June 12th, 2016
Forbes: Millennial Franchisee Owners Reimagine Traditional Business Models
by Jeff FrommCONTRIBUTOR
Watch out, world. The millennials are taking over.
Today, some of the greatest and most profitable businesses are owned or operated by decision makers younger than 35. Why are these young adults gaining such a major influence in our economy as the CEOs and leaders of major brands? Millennials have the entrepreneurial bug.
Despite the high risk that comes with starting a business or taking on a franchise partnership (more than 99% of startups that seek funding inevitably fail) millennials watched their stressed-out parents climb the corporate ladder and decided enough is enough. Additionally, many millennials graduated college and experienced first-hand the devastating impacts of the Great Recession. They are wary of corporate America and are turning to alternative options like franchising.
The International Franchise Association recently launched a program called NextGen in franchising to teach millennials about the value of stepping into the franchising business and the opportunities that exist. As two millennials who own a franchise, Josh and Dan Steppling are very aware and excited about the future of franchising for a new generation of business owners.
Josh and Dan Steppling just recently celebrated a highly successful first year in business together. As young Subway franchisees, Josh and Dan own two store locations and manage an additional six. Being millennials themselves gives the brothers a fresh perspective on their business. I interviewed the Steppling brothers to get their take on the millennial attitude towards the franchising business path and how they are making their business more attractive to a millennial audience just like them.
Jeff Fromm: How do millennial business owners differ from business owners of previous generations?
Dan Steppling: Millennials are certainly a different breed. Besides the fact that we’re more digitally connected and tech-savvy than our elders, I find that we all share a collective sense of social responsibility. We all want to use our businesses in a way so we can contribute to a cause or help achieve something bigger than ourselves. Profit isn’t the only goal – equally important are the people and the planet.
Josh Steppling: Millennial entrepreneurs realize that there are deeper motives to business than creating profit. We create cultures of inclusion, social responsibility and accountability, whereas the older style of management treated employees as replaceable pieces of a puzzle. As business owners, fulfillment is not defined by the bottom line; it is realized in a non-hierarchical, cost-efficient operation where employees are joyful and comfortable, customers are pleased, and products/services are providing true value (addressing customer’s emotional and social needs rather than just financial).
Fromm: How do you create differentiation in your stores(s)?
Dan Steppling: Without question, taking care of our guests is paramount. As the owners, we strive to make our Subway sandwich shops best in our market and our employees really feed off that. Equally important to us is taking care of our employees as if they were our own family. No matter what industry we’re talking about, fostering a comfortable, empowering environment is necessary for any work environment to be successful. And lastly, we get involved with our community. We’re proud to be small business owners in our community and take pride in supporting local causes and charities. We feel it’s one of the best ways to network and market our business, because people take notice of those who support the local community.
Josh Steppling: Even with a major brand like Subway, each shop is different – the surrounding demographic, building character and style and employee-created culture are unique and are reflected in the store. We empower managers to create their own stores with their own “vibe.” Customers and employees alike feed off of the energy in an environment from the moment they enter it, so for us it’s important that our environment genuinely reflects us as a small business.
Fromm: What is the most important thing to know about selling to millennials?
Dan Steppling: Two things come to mind: trust and brand perception. Millennials do business with people and entities they trust. Building a healthy, trustworthy brand is essential. Companies that make integrity a priority and demonstrate responsible business practices will do well with millennials. A recent Nielsen study showed that millennials are more willing than any other generation to pay extra for products or services that are beneficial to the environment. But as we know, building your brand into one of the “good guys” requires consistency and time. Millennials now make up one-fourth of the United States population, so it’s important that brand appeal directly to millennials. When you’re selling to this demographic, be honest, be authentic and work to keep a positive brand perception.
Josh Steppling: Value has been redefined by millennials to mean more than just a price point. We want to feel good about what we are eating. We want to know that it’s good – not just for our bodies, but good for the local economy, good for the environment and ultimately good for the world.
Fromm: How has the selling model evolved as a result of modern consumer behavior?
Dan Steppling: Consumers’ needs and behavior are constantly changing and it’s happening even faster with the evolution of technology. A consumer can research a product, evaluate its alternatives, look up peer reviews, and finally order the product – all from their phone and get it delivered to their house the very next day. It’s this shift in consumer behavior that’s been devastating to brick and mortar retailers. The secret to success in today’s times is reaching these customers during their digital shopping process or giving them a reason to physically come into your place of business.
Using our industry as an example, our consumers are more educated and health-conscious than ever before. “Cleaner,” simpler food without artificial ingredients and proteins raised without antibiotics is the latest thing that consumers are calling for from food brands. The quality of calories has become just as important as the quantity of calories. This shift can be seen in all industries though, not just the restaurant/food industry. There are “organic” or “eco-friendlier” alternatives to whatever good or service you’re shopping for.
We also need to be aware of future consumer behaviors; anticipating trends and predicting what the future guests will want and how they will shop is equally important. Companies that predicted, or in some cases, started, the above-mentioned trends are way ahead of the game. Entities need to start paying attention to keywords such as sustainability and social responsibility and in our particular industry, words like organic, antibiotic-free, farm-raised, etc. In regards to Subway, the brand is always improving, listening to its guests and adapting to meet their ever-changing needs.
Josh Steppling: Today’s selling model involves much more consumer education across many different consumer mediums. Millennial customers are looking for what brands offer beyond just a price point, and they are using new media avenues to acquire this education, using traditional methods of advertising — such as TV and radio — less and less.