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How I discovered them and implemented them, and how they helped me start small and finish big with Subway!

Before I tell you my story, and the stories of the other microentrepreneurs in this book, and then get into the substance of the Fifteen Key Lessons, it’s important to explain how I discovered each lesson and how the lessons contributed to Subway’s growth, and to my current way of thinking about building any business. I wasn’t looking for these lessons when they became evident to me. Chances are you’ve already learned some of these lessons on your own, but you haven’t recognized them as lessons. Several of the lessons escaped me until I was well into the development of Subway Restaurants. But eventually they all appeared—some from my childhood, some from my business associates, and others from trial and error. Each lesson proved to be invaluable to me, and I believe they’ll be important to you, too.

Lesson One: Start Small. I learned this lesson while owning two newspaper routes. In my estimation, a newspaper route is one of the greatest training grounds for business. It’s a really small business, and yet it provides a vast array of experiences with all the fundamentals of business represented. You have to buy a product, deliver the product, provide a good service to customers, and of course you have to collect your money. It goes almost without saying that you’ll have to work hard to make a profit. Through rain, snow, hail, and on sunny days when you’d rather be doing something else, you’ve got to deliver your papers! A paper route is a great way to be introduced to the world of business, but actually, any small start serves the same purpose.

Some people have the idea that a small business doesn’t amount to much unless it delivers a sizable income, or it expands into an international enterprise. But I don’t agree. Just because it’s small doesn’t mean the business can’t grow. And while it is small you will have the time to learn the lessons that are essential to your future success. If you want to finish big, starting small is the best way to begin.

Lesson Two: Earn a Few Pennies. I learned this lesson at age seven when it was important to have pocket change. Collecting discarded soda pop bottles and redeeming them for pennies was an important lesson. Buried in the process of collecting bottles and redeeming them for a couple of cents was a lesson that said: It’s not how much you earn at first, it’s learning to earn something, even a few pennies. Exchanging bottles for money taught me the importance of the transaction in business. It set me up for bigger things to come. At the time, of course, the lesson didn’t interest me. I spent the money on baseball cards, comic books, and other things that kids enjoy. Little did I know that this was my first real lesson in economics.

Lesson Three: Begin with an Idea. This lesson was introduced to me at a family picnic when I was seventeen. Family friend Pete Buck suggested that I open a small sandwich shop. He saw a need for one, and that was the idea for Subway. We spent a few hours talking about the idea, and later that day Pete and I became business partners. The idea was so simple that we got started the next day.

Take a look around you. What needs to be improved? Where is there a void? Ask others for their opinions. Eventually you’ll find a good idea.

Nowadays, it seems all the big business ideas are coming from the recent technology of the Internet. Talk about starting small and finishing big, some of these dot-com businesses have created overnight billionaires! But even many of these companies started with a simple idea.

Lesson Four: Think Like a Visionary. After Pete and I agreed that we would start a sandwich business together, he then suggested that we set a long-term goal. That’s when I first realized the importance of creating a vision for your business. Pete suggested that we open thirty-two stores in ten years, a rather incredible goal, but big enough to capture my attention and commitment. That goal would help keep us focused during the difficult times that awaited us.

It’s not enough to have an idea. It’s important to look beyond the idea. If you implement the idea, then what? It’s really important to ask the “what” questions. What will result after we open the business? What can it become? What value can it provide? What good will it do for me emotionally and financially? What is it about this business that will capture my commitment, my energy, and money?

From those questions come the answers that will help you create a vision for your business. Think big when you create that vision! Give yourself the opportunity to get excited about your idea and the future.

Lesson Five: Keep the Faith. I learned this lesson within six months of getting into business. That’s when Pete and I realized our first sandwich shop was an economic failure. At that point, it would have been so easy to give up the belief in our idea, and our vision, and close our business. Fortunately, we didn’t take that approach.

Building a business is a challenging commitment and the challenge never ends. Many days the future of your business will look bleak. You’ll run short of money, you’ll lose customers, vendors will disappoint you, employees will sometimes take advantage of your business. Many things can go wrong. When they do, you can expect at least some of the people around you to say that you should forget your “crazy idea” and do something else, like get a job! But during these times you cannot lose faith in yourself or your business.

Starting a business as a teenager was actually a blessing for me. It never occurred to me that I couldn’t succeed, and people didn’t discourage me because, after all, I was young. There was always time for me to rebound. Consequently, on those bleak days that come with every business venture, I might have been disappointed, or emotionally down, but it never occurred to me to give up faith in what we were doing and what we could accomplish.

Lesson Six: Ready, Fire, Aim! I learned this lesson by opening the first restaurant without any experience. In other words, I learned it by doing it and not just thinking about it. With clarity about the idea for Subway, and at least a glimpse of the vision, I went to work the next day! Someone else might have taken time to plot out the job requirements and to write a business plan, but doing those things may have prevented me from actually starting. There’s a good chance the planning process would have consumed my energy. Or I would have decided that what I thought was a good idea wasn’t such a good idea after all.

As I’ve discovered on many occasions since starting Subway, it’s better to fire in the general direction of where you want to end up and then adjust your aim, than never fire at all. Get started. Move in the general direction of where you want to go. Make course adjustments along the way.

Lesson Seven: Profit or Perish. Early in Subway’s development I found out that it’s easy to make a lot of sales and still not make a profit! That’s when I learned about profit or perish. One day my accountant congratulated me for generating annual sales in excess of $1 million for the first time. But in the next breath he also explained that unfortunately I had lost $100,000 that year! How could that happen? It didn’t take me long to figure out there are only two ways to make money: increase sales and decrease costs. Believe me, this is a lesson worth learning as soon as possible. It’s a lesson that we teach our franchisees at Subway.

Lesson Eight: Be Positive. I learned this lesson in the midst of building the first few Subway shops. From an economic point of view, those first shops were disastrous. In the process of locating and building those shops, I made many mistakes, as might be expected of someone who was inexperienced and had no real plan. The early failures could have boxed me into a negative mind-set where it might have been nearly impossible to solve problems and make real progress. Fortunately, that’s not the path I chose. I’m sure it helped that I was young, and I also had a business partner who set a positive example. Where there were challenges, we sought solutions. And even when one solution didn’t work, we sought another and another until we worked through the challenge. It’s a lesson that I continue to practice every day that I’m involved in business.

When you’re faced with seemingly insurmountable obstacles, it doesn’t help to be negative. Keep a positive mind-set.

Lesson Nine: Continuously Improve Your Business. This is a lesson that may not become apparent until you’re faced with competition. Businesses do not stand still. They may fall behind some times, but those that succeed do so by continuously improving their operation. Progress requires that they introduce new products, new ways to serve their customers, new ways to market, new ways to get ahead of everyone else. This is not a once-and-done experience. It’s continuous.

Even today, when we introduce new ideas at Subway, our competition won’t be far behind. The only way to stay in business is to continuously make these improvements.

Lesson Ten: Believe In Your People. One of the greatest assets in any business is people. That’s been reinforced for me over the years, but even so, I learned this lesson the hard way. You’ll enjoy the story that follows if you’ve had to learn this lesson the hard way, too.

One night I walked into a Subway shop and found a mess behind the counter. There was food everywhere. I read the riot act to the employee who was working alone. “You’ve got to keep this place clean,” I demanded of him. I helped him clean up and then sternly said, “Don’t let this happen again.” And I left the store.

The next day, much to my surprise, I discovered that store had set a new sales record for the most sandwiches sold in the shortest period of time. That’s when I realized the place was a mess because our single employee was working hard to serve our customers. As I looked further into the matter, I discovered he had experienced a rush of business just before my appearance at the store. He never had a chance to clean up the mess, and I never gave him a chance to explain.

That night I went back to the store to apologize to our employee. But he told me not to worry about it. He said it was okay. Intuition told me it wasn’t okay, so I coaxed him to open up. “Are you sure?” I asked. “I feel bad about what happened.”

He then admitted that he was angry with me, and he wasn’t able to get his work done because he was thinking about how badly he had been treated. An hour or two later, he said he was still angry! That’s when he decided he had to do something to work out his aggression. “After you left the store,” he said, “I went in the back room and poured a gallon of oil down the drain.” That’s when I learned that you better believe in people...or some of them might get even with you.

Lesson Eleven: Never Run Out of Money. I learned this lesson as a kid, and I bet you did, too. Almost all of us have played the game of Monopoly. On a cold winter’s night, or a rainy afternoon, mom or dad would pull down the Monopoly box, spread open the board, count out the money, and set us up to play the game for several hours. It was a lot of fun...so long as you didn’t run out of money. As long as you had money, you remained in the game with everyone else. But if you ran out of money, your game was over. You’d have to watch television while everyone else continued having fun playing the game!

Consequently, since then I’ve realized that you must never run out of money. You can make mistakes, you can have a bad day, a bad week, even a bad year. You can get low on money, but you must never run out of money!

Lesson Twelve: Attract New Customers Every Day. As I was preparing to open our first Subway shop I learned the importance of attracting customers every day. That first shop, as well as every additional shop we opened, was surrounded by potential customers. However, that fact didn’t guarantee us a successful business. One day it occurred to me that we couldn’t grow unless we could continue to attract new people to our location. That’s when I began to understand the theory of Awareness, Trial, and Usage. It became important to me to make people aware of our shop and then invite them to try our product. Then, we had to turn them into regular users or customers. Once I understood this lesson, it became my job to attract new customers every day.

Lesson Thirteen: Be Persistent: Don’t Give Up. Many days it would have been easy to throw up my hands and walk away from Subway. I often remember thinking, “How will we make it? We don’t have enough money.” But in the back of my mind there was this almost self-evident lesson that said: If you quit, you fail. If you give up, you’re out. If you stop playing, you can’t play anymore.

Not giving up requires something more than keeping the faith and maintaining a positive attitude. It’s all about persistence. If you don’t have faith in what you’re doing, or faith in yourself, and if you can’t think positively about your situation, it’s nearly impossible to be persistent. Some days you’re going to feel like your business is rejecting you, or you may feel like separating yourself from the business. On those “blue Mondays”—which surely will occur—you must always find a way to persevere. It’s perseverance that enables people to keep going so that they can become successful. I think we can all look back on something in our lives that we gave up on too soon. Had we remained committed to a plan, a goal, or a vision, had we persevered in spite of the obstacles, things may have turned out differently. In business, it’s important to work through the issues, no matter how difficult. Otherwise you could find yourself giving up and never finishing big. People who give up ultimately have to go back and start all over again. Never give up!

Lesson Fourteen: Build a Brand Name. Like most adults, I learned this lesson at the supermarket. Let’s say you want to buy a carton of cereal. At the supermarket, you’ll find an entire aisle with many brands to select from. There’s cold and warm cereal. Sugar-free cereal, protein-enriched cereal, and high-fiber cereal. There’s cereal with fruit, cereal that’s crunchy, and cereal with famous sports figures on the box. And look, there’s generic cereal, too!

If we compare the labels of these various cereals we’ll find that the brand name products are pretty similar to the generic products. In fact, the only real difference appears to be the price. The generic cereal costs less. So what are we going to do? More often than not, people will spend a little more and buy the brand name.

The fact is, branded products sell, and they sell for more than unbranded products.

Lesson Fifteen: Opportunity Waits for No One. When my business partner, Pete Buck, who you’ll soon read more about, invited me to go into business with him, I had the choice of saying yes or no. If I had said no I don’t know what I’d be doing today, and there’s a chance Pete would have offered the same opportunity to someone else. Of course, it was easy for me to say yes because of the circumstances. First, I had nothing better to do, and second, Pete was investing the money. Nonetheless, when you’re faced with opportunity it’s important to be prepared to say yes before the opportunity goes elsewhere.

This is not to say that I believe in taking every opportunity that comes along. But you’ve got to say yes to something if you want to start and build a business.

* * *

There you have them. Now that it’s clear how I learned these Fifteen Key Lessons, and what they mean, let’s move on. I’m going to tell you my story in the next chapter, and then, through the resourceful research and writing of my co-author, John Hayes, I’ll tell you the stories of other microentrepreneurs who collectively have implemented all of the lessons in their businesses. You’ll find these stories in Chapters 4 through 18. Finally, I’ll conclude the book with some ideas and information about how you can apply the lessons that I’m sharing with you. You’ll also find more information in the Appendixes about microenterprise, microlenders, and how you can start a Micro Investment Lending Enterprise in your city.

Besides the help these Fifteen Key Lessons gave me, I truly believe they can help most people who start small. Thirty-five years ago, just out of high school, I planned to be a medical doctor. One day Pete Buck, a family friend, suggested that I open a tiny sandwich shop to earn my college tuition money. What I didn’t know—what no one knew—was that Pete’s idea would lead to the creation of Subway, the world’s largest chain of sandwich shops, and for many years, the world’s fastest-growing franchise company. Even in my wildest dreams I couldn’t have imagined how this opportunity would change my life, or how the resulting business would impact the lives of thousands of people worldwide. Now, with more than 36,000 restaurants in more than ninety eight countries, and annual sales in excess of $16billion, even I admit it’s an incredible story.

But beyond the importance of the Fifteen Key Lessons, there’s a valuable take-away message that I want to be sure you understand before we go any further. You can adapt these lessons to your business, either one that already exists, or one that you plan to start. You can use these lessons to build an exciting and rewarding business. You can use these lessons to start small and finish big. I’ve done it, others have done it, and you can do it, too!