Advantages of Franchising – Clay Serenbetz

The primary advantages for most companies entering the realm of franchising are capital, speed of growth, motivated management, and risk reduction — but there are many others as well.

Capital

The most common barrier to expansion faced by today’s small businesses is lack of access to capital. Even before the credit-tightening of 2008-2009 and the “new normal” that ensued, entrepreneurs often found that their growth goals outstripped their ability to fund them.

Motivated Management

Another stumbling block facing many entrepreneurs wanting to expand is finding and retaining good unit managers. All too often, a business owner spends months looking for and training a new manager, only to see them leave or, worse yet, get hired away by a competitor. And hired managers are only employees who may or may not have a genuine commitment to their jobs, which makes supervising their work from a distance a challenge.

Ease of Supervision

From a managerial point of view, franchising provides other advantages as well. For one, the franchisor is not responsible for the day-to-day management of the individual franchise units. At a micro level, this means that if a shift leader or crew member calls in sick in the middle of the night, they’re calling your franchisee — not you — to let them know. And it’s the franchisee’s responsibility to find a replacement or cover their shift. And if they choose to pay salaries that aren’t in line with the marketplace, employ their friends and relatives, or spend money on unnecessary or frivolous purchases, it won’t impact you or your financial returns. By eliminating these responsibilities, franchising allows you to direct your efforts toward improving the big picture.

Improved Valuations

The combination of faster growth, increased profitability, and increased organizational leverage helps account for the fact that franchisors are often valued at a higher multiple than other businesses. So when it comes time to sell your business, the fact that you’re a successful franchisor that has established a scalable growth model could certainly be an advantage.

Staffing Leverage

Franchising allows franchisors to function effectively with a much leaner organization. Since franchisees will assume many of the responsibilities otherwise shouldered by the corporate home office, franchisors can leverage these efforts to reduce overall staffing.

5 Business Tips Every Entrepreneur Should Know

The biggest problem founders and small business owners have is that they’re experts in their field and novices in what it really takes to effectively run a business. That’s what usually trips them up, sooner or later.

The problem is probably you.

When I was a young manager, my company sent us all to a week of quality training where the most important concept we learned was that 90 percent of all problems are management problems. When things aren’t going well, the first place to look for answers is in the mirror.

Listen to your customers.

It boggles my mind how little most entrepreneurs value their customers when, not only are their feedback and input among the most critical information they will ever learn, but their repeat business is the easiest business to get.

Trust your gut.

This phrase is often repeated but rarely understood. It means that your own instincts are an extremely valuable decision-making tool. Too often we end up saying in retrospect and with regret, “Damn, I knew that was a bad idea.” But the key is to know how to access your instincts. Just sit, be quiet, and listen to yourself.

Know your finances inside and out.

If you don’t know your revenues, expenses, capital requirements, profits (gross and net), debt, cash flow, and effective tax rate – among other things – you’re asking for trouble. Big trouble.

Learn to say “yes” and “no” a lot.

The two most important words business owners and founders have at their disposal are “yes” and “no.” Learn to say them a lot. And that means being decisive. The most important reason to focus – to be clear on what your company does – is to be clear on all the things it doesn’t do.

Design your Perfect week

Admit it: You want to work less. And work smarter. You want to enjoy your free time, but you need to make good money. And of course, you want keep learning and enjoy your career at the same time. Whether you work in a so-called creative industry or not, balancing personal autonomy with productivity and great teamwork is a challenge we all face. Is there a possible solution to this seemingly impossible equation?

1. Monday morning: Start focus.

Begin by gathering all your team members in a room where you’ll spend 20 minutes reviewing the challenges of the week. Each person writes their three personal challenges for the week on a post-it, puts it on wall and reads it allowed it to the group.

2. Wednesday morning: Share with others.

At Base Design, we call this the creative meeting, but it can be adapted to fit many types of businesses. This time, everyone is present, from the office manager to creative and financial directors, and you’ll spend about three hours getting on the same page about all aspects of the business.

3. Thursday lunch: Forget work.

This is the true feel-good rendezvous of the week. It’s a very simple concept: One staff member takes a turn cooking for the rest of the team. There’s no work, no agenda, just time to enjoy a meal and the company of your colleagues.

4. Friday afternoon: Look back.

Time for a review of the week. Duration is variable. This is when the team gathers and each one gets returns to his or her Monday post-it. Did everyone fulfill their three challenges? Yes, great. No? Let’s analyze why, discuss it with the others and learn from it. Remember, the goal is to work less and better — and here’s an opportunity to discuss how to do just that.

5. The rest of the week? Full autonomy.

We’re all adults here. Each member of the team is certainly mature enough to organize the time spent on their own projects and meetings, inside and outside the company, and combine it with the demands of their personal life in a way that works for them. No judgment, no second guessing. Just deliver good work on time, and everyone is happy.