Topic for discussion: What was the observation Anne made that had a profound impact on the rest of her life?

Possible answer: People were buying more pretzels than slices of pizza. Anne even told the owner that they should stop selling pizza. And though it took him several weeks to agree with her, after they focused on pretzels, sales increased.

Anne's insight from that experience was that plenty of money could be made by selling one simple bread product.

You think about it: Do you think you might spot some opportunities if you stopped long enough to question everything you are now doing? What should you stop doing to make room for what could add more value to your business?

Topic for discussion: Why did Anne start a business?

Answer: We learned from the television show that her husband Jonus wanted to start a ministry that would need funding. In our interview we learned that he was burned out and wanted to do something other than work just for money. His idea was to offer family and marriage counseling on a free or low-cost basis to the people in his own community and target his efforts to the religious group he has been part of all of his life.

It makes perfect sense that he would want to offer his services to many who could not afford to pay. The couple decided that Anne would work to earn enough to support their simple personal lifestyle and the counseling center. It was while working for someone else that Anne had the idea to start her own business making and selling pretzels.

Topic for discussion: Why is the reason you start a business important?

Answer: The motivation behind starting a business will guide your decisions. Since Auntie Anne's was born to give, she could not comply with the bankers' requests to stop giving away money. Had her purpose been to make money for herself, she would have had no trouble working with a bank. The reason you start a business will be clear to others. Anne has been able to attract franchisees who also want to work in a business that is committed to giving. People want to spend their time doing something important.

On the surface, Auntie Anne's sells a fabulous tasting pretzel, but so much more is happening here. For example, jobs are being created for entry level workers; and, the franchisees are encouraged to find charities in their own communities in which they can invest. It is very difficult for most companies to recruit franchisees and this has never been the case for Auntie Anne. She not only has a great product, she has a heart for people and this is appealing. Anne believes there is power is the concept of giving. This power energizes people at a level which never could be achieved if the goal is simply to make money. If you start a business, you must be interested in other people – these are your customers – more than you are yourself.

You think about it: Why did you start your business in the first place? Have you achieved that goal? Do you think you have the best reason to be in business? Do you think selfishness has held you back in any way? What can you do to be more generous?

Key Idea #2a: Create your unique selling proposition. Rosser Reeves went to work in 1940 for the New York City-based advertising agency, Ted Bates and Company. Twenty-one years later he published his thoughts about advertising in a book called, Reality in Advertising. Mr. Reeves is considered to be the inventor of the concept, USP, or unique selling proposition.

In Reality in Advertising, he attempts to clarify his definition of unique selling proposition. He says:

Topic for discussion: Why and how did Anne create her unique selling proposition?

Answer: I want to suggest that Anne was smarter than Mr. Reeves. While he was in the business of selling anything and had to write ads that would cause a consumer to let go of cold hard cash in exchange for the item Mr. Reeves was writing about, Anne took his idea a step further.

Anne created a unique product that customers sell for her. Anne's unique selling proposition is a flavor sensation. It is a satisfying bread product that has to be experienced to be believed. It is wholesome because it is low fat and made from wheat. Historically, bread is considered to be, "the staff of life."

Anne is full of common sense which is the reason she and Jonus knew their pretzel had to stand out against the competition. In the Pennsylvania Dutch region of this country, there are soft, hand-rolled pretzels everywhere. Anne had never read Mr. Reeves book. She just knew she had to come up with an over-the-top flavorful product or she would have to go back and work for someone else.

Working at night in their own kitchen, Jonus convinced Anne to let him add a secret ingredient to the dough. The result is what we taste today. It is a secret and just like Coca Cola, the recipe is under lock and key.

Create a truly unique selling proposition and you don't have to hire an ad agency to crank out copy that may or may not deliver the sales.

You think about it: What is ordinary about your product/service? What is unique? What do customers say about your product/service? What would make your product/service more unique?

Key Idea #2b: Ask yourself, "Can I franchise my business?"Anne and Jonas had seven stores and they were exhausted. They began to allow others to sell their product with a licensing agreement, then they realized that they would be better off developing a franchise business.

Topic for discussion: How does a business owner determine if a particular business will succeed in a franchise format?

Answer: First, you need to succeed yourself. Establish one profitable location then hire an expert in franchising to look at your business. This consultant can guide you through the process which does involve federal regulations. Carl makes it clear that an idea is not good enough, you must have tested the idea and be able to prove that it is a viable business.

We learned this same lesson from Gary Solomon, the founder of FastSigns. He ran his own location profitably before he brought new owners into the organization. Believe it or not, there are franchise concepts out there that have not been through the reality testing Anne and Gary applied.

Don't even think of taking money from a person and making them a franchise owner of an operation that you yourself have not made successful.

You think about it: Do you have more customers than you can serve? Do you have more locations than you can manage? Do you believe customers in markets where you do not now have a presence would buy your product/service if it were offered there?

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Key Idea #3: Put systems and teachers in place to develop a franchise organization. If the way in which you handle the operations of your business is not clearly defined, you simply cannot bring in franchisees.

Topic for discussion: What does a franchisee expect from a franchisor?

Answer: Systems and training. The whole point of selling a franchise is to offer first a great product then a turn-key plan for success based upon an already existing track record.

If every detail is not spelled out, the franchisee is short-changed and the franchisor does not have consistency of brand across all locations.

Anne is a teacher and so is every great business owner we know. Growth is all about extending yourself and your ideas through systematic teaching. The two-week start-up training new franchisee owners receive is just the beginning. Every day is a learning day at Auntie Anne's

You think about it: What do I need to teach others in my organization? What needs to be learned? Who could teach us?

Key Idea #4: Find an angel when the bank turns you down. As most small business owners do, Jonus and Anne financed their start-up and growth from their own pocket.

Topic for discussion: Why did Anne go to a bank and why did they turn her down?

Answer: Growth takes cash. Anne's vision got bigger than her cash flow so she hit the pavement for a bank loan. Banks turned her down because she was giving too much money away.

Rather than give up giving, Anne gave up on the banks. She refused to stop contributing to the counseling center as this was the original purpose of the company. A friend told her about a wealthy chicken farmer who enjoyed eating Auntie Anne's Pretzels so Anne went to visit him.

She told the farmer that she needed a loan to grow and he was happy to accommodate. The lesson here is that wealthy people want to invest in ideas they love and they want to earn money on their money. By creating a business-to-banker type of relationship, Anne was able to get the cash without giving up any ownership.

The angel investors are often more like venture capitalists. We read in the Wall Street Journal about the ones who want to buy- in, not make a loan. These angels are interested in putting cash in to grow a business; and for that cash, the founder has to give the angel part ownership.

Anne is teaching us here that all angels don't demand ownership.

You think about it: What would you do to grow your business if the chicken farmer loaned you a million dollars with favorable terms? Where could you find an angel?

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Key Idea #5: Be good to attract good. We have not attended an Auntie Anne's franchisee convention but we can guess that it is full of people who want to make a living by doing good. This guess is based upon the law of attraction. Like attracts like.

Topic for discussion: Why does Anne think her business is successful and does what she thinks influence the type of people who buy an Auntie Anne's franchise?

Answer: She said, if you operate by the golden rule, if you seek to understand others before you try to get they to understand you, if you do more for people than they ask of you, if you love the people in your workplace, you will be successful.

Next we get a clue into Anne's definition of success. She said, "without these things you may make money, but you won't feel the sense of satisfaction and fulfillment."

In, "Wall Street," the movie, Gordon Gekko, played by Michael Douglas is a handsome, hardbody, hard-personality ruthlessly in pursuit of money. He said, "If something's worth doing it's worth doing for money." Isolated, that sounds logical for any business owner. In other words, our business exists to earn profits and those profits make it possible to hire people and serve customers.

However, Gekko also said, "If you need a friend, get a dog." This makes us think about why so many in the country spend so much time, money, effort and emotion on their dogs. You've seen the trend! As dogs age, owners are spending thousands for surgeries and medications to try to keep them alive.

When it comes to people, Anne Beiler is on a different planet from Gordon Gekko. Anne Beiler may or may not have a dog but we are confident that her human relations come way before the relationship she has with an animal.

Why does Gekko say dogs are better friends that people? Because he has never approached another person the way Anne approaches people. Anne's parents taught her the Bible and she lives close to its teachings.

In Luke 6:38, the Bible says, "If you give to others, you will be given a full amount in return. It will be packed down, shaken together and spilling over into your lap. The way you treat others is the way you will be treated." This principle is a key to understanding Anne. With Gekko, he never gave anyone anything and doesn't think it important to do so. This is why he needs a dog.

Anne Beiler and Gordon Gekko are both capitalists. Anne, however, is more complex. She wants more than money from life. While her CFO and CPA keep track of the numbers at Auntie Anne's, Anne keeps track of the spirit and vision of the people who are producing the numbers.

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Key Idea #6: Put people ahead of profits. It seems as if each lesson we learn from Anne keeps coming back to this idea.

Topic for discussion: Why do feelings matter in the workplace?

Answer: Because when people feel good, they do good and when they feel bad, they do bad. The essence of Anne's customer service philosophy is to be nice. She says, just be nice to customers. The problem with this is, you can't be nice if you feel bad. There are so many books, and audio tapes and motivational speakers running around with this message it seems as if we should all know this by now.

Our job here though is to understand why any one business is successful and in the case of Auntie Anne's, she says her number one job as founder has always been to take care of people's feelings. Today, more than ever, she is free to do this.

As much as any business owner we have studied here, Anne Beiler focuses on feelings. Granted, this idea may be more important when the workforce you manage is on the frontline with customers everyday. In other words, maybe your IT guy who never sees a customer doesn't have to feel good to do good.

Ideally, every person should be happy in life and therefore happy in work. But that is simply not the case. Anne believes that the old boss-talking-down-to-subordinate model is passe because it makes most people feel bad, including the boss. It doesn't work anymore because most people are not like Gordon Gekko. Most people aren't just interested in money. They are interested in feeling good, doing good and making their world better.

You think about it: What do you do that you know makes people feel good? What do you do that you know makes people feel bad? Do you think about how people feel when you in the room? Would the people who work for you rather you be in the room or out of the room? Do you think Anne's number one job should be your number one job? Do you think that reaching $232 million in sales has anything to do with Anne's understanding of what makes people tick?

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Key Idea #7: Hire expert advice when you enter uncharted territory. Anne knows bread and she knows people but when she thought about franchising her business, she hired an expert to guide her.

Topic for discussion: How can a small business afford all the experts and consultants who are available to offer advice on every topic imaginable?

Answers: Most don't. Although, carefully chosen experts can save time and heartache. If you use Anne's rule of thumb, you hire experts when you arrive at a place you've never been before that seems to be confusing and perhaps fraught with potential legal problems. While Anne didn't hire a consultant to evaluate her pretzels, she did hire the well-known company, FranCorp to answer the question: Is franchising a good idea for Auntie Anne's?

When the answer to that question turned out to be yes, Anne hired the firm to put the documentation in place so that Auntie Anne's would be positioned properly for long-term success.

So much about building a business is a "do it yourself" project. But, when you begin to form financial partnerships, it is wise to have the contracts and supporting paperwork put in place by people who know the ropes. Even though there are dollars out up front, it is more cost-effective to pay professionals at the beginning than when a problem arises that could have been prevented. Rule: It is cheaper to have attorneys at the beginning of a relationship that at the end of it.

One mentor told me, "If you are a capitalist, you will be sued." Everyone who has run a business for any amount of time knows what I am talking about. Anne was smart and is smart about all the legalities. Don't be cheap or naive when you come to a crossroads. Hire someone who has a map.

You think about it: Are you over your head when it comes to technology? Would a human resource consultant be able to improve or create an employee manual for you? Might there be an insurance expert who could save you dollars? If your team isn't working smoothly, should you hire someone to lead an in-house seminar or help you figure out who needs to be fired?

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Key Idea #8: Create a product that makes people say, "wow". Jonas Beiler found a secret ingredient which makes the pretzel taste fabulous and different from any other pretzel. Jonas' recipe is special and Anne is convinced that if a customer says, "Wow" about your product, you have a great chance to succeed. Most customers of Auntie Anne's either say, "Wow" or think, "Wow" when they taste the product.

Topic for discussion: How does a business owner find out what the customer thinks?

Answer: In Anne's case, she started selling baked products when she was 12 years old. When she opened her own shop in 1988, she was standing behind the counter and watching her customers bite into the product and then react. Anne is always looking for someone to say, "Wow." This is not sophisticated research, it is simply evaluating the customers you have in front of you. Soft pretzels have been enjoyed by people in Pennsylvania and New York for years and Anne figured consumers in other areas would love them too. She was right.

You think about it: How do you get close and stay close to your customer? When was the last time you watched a customer engaged with your product or service?

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Key Idea #9: Teach people to be nice. While Anne will not tell the secret ingredient in her pretzels, she is happy to tell her secret to repeat business.

Topic for discussion: What does Anne believe repeat business is all about?

Answer: It is all about nice people. Anne is proud of her product but she tells us that repeat business will not happen if the person serving up the product or service offers a lack luster performance. Anne said you do not go back to places where you are treated with ambivalence.

We have studied other companies that say you can't teach people to be nice, you have to hire nice people. We tend to agree that it is very difficult to teach how to be nice and it would be impossible to teach a mean person to be nice. We think Anne's common-sense approach to selecting franchise owners serves as a near-perfect screening device. Anne won't sell a franchise to a person who is not nice and that person will hire people who are either nice or young enough to be taught! This is the like-attracts-like strategy.

When you look into the eyes of Anne Beiler, you see a nice person. However, a basically nice person still needs to be given direction and that happens constantly in a well-managed Auntie Anne's. Employees are taught to look customers in the eye, to smile and to engage.

You think about it: Do you have any employees who interact on a regular basis with customers who are not nice? How do you measure nice? Is being nice as important to you as it is to Anne?

Key Idea #10: Put a leadership succession plan in place. Anne said she wants this company to out live her. She has acted on her goals by recruiting Sam Beiler and naming him President of the company.

Topic for discussion: What qualified Sam to be President of Auntie Anne's?

Answer: First, Anne trusts him. They both used this most important word when talking about the success they have had at passing the leadership torch. The inability to place trust in another person is probably the biggest reason entrepreneurs fail to put a leadership succession plan in place.

Most companies die with their founder or they die when the founder decides to quit working. Some would throw these types of companies into a category called "lifestyle companies." In other words, the company was a vehicle for the founder to live a certain kind of life. We disagree.

Most small businesses would-could-and-should have a life separate and apart from the founder. If the founder would first learn to trust, it opens the way so the founder could find people in which to place that trust. And the business, with all its customers, suppliers, and employees, should continue to perfect relations, systems, and their contributions to their community and world.

Happily this is the case with Anne.

Topic for discussion: What prepared Sam to be President?

Answer: He spent years in the field. He and his wife became Auntie Anne's franchise owners in 1989 then he became an employee of the corporation working with franchise owners. He was perfectly groomed. You might wonder about his last name being the same as Anne's. The two are cousins. The fact that Anne and Sam are related could bring up the seemingly endless discussion around family-business issues. Our observation of this situation is that endless communication internally in Gap and externally to the franchisees has made the family relation a non-issue. Sam worked his way to the top. He was not given anything he did not earn simply because his last name if Beiler.

You think about it: What keeps you from passing the torch? Do you have someone you are training that can move into your place soon? Are you nervous that if you pass the torch, you won't have anything to do? Do you think your life might feel empty if you don't have to be in the office everyday?

Review Exiting at the Top.

Key Idea #11: Make your mission statement inspirational. Anne says it is easy to dream. It comes naturally. But to take a dream and to shape it so it becomes a value proposition around which you can develop a business model, then a business plan with a return on investments, requires insight, information and even more -- it takes inspiration. Don't just dream; shape your dreams and build your reality.

Topic for discussion: Why LIGHT as the mission statement and why does it work?

Answer: Mission statements are plastic, even transparent; and most are too long. Anne told us that the company's first mission statement was several paragraphs. Later she decided that it should be a useful tool -- a mission statement should be easy to remember. A team of people at Auntie Anne's came up with the acrostic they use today.

The word, LIGHT, is a working philosophy for Auntie Anne's and it feels bigger than a mission statement. That is a good thing. The bigger you can ask a person to think, the bigger they will act.

L stands for lead by example. This statement disqualifies any person who is talking all the time, right? A leader at Auntie Anne's was a doer and can still do all the jobs if necessary. A leader at Auntie Anne's doesn't tell a person to be nice, the leader is nice. Lead by example is a goal that is never fully achieved. Anne is asking leaders to keep working on themselves as she is continually working on herself.

I stands for invest in others. Invest to us sounds like long-range thinking. Invest implies teach, coach, nurture, love and care deeply about the other person. This is hard too!

G stands for give freely. Go back and read what we said here about why Gordon Gekko needs a dog. Selfish people have rotten lives. Generous people have lush, rich, lavish lives. Anne is wise to permeate the organization with such a challenge.

H stands for honor God. This is a religious statement. The company lays it's heart open for examination. Fine. If you don't believe in God and if you don't want to honor God, then you don't belong at Auntie Anne's. Every company should be this clear about its underlying belief systems.

T stands for treat others with respect. We see this at every great company we study and it is a required way of thinking for any entrepreneur or leader. If you want people to follow you down a path to achievement, those people must sense that you respect what they are bringing to the journey.

You think about it: Should your mission statement be shorter? More to the point? More beliefs oriented than action oriented?

We invite your comments, suggestions and questions.

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