Has Your Franchise Got These Four Core Elements Right?
A successful franchise business opportunity doesn’t just happen by chance. For your franchise investment to become profitable, you need to be dedicated, passionate and work hard. But more than this, you need to have the core elements in place to succeed.
Your franchise business model can be broken down into four core categories. This allows you to evaluate the effectiveness of each area of your business and identify any areas for development or improvement. Reviewing your franchise this way can help you create a plan for growth.
So, can you be confident that you’ve got the following elements of your franchise right so that you’re set up for success?
Strong leadership can turn the simplest franchise business opportunity into a huge success. Similarly, your franchise investment can fail if you lack basic of leadership skills.
When you become a franchisee, you need to take on many roles. However, none will be as important as your ability to lead and motivate your employees so that they help you deliver franchise growth and profit.
Perform a self-assessment and be honest with yourself about your existing skill set. If you feel that you don’t possess any of the following essential characteristics found in many successful leaders, then you need to consider how you can improve your leadership qualities:
- Vision: Inspirational leaders can look past the here and now and visualise a future and develop a plan that the whole team want to be part of.
- Expertise: Franchisees that have a full understanding of all elements of the business are better placed to be effective leaders. They know the challenges that their employees may face and can help to overcome them.
- Communication: Leaders not only communicate openly and honestly but can effectively listen too. They take on board feedback from their employees and are willing to implement change based on the ideas, opinions and concerns of the team for the good of the franchise.
- Respect: Strong leaders understand that the way they treat their staff impacts the way their staff treat customers. If employees are respected, they’ll feel valued and have a sense of job satisfaction. By respecting the team, leaders can develop mutual trust throughout the franchise.
The way you lead as a franchisee is one of the only elements of the franchise business model that you truly control, so take ownership of it and become the best leader you can be.
2. Cash flow
Cash flow management is one of the toughest challenges for any business, including franchises. The inability to manage cash flow and maintain profitability levels is the most common reason that many small businesses fail.
When you first start your franchise, you may have working capital to keep you afloat during the early months of trading, but sooner or later you'll need to get a grip on your finances. Here are some tips on how to effectively manage your cash flow:
- Forecast: Your franchisor should be able to give you an idea of what a typical cash flow forecast looks like for a business of your size. Use this as a guide and regularly update your projections so that you have an accurate cash flow projection for the next 3, 6 or 12 months. This will help you to identify any issues before they arise. By being proactive, you can put a plan in place to cover any shortfalls.
- Save when you can: Without a doubt, there will be months where your outgoings are higher than your incomings. When your franchise is performing well, put some money aside to cover your expenses for the months when cash flow is a concern.
- Spend your money wisely: Although it’s important to save, you also need to spend money to make money. Make sure that you boost the efforts of franchisor’s national marketing campaigns with local promotional activities to keep the customers knocking at your door.
And marketing is another core element of your franchise business opportunity. The franchisor will take care of brand-level advertising, but you'll need a local marketing plan too. If your franchise is based where you live then, you'll probably know what it is your target customer base want and need. If you're not familiar with your franchise territory, then you need to research the local community.
Here are some ways that you can drive the success of your franchise:
- Create a customer database: Encourage repeat business by adding value for your customers. If you collect email addresses at point of sale, you can then send regular emails with content relevant to your business. By providing industry news as well as hints and tips, you'll remain front of mind when the customer needs to make a repeat purchase.
- Support your community: By sponsoring a local football team, volunteering at a charity event or hosting networking evenings at your premises, you’ll become known and respected in your area.
- Look for PR opportunities: Writing an article for a community newspaper or being interviewed on a local radio station, you’ll be able to raise awareness of your franchise without the need for a big marketing budget.
It is the responsibility of the franchisor to develop a detailed operations manual for you to follow and run your franchise according to the franchise business model. It will have been used as the basis for your training, and so should also be used to train your employees.
As a franchisee, the operations manual should be your first point of reference when understanding the best way to run your business. If you're a new franchisee, or you're new to a particular industry, you may have to consult the operations manual regularly.
During this time, if you feel that the operations manual is not comprehensive enough or doesn't give you the information you need to run your business correctly, you should raise it with the franchisor.
After all, the operations manual is one of the critical elements of the franchise system and is part of the reason why you chose to make a franchise investment rather than starting your own business from scratch.
The Editorial Team, Point Franchise ©
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