In the last blog, I shared Sue Petrowich’s franchise journey and listed the 7 steps for business success. In this blog, I’ll detail details of steps 1-5. Let’s get started.
1. Research and understand the process of franchise ownership.
Research and understanding the process of franchise ownership is key to entering the world of business ownership. The first step is to familiarize yourself with the different types of franchises available, and the multitude of industries where successful brands are already operational. A strong franchise system will provide a legal prospectus, or Franchise Disclosure Document, that outlines the expectations and obligations between the franchisor and franchisee. It covers topics like territory, fees, ongoing support, and termination of the agreement. Embracing the expectations of brand execution is essential to a successful franchise experience for both parties, the franchisee and franchisor. As a potential franchisee, it is important to research the franchisor’s history and track record. What is their success rate? Do they have any lawsuits against them? What is their customer satisfaction rating? In some situations, it may be wise to seek the opinion of a franchise attorney to help you understand the legal implications of franchise ownership.
It is also important to consider the financial investment and return expected of franchise ownership. The initial investment typically includes the franchise fee, start-up costs, and ongoing fees such as royalties and advertising fees. The investment may seem daunting until the unit economics are understood and “break even” is defined. Finally, be sure to research the market and competition. Understand the current market trends and why competition is actually a benefit to gaining exposure and reputation.
2. Have a plan for how to finance the business.
The second step to becoming your own boss is to have a plan to finance the business. Depending on the size of the business and the amount of capital needed, there are several options to finance the business. The most common approach is via a bank or home equity loan. This is usually the best option for those who have a good credit score and can provide collateral for the loan. Another option is to use personal savings, or seek family support. It is also important to understand the long-term implications of each financing option. For example, if you are taking out a loan, make sure you understand the interest rate, repayment terms, and any other requirements. Before deciding on a financing option, critically evaluate the risks and rewards associated with it. There is no single right answer, as every individual financial picture is unique, and the return on investment is truly viable.
Be as Detailed as Possible
Any good business plan includes a detailed breakdown of expected expenses and revenue line items. It should also include a timeline for loan payments or tax advantages. Make sure to include your estimated start-up costs, operating costs, and any other expenses that may arise. You must include your own income as part of the expenses, as owning a business should return financial gain to the owner. Lastly, it is vital to create and track your budget to ensure that you are staying within your financial limits. Franchise systems offer different tools and software programs to monitor your finances. Additionally, hire an experienced franchise accountant to ensure that your record keeping is accurate and compliant with applicable tax laws. Rely on The Plan. Create a financial plan and budget enables you to successfully launch your business.
3. Develop a culture of support and communication with employees.
Developing a culture of support and communication with employees is a key step to ensure you have a viable, successful business. Establish open and honest communication with your employees, to build two-way trust and create an environment of mutual respect. Include your employees in goal setting exercises, delivery of exceptional service, and long-term expectations of the business. Documenting these goals gives them the confidence and ownership of their roles. Communicate publicly to recognize your employees for their hard work and accomplishments. Appreciation for their efforts creates an atmosphere of respect and loyalty. To enhance longevity, be sure to offer opportunities for professional development and growth. This include ongoing training, new skill development, mentorship programs, or offering roles for advancement responsibility. By providing these opportunities, you are showing your employees that you value their contributions and are invested in their development.
Creating a culture of support and communication facilitates trust and collaboration. Encourage your employees to work together and share their ideas, rather than working in silos. This fosters a sense of community within your organization. Additionally, make sure to provide a safe and respectful space for employees to voice their opinions and ideas. Finally, fostering open dialogue and feedback between employees and management extends retention of your most valuable hires. Regularly scheduled meetings and check-ins between employees and their supervisors ensures consistency and timeliness in addressing immediate needs. A successful work environment allows employees to feel comfortable communicating and voicing their opinions, as this will help to create a culture of trust and respect.
4. Have an infrastructure in place for payroll, HR, and operational tasks.
Business owners should work towards the big picture of growth and expansion. This is where the true wealth lies. Hire a professional services company to manage the complex elements of payroll, review and raise schedules, as well as tracking vacation, sick, and other leave time. A solid system will manage hiring and onboarding employees, managing employee performance, and tracking compliance with applicable laws. Having the right infrastructure in place will enable business owners to streamline their processes, save time and money, and ensure their employees work for a business that is running smoothly and efficiently.
5. Look for opportunities to expand and grow the business.
Growth and expansion, by reinvesting in your company, will increase reach, customer base, and revenue. Consider the industry trends and market conditions, as this can help inform decisions about which opportunities are best suited for the business. Another way to run a more profitable or larger business is to invest in technology that improves efficiency and enhances the customer experience. Opening new locations gains more market share, allowing the business to reach new customers. Sometimes it makes sense to enhance or add new features, services and products provide more reasons the customers continue to frequent the business. Give consumers what they need and want.