Mike: Hey everyone, I’m Mike Sullivan. Thanks for joining me today on MO.com. I’m talking with Brian Spindel today of PostNet. Brian and his partner have done some pretty incredible things with running their own business, consulting with others to open similar types of business, and then ultimately franchising their business. Brian, thanks for joining me today and let’s talk a little bit about how you met your partner and how things got rolling in developing PostNet.
Brian: Yeah, absolutely. Steve and I have been in business together for about 28 years. We met each other in the early ’80s when we were introduced by our fathers who were actually both in the same business, in the water purification business. No connection to what we ended up doing.
Steve and I opened a shop, a very simple basic retail packaging and mailing business, a shipping business back in 1983. That was in the Las Vegas area. It was not calledPost Net. The PostNet franchise came in the early ’90s, nearly a decade after that. But our first shop was a very simple, independent pack and ship business. We did well. Because we were in Las Vegas, a lot of people who were visiting their relatives would come in to our shop to ship stuff back. Because that industry was just starting, they were from places like Pennsylvania and Florida, and they would look around our shop and go, “My gosh. What is this place? Is this a post office? What exactly is this?”
We would explain to them that we designed the shop. We found our location, negotiated our lease. It didn’t take too long before somebody asked us to help them into business on the East Coast.
In 1986, we formalized that. We started the predecessor company, the franchise, helping other into this new retail shipping business independently. People would choose their own names and have their own shop designs. That’s where we really grew our expertise in helping consult people with respect to locations, constructing centers, training people, and helping them into business.
At the same time we were doing this, the rest of the industry was growing. It was becoming more complex and more sophisticated. Services like fax were coming online. Of course, the PC was starting to become popular in the late ’80s and early ’90s. Internet wasn’t popular yet.
So we started incorporating other products and services into these centers. Also, these independent shops that we had developed started saying, “Listen, I’m competing with Mailboxes Etc, and they have 1000 stores now and they have special deals with the suppliers and vendors.” So it really got us to thinking that we needed to change our structure. That’s why, in the early ’90s, we started putting everything in place to start franchising. We came up with the brand PostNet, and we started franchising in July of 1993, which was 18 or 19 years ago now.
Since then, we’ve developed about 700 PostNet franchises. About half of them are in the US and half of them are operated outside of the US through mastered licensees.
Mike: Tell me about the decision to shift from running your business and then consulting to moving into a franchise model. How has that experience been different for you?
Brian: That’s a good question. In essence, that’s what drove the decision. We were looking at these independent shops, and we realized that because the business wasn’t as simple as it was when we started it, there was more sophistication that was necessary with respect to operations, systems, branding, marketing. So that drove the decision into franchising.
The other thing that has been really interesting and exciting for us, we started obviously when we were much younger. In essence, the business was primarily a B2C business in the ’80s when we started. In other words, the people that would come to us would be Grandma shipping a package for a birthday, or the holidays were really big.
In the ’90s, we were still B2C, but we started offering some convenience services, things like black and white and color copies. Of course, we started the fax services, the computer services. So we started bleeding over a little bit to home-based businesses and small office, home office. But it was really the early 2000s when we started putting the pieces in place to really take advantage of B2B. So we were serving the B2C market. We’re in retail locations. We then developed this whole suite of digital printing services. We wouldn’t have been able to do that earlier because, quite frankly, the technology didn’t exist to connect a high-end, high-speed, quality printer to you computer and print originals instead of making copies off the glass.
So our centers today, our neighborhood business centers offer a full line of not just digital printing, but any printing you could ever need in your business, as well as wide format, large format printing, posters, banners, signs, tradeshow booths, advertising specialties. So right now we serve more business to business than we do business to consumer. This year, we’re also incorporating new Web services, marketing services, and financial services to further expand what we’re offering small businesses. Post Net’s neighborhood business center wants to be the business behind America’s business. There are a lot of small businesses that are having a hard time keeping up with everything they need to do. PostNet can be a resource to help them do that.
Mike: So you picked up the whole operation and moved from Las Vegas to Denver. Can you tell me a little bit about what prompted the move and what experiences or bumps you hit along the way?
Brian: That was an interesting time for us. Steve Greenbaum, my co-founder and my business partner, we had been in the Las Vegas area. That’s where we had met. As I mentioned, our first shop was there. We had been through three commercial five year leases by the time 2004/2005 rolled around. We were needing more space because of our expansion. We said, “Listen I think we’re done paying landlords now. We’ve been in business long enough now where we’d like to own our own property.” That got us really thinking about rather than in five year chunks of time, to 10, 15, 20 year chunks of time. Vegas was great to us. It was a good place to be. People didn’t mind coming there, but we were ready for a change.
So the fact that we were ready for a change, the fact that we were ready for a different lifestyle, the fact that we were ready to go into a market with a very educated workforce, we wanted to be more central in the country. There were a lot of things that drove us to Denver. Also, the fact that we found an outstanding opportunity to acquire a building in lower downtown Denver, right over by Coors Field in the ballpark neighborhood. It has really been a great move for us. It certainly came with challenges. Out of a 30 person staff at the time, there were only six of us that ended up coming. We had to reconstitute our entire company in a matter of months during the transition from Las Vegas to Denver in early 2005. But now that the dust has settled and we’ve been here for six years, I can tell you that we’re the best version of PostNet ever. We’ve got a really great engaged group of people that are really committed to helping our franchisees succeed.
Mike: Talk about, from your experience, the benefit of franchising your business and, from an entrepreneur’s perspective, buying into a franchise.
Brian: Certainly. You mentioned two things there. One is to become a franchisor. A lot of people who start their own businesses from the ground up and have a concept that they feel is scalable, but maybe don’t have the capital to scale it, or want to scale faster than their own capital would allow, franchising is a great vehicle for that. It is costly to start franchising. It’s difficult. There’s a lot of regulation around it. You have to have audited financials, a disclosure document, and a number of other things.
Also, the thing for anybody out there thinking about starting their own franchise, is that franchising is much different than your own business itself. So maybe you make the best pizza on the block and maybe you’ve been very successful as a pizza maker. That doesn’t mean you’ll be a good franchisor. So you have to realize that you’re getting into a whole other business when you decide to franchise. I’ve seen a lot of people with really great concepts, that are really great operators of a concept, they get into franchising, and they have no idea what they’re doing. So it’s important that you do your homework. We were lucky to have that transition period where we owned and operated a business, and then we consulted others on getting into the business, and then we got into franchising. So we had some natural transitions over a number of years that allowed us to grow our experience and our knowledge and doing the things that a franchise organization does, which are completely different from running and operating a center or a store.
So, on the franchising side, that’s what I would say. As far as the franchisee is concerned, it’s a great way to get into business if you’ve never been in your own business before. You’ve got somebody who has an experience base. They have a knowledge, they have systems, they have technologies. Franchisees that come into our system, for example, they don’t have to build their own website. They don’t have to worry about email infrastructure. They don’t have to worry about marketing collateral and programs. We have an advertising agency that does all the creative concepts for them. So, in essence, you’re not only getting the not re-inventing the wheel, you’re getting a wheel that’s been perfected and will be perfected as you move forward in the future.
It’s hard being in your own small business and to wear a lot of hats. You have to worry about research and development, customer acquisition and retention, running the business day to day. It’s just very difficult. So being a franchisee, you do pay for that, but the concept of the franchise is that ultimately all the value and benefits that you’ll receive in return are well worth the fees that you pay.
Mike: You mentioned some of the new services that you’re going to be offering in one of the previous questions. What’s on the horizon for you?
Brian: Well, I don’t know if you can sense it, but we’re very excited about these new services and products we’re piloting in our centers this year. It’s going to really take us from offering a complete suite of logistics services, shipping services, mailing services, direct mail for small businesses. The digital printing backbone that I mentioned, as well as the full service printing in the wide format, the large printing, the signage. But also, a whole suite of web based services. We can help businesses get into their own websites. I was actually surprised. I was at the International Franchise Association Conference this last weekend. Google had a representative speaking. I was shocked to hear from somebody from Google stated that businesses less than 50 employees, nearly half of the businesses don’t have a website, which is pretty shocking. That was pretty shocking. But I wasn’t shocked to hear that over 95% of those businesses, if they do have a website, are not optimized for mobile.
So there’s a lot of opportunity to help small businesses. I know any small business operator out there, you have to worry about social media. You have to worry about search engine optimization. You have to worry about all this stuff now and if you don’t have a good consultant, company, or partner that can help you, you’re in trouble. You’re going to be behind the curve. In essence, PostNet is bringing all these services to marketplace with a fellow entrepreneur in the neighborhood that can consult with small businesses, not just on the web services, but also on marketing services, and ultimately also with financial services. So these three suites of services that we’re developing will really, truly differentiate PostNet in the marketplace and will also make us America’s neighborhood business center, which is our mandate.
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