Last weekend, I started watching The Profit after reading this post, by Alex Tabarrok about the show and the economic lessons you can learn watching it.
I watched the first two episodes, and so far I’ve thoroughly enjoyed it. In each one, the host Marcus Lemonis invests in a struggling business and runs it for a week in an attempt to turn it around.
It’s a reality show, so there is a bit of over the top drama, but each episode you learn some valuable business lessons.
The second episode I watched focused on a Greek fast food restaurant, struggling in the early stages of franchising. The franchisees were all barely able to stay in business, there was no help from the franchisor and very little consistency between the locations.
The lessons from the episode reminded me a lot of the lessons taught in the book, E-Myth by Michael Gerber. In the book, Gerber emphasizes the importance of processes and standardization to running a successful (and enjoyable) business.
Entrepreneurially inclined people tend to resist processing everything, but that actually creates a massive strain on your ability to train to people and to grow your business. To get control over your business Gerber recommends looking at it like the prototype of a future franchise, even if you never intend to have more than one.
The three major points of emphasis Lemonis focuses on are “people, product, and process.” In the Greek restaurant franchise, all three, but especially product and process were issues. With some simplification of the menu, standardization of the locations, and support for the franchises, the restaurant was able to turn around and start doing a lot better.
Now there are more than 20 locations open across the country (…and some legal trouble between Lemonis and the original owners). Obviously, it sounds a lot more simple than it is in reality, but it is very interesting how some simple changes can make a massive difference to the profitability of a business.
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