Doron Straus | Corporate Trainer – Business Alliance, Inc.
Earlier this week I was fortunate to spend some time speaking with Michael Hume and Heath Falzarano of Naturals2Go. The conversation was very interesting, as we addressed a variety of topics, including those unique to the Business Opportunity model. Here is a transcript of our conversation.
DS – Hi Mike and Heath, thank you for your time today. I would like to start out by discussing the differences between a Business Opportunity and a Franchise model. Maybe you can provide a little clarity for our brokers.
MH – There are three main differences between a Business Opportunity and a Franchise. In a Business Opportunity there is no Franchise Fee nor any Royalties to be paid. This makes a Biz Op a very attractive option. Second, there are no exclusive territories, therefore there is no need for a territory check. Last, there is no FDD. We have a Disclosure, but it is quite simple as compared to an FDD since the model is simpler than a franchise.
DS – Tell me a little about this simpler model?
MH – We are in the “re-order business.” We are “front-end loaded.” We don’t sell machines, we sell programs. We find locations for them and as the operators succeed, they will want to buy more machines.
The operators can put in any product that they want into the machines, healthy or not healthy products. We allow complete diversity in the product mix that they choose. We do not provide products to them; however, we have many resources for them. The location of the machine may determine the type of product that they will vend. Our operators can even change the branding on their individual units, they can change the wrapping, it does not have to say Naturals2Go. Maybe they want to place a unit in a car dealership and the dealership wants their brand logo on the machine!
We participate in and promote the FitPick® program where only about a third of the contents within a unit needs to be filled with healthy product. Many of our operators focus on income over health, however there are many that are reverse.
DS – Who are you looking for as an operator?
MH – We have a huge number of military veterans. They are sick of following orders! They enjoy independence. They can spread their wings! We have all kinds of operators. Part-timers, full-timers, and those that want to scale. Part-timers typically buy 4-7 units and are looking for a side income, maybe they are retired and want something to do. Full-timers want to replace a 6-figure income, so they will buy 20-25 units. Those that want to scale will start out with 8-12 units. We have millennials, retirees and in between. Over 50% of our operators are females. We also have a big E2 VISA program. Most of our operators start out by servicing their own individual units, then they bring someone in as they grow.
DS – Can you discuss the competitive landscape and how you differentiate yourselves?
MH – First, we sell programs and not machines, period! The variable is the operator. Second, we deliver on what we say. We are in it for the long haul.
We are very versatile, not only do we have the standard vending units, but we also have coffee machines for offices. We have an entire inventory of other types of vending for micro markets. Remember that the vending industry will be $147B by 2027 and we are positioned for that growth.
DS – In your opinion, what are the brokers that do the most placements with Naturals2Go have in common?
MH – Over 50% of brokers closed their very first deal with Naturals2Go! It is an easy model for a broker and candidate to cut their teeth on. We have brokers that close over 20 deals a year and many that close between 6 and 15 deals. The key is to have Naturals2Go in the discussion mix every single time as it fits so many people. Remember Naturals2Go after other opportunities have fallen through!
Brokers don’t feel that we pay enough. Keep in mind that Naturals2Go pays the bills while the broker is waiting to catch that big fish! We pay $800 per unit and the average sale is 10 units. Not forgetting, we also pay $200 for each unit that an existing operator buys down the road if the broker is still active. That’s like an on-going annuity payment!
DS – What do your most successful operators have in common?
MH – Well, there is a philosophical answer and a tactical answer to that question. The philosophical answer is to take ownership of it! It’s your business! The tactical answer sees operators who are always looking at their bottom performing locations and how they can increase their performance, whether it means different products or moving the unit to a different place within that location or even moving the unit out of that location entirely. We have dedicated account managers that will help an operator with this situation.
DS – What are the greatest challenges that you face with broker referrals?
MH – We do not require a specific net worth or cash liquidity although the average liquidity we would like to see is $20K. If they do not have it, they must have funding or the ability to get funding. We also need to feel confident that they have enough working capital as we do not want to see them spending their last dime. We can assist with funding as we have a dedicated person for that. We also require that they watch an hour-long video before we really engage with them, otherwise don’t refer them to us.
DS – Do you have a preference regarding the information that our brokers should present to you? A longer questionnaire? Shorter?
HF – Questionnaires are beneficial. Generally, a 4-page questionnaire is unnecessary. We will look at them for “key nuggets.” What is most important is understanding their candidates why. Also, who are the decision makers? Basically, a questionnaire is beneficial, but it is not our focus. Before we really work with a candidate, they must watch a 1-hour webinar, we will not engage with your candidate before that and then, when we do, the phone call we make is very structured with an emphasis on why are you interested in business ownership? What is it about Naturals2Go that interests you and why do you think it would be a good fit for you?
DS – Do you look for a specific “cultural fit?”
MH – Since we work with such a broad audience, there really is no specific culture. We believe that you should “do the next right thing.”
HF – You are not in the vending space; you are in the people business that’s into vending!
DS – Thank you both for your time. I hope that this will be beneficial to you by getting you in front of our brokers and beneficial to our brokers so that they gain a better understanding of Naturals2Go! Enjoy the rest of your week!
