Reaching out to others
is essential for growth,
Sociale founders hear
by Elizabeth Martin
JASON AND LISA HAKE are busy. Really busy.
Like most entrepreneurs, this husband-and-wife team are trying to runthe day-to-day operations of their Minneapolis-based meal preparationcompany, Sociale Make & Take Gourmet, in addition to marketing,sales and strategic planning. Sociale is one of three winners of theUpsize Growth Challenge 2007.
The Hakes (pronounced HAY-kee) are also in a race to open new stores.The meal preparation industry is exploding, and the Hakes are expandingthrough franchising by growing from nine units in three states to aplanned 35 units across the country by the end of 2007. By 2012, theirgoal is to have 200 franchises.
That may seem aggressive, but the meal preparation industry is growingeven faster. Sociale?s biggest competitor already has 200 locations.Jason Hake says the company?s revenue is ?in the seven-figure range?and each franchise unit grosses between $400,000 and $800,000.
?Our competitors have grown quicker than we have, and we need to playcatch-up,? says Lisa Hake, Sociale?s vice president and co-founder.Jason Hake is president and co-founder.
Lisa Hake heads up marketing, which hinges on the Web site. ?Our Website is just as important as our food,? she tells Kirk Hoaglund, CEO ofClientek and the Upsize Growth Challenge technology expert.
Not only is the Web site most customers? first point of contact withthe company, but also 99 percent of orders are also placed online. Inaddition, franchisees also use the site to know how many customers havesigned up for a meal preparation session.
Lisa Hake handles the daily Web site maintenance. ?I?m the IT expertand I learn as I go and while I can figure it out pretty quickly, it?snot my area of expertise,? she says.
Hoaglund notes that Sociale hired legal and accounting experts, becausethose weren?t their areas of expertise. The same should be done fortheir IT needs.
Hoaglund suggests using the Microsoft Gold Partner referral site, whichcan be accessed through www.microsoft.com. As a gold partner, a firm?semployees must be tested each year and also have to provide names ofcustomers who can provide feedback on the firm?s customer service.
?It?s a little bit like asking for a CPA rather than a bookkeeper,? he says.
Despite their ambitious growth plans, the Hakes have managed to retainfull ownership of Sociale. But they foresee the day in which that won?tbe the case.
?Jason and I are tapped out both from a time perspective and from a financial perspective,? says Lisa.
As they?ve talked to other franchisors, they realize that retaining 100percent ownership while continuing to grow is uncommon. And while theHakes realize that they need cash to grow, they don?t want to give uptoo much of their ownership.
Sociale?s best options are funding through friends, family and angelinvestors or turning to venture capitalists. Friends and family canhelp if Sociale?s capital needs are small, explains Rick Wall, CEO ofHighland Bank in St. Paul and the Upsize Growth Challenge financeexpert. but if the company requires larger amounts, it will have toconsider venture capitalists. Such investors usually want a higheramount of equity in the business and will require the Hakes to have anexit strategy.
?You?re in the classic spot where you?re growing fast, which is a goodthing, but you?re short on cash,? says Craig Murphy, a certified publicaccountant with McGladrey & Pullen in Minneapolis, who helped thisyear?s winners with finance and operational questions.
?To raise money or not to raise money is the question,? says Jason Hake. ?And we don?t have the answer.?
Wall points out that if Sociale wants to meet its goals of opening 200stores in the next five years, not raising money is not an option.
?You?ve got to know what you need and have an idea what you?re willing to give up,? in order to get it, says Wall.
Sociale has done a lot of things right in the legal and marketingarenas, agree panelists Elin Raymond, president of The Sage Group, andMichele Vaillancourt, attorney with Winthrop & Weinstine.
The company recently hired a national public relations firm thatfocuses on franchises. Franchisees are getting a lot of media attentionas well.
Both panelists ask whether Sociale assisted its franchisees withfinancing. ?There are different programs available for minority-ownedbusinesses, and that?s women,? says Vaillancourt, noting that Sociale?starget franchisees are women.
Raymond recommends a franchisee referral program that would allowfranchise owners to recommend others who might be interested in openinga Sociale store.
?If that referred individual became a franchisee, then reward your current franchisee,? she says.
Jason and Lisa Hake, Sociale Make & Take Gourmet: 612.209.2695; jason@socialegourmet.com; lisa@socialegourmet.com; www.socialegourmet.com
[WHAT THE EXPERTS SAY?]
?ABOUT HIRING PROS
?You hired professionals to do some difficult jobs,? such as legal work and accounting, says Kirk Hoaglund, founder of Clientek. ?You should do the same with your IT.? As an entrepreneur, Hoaglund identifies with the plight of small-business owners when it comes to extracting oneself from the day-to-day responsibilities of running the business. But he says he finally had to realize, ?If it?s got to be done my way, it?s not going to get done at all.?
?ABOUT RAISING MONEY
The need for raising capital but not giving up too much control is a dilemma that Sociale faces, as do many fast-growing businesses, says Rick Wall, CEO of Highland Bank. How you go about getting cash will depend on how much you need. If you can measure your amount in the thousands, you should look to friends, family and possibly angel investors. For Sociale, which wants to open 200 locations and so needs much more, venture capitalists are the likely source, Wall says.
?ABOUT WEB SITES
Sociale?s Web site is one of the most important aspects of its business. It not only introduces potential customers to the concept, but is also the way that many potential franchisees learn more about the company. Elin Raymond, president of The Sage Group, recommends that the company create a press room section of the site and expand its current offerings to include a fact sheet, bios and photos of the Hakes, and links to media coverage.
?ABOUT ESTATE PLANNING
Because the Hakes have franchisees depending on them, along with their three young children, estate planning becomes even more crucial, says Michele Vaillancourt, attorney with Winthrop & Weinstine. ?It?s a pain to get into place, I?m not going to lie,? she says. ?But it?s important.?
