what's the cap? For some people it's going to be, I don't know, $200,000, $300,000, half a million dollars. I don't know, based on your roles. And I'm not going to ask you guys to answer that question, but I can tell you for me as an engineer, when I first started out, I think I was making around—I started at like $55,000, which was, as an engineer, my first job. You can understand why I didn't feel like I was valued when I was making less than I made in my first internship.

So anyways, if I were to keep that role and keep working my way up, I don't know, I feel like I would be somewhere around, maybe the $250 or $300K mark maybe—if I'm being generous. By the way, we're going to rate these things. I'm just going to pick a scale of like one to five, with one being the least desirable and five being the most desirable. And so from that number, I mean, that's pretty decent. It's all relative, right, to what we're shooting for, what our goals are. I certainly was not close to this at the time I started. But maybe that's where I'd end up if I kept going up the rungs in the corporate world. And so on a scale of one to five, that's not bad. But probably where I was shooting for, I would probably rate this as maybe a three. That's what I would rate that, from one to five.

Asset Creation

So asset creation. How many people have ever sold a job? Sold their job? Right? I've never heard of that. So asset creation—when you have a career and you're working for someone else, you're not building anything to sell later, right? So that's what I mean by asset creation. You'll see the difference when we start talking about owning a business. But in asset creation, on a scale of one to five, that means really zero. You're working for someone else, you're bringing in your income from your job, and that's it.

Tax Benefits

Are there tax benefits to being an employee? No, no tax benefits. Again, you'll see the difference when we start looking at some of these other things. But you're paying your employment taxes, your payroll taxes on one side. And then anytime you buy anything from the store or wherever else, you're paying sales tax, right? It's annoying—unless you're living in Oregon, I guess.

Autonomy and Time

And then time. So near-term time for sure is going to be demanding at the beginning. You've got to go all in—the first 12 months are going to be rough. It just is. Twelve to 18 months—near-term that gets a one. But long-term, if you do it right, it can be great. It can work as well as you want, as long as you have the right people underneath you to deal with this, right?

Any questions, comments, feedback on this?

Audience Member: I think the autonomy thing for a franchise might not be necessarily a five because you don't have clear range to do what you want with the company. So like, you can't just take McDonald's and be like, "Yo, I'm adding chow mein."

Alan: That's true. That's very true. Yeah, you're right. I was thinking of autonomy more from how I spend my time. But you're right—there's an aspect to autonomy, which is there are certain things you can't do. Right. So if you're like, "Oh, I want to change this McDonald's logo, this logo's not good, so I'm going to create my own." That is not going to happen.

You're right. There's—I'd say less autonomy with regards to control of the business part. Autonomy as far as time, you can kind of choose a little bit when you want to work. Yeah, that's true. But you know, you're right about that. Maybe I'll give this a four. I'm happy with that.

There are definitely things you give up with the franchise model, and that is one of those things. Creativity—well, there's certainly creative aspects of it. And I will say you've got franchises on the spectrum, right? You've got established franchises like McDonald's, which is what everyone thinks of when they think of franchising. And those have tens of thousands of stores, right? Systems are dialed in. Process and systems—they don't need to change a thing. They got them all ready for you. They tell you how long to spend on whatever and the next station, and everything is dialed in.

And then on the other hand, you've got these emerging brands, right? And these are ones that have been around for maybe—they have like two franchisees, maybe 10, maybe 20. They usually say around a hundred locations is kind of that transition area. But these folks, they've got the corporate store that they started, and maybe they've got a few others, but they're still evolving their processes, right?

And so on the one hand, they're gonna be really supportive because they want you to succeed so early on. But you're gonna have some things that you come across like, "Hey, there's nothing—this isn't in the manual. What do I do here?" And so you're gonna have to problem solve to figure some of these things out for yourself, more so than in the established brands. But they're also looking for more feedback. And so they're actually more open to things that you learn. Like, "Man, I just figured this out—the $5 footlong." And they're like, "Give it to me." And then they spread it to the rest of the system. And that's how things grow in any franchise system—getting that kind of feedback, which is great.

So depending on your level of entrepreneurialism—if you're more entrepreneurial, emerging brands probably would actually be more for you versus if you're just like, "Just give it to me and I'm just going to do it. I don't want to think about making modifications." Then more established brands are probably more aligned with what you're looking for.

Reflecting on Your Options

So with this, we've got these four different options, and just take a moment to reflect on these and think about which of these might be something you're leaning towards.

Success is possible in all of these things, including the independent business. The reason why franchising is attractive for a lot of people is it's already been done pretty much. You just find that model. And that's why this is also attractive—because the model is there. The business hasn't been started necessarily and isn't up and running yet—you're starting it. But you've got the support. You've got the people who've done it before you. You've got the model, and you've got not just the franchisor, but all the franchisees across the system are there just to help you as well.

And that's one thing I love about this—having every other week or a couple of times, or once a month or whatever it is, talking to other franchise owners that are doing the exact same business as you, just in a different location. And to be able to get their support and to hear, "Well, how are you doing that? Have you tried this?" Things of that nature where you're growing with your peers.

Audience Member: The other thing about franchises—you talk about systems, but you're not talking about supply chain. You also get the supply chain, and it's a stable supply chain. The products are consistent, things like that.

Alan: Yeah, yeah, yeah. It's a great point. You get the supply chain and all the backend stuff. I mean, one thing that's really nice about this—there's technology. They're always technology forward. They are building up the supply chain. So if you started a painting business right now, you just decided, "I'm going to start an independent painting business"—they have the volume of hundreds of locations. They're buying tens of thousands of gallons of paint and can get better pricing than someone who's just starting off on their own. So yeah, scale is really big with this.

You've got—at ShelfGenie, they were purchased by Neighborly. So Neighborly is this bigger brand that owns like 20-something brands underneath it, and ShelfGenie is one of them. The interesting thing about Neighborly is they have just deep pockets, right? And they have the ability to pool resources for all of those brands. Those 20-something brands—they can say, "Okay, we're looking at doing some digital marketing," and they bring some vendors together and say, "What kind of pricing can you give us if we've got all of these franchises, these businesses that will use your services?" And so that's that amount of scale that they've got, which is great.

Thank you guys. I appreciate you being here and look forward to hopefully seeing you at the next one.