I often get asked whether a particular business is good enough to scale by franchising.
So today, I will list seven important attributes I look out for in the business to give you an idea. Your business does not need ALL of them, and when we work on the scalable business model, often some of the attributes are created.
12 Months Trading
It is a great idea before you franchise that your business has been trading for at least 12 months. Reasons for this are three fold.
First, you understand the seasonal ups and downs a franchisee could experience, so this may be important when you are looking at how much working capital is required by the franchisee. I have also seen commencement dates change to fit around any quiet patch or super busy patch. Damage from opening when it will be super busy is just as bad as a lack of customers for the franchisee.
Second, by operating your business for 12 months you get to understand your customers problem the business solves....
If I was a betting man I would bet you want more profit.
We all want more profit… well, most of us anyway.
Today I’m going to begin to write a small series of simple ways to grow your profit.
This first one is on your “average dollar yield”.
Average dollar yield is the value of each transaction in your business on average.
Example: If today’s trading revenue was $2,000, and this was spread over 10 sales throughout the day, then your average dollar yield is $2,000/10 = $200.
If your revenue was $2,000, and this was spread over 200 sales, then your average dollar yield is $2,000/200 = $10.
Every business has a different average dollar yield. The amount is not important.
A simple way to increase your profit is to increase your average dollar yield from each customer.
This increases your revenue and more profit drops out the bottom for you to spend on yourself or business investments.
Using the two examples above:
Let’s say your average dollar yield...
Tomorrow my youngest daughter starts her first job.
It is working in a cafe.
She is a little nervous, but the business has done many things right to help her on her new adventure.
First, the Manager told me they like to employ local people. She said they feel as a local business they have a responsibility to support local people.
I really liked that.
Then she said to me they like to always have a local school young adult new to employment in training. “We do it to give a leg up to help someone start their career, even if it isn’t in the cafe scene. Getting a first job opens the door to other opportunities”.
I really liked that thinking too.
Here is the welcome process my daughter has experienced so far…
She had a meeting with the Manager who took the time to sit down and explain the induction process and what the expectations are.
Then, my daughter was introduced to everyone in the team who was working at the time.
And during the introduction everybody...
Franchising and Licensing creates leverage.
What does leverage mean in the context of leadership?
My definition is “the ability to use a small amount of energy to gain a very high return in relation to the original energy spent”.
So how do we do this?
For a start a big advantage of franchising is the franchise partners all share a common goal. This goal is to use your secret sauce, your business model to serve their customers.
They require similar knowledge on your secret sauce and operating your business model. Training can be the same for every franchise partner.
If training is the same for everybody, then they can all access the same content.
Now you have the opportunity for scale leadership.
Scalable Leadership Tip #1
Ensure everybody uses the resources available to solve their problems.
If you find they are skipping the resources available because it’s easier to send you an email or call you on the phone… reply “where did you look in the...
Yesterday my son bought his first car.
It’s been a long time coming while he patiently saved away, waiting for this big event day to arrive.
He found the car on the web.
First we visited and inspected the vehicle, and to take it for a test drive.
Then we arranged for a professional inspection to ensure he wasn’t buying a lemon.
All good… pass.
Time to make an offer. We were ready to buy.
This part he asked me to do. My son is sixteen and didn’t know how to buy.
He wanted to talk price on the first visit. But we were not ready I told him.
We offer when we are ready to buy. This gives us power at the time of doing a deal because we are ready to buy.
I often see this in business.
The business owner is ready to cut straight to the chase and talk money… often discounting before the buyer is ready to buy. Often the price is not the objection but the seller has given away the margin.
Only talk money when the seller is ready to sell and the buyer is ready to...
Find Your Leadership Rhythm
Have you ever thought that you may have to invent your leadership style to maximise business results, or do you think that it’s a take me as I am gig?
What do I mean by “invent”?
I mean learn a style that works for you and works for the team to get the end result of a happy aligned group all moving forward in the same direction.
It is true that it’s best to lead naturally to fit in with who you are. An authentic self is important but you don’t want your style to be getting in the way of awesome results.
So there might be some learning to tweak what you already have.
Some leadership styles will lead to ultimate failure unless either you change… or put someone else in charge.
A franchisee will value a strong leader being:
The list can go on and on, but...
This is a hot question I often get asked.... and I first start with my own questions in reply
So why franchise? What is your driver to travel this journey?
I ask these questions first because it matters. Look at the following replies and see if any of them is you:
Franchising can certainly deliver on all these reasons.
So when is it the right time to franchise your business?
Business data is very important, and reviewing this data is crucial to business success.
An example of this happened to me this week. A client had lower than expected sales for last month. Why? He had no idea.
For me, this is no good, we need to know why. Is it a trend? To solve this I suggested he looks at the following data.
The result was more Orders were being received, so the business was busier, but the Order value was lower. Why? Looking at the top 20% Jobs from the previous periods showed a decline in Orders from the top...
This simple system can be used for all types of projects to help get your desired outcome.
Developing internal business systems is also why franchising works so well. It turns a desired outcome into a system, and the people work the system.
I break project work into five steps:
As the person ultimately accountable for the project to be delivered ontime, you may be involved (or at least approve) the five steps at the beginning. Then use the milestones and timeline to help manage the project.
The exciting thing here is all team memvbers involved have complete transparency and can see where additional support may be required.
As an example... I have recently created a 29 step 10 month plan for a...
Are You Chasing The Money Or Building Your Future
I have been observing the number of business owners focused on the money. Each day they spend their 'now' earning money.
Yesterday they took action in their 'now' to earn money...
Today they take action in their 'now' to earn money...
Tomorrow they will take action in their 'now' to earn money...
Do you see the problem?
It is a culture cycle of focusing on earning money everyday and the actions taken to earn the money are repeated everyday. This stifles growth of income and growth of asset value.
Don't get me wrong, earning money to pay expenses and the lifestyle we want is very important, but what if there is another way to achieve the same and better result?
This is what should be done instead.
Focus on improving the 'now'.
How do we do this? By thinking about when we do an activity, we look at ways to systemise the activity. Then we are building value into the future. The result will be our 'now' in...