The Power of Leveraging Your Money on Advertising/Marketing
I had drastically varying levels of successes and failures with my different ventures and though the failures have had a devastating impact, all of my successes but especially my failures have given me an even bigger toolbox to make my next projects more successful.
One of the businesses I owned was a body wrapping business that helped you lose inches and even dress sizes with regular treatments. After 4 months my Arlington location ranked #11 in the world. Here was our growth pattern.
- 4 months = #11 in the world
- 11 months = #6 in the world
- 18 months = #4 in the world
- 23 months = # 3 in the world
We held our #3 ranking well through the end before we decided to change our systems. I just sold my business last month (again for the second time this year). But here’s how it began.
I believe that we can always achieve greater things together than separately. The power of leveraging is often overlooked because our ego, pride and/or greed gets in the way. When I first decided to get into this business, I found out that there were only 4 other salons/shops in the DFW area. Coincidentally, the Dallas location named The Body Wrap Shop was the #1 producing shop in the world for the 2nd consecutive year. The 2nd shop, Body Wraps Plus who’s no longer in business, had literally just opened their doors so they weren’t on the map yet, and one each in Rockwall and Cedar Hill (I think) that seemed to have lost all hope for their businesses.
I had never owned a business before. I knew there were basic rules to follow with all businesses. So, I figured with my instructing experience at American Airlines, my face to face customer service experience as a bartender, my intense marketing training at Hobbs/Herder Advertising and the long line of entrepreneurs in my family were a good foundation for venturing off into my first business. That and a little luck. Oh, did I forget to mention that I also come from a short line of compulsive gamblers? So I rolled the dice…
I found this business on a website for franchises and decided that body wrapping was what I needed to get into. Now, very BIG mistakes I made at this point:
- I didn’t do enough research on the company that was selling me the license for this system.
- I didn’t do enough research on the owner of the company that was selling me the license for this sytem.
Had I done my research properly, I would have immediately stopped my efforts to open up this particular business because:
- This company VMM Enterprises had multiple lawsuits and FTC complaints against them from their licensees.
- They were usurious in their dealings with us. They would charge us over $5,000 for every gallon of solution & mineral mixture that I learned much later that I could get for $50. You’re reading this right. I have not left out any extra zeros. Total bullshit, I know.
- The failure rate that was documented was well over 80%!
- They used your success to put competitors 4 miles down the road from you…it reminds me of the lawsuit regarding the proximity of other Subway franchises leading to the demise of many of those sub shop owners.
- FDA Violations.
- They violated merchant credit card terms by charging us for products they would take weeks to ship out to us.
However, I have a hard time with continuing resentment because I wouldn’t be where I am today and I’m not sure I would have had the opportunity to push my personal ethics and strength to the limits so quickly. So we trucked along and took the necessary steps to open within 6 1/2 weeks of first contacting VMM Enterprises. This 6 1/2 weeks included 2 weeks of on site training in Clearwater, FL, so it was truly a time full of angst and trust as Jason did his very best to get the build-out completed per my instructions from 1500 miles away.
As soon as I got back home, my first order of business was to build an alliance. I remember calling S.R. of Body Wraps Plus in Ft Worth. She was just sweet and full of sunshine while she spewed out all sorts of profanity about…well, everything. She first warned me about our competition, M.W. of The Body Wrap Shop in Dallas. Apparently there had already been some run-ins with M.W. by the other shop owners, but I couldn’t be deterred. My thought process was that I wanted to learn and grow with the best, and the best happened to be M.W. When you gross $140,000+ in one month in this business, you are indisputably the best.
It didn’t take very long to get in touch with M.W. I simply introduced myself on the phone and asked if she would be willing to meet with me so we could discuss working together. Our first meeting proved to be one of many productive meetings that would form an alliance so successful that we had others asking to join our advertising cooperative. The intention of our partnership was just to pool our funds together so that we could leverage our money. We both knew that her $15k and my $8 of advertising separately would not be as impactful as a combined $23k and the influence would exponentially grow with that type of consistent marketing. The by-product of our partnership was both of us conforming to the same policies & procedures including dress code, pricing, hiring practices, etc. In essence, we created a mini franchise model under our nugatory parent company.
From the beginning of our co-op, we had potential licensees calling us for training, mentoring, and to ultimately see if they could join us if they were in our metroplex area. None of them worked out until late 2006 when within a month’s time, 2 other owners independent of each other approached us and we felt like we needed to expand our group. By now, I had 2 locations and so did M.W. My stats were on a huge upswing during the busy months and we barely made it during the slower seasons, but we made it. By now, we were spending nearly $30,000 per month which is astonishing better than if we each had to double our investments for the extra 2 shops we now had. That’s the power of leveraging money.
When we agreed that the 2 new shop owners were a good fit, instead of having to increase our advertising dollars once again, we were leveraging our money again by having our 2 new partners contribute to our current budget, thereby giving us the much appreciated ability of decreasing our own investments. We were also able to assist these new shop owners out by decreasing the amount of their initial investments into marketing due to our own branded name. Rather than having to contribute $8,000 per shop like I had initially done, they only had to contribute $2,000 a piece.
I also consulted these ladies during their first year with an agreed upon monthly fee that decreased with time. They had the opportunity to call me whenever they needed regarding anything in their business. When they individually asked me why I was doing this since they were more my competition than M.W.’s (their stores flanked me!), my answer was that I viewed this situation much like I viewed the responsibilities and joys of parenthood. I wanted them to be bigger, stronger, and more successful faster than either M.W. or myself by cutting out much of the mistakes that we had made thereby abbreviating their learning curve by drastically.
Though about a year ago, we had to sever our ties with M.W., it was still one of the best alliances we could have made at the time and the co-op changed the way each of us was able to conduct our businesses in a cut throat business. We proved in our little group what VMM Enterprises tried to disprove by their mere existence: together we can accomplish much greater things than individually. I believe this is a truth for our life.
So my farewell thought for this post is: Do not underestimate the power of leveraging your money.
I will tackle the topic of an official advertising co-operative agreement in a later post. Good luck in your venture!
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