Why I Believe in the Small Business Entrepreneur

When it comes to small business, I might be the biggest fan in Phoenix.

Ultimately, there are three ways to become a business owner:

1. Start one from scratch,
2. Acquire an existing business from the current owner, or
3. Start a new business using a licensed or franchised model

Typically, when the lifestyle of the entrepreneur is high on the priority list, taking shortcuts like #2 or #3 can be very effective ways of becoming the CEO.

When looking for a good business model match for my clients, we always start with the client, what their particular life goals are, as well as their skills, interests, needs and expectations. Truly, it’s impossible to separate the small business from the small business owner, and so we must take into consideration the individual characteristics and strengths of the entrepreneur.

I’ve been excited to share our wins with this #yesphx community because of the camaraderie and support you all are on to the growth of this city we all love. At the same time, it has been difficult to know where the success of a small business owner finds their space here. They aren’t necessarily highly scalable SaaS businesses that will go through multiple rounds of venture capital raises before going public, but they play an enormous and critical role in the growth and livability of our economy!

However with Matt’s encouragement I thought it was time to share!

Many of the principles I work on when helping a client identify and start the right business model may be transferable to your business.

Some general principles for small business success:

1. Repeat customers/recurring revenue — attracting customers is often the most challenging part for small business owners. Once a new customer is acquired, it’s best when they come back to buy over and over again.
2. Low to no competition — this is a two-way street because sometimes having no competition means there actually isn’t a very compelling market opportunity, but if the business has something about it that makes it truly difficult or even impossible to replicate, that is obviously a huge advantage.
3. Low overhead — we’ve all heard that the three most important aspects of business are, “Location, Location, Location.” With so many of us focusing on tech, it’s often easy to forget that most small businesses are still dependent on foot traffic and being at the right place at the right time for their customers to buy. High rents that need to be paid every month whether sales are up or down can be one of the main causes of a small business running out of money and failing. Anytime we can mitigate this risk by choosing business models with low-cost real estate or no real estate we have an advantage. Just like we’re seeing an increase in delivery impact large business, like Amazon buying Whole Foods and the Uberization of everything, this is also a major factor for small business.
4. A great way to find new customers — As I mentioned in number 1, this can often be the hardest thing about being a business owner. So if this can be simplified and accelerated then that is a major plus.

As an example, there is a great business in town with low overhead and high margins that services business customers on a recurring weekly schedule. I know about it because one of my clients recently decided to acquire it!

Filta Environmental Kitchen Solutions meets all of the criteria above and is about to hit a major growth spurt.

Imagine this… When you work in a commercial kitchen and the long, hot hours, the nights you work the latest are the worst because these are the nights when the kitchen staff switch out the oil in the deep fryer. It’s a dirty, hot, smelly and dangerous process that is difficult to do while the customers are at the restaurant because they need food right away and the business can’t afford the downtime. And depending on how busy things are, it needs to be done often.

Now for the exciting part, this business uses a proprietary technology to provide an “eco-friendly, mobile, onsite service for the micro-filtration of cooking oil, the vacuum-based cleaning of deep fryers, and full fryer management.” This service provides some key benefits to the business customers it serves, including:

• Increased Life of Used Cooking Oil
• Removal of 99% of Carbon from Fryer
• Consistently Cleaner Fryers
• No Down Time
• Reduced Accident and Insurance Claims
• No More Boil Outs
• Improved Food Quality
• Possible Increase of Employee Retention
• Reduced Kitchen Odors

The customer of this business is primarily a business customer (B2B) with a kitchen with at least one deep fryer. Typically this brings up thoughts of restaurants like I mentioned, but in reality their most significant customers are actually non-restaurants like:

• Hospitals
• Colleges & Universities
• Grade Schools (both public and private)
• Hotels & Resorts, Sports Venues (Stadiums, Arenas and Ballparks)
• Nursing Homes
• Grocery Stores
• Convenience Stores
• Airports
• Corporate Cafeterias
• Institutional Cafeterias
• Military Bases
• Airports
• Amusement and Theme Parks

It’s a technical and chemistry-oriented process. The oil in deep friers can only be used for so long before it needs to be replaced. Replacing the oil overly frequently is expensive, but not doing it frequently enough is sub-optimal as well. Because this service extends the life of the oil it is a very environmentally friendly business that decreases waste, allows the business to order half as much oil (so it saves money) and because the service is performed regularly and that’s all they do, they finish the process in a few minutes instead of it taking the regular employees much longer. Because of the risk of getting burned this also significantly decreases workers comp insurance claims. It’s a no-brainer for the customer to hire this service because it only costs $40–80 per visit, which basically is paid for by using half as much oil.

Lot of hospitals are managed by hospital systems and lots of hotel, ballpark and other commercial kitchens are actually managed by external kitchen management companies which are giant national companies. Because this local business that my client is buying is part of a national network that already has relationships and contracts with these national kitchen management companies, there are literally hundreds of customers in the Phoenix area that will hire my client to provide this service the day he opens his business on August 1.

Cool, right?

My client’s new business provides a very valued set of related services to commercial kitchens on a regular, repeat basis that serves the hearts of our cities in Maricopa County…the kitchens.

Please, give a warm welcome to the #yesphx community to the new business owner Phil Bates!

The fabric of #yesphx culture is strong, I believe that small business strengthens and stabilizes the foundation of what our city runs on! If you are also passionate about small business or have ideas, I am at The Department most days and love grabbing a coffee at cartel! Phil is also a member at The Department. Drop one of us a line. This community is stronger together!

And, if you’re out late or up early, keep your eye out for my clients’ new, fully-wrapped Filta vans driving around the city in the next few months!