Second Acts

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Second Acts

Bruce Krebs dresses in a starched shirt embroidered with his corporate logo; a vestige of his buttoned-down days as a textile company CEO negotiating deals with the likes of Nike and the National Football League. His modest office in the former Four Squares retail property off Mountain Creek Road, is chock-full of sales materials and files that always seem just a scoot-and-a-reach away.

Krebs may no longer be directing garment plants or striking multimillion-dollar licensing deals, but in some respects he is now a more important cog in the American economy. He runs a local office of the Entrepreneur’s Source, a business that matches owner/investors with small-business franchise opportunities. The Entrepreneurs Source website lists Krebs’ title as coach, but he says “matchmaker” is a more apt description.

Most of those who find their way to Krebs’ office are victims of corporate downsizing, mid-life malaise or early-retirement regret who are looking for new career options. “They’ve all been downsized or kicked around by corporate America,” he says.

Many, Krebs says, are former middle-managers whose project management skills are transferable to small businesses such as handyman services, tree-trimming companies, locksmith firms and the like. Krebs steers his clients away from retailing and food-service franchises because the overhead tends to be crippling. He says a majority of small businesses fail after the start-up phase due to cash-flow problems.

Krebs can empathize with his mid-life career-changers. After a successful career as a corporate manager, he found himself looking for a new job in mid-life as the American textiles industry consolidated and contracted.

“I was 50 years old. I wanted to stay in Chattanooga, but the older I got the more I realized the chance of getting a great job was nil,” he says. “I felt franchising was the future because it can’t be moved offshore. With franchising you get a proven system to follow.”

Krebs says he has helped hundreds of clients write second acts to their work lives through franchising, with about 60 percent of those in the Chattanooga area and the other 40 percent outside the metro area.

Krebs has identified a core list of about 100 franchise opportunities that he endorses. He says 92 percent of small businesses not focused on food or retail are still operational after five years. Franchises are a job engine, he notes, accounting for faster growth in the last decade than the economy at large.

Krebs has about a dozen principles that inform his choices for his core franchise list, he says. Among them are: low overhead, repeat business, limited competition, multiple revenue streams and companies that are not adversely affected by the overall economy.

The process of matching clients to franchises starts with a careful inventory of their skills and desires, Krebs says. “Let’s say you lose your job. Or you are not making enough money,” he says. “You and I will meet many times and I will try to find out what your skills and strengths are, and what are the things that interest you.”

Steve Ruggierio, a former insurance agent who owns a franchise called Flying Locksmiths, says his journey to small-business ownership started after he met Krebs and began to take stock of his interests. “I wasn’t sure what I wanted to do, and so I took a personality assessment,” Ruggierio recalls. “You really need to work with somebody like Bruce. It didn’t cost me a dime.”

Krebs earns his compensation from the franchise companies who pay him a finder’s fee to locate investor/owners. He says all the companies pay him a comparable amount so he has no incentive to push customers toward particular businesses.

Importantly, Krebs also helps clients apply for Small Business Administration loans. To help stimulate the economy, the government is backing small-business loans with very favorable terms. Krebs says prospective small business owners can borrow up to $150,000 at 6.5 percent interest without collateral, as long as they have credit scores of 650-plus and no more than $15,000 in credit-card debt.

Others choose to look for franchise opportunities that they can tap without going into debt. Tax laws allow small-business purchasers to use money in their tax-advantaged retirement accounts, such as IRAs and 401ks, to finance new businesses.

David Graham, 60, a former TVA employee, says he used his 401(k) savings to help finance the start-up of his DetailXPerts franchise, a mobile, environmentally-friendly steam cleaning business focused on trucking fleets. Graham says his techs can steam clean a tractor-trailer truck with just five gallons of water. “I have a passion about environmentalism and sustainability,” he says.

Graham said he also considered a tree-trimming business, a head-hunting firm and a handyman franchise before settling on the vehicle cleaning service. Tree-cutting seemed too risky and head-hunting would have meant being tethered to a desk, he said.

Bob Marsden, 64, says he spent the first couple of years of his retirement working through a “honey-do” list for his wife before deciding to explore franchising. Marsden, formerly a construction contractor, now owns an Eco Countertops USA franchise that offers textured resin finishes as an alternative to expensive stone countertops. “Our motto is reface, don’t replace,’” he says. After a year, his one-man operation has yet to turn a profit, he says, but “we’re getting closer.”

Marsden says being a small-business person has its rewards. “It’s good to be your own boss, but you have to develop your own structure,” he says. “You also need a mindset to deal with feast-or-famine cycles.”

Joe Bozich, 45, was in pharmaceutical sales before purchasing his Outdoor Lighting Perspectives franchise. His company designs, installs and services landscape, poolside and patio lighting. Bozich says his franchise fee was $39,000 and he also had to invest in a van and office set-up. He currently has four employees and says the business has so far met his expectations.

“It takes more than liking one aspect of a (franchise) job to do it well,” he advises. “You have to like doing the book-keeping and doing the marketing and managing people, too.”