10 tips for cash-strapped franchisees
If you’re just starting a business, keeping a track of expenditure is critical, it can mean the difference between prolonged success and an early exit from entrepreneurship.
Initially, there are a number of things that prospective franchisees can do before they buy into a business, such as leverage the brand’s history, speak with franchisees currently in the network and receive bank accreditation, however once the business is up and running, it can be hard to tackle operations without a huge amount of capital behind you.
Here’s ten things you can do as a franchisee to improve sales, level out the balance sheet and get the business moving in the right direction, all without breaking the bank.
1. Build brains-trust
If you have done your due diligence correctly, chances are you have already spoken with a few franchisees within the network prior to purchase, however there is no reason that relationship needs to cease.
In reality, existing franchisees can provide a snapshot into what works well in their business, what doesn’t and how the franchisor reacts to certain developments and market challenges.
Maintain relationships with high-performing franchisees within your network and ask for advice and input, in many cases you will find franchisees have established their own forums for this purpose.
2. Analyse cashflow
Cashflow will inevitably have its ups and downs in any small business, however its important to remember that franchise fees and wages will remain constant.
The first step in maintaining a positive cashflow outlook is to develop a budget that encompasses all elements of the business, including recurring expenses, fees, stock purchases and wages.
You should be able to develop a comprehensive strategy for expenditure, and don’t be too alarmed if you have a bad week.
Revenue will ebb and flow constantly, remember to always cater for unexpected expenses, such as equipment maintenance and staffing instability.
3. Engage with the community
A recent study from the Franchise Relationships Institute found that all high performing franchisees share a number of core characteristics, one of which was a commitment to community, not just from a business perspective, but also on a personal level.
The most successful franchisees are the ones that have the support of the local community, they turn at sporting events, they sponsor awards nights and help facilitate charitable causes.
Get involved in your local community, people support business that support them, so don’t be afraid to show your face.
4. Master free marketing tools
As traditional marketing techniques evolve, the role of social media in brand development is greatly increasing.
It costs nothing to improve your social media presence across Twitter, Facebook, Instagram and LinkedIn, so it’s worth investing the time to build an engaged online community of supporters.
Coupled with a well-timed, paid social push through these channels, businesses can generate interest with a minimal spend.
5. Customer service over discounts
While discounting is a sure-fire way to increase sales, it does little to improve profits and generate brand loyalty.
Focusing efforts on creating a positive culture of customer service will increase the likelihood of a customer returning, developing a clientele that not only appreciates your product but buys into your brand.
6. Develop relationships with franchisor
One of the most underutilised resources at a franchisee’s disposal is the franchisor. Speak with your franchisor about tactics, ask for extra sales training and work within their recommendations for store improvement.
Your franchisor has experience in dealing with new markets and should be able to provide you with business-specific advice for improving conversion and awareness.
7. Discuss local area marketing
In your on-going discussions with the franchisor, either through field agents or franchise advisory councils, discuss tactics for your local area marketing campaigns.
Take note of what is working well, and regularly check with the franchisor when new campaigns and assets are likely to be rolled out to the public.
By having a firm grip on what the local consumer wants, when certain campaigns are finishing, you can better tailor your offering to the market in which you operate.
8. Develop relationships with suppliers
In many cases, the supply chain is handled by the franchisor, however there may be certain instances where the franchisee is free to find a suitable vendor.
Remember to prioritise reliability as a critical factor, and if you are going to shop around, consider vendors who can contribute to the quality of your operation, such as those that offer on-time delivery, or flexible terms.
You may even find that suppliers are willing to offer discounts to those business owners who regularly pay on time.
9. Set up systems for repayment
Generally, you will need to take out a loan in order to buy into a franchise system, and these on-going fees can often fly under the radar.
Presuming you have performed an adequate due diligence process, you should be aware of the level of repayment required, and can therefore factor the repayments into the everyday budget.
Set-up automatic payments so you don’t miss by mistake and incur any late fees or accumulated interest fees.
10. Train staff
One of the most expensive elements of owning a business is wages, however an easy way to overcome any turnover issues is through adequate training.
Develop a dedicated system of training that allows any new member of staff to perform all necessary operational tasks. This should be comprehensive and detailed so that all employees feel supported enough to perform their duties with confidence.
Poor training and lack of support can often lead to high staff turnover, meaning further recruitment and additional hours spent training and developing staff members, increasing costs and reducing effeciency.
It is much more cost-effective to hire strong employees and retain them, rather than continuously recruit new ones.
While it may seem counter-productive to invest money into certain aspects of operations, particularly when you are short of disposable cash, having a firm understanding of your business’ current financial health can help you determine what is working well and what isn’t.
Don’t be afraid to reach out for help, from your network, your franchisor or from a franchise accountant, relevant information is often readily available and free.
If you are strapped for cash, and your business is light on sales, it can be the result of a number of things. Perform an internal audit of your finances, customer experiences and operational standards and analyse what you need to work on.