Lesson #5: Make Business Personal through Your Relationships

When DeLuca opened up his first Subway store, it was a one-man operation. Occasionally, however, he would convince his mother to help him out. Together, they would drive around town every Friday to visit their four main vendors – the people who supplied them with all of their meat, bread, vegetables and paper. But it was not to pick up any of the supplies.

“It was a little five or 10 minute social visit,” says DeLuca. “We’d come with a check and they’d say, ‘How’s business?’ and we’d say a little something. And they’d be fine with it. They knew we were always there to pay the bills, even though we never paid as much as we bought and balances always built up.”

Before DeLuca’s business began to pick up, he did not even have enough money to pay for all of the sandwich ingredients that he was buying. Indeed, he was steadily amassing a debt to each of his suppliers. But the vendors all knew DeLuca and his mother personally; the two of them had taken the time to get to know each vendor and because of that, they had established strong, personal relationships. DeLuca’s suppliers knew him, and even if they did not get all of their money on time, they knew they would down the road.

“If we didn’t drive around to deliver checks, which is a totally inefficient thing to do,” says DeLuca, “I am positive that we would not have built the kind of relationship that allowed them to be as comfortable with us.”

DeLuca does not only make it a priority to get to know his vendors, but his franchisees and employees as well, saying, “More is more.” He sponsors new franchisee parties and celebrates company milestones together. He even hosts a “movie of the month” party, where he rents out an entire theatre and invites the whole company to come and watch sneak previews for free. DeLuca also insists on everyone being able to address top management by first name only.

“It's not necessary to be so structured in this world. With all the people who work here, whether you are real structured or not, it is not going to affect how much work they do,” he says. “People have inside of them a certain work ethic, and, if you appeal to them nicely, they'll respond and give all they can give.”

As a large result of DeLuca’s people management skills, Subway has consistently ranked as one of – if not the – best franchise opportunity for entrepreneurs. “The stores we do open tend to stay open. The closing rate is very, very low,” he says. “So our franchisees tend to have a great enthusiasm for expanding. In fact, every year the ratio of stores built by existing franchisees is something close to 70 percent.”

Throughout his career, DeLuca emphasized the importance of building strong personal relationships. From his vendors to his employees, DeLuca made sure that they understood just how valuable they were to him.

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