One of the most common misconceptions of new franchisees is that they expect to make a profit from the first day of opening their franchise doors.
This misguided notion sometimes persists despite the clearest caution from franchisors and other advisors. That said, clearly the goal for both the franchisor and the franchisee is to turn the franchise location into a profitable one.
Here are some important matters to assist in pursuing that goal.
- Know your numbers inside out. This includes the initial financial information received from the franchisor, the pro forma financials prepared by your accountant, and the financial performance of your franchise from commencement onward. Put the initial financial information you receive through stress testing. For example, consider changes to labour costs, what if minimum wages increase? If you purchased an existing location, what is the likely impact of having to replace certain plant and equipment in the short term. More obviously, consider the outcome of increased/decreased sales. This sort of consistent and continued analysis from the outset and throughout the life of your franchise will greatly assist you in adapting your business to make a profit and to keep it growing.
- Culture and employees are key. To succeed there is no doubt that you need to put time into building the right culture and cultivating the right individuals for the right roles. It cannot be emphasized too much, that putting time into training, inspiring and developing your staff will pay big dividends down the road (literally)! The environment of your franchise (from customer service to the interactions in the back of the house) must be created and maintained thoughtfully and intentionally. How you treat your employees (and how they treat each other) is likely to influence on how they treat their role and the customers. Provide genuine recognition and praise, and correct them respectfully. Give them opportunity to excel and provide room for growth and promotion.
- Don't go it alone. One of the fundamental aspects of a successful franchise system is that it is based on a proven model, that has succeeded in the past and will succeed in the future. Without doubt, there are variables and nuances to your franchise and its location, but, as far as conducting the business is concerned, you have a wealth of experience and knowledge to back you up. Quality Franchisors have a vested interest and are keen to assist you in formulating business plans, marketing plans and to support you generally. Use those plans as a map to your success, modify them as required, but stick to them. Also look for online franchisee forums where you can learn or ask questions from other franchisees on their methods, challenges and discoveries. Call or even visit some of the other franchisees in your area or beyond. Don't ignore the vast resources available to you in operating your franchise.
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