Three Things They Didn’t Teach Me at an Ivy League Business School

Ivy League Business SchoolFor those of you who are in business or considering starting one, I want to share the three most important things I’ve learned over 45 years of doing workouts for troubled businesses. Or the three things they didn’t teach me at an Ivy League business school.

First Workout

Derek Prince was my spiritual mentor and in 1977 he sent me on my first workout of a Christian owned business. As an investment banker I had been doing workouts for several years before this opportunity to help a new believer in Christ. The business was 10 fast food restaurants. The owner had previously owned 10 McDonald’s before being bought out by corporate, so he was experienced in the industry.

The owner took his cash, pledged the lettered McDonald’s stock he received in the buyout to obtain a loan and immediately proceeded to build his 10 restaurants. His concept was to offer burgers, chicken and pizza for dining in or through drive-thru delivery. His unique selling proposition was to have the drive-thru deliver food through a pneumatic tube system like the drive-thru at a bank. He even hired an architect who specialized in branch banks, so the restaurants had multiple drive-thru lanes and therefore looked like a bank. In a few locations where the restaurants were close to branch banks some folks would mistakenly try to make a deposit or withdrawal much to the amusement of the order taker.

Fast Food Failure

I was sent to see if the restaurants could be saved. The short answer is they could not, but why? From a business prospective the simple answer is he started with too many locations. Here is a quick overview of the owner’s situation:

When I asked the owner, why start with 10? Why not build a prototype and work the bugs out and get a trained management team before you expand? His answer was that since he had successfully run 10 McDonald’s he knew he could run 10 of his own. I was also informed that I must not understand economy of scale for “Rick, he said, you get a much better price when you buy 10 pizza ovens.” Building 10 so fast made it impossible for him to staff and train good management.

Building a prototype restaurant would have allowed the owner to work the bugs out before going prime-time or kill a non-workable idea. Example, there were more than a few problems with the pneumatic tube system, like it didn’t handle sending drink orders very well. The cups of Coke had a tendency to spill in route leaving the customer receiving a soggy order.

Building a Turnkey Business

When I saw how these restaurants operated and compared them to the McDonald’s of that time, I learned to appreciate the genius of Ray Kroc’s turnkey business model. The turnkey franchise that McDonald’s sold with its excellent operation and system manuals allowed it to be operated by minimum wage employees who who could produce a perfect predicable experience every customer, every time, no matter which restaurant they visited. It wasn’t fine dining but it was served fast, hot and the first generation fries were the absolute best. That perfect predicable experience ended with Ray Kroc’s death in 1984.

The good news is that any business can implement Ray’s business model and create a turnkey operation that can produce a perfect predicable experience every customer or client every time.

Setbacks To Success

I do not want to make light of this business owners experience. He lost everything and ended in bankruptcy. The owner was serious, dedicated to serving the best food, and had a real gift of hospitality. He cared about his customers and his employees and wanted to provide the best dining experience at an affordable price. Even though this venture failed, he went on to become a very successful restaurateur owning everything from fast food to fine dining restaurants. He never quit and always believed that the Lord would provide, give him the wisdom necessary to fulfill his mission and be able to give to Kingdom work out of his profits.

Three things they didn’t teach me at an Ivy League business school

The first thing I heard from the Holy Spirit on the way to my new assignment was, “Rick, I don’t save businesses I save men. If I can get a man right with me, the business will take care of itself.” I learned that doesn’t mean the business will be saved, but that once the man is right with God he will know what to do about his business.

The second thing I learned was that if it’s the Lord’s business he requires you to do it His way. If it’s your business you can do it however you want. If it’s His business he will give you a blueprint, the Master’s Plan. He will provide everything needed, all the resources including wise counselors, skilled laborers, money, etc. Just as God said to Moses in Exodus, “According to all that I am going to show you, as the pattern of the tabernacle and the pattern of all its furniture, just so you shall construct it.” And the writer of Hebrews says, “That is why Moses was warned when he was about to build the tabernacle, ‘See to it that you make everything according to the pattern shown you on the mountain.’” That pattern or blueprint is the turnkey model to produce the perfect predictable experience every customer every time. For over 40 years I’ve seen the Lord turn troubled businesses into successful ones or shut down businesses that needed to be closed when His plan was sought and executed. Anything He calls into existence He provides a blueprint for and will sustain and protect as long as it is His good pleasure.

The third thing that I have learned is that just because a man is in business that doesn’t mean he understands the business of business. He might be an expert in his craft or profession but that doesn’t necessarily translate into running a profitable business. This is why 98% of all businesses fail or are just barely hanging on.

Thanks for reading.
Rick

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