Life's Short, Grow Fast: Turning Distress Into Success--At 99 mph!
By his own description, Greg Thomas is ADHD. Sitting down to read a book, watching professional sporting events, or lounging on a beach doesn't really interest him. For Thomas, life should be lived in accordance with a very simple motto: Life's short. Grow fast.
And he has. Over the past decade, Thomas has gathered up 13 Great Clips and 2 Smoothie Kings in his multi-unit franchise operation. He attributes much of his success to an ability to get into a distressed location and make it profitable.
"The decade after college, I was in corporate America, vice president of a large women's apparel manufacturing company," he says. "Life was pretty good. And every winter, a group of 10 of us guys would go to Lake Tahoe to gamble and ski. I enjoyed my vacations, but found it difficult to relax because I was always getting phone calls, putting out fires."
On those trips, Thomas says, "I was fairly envious of one of my friends. I'd be on top of a ski slope getting phone calls and putting out fires while Grant would be relaxed, enjoying his vacation. So I asked him, 'What exactly do you do for a living?' He said something about owning some hair salons and concluded with 'I don't work weekends.'" (For a profile of Grant Simon, see www.mufranchisee.com/article/467/.)
"The next year we went skiing and, again, I'm getting phone calls and putting out fires. And Grant looks at me and says, "I don't work on Fridays either." I was jealous, and a bit pissed off. So on the flight back to Atlanta I kept thinking 'If this guy can make a living owning hair salons, well, he's no smarter than I am, so I need to get into that racket.' A few months later I bought my first Great Clips."
Thomas and Simon now are partners on some stores. That works well, says Thomas, who sees himself as the action-oriented half of a team complemented by Simon's more methodical, detail-oriented approach.
Thomas's approach to growing his business is pretty simple. He buys stores on the cheap, fixes the operations, and then advertises aggressively. "As a franchisee, it's my job to get customers in the door the first time, and then it's my employees' job to earn their repeat business," he says.
When it comes to hiring, Thomas insists his locations be run by a richly diverse group of people. His goal: hire good people of all demographics, gain their respect by treating them with respect, and then motivate them. "Every one of my employees is smarter or better than me in some way, shape, or form," says Thomas. "I might be the boss, but in no way am I 'better' than them."
It hasn't always been easy for this now-successful franchisee, not by a long shot. Starting with almost no money, Thomas got into franchising by borrowing from the banks. And by his own admission, he was probably highly overleveraged for several years leading right into the recession. He's had to work hard to keep the bills paid, and doesn't mind in the least to say that sometimes that took some skillful juggling--at least until this year.
Today he's pretty much debt-free, has built some cash flow, and things are much better. But he's still going full speed ahead with new ventures, both in business and in life (see below). That's the Thomas way. He wouldn't have it any other.
Name: Greg Thomas
Company: Baci Fashions, Parkside Ventures
No. of units: 13 Great Clips, 2 Smoothie Kings
Family: I have a great family. My wife of 25 years, Linda, who puts up with me, and two sons.
Years in current position: 10
Years in franchising: 10
I buy "distressed" stores. I buy crap and turn it into money. I'm ADHD and I enjoy turnarounds. I'm also president of Great Clip's Atlanta co-op, which is the top performing co-op in the country. Besides having 97 percent participation and zero franchisee failures in 5 years, we're also one of Great Clip's fastest-growing large markets in the country, based on increase of AUV. I also helped establish Smoothie King's Atlanta co-op in 2010. In 2008 and 2009, Atlanta was their worst-performing market in the country. But by getting franchisees to work together (rather than trying to put each other out of business), in 2010 Atlanta was Smoothie King's fastest-growing market in the country (up 10.1 percent).
Opening an apparel business just before 9/11.
Buying my first few stores without really knowing what the hell I was doing, without doing my due diligence, without reading the fine print.
How do you spend a typical day?
Analyzing each store's numbers. And by pointing to the moon and then trying to motivate my staff/team to get there.
6 a.m. to 6 p.m. weekdays plus 10 hours on the weekend. I love what I do. It's kind of like a sport.
Favorite fun activities:
Being involved in my kid's sporting events. Watching "Shark Tank" with my kids. Exercising. I don't read books, watch much network TV, go to professional sporting events or concerts, or sit on the beach. That stuff bores me.
Weights, exercise, sprint triathlons, tennis.
Favorite stuff/tech toys:
What are you reading?
Though I don't read novels, I read tons of Internet articles about business, competition, and politics.
Do you have a favorite quote or advice you give?
"Life's short. Grow fast."
Best advice you ever got:
"Be careful... debt service can kill you." (from my friend, Grant Simon).
At 39 years old I found myself working for a bottled water company. I was driving a delivery truck, wearing a silly uniform with bow tie, and delivering 5-gallon bottled water to homes and offices. It was a humbling (if not humiliating) experience for someone who was VP of a large women's apparel manufacturing company for the previous 10 years. But I did what I had to do to keep from going broke and losing my house. The owner of that company was arrogant, an "elitist" in every sense of the word. On several occasions, I heard him refer to his delivery staff as "a bunch of knuckle-dragging morons." That was kind of a Leona Helmsley moment for me. The difference between being rich and being poor is just one or two decisions, and I know what it's like to be on both ends of the spectrum. So I try to run my business the opposite of how that former boss would do it. I respect all my employees.
In 2007, I had 5 stores and things were starting to look decent for me (though I still didn't have much cash flow). Then I got invited to the Multi-Unit Franchising Conference with all these heavy hitters like Charles Smithgall and Gary Grace. I honestly felt like a tick turd around all the huge franchisees with 30-plus stores. But after having a few beers and getting to know some of them, I realized they really weren't that much different from me--except they were rich. So I left that conference thinking, Hell, if they can do it, I can do it. That conference completely changed my perspective.
How do you balance life and work?
Thank god for the iPhone.
I talk with my employees about where they want to go, where they want to be in five years, and what it will take to achieve that. I realize that many of my employees want to be Indians, not Chiefs, and that's fine. Regardless, I give them all the numbers. I share everything. The more they know about making money, the better they'll run my business. And if someday my best employees leave and start their own business, that's great.
Would you say you are in the franchising, real estate, or customer service business? Why?
I'm in the people business. Great service and operations are the backbone. Also, I'm very respectful of my customers' time. Whether it's haircuts, smoothies, or carwashes, no one likes to wait.
What gets you out of bed in the morning?
Last year, the stress of knowing whether or not my checking account went negative. This year, having to get my kids on the bus.
What's your passion in business?
To chart my own course. To be different. To be out of the box and try things that others would never even contemplate.
Management method or style:
I believe strongly in diversity. While some men might like a store filled with bombshell blondes, I think that's bad for business. I want someone black, someone white, gay, straight, Hispanic, Asian, Persian, young, old, fat, and skinny. No matter what the brand or business, I want my stores to be reflective of the market they're serving. Diversity just makes good business sense.
Up until 2011 my biggest challenge was simply juggling money to keep from bouncing any checks. Yes, I swapped money from one business to the other. I robbed from Peter to pay Paul. For years, my stores "had to" grow at 20 percent just for me to be able to make the debt service. Fortunately they did, and then some. As of today, most all my debts have either matured or been paid off early. And now that I don't have those headaches, I'm not too stressed.
How close are you to operations?
Very. I issue paychecks weekly. And with each check they get a newsletter. One side of that newsletter is stories, guidance, concerns, incentives, upcoming events, etc. The other side is the store rankings. I share everything. And I sort it from best to worst. Everyone knows where they stand, and stores and employees who are lagging tend to get fixed or fired rather quickly. No one likes to see their name at the bottom of the list in any category.
How do others describe you?
Lots of energy, 99 mph.
How do you hire and fire?
We hire quickly (sometimes on the spot). Why? Because the very best applicants land a job in one day. If we don't hire them on the spot, a competitor will. So we have to be a quick judge of character. Oh, and we fire just as quickly: 90 percent of all our firings take place the first week. But if they make it past that, they stay on for a long time. We have very, very low turnover. I think it's my job to keep the employees motivated and productive. We pay "above par," but keeping employees takes more than just money. It takes mutual respect, motivation, etc.
How do you train and retain?
Being that I don't know how to cut hair, make a smoothie, or wax a car, I leave training to my GMs.
How do you deal with problem employees?
We fire them as quickly as possible. And then we help them get a job with our competitors.
$3 million plus
Although I own some of the stores myself (solely), I also own some stores with my neighbor, Grant Simon. He and I are pretty much opposites. I like sales, operations, and dreaming, and he likes the administrative and legal side of things. Most partnerships fail, but ours seems to work great. Our first venture was to buy the largest carwash in the state (Auto Indulgence). Then we bought a bunch of distressed Great Clips. Then we started buying distressed Smoothie Kings. And now we're looking at other distressed opportunities. We've got a great track record, so why not. Grant and I have an interesting partnership. We have our own separate home offices, and we work pretty independently. But every Monday night for the past six years, we go to the gym to lift weights, and then we go to Taco Mac to drink beer and discuss business. That's our weekly board meeting. They even have a plaque on the wall with our name on it (which is an embarrassment to the wife and kids). All of our business decisions are discussed and vetted at the gym and at the bar.
I really don't have any specific goals. We just try to grow each and every store, and when they've peaked perhaps it's time to sell that store. I don't like owning anything that's moving backwards.
Growth meter: How do you measure your growth?
In average unit volume; same-store sales versus the year before.
Vision meter: Where do you want to be in 5 years? 10 years?
I'm actually in shock at where I am today. And as long as this ride keeps going up, I'm just happy to be on board. But no matter what, I never want to crash. I never want to work for someone else, ever.
How has the most recent economic cycle affected you, your employees, your customers? Are you experiencing economic growth/recovery in your market?
The terrible economy is actually good for my business. I'm a bottom-feeder, and the worse things get, the more opportunity I have. Plus, the absence of money in the lending market actually puts me in a much stronger position. There are tons of opportunities out there, but few have the expertise and resources to buy them, and that's enabling us to get some great deals. But even if I'm not buying more stores, the bad economy doesn't have to hurt my business. We can grow in almost any economy. All we have to do is have the best operations and we'll steal market share from our competitors.
What did you change/do differently during the recent tough economic times that you plan to continue doing into the future?
Focusing on "distressed" stores.
How do you forecast for your business during trying times? Can you even forecast at all?
Most of my stores grow at such a fast rate that it's tough to gauge, compare, and forecast.
Where do you find capital for expansion?
From 2001 to 2008 I was very highly leveraged (most would say I was over-leveraged). But banks were literally throwing money at me. I had almost no income. I was actually below the poverty level from 2005 to 2008, but banks continued to lend to me. Fortunately, today I'm virtually debt-free--and I can't get a loan.
Is capital getting easier to access? Why/why not?
In 2010, I honestly went into every major bank in Atlanta (Regions, SunTrust, Fifth Third, Wells Fargo, Bank of America, etc.) and said the same thing: I have a high net worth, profitable stores, a perfect credit rating, almost no debt, and I'd like to borrow $100K to open a store. But I got turned down at every single one. Few even asked me for my financials, and those that did said they're not interested because my multiple stores and businesses would be impossible to approve based on the new underwriting requirements.
In 2010 I went into a car dealership with cash to buy a fancy car, a car I definitely didn't need. The dealership owner said, "Only a fool would pay cash in these economic times." I told him the banks wouldn't give me a loan. And he said "B.S., I can get you a loan in five minutes." And sure enough, within 5 minutes I had a 3.9 percent car loan. So I can get a loan to buy a car I don't need, but I can't get a loan that would create jobs.
Have you used private equity, local banks, national banks, other institutions? Why/why not?
To get me through from 2008 to 2010, I used whatever I could get, and that included maxing out my credit cards on occasion.
What kind of exit strategy do you have in place for your business?
None, but I would like to devise a plan whereby my employees might buy a store or two from me, and I might even be willing to finance them.
What kinds of things are you doing to take care of your employees?
I issue paychecks weekly. I take each store to a nice dinner every time they break a record (in $1K increments). I often take the entire market to an event or bowling or something. I have a "big carrot" and "little carrot" award for managers if they hit certain sales increases (1-year lease of a convertible Mustang, plasma TV, etc.).
How are you handling rising employee costs (payroll, healthcare, etc.)?
I think the new healthcare law sucks. It's costing me so much from an administrative standpoint that I've actually flipped how I do benefits for some markets and stores. For example, I tell my Florida employees to go and get their own health insurance (from eHealthInsurance.com or from Costco), and I'll simply reimburse them a set dollar amount. So instead of being pretax, it's taxed, but on the flip side, I don't have to deal with the headaches. Plus, the employees get to maintain control over their own healthcare needs (which is good because I don't think their private health issues should be their employer's concern).
How do you reward/recognize top-performing employees?
With plenty of attention and recognition.
2011 MVP AWARD WINNER
You were recognized for demonstrating outstanding performance and innovation in growing your organization and brands.
Our goal was not only to increase attendance, but also to build brand awareness and to give our customers and our employees something memorable, something that would help differentiate Great Clips from our competitors. Each week we'd get on a conference call with the franchisor, our co-op's marketing committee, and our ad agency and talk about how to market the race. We came up with a great ticket promotion, radio ads, TV ads, social media, billboards, and other novel marketing ideas. And we got all the franchisees, their stores, and their employees to work together to push our messaging one customer at a time, something a hair salon is in a unique position to do. And instead of talking about the high-profile drivers, we talked about the event itself. We educated the customer that going to a NASCAR race was more than just watching a car go around in a circle 200 times. Attending the race was an entire day of affordable fun for the whole family: kids get in free, free parking, coolers of beer allowed, etc.
By getting everyone involved, from the stylists to the owners, we put together a phenomenally successful campaign. Instead of being just another sponsor and following the traditional template that hundreds of companies before us had tried, we became a true partner to NASCAR. And in doing so, everybody won: NASCAR gained more fans, Great Clips gained more customers, and the franchisor now has some of the most supportive and motivated franchisees imaginable. This event was a huge morale builder. Just over a year ago, most franchisees in our market were clamoring for Great Clips to drop NASCAR. Today, most are supportive of it.
As a multi-unit franchisee, how have you raised the bar within your organization?
What innovations have you created and used to build your company?
What core values do you feel led you to win this award?
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