"If you’re overly concerned about a work/life balance, you shouldn’t be an entrepreneur because when you have to put in 16 hour days, you have to put in 16 hour days. If you want to do a 9–to-5 job, do not become an entrepreneur. That’s not the mindset. You have to have the mindset that failure is not an option and that you’ll do whatever it takes to make it work.”- Gordon Logan
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Why to Listen | Sponsors | Selected Resources | Transcript & Time Stamps | Comments
Gordon Logan is the Founder & CEO at Sport Clips Haircuts, a company that he started back in 1993 and now has over 1,700 locations in the US & Canada. Logan started out at MIT, after which he served as an Aircraft Commander in the U.S. Air Force for seven years. After his military service, he worked as a financial planning and control consultant with Price Waterhouse & Co. in Houston, Texas. He holds an MBA with Honors from The Wharton School of Business.
Why to Listen:
In the past I've interviewed veterans involved in Franchises. Gordon started a company that has become a franchise with over 1,700 locations, and many of their franchise owners are veterans. He gives an incredibly vivid look at what it is like to start and grow a company, how to remain fresh and grow with your business, and how failures are never final.
Selected Resources:
The Sport Clips donation to the VFW enables their Help a Hero Scholarship, something every veteran should look at.
Good to Great: Why Some Companies Make the Leap and Others Don't
Great by Choice: Uncertainty, Chaos, and Luck--Why Some Thrive Despite Them All
The ONE Thing: The Surprisingly Simple Truth Behind Extraordinary Results
First, Break All The Rules: What the World's Greatest Managers Do Differently
Any book by Peter Drucker
Any book by Zig Ziglar
Transcript & Time Stamps:
(0:05)
Today my guest for Episode #147 is Gordon Logan, the founder and CEO of Sport Clips. I’m also trying something new today. This interview is available via podcast and also via video if you prefer that. I think you’ll really enjoy this interview with Gordon. If you’ve listened to Episode #141with Eric Stites, Episode #132with Marlon Terrell, or Episode #129 with John Francis, you know all about franchises can be a great fit for veterans. Gordon is aninteresting case study because coming out of the Air Force, he started a company that eventually became a franchise that now has over 1,700 locations. Not only did he start this company, but he also employs many veterans and has donated money to the VFW for helping veterans in their education. He has done a lot of work to help the veteran community.
(1:35)
Regardless of whether or not you are interested in entrepreneurship, I really enjoyed my conversation with Gordon Logan because he is a lifelong learner. You’ll learn during this interview how he grows through conferences, books, and the failures and successes of others. I think this is a really admirable trait.
(2:10)
We also talk a lot about failures and setbacks. Some of the greatest setbacks we’ve faced sometimes lead to our greatest successes. I think this is a really great story to hear. Lastly, if you haven’t had a chance to leave us a review on iTunes or YouTube, I’d greatly appreciate if you are able to do that. It helps us get the word out to as many veterans as possible.
(2:50)
Joining me today from Austin, TX is Gordon Logan. Gordon is the founder and CEO of Sport Clips Haircuts, a company he founded back in 1993 and now has over 1,700 locations in the United States and Canada. Gordon started out at MIT after which he served as an Aircraft Commander in the United States Air Force for seven years. After his military service, he worked as a financial planning and control consultant with PricewaterhouseCoopers. He holds an MBA with honors from the Wharton School of Business.
(3:45)
How did you end up at PricewaterhouseCoopers?
After I left the Air Force, I went to Wharton to get my MBA. I interviewed at PwC when I went to Houston for some training. So even though I did a lot of interviewing through school, I really wanted to come back to Texas. So when I was in Houston, I took advantage of that and went to go meet with some people from PwC. The partner in charge of the group was a Navy veteran and we hit it off. I ended up having a great four years there.
(4:55)
How did that prepare you for what you eventually did with Sport Clips?
The consulting group I was in was fairly small at the time – about 12 people. So each of us became a jack of all trades. It ended up being like a postgraduate education in business. I had the opportunity to meet and work with a lot of really sharp people.
(5:55)
What advice to you have for military members that are interested in going directly into entrepreneurship after they leave the military?
I think education and/or experience is a good route to go first because the military is a completely different environment than the corporate world. I wouldn’t change my military experience but there is a totally different mindset outside the military as far as personnel decisions, marketing decisions, and operating decisions. So coming out of the military, I would certainly recommend getting some experience in the business world before striking out on your own.
(7:50)
I completely agree. I went from the Navy to business school and then straight into starting my own company. I look back now and see that if I had gotten a couple years of experience at a company first, I would have gotten exposure to a lot of things that I could have then applied to my business.
And that’s a reason franchising can be a great option. I’m very involved in the International Franchise Association’s VetFran program. It’s a program designed to get veterans involved in franchising. For a 2-3 year period, we had a goal of bringing 50,000 veterans into franchising and we ended up bringing 200,000 veterans in. The vast majority went to work at a franchise rather than becoming a franchisee. Many times that ends up being the path to ultimately becoming a franchisee.
(8:50)
The advantage of working for a franchise is that you don’t to reinvent the wheel. We feel like franchising is a great place for veterans to end up because in the military, you learn to execute a system and work as a team. Within a franchise system, the business plan and structure are already in place. So the focus is on execution and not reinventing the wheel. That’s why I encourage veterans to look at working for a franchise as an option.
(10:05)
I completely agree with the idea that franchises can be a great fit for veterans.
It’s very common to see veterans excel in franchises. Some of the best franchisees I’ve seen have been veterans. And one other thing. You asked me about going back to school. I want to remind everyone about the VFW Support a Hero Scholarship. If a veteran is considering going back to school, we have a scholarship for up to $5,000 per semester. That can either supplement the GI Bill or be used aside from the GI Bill.
(11:30)
How long would you recommend someone work in a franchise before becoming a franchisee themselves?
I think that can vary a lot because there are all kinds of different franchises. In the restaurant industry, it’s very common that a person will work in a franchise and then eventually become a franchisee. It also depends on capital requirements. For a lot of younger veterans coming out of the military, often times they don’t have the financial resources to become a franchisee right away. Under capitalization is one of the reasons why new businesses fail so they need to be careful about that.
(13:05)
What was the genesis for Sport Clips?
I read an article in the Wall Street Journal about a new hair care franchise. A fraternity brother from MIT was working for a bank in Houston and he and I had talked about going into business together. Ultimately, he wanted to be in the restaurant business, which I wasn’t as crazy about. So we never ended up going into business together but it got me thinking about it.
(13:49)
I read that article about the hair care franchise and started looking into becoming a franchisee. Through that, I got experience as a franchisee before becoming a franchisor. I was successful in my salons but 12 months after I opened my first salon, my franchisor went Chapter 11. So I had to learn very quickly to become self-sufficient. Eventually, I was elected by the franchisees to represent them on the Board of Directors so I had the opportunity to see things from that side as well. Later, another franchisee and I ended up buying that system and I become a franchisor. That was a full-service salon business - about 50/50 male and female customers. In the early 90’s we started looking at what niches were being properly served and which were not. It became obvious that the men and boys market was being almost completely ignored by almost the whole industry. We saw this as an opportunity – that if we created a concept aimed at men and boys, there could be an opportunity there. We then sold off the full-service business and started a prototype for Sport Clips in June of 1993. We started franchising about three years later.
(15:30)
Like any new business, the early years were a struggle. It took us five years to get our first 50 locations open. Then another two years to get to 100. Since then, we’ve opened between 100 and 150 new locations per year.
(16:00)
I love that story because I’m sure at the time when your franchisor filed for bankruptcy, that was frustrating to go through. And yet in the long run, things worked out really well for you.
I think that’s true and I think one of the things you learn in the military is that things don’t always work out the way you expect them to and all plans are subject to change. So you adapt and you turn challenges into opportunities. This is all very applicable to the business world.
(17:05)
In those early days of Sport Clips, what was your day-to-day like?
I had two small children at the time but my wife was very supportive. 16 hour days were not unusual. We did not have a lot of excess capital so we couldn’t hire a lot of support staff. When we started out, we had four people and we grew that gradually as we could afford it. We were also very careful not to overextend ourselves. We didn’t grow outside the state of Texas for six years.
I eventually got a call from fellow in Denver that worked for Mailboxes, Etc. which eventually became UPS Stores. He was interested in learning about our area development program. At the time, we didn’t have an area development program. But to make a long story short, he eventually became our area developer in Colorado and New Mexico. That became the model for our growth over the next 10 years. We took that area development program and applied it to other areas around the country. Sometimes it’s good to be smart but even better to be lucky. In this case we lucked out that this area development program fell into our lap and ended up being instrumental in the development of our business.
(19:40)
I understand how luck came into play there but I also admire your willingness to be open minded about the possibility of where that opportunity could lead.
I love Jim Collins books – one of the more recent books is Great By Choice. In that book, he talks about how everyone has luck at one time or another– either good luck or bad luck. How you react to that has a lot to do with your future success. If you’re able to make possibility out of a setback or take advantage of an opportunity, that can have a lot to do with your ultimate success.
(21:00)
What advice would you give surrounding work/life balance?
If you’re overly concerned about work/life balance, you shouldn’t be an entrepreneur because when you have to put in 16 hour days, you have to put in 16 hour days. If you want to do a 9–to-5 job, do not become an entrepreneur. That’s not the mindset. You have to have the mindset that failure is not an option and that you’ll do whatever it takes to make it work. Sometimes you get lucky and things go perfectly but more often than not, you’ll hit setbacks and bumps in the road and you have to make it work. It’s important to spend time with your family and your kids but for me when something was going wrong with the business, I was 100% focused on fixing it.
(22:40)
As Sport Clips grew, how did you make sure you were also learning and growing with the company?
I tried to learn from others’ mistakes and successes. As a franchisee in a failed franchise, I learned a lot about how not to run a franchise. I think it’s important to join a trade association for whatever business you’re in. There’s a tremendous amount of networking opportunity there and people you can learn from. Every franchise’s public disclosure document is available to you. Always look not only about your own industry but others as well.
I read a lot about topics like marketing and branding. I read a lot of books too about management and motivation. I try to take those principles and apply them. There’s a lot of great books out there. I think Jim Collins is great. There’s a great book The One Thing by Gary Keller. I also like to book Focus by Daniel Goleman. I like Zig Ziglar too.
One thing that everyone needs to remember is that relationships are vitally important. You need a team that sees the vision and supports the vision.
(28:29)
Do you see any common mistakes or misconceptions from veterans that go into franchising?
I don’t think there’s any one thing that sticks out. Most veterans that go into franchises have been out of the military for more than 10 years so they have some business experience prior to becoming a franchisee.
(29:20)
What do you think is the minimum capital someone should have before they go into franchising?
Some franchises are low cost startups that you can work out of your home whereas something like McDonald’s is a $2 million investment. One mistake I see is that people will only look at low-cost startups. Even though the cost may be low up-front, the return might be low too. So that’s why it can be worth it to go into business first and build up some capital so that you’re able to keep your options open.
If you’re looking to build something larger, you need to think about whether or not your franchise lends itself to growth and multi-location ownership. All of our franchisees sign up for a minimum of three locations. Our requirements are $200,000 liquid and $100,000 net worth. Most of our franchisees are far above that but that’s not something someone in their 20’s will likely be able to afford.
Don’t just look at what it is today, look at what it’s going to be in 5 to 10 years and make sure you’re working toward that.
(32:25)
What does your day-to-day look like now?
It’s fun. For the first 100 stores, I was at every grand opening doing everything from hanging banners to stocking shelves. Today we’re much larger. We have about 150 people on our support team. Now it’s about maintaining consistency. We’re the only hair care franchise that operates in all 50 states but that presents its’ own challenges in making sure that the experience is the same in each location. We work to make sure our culture is passed and maintained at each store. We want to make sure each store is in a position to grow and succeed. Today we have about 500 franchisees. These people are able to gain financial independence and have control over their own lives. Being able to touch lives like that is very rewarding.
(36:40)
That’s really interesting and I can see how that would be both challenging and rewarding to make sure your culture is represented at each location.
We’ve tried to keep things simple. Even before we started Sport Clips, we used a motivational video by Lou Holtz, the former coach at Notre Dame called Do Right. It was all about the values he used to bring kids together and mold them into a team. Those values were very consistent with our values so when we started Sport Clips, I wrote to Lou Holtz and asked him if we could use that video in our training program. He very graciously gave us permission to do that. Today, we have those same values which are “do the right thing”, “do your best”, and “treat people the way they want to be treated”. We teach that to everyone including employees and franchisees.
We also try to reinforce these concepts with things like our Help a Hero Scholarship which creates a culture of giving back. It brings a disparate group together. This year we raised $1.5 million for the Help a Hero Scholarship. We’re also the first national sponsor of the St. Baldrick’s Foundation. We also support the Red Cross with blood drives that they are doing. Additionally, we sponsor the Ageless Aviation Foundation, a program that gives rides to veterans that are senior citizens. These are the types of things we do to reinforce our values throughout the franchise.
(41:00)
Can you talk about a failure or setback you’ve experienced in your career?
I had a fairly big one back in the 1990s. I was so busy running the business that I wasn’t paying very close attention to our accounting. We had someone running that part of the business that I trusted but it turned out that she was embezzling funds. This almost put us out of business. I had to make decisions about where we were going to use our remaining funds. It was a setback that ended up positively because it made us focus on where we really needed to put our money.
We have 55 company stores that we operate. We use these stores to test ideas before we move them out across our franchise. Jim Collins uses the analogy that you should fire bullets before you fire cannon balls. If you have a program that you’re testing, allocate a small portion of your resources to it so that if it doesn’t end up working, you can end that program without a huge impact to your business. We’ve been testing a concept over the past three years that hasn’t worked out as well as we had hoped. So we’re still working on developing the idea and deciding how we should reshape it.
(46:40)
I love that idea of testing out an idea in small ways before investing a large amount of time and resources into it. Sometimes I tend to go all in on an idea or concept when it would have been better for me to test it first.
It’s a temptation for all of us when we think we have an idea that can’t possibly fail. But there’s a lot of ways bright ideas can fail so it’s a lesson for all of us about not overextending ourselves.
(47:30)
What are some of the strengths and weaknesses you left the military with?
I think the strength that you leave the military with is understanding how important teamwork is. Also, the military tends to put very junior people in leadership positions. You realize the importance of being responsible for other people.
I was flying C-130s and we had a crew of four or five. Within those teams, I always tried to make sure I was taking care of my people. One time we were at a base in Turkey. In the officers’ quarters we had fairly nice accommodations with air conditioning. I got a call from my flight mechanic in the enlisted quarters that the air conditioning was out and we had a flight early the next morning. I ended up getting them moved into officers’ quarters so that they could be comfortable. That goes a long way with building respect amongst your people. We all knew that we could depend on each other. These values of teamwork allow you to succeed in business as well.
One blind spot I can see is that in the military, we are used to very defined processes. In business, sometimes it’s necessary to break out of how things have always been done and think about new ways to implement a system.
(51:50)
Is there anything else you’d like to share with our listeners?
I would encourage taking a longer range goal of where you want to be and then take smaller steps to get there. Write your goals down and have a written plan of where you want to be. Break those goals into smaller actionable items you can do this week, this month, and this year. And then be willing to make course corrections along the way.
(53:55)
I love the saying, “The plan is useless, but the planning is essential”. That exercise of breaking things down and writing things down can be hugely beneficial even if you end up going in a completely different direction. And thank you very much for your time today, Gordon.
Post-Show Notes
For those who watched this interview via video, I’m curious to know your thoughts. Please feel free to reach out and tell me what you think! And once again, if you haven’t gotten a chance to review us on iTunes, please do so. Also please sign up for our newsletter to receive the latest information about what I’m doing with the show. Enjoy the rest of your week!