WHAT’S NEXT ?… STARTING THE RACE TO FRANCHISE SUCCESS
You survived approving your franchise agreement, or more importantly the anxiety that played co-pilot in that process. That anxiety you feel prior to the contract signing is seen by many as your mind doing one last check and asking you if you did your homework and are ready for what happens next. The hard part is that you may not totally understand what actually happens next, so let’s get some of that on the table and move unknowns closer to the known category.
Let’s assume you built a detailed model of what would make for your perfect match before you started your franchise search. Let’s also assume that you did a detailed proper franchise investigation like my candidates do. In that investigation you would have spent quality time with your prospective franchisor partner as well as talking to some of their existing franchisees. So, for the moment, where the anxiety over doing a proper investigation is concerned, let’s assume you did one and move on to what happens next.
The day you sign a franchise agreement you will begin focusing on building your foundation in that business. The first step is often the hand off of your file from the development department to the training and support teams, who you likely met at Discovery Day. This this stage feels to many like that first day of school or at a new job, exciting but with unknowns. The difference is that you will not be going to the store for a backpack or a Trapper Keeper, you will be laying all of the groundwork for opening. Tasks now include scheduling training, business entity setup, licensing, beginning the recruiting process and site selection.
Training and site selection are your first opportunities to invest well for your future, don’t short change either of them as they will have long lasting benefits. I always tell my candidates that we know they bring great expertise and experience to the partnership, but that there will be an adjustment period as they move from the job where they benefitted from their core expertise to their franchise where they have things to learn before they will be a comparable expert again. Fortunately they sought a proven system, expert partner and a peer group that can support them as they build this new acumen.
Training services will be something that you may use most prior to opening, but also at times after opening. Once up and running, many franchisors will let you send key team members in for more formal training than they could get in your business alone, it may be well worth your investment in building your team’s skill set.
When picking a site, especially for retail or restaurant, you will likely see a range of options in your market. Some will seem attractive due to lower cost but keep in mind in commercial real estate lower cost often means that site may not have the same appeal that a higher cost site does. This may be due to lower traffic on roads close to the property, low traffic into the property, low visibility, old site that needs renovation, or other factors. You should not automatically pick the highest priced site, but should do a full analysis of the available options to determine what level of investment produces the greatest returns over the life of your franchise agreement. Too many business owners focus in the cost for the first few months, not the long term revenue.
Where site selection is critical the franchisor will often have an in-house or contracted team to assist with site identification and lease negotiation.
Staffing is another category that you want to focus on getting the best you can at a fair price. Your initial staff will create the first impression your market has of your business. Most readers here know to look for capable, friendly outgoing team members that are going to be teachable and reliable. Staffing will be an ongoing project, it will begin before you open and be part of what you do as long as you own the business. Use the resources provided by the franchisor to help select and train your team.
Now, with the foundation built it is time for your Grand Opening. Lean on the franchisor and their team to prepare for your first day in business. There will be a check list of items to work through that will benefit your growth, chief among them may be marketing or sales. An old mentor of mine used to say: Revenue solves all problems.
Hitting the ground running will be key to maintaining your excitement in the early days. The cost of marketing and client acquisition can sometimes look high after you have been writing checks in your pre-revenue phase but it is absolutely necessary. Slowing your commitment to growing your business now will only frustrate you down the road. Be sure that you factored a strong marketing/sales effort into your grand opening and beyond. Prior to revenue those funds will come from your investment pool and they are as important as securing the right site and staff.
Once your business is up and running you will want to keep committing your post expense dollars to customer acquisition whether through marketing or sales. The more you re-invest towards growth in the early days the bigger the long term impact is for your business, profitability and the value of the asset you are building. Every business has its own path to profitability so from your grand opening the race was on.
Here is the payoff: Get that first business built strong fast, make wise ongoing investments in growth and you get to repeat the whole process. This is where you get to take advantage of the compound effects of speed of growth, profitability and reinvestment coupled with your personal efforts to build a portfolio. Each time you open a new location you grow your profits, increase the size of that portfolio asset base and are in control of creating the lifestyle you desire. Profits are always better than paychecks!
Mr. Knauf is a highly sought after trusted advisor to many companies; Public, Independent and Franchised, of all sizes and in many markets. His 20 plus years of experience in both startup and mature business operations makes him uniquely qualified to advise individuals that have dreamed of going into business for themselves in order
to gain more control, independence, time flexibility and to be able to earn in proportion to their real contribution.
For more information: Website: www.georgeknauf.com