7 Tips for Building a Profitable Franchise
Profitable franchise units don’t spring up overnight. But there are certainly some tips and tricks you can take on board to help you reach your most ambitious business goals.
It’s one thing to follow your dream of becoming the boss, but another thing to turn your passion into profits. So, how do the thriving franchisees do it? And how can you become just as, if not more, successful? We’ve outlined some profit-driving tips that should help transform your business…
1. Look at your costs
While you should avoid cutting costs at the expense of the quality of your product or service, if you keep a close eye on your outgoings, you can make your business more profitable. The four cost areas to think about are your suppliers, finance, premises and production.
These are some examples of the questions that you should be asking yourself:
- Could I negotiate a better deal with my supplier?
- Am I using loans and overdrafts effectively?
- Am I getting the most out of my space?
- Can I make my production processes more streamlined?
2. Set realistic and achievable goals
Profitable franchise units are owned and operated by entrepreneurs who are willing to take risks to become the best. They're driven by their passion and the pursuit of their goals. But drive and ambition are meaningless when there’s no map to follow to achieve the goals, and when the goals are unrealistic.
Set SMART goals to help make sure your business has focus and you have a clear path to success. They are:
Creating a detailed and effective franchise business plan will enable you to know what you want and how to get there. It will also help to identify which opportunities to take advantage of and which challenges you may come across during your franchise journey. As the saying goes, fail to plan, plan to fail.
>> Read more:
3. Measure your achievements
You’ll need to make sure that you are operating as efficiently as you can. Define the key performance indicators (KPIs) that are most appropriate for your business so you can clearly measure your goals. A KPI is a measurable value that shows how efficiently your franchise unit is achieving your business objectives. Below are some examples:
- Growth in revenue
- Number of leads
- Net profit margin
- Monthly website traffic
- Employee satisfaction
What do good KPIs help achieve?
Objective evidence of progress towards achieving your desired result
Comparison that shows the degree of performance change over time
4. Maintain accountability for achieving these goals
In order for your franchise unit to thrive, it’s important that there is a level of accountability for achieving your business goals. Helping your employees understand how their work contributes to your franchise unit’s success is key to employee accountability. You should have a process in place where you or the management team check in with your employees’ achievement of their goals. This check allows you to adjust goals that are no longer SMART and remind your employees that you care about their hard work and are observing how they progress.
5. Focus your sale efforts
When it comes to boosting your profitability through sales, there are two key strategies. These are selling more to the profitable customers you already have and enticing similar customers to your business who you can also sell to.
Try to concentrate your sales efforts on customers that provide high sales and high profit. But there is also room to make your franchise unit even more profitable by nurturing customers that provide high profitability on low sales.
You could consider these three techniques to sell more to your best customers: up-selling, cross-selling and diversifying. Let’s look at a quick breakdown of what these terms mean:
- Up-selling is a sales technique where you try to sell the customer more expensive products.
- Cross-selling is selling an additional, often complementary, product to a customer.
- Diversifying is recognising the needs of a customer and developing a new product to meet them.
>> Read more:
6. Move into a new market
Expanding into a new market can make your franchise unit miles more profitable. But it should be approached with caution, as it does come with a significant amount of risk. This is why research is so important before you make any expensive mistakes. Think about how you can adapt your existing products or service to tap into a new market. Also, make sure you have a full understanding of who your new customers are, why they will be interested in buying from your franchise unit, how they will do so and how much cash they are prepared to part with.
7. Ask for feedback
Even if your franchise unit’s profits are through the roof, there’s always room for improvement. And the best way to continue to develop and progress is to seek feedback from customers, employees and your franchisor. To build a profitable franchise unit, you mustn't hide from the truth. By asking for feedback, you can use the valuable insight that you gather to increase sales and develop your business further.
“[Franchisors] have the knowledge of how to make the business a success and you can draw from that to replicate in your own business. You’re investing in them, both personally and financially, so think about how you’ll be supported in your own business and whether that meets your expectations.” – Nigel Bayliss, Poppies Sheffield
Follow these tips to increase your profits
If you try out some of these tips and tricks, we’re confident it will help you build a more profitable franchise unit. If you’ve not already started out on your franchising journey, you might be interested in the top 12 most profitable franchises under £20,000. Or, if you’re already a franchise owner and want to continue your reading, you can check out the seven ways to improve the profit margin of your franchise restaurant.
Becky Martin, Point Franchise ©
Search engine optimisation can have a huge impact on a business’s success. But [...]Article published on 31/07/2020 11:50
With today’s economic pressures, many households need two incomes and a home-based [...]Article published on 26/06/2020 08:00
One of the cornerstones of how to be a good business owner is self-confidence, [...]Article published on 27/05/2020 14:10
In today’s economic climate, it’s more important than ever that business owners [...]Article published on 07/08/2020 15:00
ARTICLES FOR FRANCHISORS