One of my first jobs growing up was at McDonald’s. I worked behind the counter, the drive-thru, even the grill, and had a chance to learn so much about how to run a business, what goes into a quality product, and how to take care of customers. I also got a behind-the-curtain view of one of McDonald’s secret weapons: it’s systems.
McDonald’s was a pioneer in creating consistency across its platform. A french fry in San Bernardino, California tasted exactly the same as it did in Syracuse, New York. This approach to regimented systems and procedures is explored in Michael Gerber’s classic small business book, The E-Myth, a favorite among entrepreneurs. So whether it was ringing up customer orders, mopping the floors, or flipping burgers, I was taking superfluous notes.
You can imagine my excitement, then, when a movie about the McDonald’s story hit theaters in 2016. I took my two kids on opening night! We even sat in our local McDonald’s parking lot afterwards discussing the film and eating the products.
The Founder, starring Michael Keaton, is a biopic about how McDonald’s went from a one-store restaurant to a multi-billion dollar global and cultural phenomenon. Keaton plays McDonald’s co-founder, Ray Kroc, who is largely credited with the epic rise of the hamburger chain. And while there are some disputes about some minor inaccuracies in the story, one thing is absolutely certain: Ray Kroc became incredibly wealthy. By the time he died in 1984, Kroc had an estimated net worth of $600 million, just shy of $1.5 billion in today’s dollars. Not bad for a guy who was selling milkshake machines out of his trunk just a few years prior!
But the most important thing about Ray Kroc’s wealth creation story (and why I think every small business owner should watch) is not simply that he created wealth in his small business, but how. Hint and spoiler alert: it’s not the hamburgers.
The movie covers the company’s approach to customer service, delivering a consistent product, and doing it quickly. It shows the mechanics of persistence, negotiation, and the beauty of the franchise model. But it also shows how much work, risk, and emotional energy go into all of those things. In the end, a company can spin its wheels, satisfy customers, and make a profit but still be missing a secret ingredient.
The company was growing and thriving but Kroc began to realize that he was spread too thin, busy, and hurting for cash. Kroc scratched his head at how much success he was feeling while his bank balances and credit limits were telling a much different story. Sound familiar?
Most small businesses I work with encounter a similar story. Be it a dentist, lawyer, or pet store, the business you create can give you a job, a nice lifestyle, and an occasional profit. But the ups and downs of the economy and business cycles can leave you feeling drained emotionally and financially. All the while, your landlord is quietly and passively getting rich.
The rest of Ray Kroc’s story should be obvious by now. He ended up getting in on the real estate that held each McDonald’s store, not just the franchise fees and royalties. Kroc figured out a way to not only sign up franchisees into the McDonald’s system, but to create tenants as well. He started collecting rent checks on these stores to finance the mortgages, accumulating both equity and appreciation in his sleep. Talk about passive income! In short, he made a fortune.
There’s no reason that other small business owners can’t do the same, especially with small business funding programs like the SBA 504 loan program that puts business owners on to their own wealth creation trajectory with a smaller down-payment and longer amortization than a conventional commercial loan. It’s why I made The Founder required viewing for my kids and the team at Fountainhead Commercial Capital, and encourage all small business owners to watch as well. You’ll be informed, inspired, and on your way to not only improving your business, but super-sizing your personal net worth as well.
Chris Hurn is an American writer, entrepreneur, and business executive. He is the Founder and CEO of Fountainhead Commercial Capital, a company that provides commercial real estate financing and conventional commercial loans for small business owners. He is the author of The Entrepreneur’s Secret to Creating Wealth: How The Smartest Business Owners Build Their Fortunes, a book that details financing for small business owners.