Set a road-map for your franchise journey.
CJust like any adventure, your business journey needs careful preparation and planning, with due caution for bumps along the way, but franchisees have one big advantage in that
they are not travelling alone.
ongratulations if you have signed up to be a franchisee. You are ready to launch into your exciting new business, and probably envisage it will be everything you have ever hoped for. You can update your LinkedIn job title, order the business cards and prepare for your future success.
Like any business owner, you believe the rewards will always outweigh the blood, sweat and tears. But how do you ensure your new business investment will make the cut in this extremely competitive market?
You know it is going to be slow at the start, but you have the determination to ignite the process and push ahead. But where to begin? Firstly, create a framework for the first year or two, and you will be well placed to succeed in your business journey.
There are important pointers to remember and anticipate on the adventure. The first is your business plan, including setting up your trading entity. Whether you run it as a family trust, as a sole trader or as a company, the business plan will help you to anticipate the future, minimise tax and distribute profit. It is also important to rely on a good accountant.
Your business plan should also identify the working capital you will need to secure your business until it becomes profitable. This will determine how long your business can survive paying its overheads such as rent, wages, cost of goods and royalties, as well as your personal living expenses such as mortgage and school fees.
TALK TO PEOPLE
Another important aspect of your planning is to talk to people who have been on the same journey. Seek advice from other franchisees in the network you are considering joining, not forgetting people who may have abandoned their quest – franchisees who have left the network for whatever reason. It is most important to weigh the advice from other wayfarers before you set out on your journey.
Having a business plan is similar to having a roadmap: it is a guide to help you reach where you want to go. A business plan keeps your destination (goals) in
view, focuses the mind and compels action. It also means that should you start to go off track, you have a point of reference to return to so you can adjust the course as needed.
Your business plan covers the essentials of your business journey...
• Your goals (destination)
• Your steps to achieve these
• The budget you will need
Along your business journey you also have reference to the franchise operations manual, and training. And to help you breathe easily, the document affirming independence of advice that accompanies the disclosure document is an assurance for you that the franchise has been reviewed by experts.
Under the Franchising Code of Conduct you are required to sign and acknowledge that you have taken independent legal, business and financial advice about a franchise agreement and any other representations made by a franchisor – or that you decided otherwise. But like any journey, it is wise to have travel insurance, and paying for specialised franchise legal and financial advice is certainly a good policy.
Who goes along with you on you franchise journey? Your family, of course, so it is important they are all engaged and equally focused on helping you achieve success. After all, your family will ultimately benefit from your hard work. Frequent transparent communication is crucial to retain family support, as the reality is that there will be long hours, missed holidays and unexpected commitments. However, the long-term benefits far outweigh the short-term sacrifices.
But whatever bumps there are in the road, you always have your “GPS navigation” to fall back on – your franchise support team, including the business
development, area or regional manager, who are ready to help if you stumble. Every step of the way you are not alone. This is one of the key benefits of owning a franchise business and working with an established brand.
You are in this position because you have done your research. It is an opportunity that allows the independence of small-business ownership while being supported by the benefits of a big business network. Franchises have a higher success rate than startup businesses, and furthermore, it is far easier to secure finance for a franchise. With all these benefits, your journey should be far less bumpy.
Along your way, observe all the
It is most important to weigh the advice from other wayfarers before
you set out on your journey.
“road rules”: meet all your franchise agreement obligations, pay your royalties and levies, and ensure you cover your employer obligations. You can also keep on track by reviewing your business plan at least once a year with your business advisors and your family.
Be aware of what is happening around you. Do not become “store blind”, failing to observe small changes or mistakes. Be alert to unexpected interruptions such as changing market conditions, increased competition and seasonal fluctuations. On the other hand, watch out for opportunities to grow your business. Monitor the market, stay hungry and be flexible.
Don’t forget to use your operations manual. It offers plenty of information designed to help you reach your full potential. It is a step-by-step guide to every aspect of the business.
Finally, gauge your progress by monitoring the return on your investment. You need to determine the time frame to pay back your original investment and interest on any loans. You need to ensure your franchise agreement and any leases are long enough to meet those obligations, as well as pay yourself a reasonable wage. Ideally, when you are ready to sell you should have a capital return that makes all the sacrifices along the journey worthwhile.
Meanwhile, don’t let anything stop you from planning further ventures. Have a plan, use it, change it, but keep your long-term goals in mind, such as multi-unit expansion or consolidating the business for your ideal lifestyle.
Neil Soares has first hand experience in the franchising space. He has over 25 years of experience in franchising operations, business consulting and business development around Australia. Holly Barnes is a valuable asset of the DC Strategy Group. She...