The dream of launching your own business is so potent that it’s hard for many entrepreneurs to look far beyond that golden moment. Sure, you’ve got a business plan and are ready to take the rough with the smooth. But how much insight do you really have into what that will mean in practice?
Beyond the challenges of getting your product established and your business operating smoothly, you’ll also find that you’re facing an emotional journey in motivating yourself to keep going – plus motivating any investors to keep walking the road with you.
I can best demonstrate this through a business lifecycle that I’m very familiar with personally and professionally – franchising.
Related: Crack The Time-Management Puzzle
I often refer to the six key stages outlined by Greg Nathan in his book, The Franchise E-Factor, when I’m presenting training workshops to our Cash Converters’ franchisees.
1Feel the glee
Nathan calls the first stage “Glee”, recognising that thrill of getting the go-ahead from your bank, investor or franchisor to embark on this exciting and somewhat daunting journey.
The advantage for franchisees is that the franchisor teaches them the “recipe” of the business.
They soon realise, though, that like any other startup, it’s up to them to “bake the cake” – to make the business happen and grow by engaging with it, following the agreed business model and setting up effective operational controls.
2Know the fee
When things go well, franchisees’ confidence grows. They can even begin focusing on the energy and inspiration they’ve put into growing their franchise and reach a stage of questioning what they’re getting for their franchise fee.
“Why am I paying royalties, when I do all the work?” some of them wonder.
3“What about me?”
A few move on to thinking, “Maybe I could get the bigger slice of the pie that I believe I deserve if I cut out the franchisor or my investors?” This can be prompted by business conditions, such as sales figures flatlining or, worse still, cashflow not covering key overheads such as taxes and other regulatory requirements.
4“Time to break free?”
The next stage is critical in ensuring the business relationship is or becomes truly reciprocal.
I believe this is when a franchisor or investor needs to show leadership by convincing the franchisee or entrepreneur of the synergy in their relationship and the mutual benefits that it has brought and will bring.
5Watch and see
When that works, the road should get smoother and the business should blossom. Or you might spot the franchisee acting out his or her success for all the world to see. Maybe this is with flashy cars and other accessories of a bling lifestyle.
It could be partying around town, even substance abuse, gambling or having affairs. Again this needs a franchisor or investor to step in like a lifestyle coach, underline how unsustainable such behaviour is and refocus the franchisee on the business.
6The triumph of “we”
We know and appreciate that Cash Converters franchisees represent the brand at the coal face. If they need any assistance, whether business or personal, it’s in our mutual interest to open the doors and help that happen as between two mature adults.
Starting your own business is a big step for anyone. Recognising and succeeding in keeping your franchising or investment team onside as the business develops is a vital survival challenge.
When you achieve this, you will be able to look round proudly and say, “See what we built together.”
Factors To Consider Before Signing Up As A Franchisee
Franchising is a brilliant way to get into business with not many entrepreneurial skills as it comes with a roadmap to follow for success.
You’ve been considering entrepreneurship for a while, and now that you’ve finally raised some money and been approved for a loan, you’re ready to quit your 9-5 job to run your own business. You may even already have your eye on a particular franchise, but while franchising is considered an easier and more low risk way to get into business, are you suited to being a franchisee?
“The question is not ‘is franchising right for you’, but rather, are you right for franchising? Because if you don’t have the right attitude and skill set, it can be a very expensive mistake,” says small business expert and author Steve Strauss.
Franchising may seem like an easy way into entrepreneurship, but along with an established name and proven systems, come rules, regulations and little room for creativity. If you’re not ready to become a franchisee, but want to go into business for yourself, you may find yourself struggling to operate within the system’s blueprint.
Ask yourself these three questions before proceeding with the process of franchising:
1. Will you be able to follow the directions of the franchisor?
You’re buying into an existing and proven concept so it’s safe to assume that the franchisor knows best, and so you have to be open to learning and following guidelines for business success. If, for example, you have experience in advertising and think you have an improved technique of marketing the franchise, you may want to change the advertising material provided by the franchisor – don’t.
“Being a franchisee means following the directions of the franchisor, even when you think you know a better way,” advise experts from strategic and tactical advisory firm MSA Worldwide.
“In addition to initial training, you need to be prepared to accept coaching and advice from the franchisor on how you operate or market your location.”
2. Do you have the need to experiment?
Lou Groen may have had success in launching a new menu item that McDonald’s approved of in 1962, but not all franchisees are that lucky. Stick to the plan and limit deviations to the menu or anything that involves the customer experience.
If the franchisor’s concept doesn’t involve deliveries, offering them to your customers may cause issues for others within the franchise system. “If it’s not part of the franchisor’s concept, you’re deviating from the concept and therefore, no longer running your store as a franchise,” according to MSA. Franchising arguably limits innovation opportunities, so if you’re prone to implementing creative ideas and evolving business offerings based on said ideas, rather start your own independent business.
3. Are you a team player?
These first two questions you address should already lead to the realisation that everything you do affects everyone in the franchise chain. One bad experience at your establishment and suddenly, all the stores are affected by bad press or unsavoury social media attention.
“Other franchisees are relying upon you to offer to the consumer a consistent level of service, product quality, and brand message. You are going to have to work with others in the system in making decisions,” advise experts.
Remember that as part of a chain of other business owners, you may have to accept that majority rules when it comes to decisions where franchises do have a say.
3 Ways You Can Innovate And Improve As A Franchisee
Although your role as a franchisee isn’t really to innovate, there’s room for creativity if you go about it the right way.
When you signed on the dotted line after reading and agreeing with the franchise agreement, you knew that you were buying into a proven system where everything has already been thought out for you, and all you have to do is follow the formula for success.
But you’re a franchisee longing to put your own imprint on your business, and it may be frustrating to feel boxed in by a formula, while you’re bursting with new ideas.
“Franchising, by its nature, discourages innovation on the part of franchisees, who are required by their franchisors to follow very specific policies and procedures on exactly what they will sell, how they will make or deliver it,” notes Randy Myers, contributing editor for CFO and Corporate Board Member magazines.
This doesn’t mean your ideas will never see the light of day though. But before you approach your franchisor with your brilliant insight, consider the following steps that may well lead you down an innovative path:
1. Get the basics right first
Franchisors know that customers like consistency as it makes them comfortable and trust every location of their franchise they choose to visit. But, even the strictest franchisors get hungry for new ideas. It’s the timing that’s vital for your idea to even be considered.
“Most good systems don’t want new franchisees to even think about innovations until they learn the existing system inside out and prove that they can execute it like a star,” said Jeff Elgin, CEO of FranChoice, a network of franchise referral consultants. “At that point, they have become successful, their base is secure, and they have earned the right to consider innovations.”
It’s wise to ensure you’ve learned your franchisor’s existing business model before you suggest any improvements.
2. Do your homework
So, you’re doing well and you’re sure your idea will be welcomed as a crucial innovation to the franchise system – but research your proposal, suggests Kim Stevens, VP of Regional Development and Director of Franchise Awarding at Woodhouse Day Spas. “Especially if you’re suggesting something that would impact all franchisees, create a business plan before approaching your franchisor,’ she says.
It’s also good to have another look at the franchisor’s policy for accepting new ideas to ensure you’re prepared for tough questions before you propose your idea.
3. Speak to the right people
Elgin recommends you first identify the person at the franchisor’s head office who’s responsible for receiving new ideas. “Many of the ideas a franchisee comes up with will already have been proposed by another franchisee,” notes Elgin.
To avoid wasting your time, no matter how great you think the idea is, present it as early as possible before spending anything developing the idea.
3 Pricing Tactics To Recession-Proof Your Franchise
As consumers tighten their belts, how can you ensure your franchise is their first choice in the midst of strict budgeting and curbing of spending?
Whether or not there is a dip in the economy, you have stock on shelf you need to sell. But, if consumers are cash-strapped, you have to make every effort to ensure that your franchisees aren’t running at a loss.
“There’s no doubt that shoppers are more discerning about what they need and how they shop. However, quality remains significant and brands that continue to delight their customers will reap the benefit of being chosen,” says Ailsa Wingfield, executive director marketing and communications: Africa, at Nielsen.
Why not give customers the best of both – value for money at a competitive price – by applying one or more of the following pricing tactics in tough economic times:
1. Consider a greater focus on your house brand
“The days of in-house retail brands being treated with a fair amount of disdain by South African consumers have come to an end,” says Wingfield.
The global performance management company’s research has found that R38.4 billion of the amount consumers spend at hypermarket and supermarket tills – or R10 out of every R50 – is spent on private label products. South African consumers are beginning to feel that the quality of these house brand products is as good as that of established name brands.
Since research indicates consumers are further likely to shift between branded products and retailer private label offerings, it would be of benefit to your franchise if your in-house products are perceived as viable value alternatives of similar or better quality.
2. Sell products in bundles
This the method combining various products and selling them together as one bundle for a lot less than if they were being sold separately. This method is great for moving items that might be selling slower but also great for achieving a higher value perception in the minds of consumers.
CEO of GuruShots, Gilon Miller, says there are several bundling techniques you could apply, including:
- Pure bundling, where you offer a group of products that are only available as a bundle and aren’t sold separately.
- Mixed bundling, where you offer products that are sold both as bundles and as individual units.
- New- or lesser-product bundle, where you bundle a successful product with a newer or less successful product – the stronger product will help the other product find its way into a new market.
Bundling results in cost efficiency, more competitive pricing and might also encourage customers to regard a single store as a source for several solutions.
Related: How To Recession-Proof Your Business
3. Add even more value
When you price your product in alignment with the value your customer sees in it, you’re preventing both you and your customer from the possibility of losing out on value.
Calculating your optimum price, involves asking yourself these questions:
- Will your customers save money or time by using your product or service?
- Is your product or service is unique?
- Will your product or service help customers gain a competitive advantage?
- What does the competition charges?
“Value-based pricing ensures that your customers feel happy paying your price for the value they’re getting,” says Patrick Campbell, co-founder and CEO of Price Intelligently. “Pricing according to the value your customer sees in your product prevents you from short-changing yourself while creating an experience for customers that’s most aligned.”
The more value your customers see in your product, the more they will be willing to pay for it, ultimately improving your bottom line. When your pricing is reasonable, they won’t need much convincing to make the purchase at your franchise instead of your competitor’s.
- The Alfa Romeo Stelvio – More Than An SUV
- (Podcast) Are All Prices Negotiable?
- (Podcast) Phone Calls Often Solve Email Problems
- (Podcast) Being An Entrepreneur Is Painful
- (Podcast) Playing To An Audience Of One
- Be 1 Of 3 High Growth Scale Ups Sponsored By FNB & Vumela To Participate For FREE In 10X Accelerator Program (Value Of R650 000)
- R33 Million Boost For Job Creation And Innovation In SA
Start-up Industry Specific2 weeks ago
How Do I Start A Transport Or Logistics Business?
Entrepreneur Profiles1 month ago
10 SA Entrepreneurs Who Built Their Businesses From Nothing
Upstarts4 weeks ago
10 Young Entrepreneurs Under 30 Share Their Start-Up Secrets
Business Plan Advice4 weeks ago
Writing a Business Plan May Not Be Your Idea Of Fun, But It Forces You To Build These 4 Crucial Habits