Harnessing the Power of Goal Setting in Growing a Company
You can learn so much from other people’s mistakes if you are alert.
Now in my fifth career and at 70 years old, I’m pretty sure that this is my last hurrah. Looking back, I did fairly well in each of the first four, I just left too soon in each case; well, prior to the big pay day. In 1995, I opened my first Aaron’s Sales and Lease ownership store in Louisville, Ky. That same year, I read a book titled, “A Faster Company” by Patrick Kelley who had set a goal to build a billion dollar company in 15 years; he actually achieved his goal in 13 years. I had the good fortune in 1998 to spend several hours with Kelley at his company headquarters in Jacksonville, Fla. I showed him our company values, of which I was extremely proud. Upon viewing our company goals, Kelley said, “Great, but what are your goals?” I told him that I would work on them when I returned home and he said to me, “No, let’s do it right now!” We were at lunch and he took out his pen and a paper napkin and in 10 minutes, we originated four goals for our company to be achieved in 10 years. With a deadline of Dec. 31, 2008, the goals that we set were:
1. 100 Aaron’s stores
2. $100 million in annual net revenue
3. $15 million in annual pretax profit
4. 100 SEI/Aaron’s millionaires
On Dec. 31, 2008, we had not achieved any of our four goals. But, we came close. I honestly feel that if we had not set those goals and made them public, we would be sitting here right now with four or five stores. And what’s more, we have four new goals with a deadline of Dec. 31, 2018, and they are:
1. 200 SEI/Aaron’s stores
2. $250 million in annual net revenue
3. $20 million in annual pretax profit
4. 25 SEI/Aaron’s millionaires
There are currently 101 Aaron’s stores open with another 10 to 12 to be opened or acquired this year. Our net revenue for 2012 was $130 million. I had never set any goals in my business career prior to this company. Pat Kelley opened my eyes to the power of goal setting. I am so lucky to be working with my son, Chas, a 31 year-old graduate of University of Virginia and Harvard Business School. Chas is adamant that we can be a billion-dollar company if we just keep operating at a high level and growing at a rate of about 12 percent per year.
I got to know another extremely bright and successful young man in the franchise business, Russ Umphenour, CFE, just by simply calling him and asking if he would meet with me. Umphenour built a company called RTM from the ground up and became the largest Arby’s franchisee with 775 stores and $900 million in revenue by the time he sold the business. When Umphenour, who’s now the CEO of FOCUS Brands, Inc. looked at my goals, he said, “100 stores, that’s great, but would you rather have 100 stores or 50 profitable stores?” After meeting with him, I went back and re-examined my priorities.
You can learn so much from other people’s mistakes if you are alert. I really love “crash and burn” stories, I just hate to star in them. Golfer Bobby Jones said that he never learned anything from a golf tournament that he won. As our company has evolved from one store in 1995, I have gradually learned that I really only have two main responsibilities as CEO. My first responsibility, and the one I have the most trouble with is, don’t mess it up. Just leave everyone alone and let them do their job. My second responsibility is that I’m a cheerleader. I visit each store a minimum of nine times a year, meeting our new associates, greeting our great store teams, cheering on our general managers and thanking everyone for their hard work. I try to meet every single customer that I find in our stores during my visits. Every Monday I call each general manager that has a successful week to congratulate him or her. Frequently, this means 70 or 80 phone calls. I’m not sure who gets the most satisfaction from my calls, me or them.
Sometimes it seems that we make what we need to be successful way too complicated.
Since becoming a franchisee for the first time in 1995, I’ve had the opportunity to study franchising in general and what makes it successful or not. My dad was a very successful businessman and when he learned that I was exploring a franchise opportunity, he said, “Son, if you’re gonna hitch your wagon to a star, you’d better make sure it’s a rising one.” By that, he meant that a franchise is only going to be as good as the franchisor (as luck would have it, I picked a good one).
In my opinion, even though franchising is a great way to enter business (just look at the statistics for success rates for franchisees versus “stand alone” businesses), I’ve developed a list of the top six reasons franchisees fail. It seems that each time I have examined a franchisee that failed, he was guilty of one or more of these key behaviors:
- Failure to follow the program.
- Failure to have the proper work ethic.
- Failure to reinvest in the business.
- Giving up halfway to the goal line.
- Having an incompatible partner.
- Growing too fast.
I could give many instances of violations of each of these essential business principles. Sometimes it seems that we make what we need to be successful way too complicated. I can sum it up with these rules:
1. Set goals
3. Be persistent
4. Keep score
5. Celebrate each victory
It all starts with having the right people on the bus. I know everyone says this, but actually living it requires constant focus. I am bound and determined not to let complacency into our company. We are going to keep fighting on and on.
Charles Smithgall is the chairman & CEO of SEI/Aaron’s. SEI/Aaron’s has 101 stores located throughout the Northeast region. He can be reached at 404-495-9707.