Evolving Business Minds

Fundamentals of Building a Massive Business with John Hewitt | #123

• Andy Silvius • Episode 123

Share episode

Imagine kickstarting a digital revolution in the tax industry, much like Netflix did for entertainment. This episode features none other than the impressive John Hewitt, the mastermind behind Liberty Tax Service and Jackson Hewitt Tax Service, who's now pioneering with Loyalty Brands. As John recounts his trailblazing journey from a 1969 H&R Block tax course to revolutionizing tax preparation software for the Apple computer, you're promised a narrative filled with strategic innovation and entrepreneurial wisdom that's hard to come by.

Navigating the tumultuous waters of business growth, John opens up about the challenges and triumphs of expanding a small operation into a formidable empire. The conversation is laced with the kind of hard-earned insights you only get from someone who's been in the trenches—the importance of learning from missteps, the gusto needed to pursue exponential growth, and the relentless perseverance that separates those who fold from those who flourish. Take a seat at the table as we dissect the pivotal moments that have defined John's storied career and how they can inspire your own path to success.

In franchising, John sheds light on the intricate dance between CEOs and franchisees, offering a masterclass on fostering a robust company culture that champions employees and, by extension, delights customers. For anyone flirting with the idea of franchising or eager to amplify their business acumen, this episode is a treasure chest of practical guidance. Listen intently as John shares his vision for nurturing passion, dedication, and a long-term outlook over immediate profits—a mantra for budding entrepreneurs and seasoned business leaders alike.

Episode Sponsored by: Olive Branch Bookkeeping, Inc

Message from our sponsor: A profitable business needs a tailored financial solution for growth. Understanding your needs and what matters most to you is our #1 priority. We have put together a bookkeeping service that will allow you to take control of your business and future growth.

📲 Schedule a discovery call with Olive Branch Bookkeeping, Inc here: https://calendly.com/caryn-23/discover_conversation

Evolving Business Minds podcast links:

Listen on Apple: https://podcasts.apple.com/us/podcast/evolving-business-minds/id1498316242

Listen on Spotify: https://open.spotify.com/show/0Qqiizmt3UzcbQM9EJFViw?si=cJSjUhPMTSqS5tH0z7SkUg

Links to connect with Andy Silvius:

Follow on Instagram: https://www.instagram.com/andysilvius/

Follow on Facebook: https://www.facebook.com/ResourcefulAgent/

Follow on Linkedin: https://www.linkedin.com/in/andrewsilvius/

Follow on TikTok: https://www.tiktok.com/@andysilvius?lang=en

Follow on X: ...

Andy Silvius:

All right. Welcome to a new episode of the Evolving Business Minds podcast. Today's guest is a renowned American entrepreneur who was named top 100 most influential people from the year 2000 to 2012. He founded and grew two of the largest retail chains in North America, one of them being Liberty Tax Service, with over 6,000 offices. He went on to sell his interest in Liberty Tax Service for nearly $500 million. He is the Hewitt in Jackson Hewitt Tax Service. I want to welcome John Hewitt to the show. Thanks for having me. Absolutely, John. It's a pleasure to have you on here. If you don't mind, can you take a minute to tell everyone listening kind of an overview of what you're currently doing with loyalty brands and how they can connect with your company?

John Hewitt:

Sure, as you said, I founded two of the top 100 retail chains in the company. They were both public companies worth $500 million, and now I have started another company called Loyalty Brands. We have eight different franchise systems in seven different industries. So the way to contact me or the company is loyaltybrandscom or the company is loyaltybrandscom. If you'd like a free copy of my book, you can send me an email with your address at john at loyaltybrandscom. Perfect.

Andy Silvius:

And I'll make sure we link all that in the show notes so people can just click and get right to it. Super so, john, I want to go back to the beginning. How did you get your start in the tax preparation business?

John Hewitt:

Well, my beginning is long, long before you were thought of. It was 1969. My dad was a CFO of a public company, wanted to be an entrepreneur but he had five children. Too quickly, very quickly, not too quickly, and could never afford to. Until I was in college and he called H&R Block and tried to buy a franchise in the suburb of Buffalo where we lived and they said we're going to open a company store there anyway, why don't you have your son take our course? Maybe he could work for us? So I took the H&R Block tax course, loved it while I was at the University of Buffalo and I found out I'm blessed, I found out what I wanted to be when I grew up and so 12 years later I was running 250 H&R Block offices and my dad was still CFO of a public company, still wanted to found his own company and he bought one of the first apples by mail, long before there was an Apple store and there weren't even 500,000 apples in the country, and he decided we should computerize taxes. So, 1981, we both quit our jobs and built the first tax software for an Apple computer, Way ahead of its time. No one wanted it, Got blessed, found a company in Virginia Beach Biggest blessing is the weather here is so much nicer than Buffalo Moved my family here in August of 82.

John Hewitt:

Been here ever since we merged the computer company with Mel Jackson. Mel. We bought six offices from his widow. They were all here in Virginia beach and we merged the two companies, changed the name to Jackson Hewitt, went public and 15 years later sold it for $483 million. So that's my start in the in the 60s, 70s, 80s and 90s.

Andy Silvius:

Now you're. You said, your dad created the program, or did you? As you both worked on the program, I did all the work.

John Hewitt:

He, he was CEO, but I, I, I did the software.

Andy Silvius:

And did you have a background in that before, did you? Just I had.

John Hewitt:

I had none, but with the Apple it was so easy. I wrote it in BASIC and BASIC is so easy. It reminds me of geometry. It's very logical and very simple to use, so I just learned enough to write the program.

Andy Silvius:

Okay, that's awesome, though, and that really changed the direction of how people do their taxes. Now correct.

John Hewitt:

Exactly H&R Block lacks so much vision. I tried to sell it to them and they announced in their annual report they're a Fortune 500 company. And they said people ask us why we don't computerize it. We say we tried it, Customers don't care, Doesn't save, save us any money we're never going to computerize. So that's how visionary hr block was in 1983 and fortunately I computerized my firm and we were at the forefront of the startup of electronic filing in the late in the late 1980s you know the that story about hr block kind of reminds me of the whole blockbuster story blockbuster and netflix.

Andy Silvius:

blockbuster didn't want to adapt and they were actually. Netflix tried to get blockbuster to buy them out at some point for some very small number, and they just didn't see the future like Netflix did. And now look at where they're at. You know, h&r Block is still around, but I'm sure they took a lot longer to compete with everyone else with that mindset. Hey, everyone, I have a quick interruption from the show, but I'll make it brief. I've got something that I think is vital for every entrepreneur out there and it can be a game changer for your business.

Andy Silvius:

Navigating the business world demands more than just passion. It requires crystal clear financial insight. That's where our company, olive Branch Bookkeeping Inc, comes in, offering not just book cleanups for those behind on taxes, but also comprehensive monthly bookkeeping, payroll management, corporate structuring and the key to informed decisions detailed profit and loss reports. Imagine this your financial record spotless and strategic, paving the way for growth without the headache of entangling years of bookkeeping yourself. With Olive Branch, you're equipped with financial clarity to steer your business forward. So if the thought of sorting out your finances feels overwhelming, let Olive Branch Bookkeeping lighten the load. They're more than just bookkeepers they're your financial clarity partners. If you'd like to see how our team can help you and your business, I'll include a booking link and contact information in the show notes so you can schedule a free discovery call.

John Hewitt:

Not sure how much you know about IBM and Apple, but IBM not Apple, but Microsoft. Not IBM, not Apple, but Microsoft. Microsoft was owned by IBM and they spun it off for like $4 million or something Bill Gates. So now, of course, microsoft is five times bigger than IBM.

Andy Silvius:

Yeah. Yeah, you actually don't even hear about IBM very often, Sorry. So it kind of sounds like you fell into the tax preparation business. Was it something that you immediately felt like you were passionate about, or was it something that developed over time after running the business and being involved with it?

John Hewitt:

No, I would say in school, like most college students, I think the most that I've talked to didn't know what I wanted to be and I was in school to be a mathematician. Now, even today, I don't know what a mathematician would do.

John Hewitt:

I certainly know job that I would want, and so the minute I took the course I just loved everything about it. I loved the fact that it involved multiplication, division. I'm great at math, great at adding, subtracting, multiplying and dividing, and back then not only did they not have computers, they didn't even have calculates when I started. So it came in handy. Secondly, it's a gray area tax, and so you get to argue and negotiate and do what's right for people. And thirdly, it's helping people, believe it or not, and I don't think most. If you've never been in the tax industry, this doesn't occur to you, but I think most people. The biggest, one of the biggest fears is going to the dentist, and the second is going to the tax preparer. So most people are afraid of it, don't like it, afraid of the IRS, and so it helped people. So for those three reasons I was instantly in love with the tax business.

Andy Silvius:

Yeah, so my wife and I own a bookkeeping firm. Yeah, so my wife and I own a bookkeeping firm. She was really geeking out that I was going to have you on here today, because she actually had a deeper understanding of your background than I did when I first connected with you. But it's something that we focus on is just helping. We're like the precursor to the tax guy right so that they can be more prepared through the year, and our whole goal is to help people understand their finances so they can make better and more confident decisions, and it's amazing how many people just leave it to the last minute, and that stress through the year, I think, really stunts people's growth and not understanding where their business is headed until it's too late and you already have the tax bill due.

John Hewitt:

Well, you're right, Most Americans are. It's un-American to not procrastinate. You must procrastinate. If you have something complicated, you must procrastinate, and it really can be costly in the tax world. Planning ahead can save you thousands of dollars, change your life, and so every time some major event happens you get married, you get divorced, you have a child, you buy a business, you buy a rental property, you have a capital gain, you cash in a capital gain you should talk to your tax advisor before the event. After the end of the year, all you can do is keep score. But you can change the outcome if you plan in advance.

Andy Silvius:

Yeah, so I'm curious what were some of the hardest challenges you faced in the early stages of growing your company?

John Hewitt:

There's massive challenges and I'm in the third chaotic huge growth company.

Andy Silvius:

Right now.

John Hewitt:

Yes, with loyalty brands, but one of my brands is going like crazy. It's mobile grooming. It's called Zoom and Grooming. It's a mobile pet grooming because we do both dogs and some cats.

John Hewitt:

But um, yeah, um, exponential growth is chaos. So you, you face all kinds of difficulties and some of the difficulties are people that that can be leaders when you have five or 10 or 30 offices. By the time you get 500 offices, you need different skill sets, you need different leaders. And then you get the 5,000 offices and you need again different leaders and skill sets. Very few people can transition to be a leader like a chief marketing officer or chief technical officer, information officer, financial officer. Very few people can make that transition. So one is there's turnover and uh, yet you don't want turnover, you want loyalty and you want, you want experience and so forth. So so that's a difficulty.

John Hewitt:

It's biggest difficulty, andy, is that when you grow from zero to like Jackson, you would have 6,000 offices. When you grow from zero to 6,000 offices and a few hundred thousand of revenue to 500 million of revenue, you have to manage two things you have to manage the income and the expenses. The structure, and you can't have too much structure or you go bankrupt and you can't have too much income without structure or you collapse for lack of service, for quality. So you have to manage those. And so at the beginning I had two employees and at the end I had 500. And I couldn't have 500 employees at the beginning, right, we would have collapsed for bankruptcy. I couldn't have two at the end, we would have had no support. So you have to manage your resources with your income and that's the most difficult part of growing. But you also make mistakes, you know, in my book.

John Hewitt:

I think that the most surprising thing about my book is so many people. The number one comment about my book is wow, you admit your mistakes. So I talk about mistakes I made and the way that I overcame them and I think I didn't realize that when I wrote it. That but people but in thinking about it and all the business books I've read, they all talk about their successes. They very seldom talk about their errors. And what I've learned in business is and in life, the people that are the most successful have made the most mistakes. So there's no way to skate through life without mistakes. The key is everyone faces adversity. The key is the winners always get up, and the losers, at some point, whether it's the first adversity or fifth, or tenth, they stay down, and so that's the difference between winning and losing is is perseverance.

Andy Silvius:

Well, and I think, taking the mistakes you had and then learning from them, viewing them as learning lessons, so that you don't continue to make the same mistakes over and over, so you can actually grow that's horrible. I mean you have to be an idiot to make the same mistakes over and over so you can actually grow. That's horrible.

John Hewitt:

I mean you have to be an idiot to make the same mistakes over and over, and I think it was a hundred. Einstein that said if you do what you, if you keep doing what you always did and expect different results yeah, that's the definition of insanity.

Andy Silvius:

Yes, I want to touch on something you mentioned about exponential growth. Um, because I don't think people. I've had the pleasure of meeting with a lot of business owners on here. I have a lot of people I've worked with that own businesses and a lot of people operate from a place of incremental increases and not exponential and incremental if you're looking at a long enough time horizon. It's inevitable. If you make the right choices and just slowly grow, it's going to grow. What was the difference for you going from? You know you're not in incremental increases, you're having exponential increases in your business and growing that rapidly. And how did you? How do I ask this, how did you adapt yourself to those situations so that you you didn't make slower growth? Does that make sense?

John Hewitt:

Yes, yes, that's a lot of questions, but I think I got it yeah, okay.

John Hewitt:

So let me say that when I built the software and I tried to sell it to H&R Block and they said they didn't want it, I said, well, we're going to build a company bigger than they are. How stupid of them not to understand that computers are the future. Right, they just didn't get it. So I said we're going to build. So when we bought Mel Jackson Tax Service, they had six locations. H&r Block had 9,000. So I didn't.

John Hewitt:

I mean, a normal person might say, well, we'll double in three years, We'll double again in five years, We'll double again in seven years. But my goal, from the minute I went out to raise money to buy Mel Jackson and to merge with our computer company, is we're going to be bigger than H&R Block. We're going to add 8,995 offices and have 9,001 locations. We're going to be bigger than H&R Block. So I think that if you're going to achieve greatness, you can't have mundane goals. And that's a big, hairy, audacious, crazy goal, right? I mean, the chances of growing to 9,001 offices is almost zero. Well, we never got there. We got to 6,000. But that's pretty good.

John Hewitt:

The good news is, if you try for 9,000, I mean today, Jackson U is a billion dollar company the 23rd largest retail franchise chain in the country. That's not so bad. But, Andy, if I'd only tried for 50 or 100, then I might've been happy with 50 or 100, not 6,000. I might have been happy with 50 or 100, not 6,000. If you're going to get to 6,000, you got to go for 9,000 or 10,000. So I believe very, very vehemently that if you're talented and or blessed the way that I am, you have to set big, hairy, audacious goals, and of course there's a book about that setting big, hairy, audacious goals and of course there's a book about that setting big, hairy, audacious goals. You always should set your goals higher than ordinary.

Andy Silvius:

Yeah, I think I've fallen victim to this where I have big goals and I'm sure there's other people that can relate to me have very large goals but what was the difference for you from having a goal and actually achieving it? Like, did you already have the plan mapped out or is it just something you figured out along the way?

John Hewitt:

No, the plan changed dramatically over the years, um, and I made lots of mistakes. So here's here's one of the biggest mistakes I ever made in my career. I started Mel Jackson and I bought six locations. By January I had 11. By the following January I had 15. And by the third January I had 22. So I've gone from six to 22 in two and a half years. Had 22. So I've gone from six to 22 in two and a half years. Now that's pretty good growth by. I think 98% of people be happy with that, right. Yeah, from six to 22.

John Hewitt:

But I looked up at my goal of 9000. And said Wait a minute, I'm going to be like 1000 years old before we get there. Right, we got to do something different. So I hadn't franchised yet, and so one of the biggest mistakes I made in my career is not franchising immediately. I waited three years to franchise and then we grew exponentially. We went from 22 to 49 to 200, to 300, to 500. I mean we grew exponentially. I didn't franchise Now, I was so dumb H&R Block was when I started was 95% franchise.

John Hewitt:

They grew out by franchising. And here it was all in front of me. I supported franchises, I knew franchising. I loved franchising, but I didn't use that tool and so we changed all the way along. We changed mistakes that were holding me back because I was doing the same old, same old instead of novel, modern, thoughtful copying others. You know, in my life I have about I believe about 30 novel theories, but I have 10,000 theories. I've stolen 9,700 of them right, so most are right, 9,900 of them. So I steal most of what has helped me.

John Hewitt:

But sometimes I just miss the obvious and that was a dumb mistake that the minute I started Liberty Tax, the very day we started franchising. So I didn't make that same mistake that I made at Jackson Hewitt the minute I started loyalty brands, we started franchising. So, yeah, you have to learn from your mistakes and so you have to adjust your behavior. I've never made a five-year plan, even a three-year plan, and sometimes not even a one-year plan, that I didn't have to adjust on the fly. I've never rolled out a new philosophy or a new procedure or a new strategy that didn't have to be modified. We sit in a room, all of us experts, and say this is our strategy, this is what we're going to do, and we never get it 100% right. So you have to understand that. You have to be flexible, you have to learn on the fly, you have to improve on the fly. You're not going to be able to predict all the reactions of whatever you're trying to accomplish.

Andy Silvius:

Now I'm curious Is there a framework you use to make sure that the reactions and the decisions when you're adapting to new things coming up? Did you have a framework that stayed aligned with your end goal? And I guess the reason I'm asking this question. I think a lot of times people can get into business and then they make changes and they veer off the path towards the goal that they want and it actually deters them from the success that they're looking for. So how did you make sure that those decisions and those adaptations aligned with your long-term goal?

John Hewitt:

In a couple of ways. Number one is we never waited to. So let's say we had a goal. I mean in in the tax season. It's like farming, right, you plant, you plant in in May to January and then you harvest in January through April, right? So? So never waited till April 15th to assess the reaction, right? So we're on top of it, we're taking the pulse of it from day one.

John Hewitt:

So, for example, one of the one, one of the fights I had with my um, my market chief marketing officer, who was with me for 35 years she's still with me, but somehow, when we used to be on tv a lot and we were on a national tv channel when there was only four and the fourth one was whatever it was the Chicago one from CBS or Ted Turner or whatever. So one time she came out with this horrible ad, I thought that the new TV ads were horrible and she had to change it every year. And I said, why do you have to change it every year? But she had to change it every year. And I said, why do you have to change it every year? But she had to change it every year. And she came out there horrible. So we did it. So I said I think they're horrible.

John Hewitt:

So here's we're going to do a test. On January 14th. We're going to buy Oprah Winfrey, same time, same time slot, at 3.30 on Tuesday and 3.30 on Wednesday. We're going to run last year's ad and this year's ad. We're going to put an 800 number in to call, right, and then we're going to test it and we're going to see which gets more calls and you can pick whichever day. You can go Tuesday and we can do.

John Hewitt:

Last year she picked to go first. We got one call it was the wrong number and I went second and 18 calls. I said get rid of the new ads and go back to last year's ads, right, so you don't wait until april 15th to test, to test your theory. It's too late so. So one part is you assess very early and within five or 10% of the time you've started, you take an assessment and then reconsider. Then you come, you make a decision. But then, secondly, is you need to listen to all of your constituents. You need to listen to your in my case it was franchisees constituents. You need to listen to your in my case it was franchisees, tax preparers, employees. As a CEO, you have to have your ear to the ground.

John Hewitt:

No one wants to give CEOs bad information or, I'm sorry, negative information no one ever wants to come into a CEO's office and say I failed or we're failed. So you really have to be attuned, you have to go seek information, you have to go ask questions, because they're not, they're gonna hide bad news for a while until it's too late. So the second part of it is seek out criticism. Seek out and ask and listen okay, yeah, that's great advice.

Andy Silvius:

So this one may sound like a pretty basic question, but I'm curious. Obviously you had such a successful business, but what did a typical day look like for you when you were running your company and it was growing rapidly? Was it just constant all the time? Did you have structure to your day?

John Hewitt:

No, it's when you're growing exponentially, there's and you have an open door policy. It's a revolving door. It's a revolving door. You do have employee problems, you have customer problems, you have IRS problems, you have competitor problems, you have. And when you have franchisees for the good I don't know if you've been in franchising or spent too much time in franchising- but, franchisees aren't employees.

John Hewitt:

Employees usually have trouble speaking up and complaining to a superior and they like chain of command. I mean some people they just love the phrase chain of command, right, I mean they that. Some people they just love the the phrase chain of command. So if there's like three people down from me, it never gets to me, right, they go up to chain man and so, but franchisees, they hate chain of command I want to talk to. I want to talk to the ceo. I got a problem yeah and so.

John Hewitt:

So, um, yeah, you have to be, and what I? The key thing is looking for systemic problems, right, that when one franchisee calls up and says I have a problem, okay, you have to make a decision. We had 2,000 franchisees. Are dozens or hundreds going to have the same problem, or is this unique to this guy? If hundreds or dozens or hundreds are going to have a problem, you need to quickly create a system or a communication to solve it in advance so you don't get hundreds of phone calls the same kind of phone call.

Andy Silvius:

So you have to.

John Hewitt:

I call it again that's tip of the iceberg theory. You have to realize for every issue is it a tip of the iceberg? Is it going to happen a hundred more times, or it's like a nuclear war, it's a one-off situation. That's either, I mean, it's just a non-event, or it's going to only happen once. Right, an alligator jumps off and ran into an office and bit someone, right? I mean, you don't need to create a system to solve that, yeah, but you have to. As a great CEO, you have to learn to preempt problems, and the easiest way to do that is to react quickly when you're presented with a complaint and make that decisive decision. Okay, this, yes, this is going to happen to many others. Let's get on it right away, solve it and then disseminate the information to every employee, everyone on tech support, everyone, every franchisee, to disseminate it, to diffuse the situation before it becomes a nightmare.

Andy Silvius:

And obviously you had a large team around you, so you probably go to the heads of those departments and get everyone together right? Did you ever miscategorize something that you maybe thought was going to be an isolated incident and became a bigger problem that you didn't foresee they?

John Hewitt:

screwed up more than I did. They would argue with me sometimes. But yeah, I mean, I'm very cocky, very self-confident, but if I don't make a mistake every minute, I make a mistake every five minutes. So I make lots of mistakes but I didn't get to where I was founding 10,000 locations without solving issues and solving problems. I made mistakes but I overcame them.

Andy Silvius:

Yeah, so I read an article on Inccom where you had commented that your billion dollar mistake was not setting up Jackson Hewitt from the beginning in a way that you could control it without interference from venture capitalists and or outside forces. Can you give us a little backstory on this and what are your thoughts on partnerships in business?

John Hewitt:

So let me say this that in all of my companies I've taken venture capital, and the problem with venture capital is or the good thing is when you start, they have a five-year horizon where they typically want to be out in five years. So when you start the first year, you're both thinking long-term and I'm almost always producing and always getting results. So we're aligned for a few years, and then about the third year or fourth year, they're getting ready to exit and so they don't want to think about five years. I'm always thinking five or 10 years from now. As an entrepreneur, as a CEO, you're supposed to have vision and think about the long-term. But as we get towards that fifth year or whatever they want to cash out five, six, seven years, they start thinking about no, no, no, we don't want to invest money today. That will hurt today's profit for the future.

John Hewitt:

Just because that's going to help the future. That's the right thing. That's going to hurt the bottom line. And when I sell my shares next year then I'm's going to help the future. That's the right thing. That's going to hurt the bottom line. And when I sell my shares next year then I'm not going to get as good of rights because the current profits aren't as big as they could have been. If they want to run the company, let's say I take money in 1990.

John Hewitt:

They want to run the company as if it's going to cease to exist in 1995. Now, so long comes 1994, and I'm thinking 2000, 2005. And they're thinking no no, I don't really care. I'm out, so venture capital is a nuisance after a few years because they're looking for their exit strategy. I'm always thinking long-term, so I'm not a fan of venture capital. I've taken it each and every time. It's a nuisance because, as they mature in the investment, they stop the partnership mentality that you had from day one.

Andy Silvius:

And this is maybe sounding ignorant on my part I just don't understand. I've never been involved with venture capitalists, but, um, is there a board that you have to speak to to get permission, like if you're trying to make changes for the long term? Uh, what kind of friction happens in there? They may not like it, but can you still make the decision that's beneficial for the long term of your company, or do you have to make those shorter term decisions to please the venture capitalist?

John Hewitt:

The CEOs always report to a board right. So the board of directors and typically the venture capital is on the board, and typically they're only a minority of the board. But if they struggle, sometimes they can convince others in the board to switch to their side. And so I had in my career at both of my companies. So at Jackson Hewitt. I was with Jackson Hewitt for 15 years and for 14 years every decision was unanimous. I didn't take venture capital until the 12th year, so everything was unanimous for 14 years, and the venture capitalist rebelled and he got enough board members to screw me on my company. 15 years later I left the company. We sold it for $483 million that year. That was a pretty good. I mean, it was a good run. I still had a percentage of the company.

John Hewitt:

So the second time it was 20 years. So for the first 18 years we had 100% unanimous decisions, and then the 19th year the venture capital guy raised his hand and fought and so we had another fight. So both times in 35 years and about a third of those where both companies were public, at the end I had unanimous decisions and then the venture capitalists rebelled and caused um, um, consternation, problems and so um, so it's uh, so they can cause problems by uh. But the second time I had learned from. The first time I had controlling stock and I got to. I got to pick one more director than the other, than all the shareholders, so I could have picked you, andy, to be on my board. So I got to win all the votes.

John Hewitt:

Now it's a public company and you get you get eviscerated in the press for doing that, yeah, but I got to pick so that they did not have controlling interest in that. When it happened the first time didn't happen the second time, but they still caused a ruckus and a problem. So, yes, board of directors are especially in a public company. Since Sarbanes-Oxley, over the last 22 or 23 years, it's been a nuisance. I mean, we were spending at Liberty $3.5 million a year just in compliance with Sarbanes-Oxley. So I'm not going to go do any more public companies. I may sell one of my companies into the public arena, but once it's public I'm out of there. It's just too much of a nuisance.

Andy Silvius:

So is that the big change you made with your now venture loyalty brands? Is it something that Exactly?

John Hewitt:

When we sat down and started Jackson Hewitt, I took two of my top people and we sat in a Mexican restaurant in old San Diego old town, san Diego and came on a napkin, wrote top 10 things we're going to do different. And the first one I wrote is I'm going to have control of the shares. We sold Liberty 20 years later and took the same two people, but now we were in Virginia Beach. We were traveling on that time this time. So on the anniversary 20 years later of that meeting, after leaving Jackson Hewitt, we went to a restaurant, a Mexican restaurant here in Virginia Beach, and wrote the top 10 things on a napkin.

Andy Silvius:

first thing was not going public again yeah, it's funny hearing you say that you wrote it on a napkin because I think you know some people just overplicate things and have to have systems and these big fancy tools and and I mean you're proof that sitting down and having a meeting and writing it on a napkin can still do a lot of damage in a good way.

John Hewitt:

You don't have to have a system until you have something to systemize.

Andy Silvius:

Yeah. So I'm curious with the, you know, having this, these large companies, how have you created a culture within your well, how have you created a culture within all of your companies that fostered growth for all of your team?

John Hewitt:

members, and my webinar two weeks ago Thursday, 12 days ago was on creating a culture. I do it to mentor, and one of my ex-franchisees who's building a company has about eight or nine employees. He said how did you build? Number one is, how did you build the culture at Liberty, that great culture, and how did you maintain it? And so it took me, andy. It took me about 50 minutes, five zero. It took me 50 minutes to go through why you should have a culture and how to do it. So when I don't, I assume I don't have 50 minutes right now.

John Hewitt:

So I'm going to give you the short answer. The short answer is to and Herb Kelleher said it. Well, he's one of the founders of Southwest Airlines. He said, and I grew up thinking customer's number one, customer's number one, customer's number one. And back at Jackson Hewitt, our mission statement was winning customers for life. So I mean, but Herb Kelleher, right after we came up with that mission statement, a couple years later his book came out and said no, no, no.

John Hewitt:

If you want your customers to be treated as number one, you have to treat your staff as number one, treated as number one. You have to treat your staff as number one. And so it's doing what's best for everyone, doing what's best for your staff, and that creates the culture. You know, the reason we call it loyalty brands is I have so many people loyal to me that are with me. I have one 54-year guy, two 35-year people, five 25-year, five 20-year people, I mean, and there's only one way to get loyalty and that's to give loyalty. So it starts with giving loyalty and wanting what's best for every human being.

John Hewitt:

That's the way you develop and keep a culture. But again, if you want, if you're listeners, you can find it on loyaltybrandscom, on why you should have culture and how to keep it once you have it. And great companies have culture. There aren't too many great companies in the United States. You know, whenever I do a seminar, or sometimes with 50, 100 people, I say let's agree on how many companies are great, national companies that we all can agree on, and there's never more than five, and the ones that come up are Starbucks sometimes and Disney, but there's few that everyone agrees on everyone agrees, though, and you think that's because most companies are focused on revenue growth, the customer, and then they.

John Hewitt:

They don't do as well for their team members most companies are most interested in the bottom line and not people yeah, that's a.

Andy Silvius:

That's a good one. I I mean I actually had a guest on my show a couple years ago who talked about something similar and having. He had made the mistake early on in his business where he was just driving hard to his team that they need to produce results and had customer focused goals. And then he started I don't remember the exact story, but basically started losing business. It started going backwards and he I don't remember why, but he recognized that his problem was he didn't take care of his team. And as soon as he shifted that mindset, his company started just rapidly growing and the work, the feeling of being in that environment, was just far better than before, because now they cared about their jobs.

John Hewitt:

The key to my success is happy, successful employees and happy successful franchisees. That's it. Those are the key words Happy, successful employees and franchisees yeah.

Andy Silvius:

So, with you coming from the world of franchising, what are some pros as well as cons of franchising a company versus owning a traditionally owner-operated business?

John Hewitt:

How much time do I have? So let me say this that you have to be careful when you get a franchise, because most franchisors fail In this country. Let me give you a quiz. Probably you're not quizzed that often, andy but, there are 4,000 franchisors in the International Franchise Association, and to be in the top 50 of how many number of locations do you have to have to be in the top 2 000 franchisors in this country?

Andy Silvius:

how many locations you have to have?

John Hewitt:

yeah, minimum of 10 20 okay, now now remember, mcdonald's has 70,000 and Subway has 55,000 and 7-Eleven has 88,000. And I had 6,000 at Jackson Univ and 4,000 at Liberty. But most franchisors fail. So you got to be really, really careful.

Andy Silvius:

But so one is make sure that.

John Hewitt:

make sure the key is do they have happy, successful franchisees? That's the key and they're required. Every franchisor is required to give you the name and phone number of every existing franchise and everyone that left. So you do your due diligence. Make sure if they don't have happy, successful franchisees, you're not going to be happy and successful. So that's the key in picking a good franchise.

John Hewitt:

But there's also a myth that, oh, it's cheaper to start on my own. I can just. I mean, why do I have to pay a franchise fee and an ongoing royalty? I mean, why do I have to do that? I can go out and save $50,000 and do it on my own. Well, the problem is, when you build a business, it costs time and money. And when you get a great franchise system like Zoom and Grooming our franchise, or Atax our franchise, or McDonald's or any great franchise chain, you get a system of doing business that's going to take you years and lots of tens and thousands of hours to develop. You're going to be years behind if you wait and don't join a great system so it's cheaper, and don't join a great system so it's cheaper and quicker to success if you acquire a great brand.

Andy Silvius:

But, on the other hand, you got to be careful because most franchisors fail, and so the key would be to do your due diligence with other franchise franchisees exactly. Are there any other signs?

John Hewitt:

call them and make sure they're not just happy. I have french, I've had franchisees that are happy and losing money, so they have to be at both those words they have to be happy and successful. They have to have. Successful to me means I've invested time and money and got a satisfactory return on my investment.

Andy Silvius:

Okay, if you had a young business owner in front of you asking what they should do to become successful in business, what advice would you give them?

John Hewitt:

Wow, if I have someone that hadn't started yet, I would say find something you love to do, work hard, persevere. The number one quality of success in anything, whether it's a sport, whether it's a relationship, a personal relationship, whether it's a business the number one quality is is perseverance. Nothing worthwhile comes without hard work. You have to work hard and andy. Life's too short. On monday morning, if you're going to work and you're not looking forward to it, you're going to the wrong place right.

John Hewitt:

To me it's if you believe, thank god, it's friday, you're in the wrong place Because to me, I love, love what I've done for 55 years. I love what I do, and Monday's a great day because the rest of the people are coming to work. I'm working 365, but the rest of the people are coming to work, and more things happen on Monday than Saturday, right? So, yeah, find something you love to do, work hard, persevere it's something I talk about a lot on my show.

Andy Silvius:

You know, just bringing up my past. But I I used to be a mechanic for heavy equipment, hydraulics and all that, and I did it for quite a few. I did it for it was almost 10 years, but there was a more days than not I I would come in and I would ask myself is this something I see myself doing the next 5, 10, 15 years down the road? And the answer was always no and I was not happy doing it. And then you become even more discontent the longer that goes on, because now you're thinking about, like, why am I wasting time doing something I hate?

John Hewitt:

But the key was to actually just take the risk, have a plan, take the risk and then execute on it. Yeah, it's often riskier to do nothing than to make a change, and people fear the fear, the change and the pain of change. And people fear the fear of the change and the pain of change. But, um, the biggest risk usually is just same old, same old. If you do what you always did, you get what you always got. If you're not, if you're not happy and excited and looking forward to monday um, you're crazy.

Andy Silvius:

Life's way way too short yeah, so I got just a couple more questions for you. This one I've been asking every guest that comes on the show because it's been such a big topic over the last, oh, year and a half, two years. But, uh, what are your thoughts on ai and how do you think it has affected business owners and entrepreneurs currently and how do you think it will affect affect them in the future?

John Hewitt:

I'm a bit ambivalent on AI. It's the talk of the town. One of the stocks I watch is the biggest AI company, nvidia, and it's gone crazy. It's tripled in the last six months and nine months. And, um, everyone's talking about and everyone's impressed by what it can do, but I've never seen anyone monetize it. I've never seen anyone improve their profits or turn a profit with it. So, um, I'm um, I'm keeping an eye on it, I'm watching it, I'm looking at others testing, but I do not see a useful, significant monetization for the companies in my industry and I haven't seen anyone roll it out and say look at, our profits are skyrocketing, our profits are 20% higher because we invoked AI. No one is monetizing it yet, so I'm not convinced that it's going to make a major change. Now it could, and I'll be the. I'm watching it and waiting for it and and I'll be I'll be jumping on that bandwagon if I see it working. But no, I'm not a fan.

Andy Silvius:

Okay, I like it. That's why I like asking everybody this question, because I get such a variety of answers and everything from both extremes to middle of the road to just you know it is what it is. So, all right, One last question before we wrap up if you could leave listeners with one actionable item that would have a positive impact on them today.

John Hewitt:

What would it be, and why?

Andy Silvius:

You have to be constantly improving.

John Hewitt:

You have to be constantly improving and I'm almost 75 years old. In a few weeks I'll be 75 years old. I'm still improving. I'm still learning, and it's a lot easier to learn if you embrace criticism, if you listen to everyone. Andy, you're a smart guy. If you and I have a disagreement, then I've learned that I'm never going to be 100% right.

John Hewitt:

And you're not going to be 100% right. The answer is somewhere in between. But if you're going to improve, you improve from being introduced to others that can help you. So I have a reading list I would say the most important author to read. I mean I have individual books, but I love Dale Carnegie, anything. So I would say read Dale Carnegie or take a Dale Carnegie course. And I've never I've sent hundreds of people to Dale Carnegie course and everyone improved, Everyone improved.

Andy Silvius:

Okay, awesome, john, it's been a pleasure having you on today and I appreciate you taking the time because I know you're a busy guy, so I think this is a ton of value for everyone listening, so thank you again.

John Hewitt:

Andy, it's my pleasure.

Andy Silvius:

Hopefully we can do it again sometime. Yeah, definitely. I just want to thank all of you guys too, Everyone who's listening today. If you enjoyed the show and you felt like it provided you value, I'd love to hear what stuck out the most to you in the comments. So leave us a message and we'll see you on the next one. Thanks for watching.