Q: What in your opinion makes a franchise business successful?
We believe it is the ‘Ps’ – people, product and position. People need to have a desire for what they do, that’s what is needed to grow a business. Our product has made the business transferable to other countries. We always look at what is available in the country before we launch. Having the best position is critical. The Boost Juice franchise is very much a walk-by concept so it is essential to find a location with high traffic. Apart from those three aspects, it is also important to market yourself properly. Whenever we open a new branch we have a big launch so that people can see us and taste the products. One other aspect is getting feedback from people. It is good to get this so that you can find ways to turn a disgruntled customer into a fan.
Q: What do you look for in a franchisee?
We look for like-minded people. We are not just interested in selling franchises, we want to find the right people with the right attitude. They need to have some business experience but the most successful franchisees have passion and an attitude to succeed. If you think franchising is going to be nice and easy then don’t get into the business. It takes a lot of blood, sweat and tears before you get the flexibility of being your own boss.
Q: So you do think there is flexibility in owning a franchise?
For the first two years you have to be involved in the business to run it. Retail is detail and you have to manage cash flow and expenses tightly.
Q: What are some of the most important qualities a franchisee should possess?
In a franchisee interview I look for the right attitude. Also I favour a husband and wife team as one will usually work on the business while the other still earns an income. This means there is less financial pressure in the early stages and they will usually have different skills that can complement each other. If the franchisee has no business experience, I recommend doing a few short courses, it is particularly important to have a basic understanding of accounting. Boost will teach you how to run the franchise, deal with customers, use the technology and improve sales but we don’t teach accountancy.
Q: What about getting outside help from a bookeeper?
It is a big mistake to hire a bookeeper; instead you should find an expert on software like Quickbooks. They can teach you how to do the basics so that you are handling every invoice and paying everyone. The products are amazing for small businesses. If you do your own accounts you will pick up mistakes that quite possibly a bookeeper wouldn’t. It is vital to take the time to learn. Don’t just say that you are too busy in the store, if you are not doing your own accounts you are losing at least 20% of your profits.
Q: How important is it for a franchisee to be an owner manager rather than employing a manager to run the store?
Many franchisees can be owner managers of one or two stores, but a good owner manager is one who can leave their store to go on holiday and it continues to run efficiently. To do this you need to hire the right people. I’m a firm believer in hiring the right people. A great manager is a leader. By having the right people, systems and processes in place, they give themselves options after two years. This could be buying another store or having a significant amount of flexibility. But some people don’t ever get there because they are unable to lead or hire the right people.
Q: Why do you think it is better to be part of a franchise than opening an independent business?
The international statistics are positive. Only one out of five independent businesses survives, while four out of five franchise businesses survive. Apart from that, by being a franchisee you are part of a network which has better buying power. You also contribute to a marketing fund, which means you get more bang for your buck, and you are part of a group of people on the same journey – you get head office support but also interact with people in the same situation as you. You should get to know the other franchisees so that you can get together and help each other out. As a franchisee, you have other people thinking about product development, using resources you couldn’t afford if you were to open ‘Joe’s Juice’.
Q: How can a franchisee ensure they are choosing the right franchise for them?
They need to look within and think ‘What am I passionate about?’ We find that our franchisees are usually interested in health and fitness and have a sparkle in their eyes. Once you have identified what you are passionate about, you need to look at what’s available, and then at the franchise itself. How long have they been around, how many company-owned stores are there, the structure, do you like the people and can you find solutions with them?
Q: How important is it to invest your own money in a franchise?
Whether you are investing your money or money from a bank, it’s still your responsibility. The best option is to borrow the least possible as paying off a loan adds to your monthly expenses. Using your own money takes a bit of the pressure off.
Q: What advice can you give franchisees?
You need to have the right attitude. We have a saying, ‘Don’t be a VERB, rather SOAR’. VERB stands for Victim Entitled Rescue Blame and SOAR, Solutions Ownership of problems, Accountability for outcomes, Responsible for your own success. The outcome from this response is more positive. Being accountable for your own business is powerful. Saying it is my fault when something goes wrong gives you incredible power. I hate the word ‘try’ – you have no option but to do it.
Q: How much research should a franchisee do before buying a franchise?
They need to do an enormous amount of research but should beware of ‘analysis paralysis’. I know of some people who spend up to five years researching a franchise, and never get around to actually buying it. You need to look at financials, the brand, the business and do your own site research – you can sit at the site and do headcounts for a few hours.
Make sure that you meet with the franchisor and talk to them face-to-face as well as other franchisees who will give you the ‘warts and all’ information.
Q: What would you say is the biggest challenge for franchisees?
Staffing is a big challenge. Don’t settle for mediocrity, find people who are bubbly and hard working. Always do a reference check, but if this is their first job determine whether or not they are confident, and have numbers acumen. You may get it wrong sometimes, but be sure to fix it quickly.
Q: What are some of the most common mistakes franchisees make?
Thinking that it is easier than it actually is, not doing their own accounts, mismanaging their expenses and holding on to staff who should have moved on. One other mistake for female franchise owners is not replacing themselves when they have a baby. If you don’t find a replacement you can expect your business to go down by at least 20%.
6 Top Tips For Reading Management Accounts
There is a golden key that reveals the secret of whether your business will survive and thrive. It is keeping tabs on the figures that summarise the strength of your business – your monthly management accounts.
There is a golden key that reveals the secret of whether your business will survive and thrive. It is not the brilliance of your business concept. It is not your talent for talking clients to sign on the dotted line. It is keeping tabs on the figures that summarise the strength of your business – your monthly management accounts.
Many entrepreneurs are usually more interested in operations and find product development or sales much more enjoyable than catching up on accounts. I sympathise – I’m one of them! So if you feel the same way, my top tip is always to make sure that you partner with or employ someone who can oversee the finances for you.
But that does not mean you can let the figure boffins and the finances take care of themselves. To function properly in your business, you need to know the outcome of your sales and development strategies – and the story of that is told in your management accounts.
If you never look at your management accounts, it is like blinding yourself in one eye. It means you risk being literally blindsided by a big surprise, whether it is heading for a significant loss or being confronted by an unexpected provisional tax payment.
Here is how Engela van Loggerenberg, our Group Financial Manager, puts management accounts in perspective for our new franchisees. She urges them to focus on six key areas:
- Priorities: Management accounts can help you pinpoint areas that you need to prioritise, whether to capitalise on growth or because they are not performing as well as you hoped.
- Strength: All businesses aim to grow their assets over time and the balance sheet in your management accounts will reflect whether and how you are achieving that.
- Control: A strong balance sheet is one that shows you have your business liabilities well controlled. The key marker here is your current liquidity ratio, which results from dividing your current assets by your current liabilities. To keep your business healthy, always aim to keep this ratio at least 2:1.
- Revenue: Ideally, you want to see your revenue grow month by month. Check your income statement both for the trend in actual revenue and also for actual against budgeted revenue to check how well your strategies are delivering results.
- Profitability: Of course, revenue is not the same as profitability. You need to know your gross profit – the basic figure of your sales less the cost of those goods – and net profit, which also deducts a range of other expenses including taxes. Track the percentage of these two profit figures as well as the actual cash amount they represent to keep a check on whether your costs are creeping up too high.
- Finance: Most businesses at some point want to finance their growth by borrowing from a bank. A set of well-regulated management accounts is a prerequisite to obtaining finance.
Your management accounts do not have to be particularly complicated to give you these vital pointers – and if you are figure-shy, the more straightforward the better.
The important thing, though, is that you do not allow yourself to be too scared to ask if there is something which is not clear to you. That is the way to keep control of this key to your business fortunes and to keep building your business from strength to strength.
A Three-Pronged Approach To Franchise Success
Danie Nel, head of business development for Cash Crusaders franchising, says the brand’s success over the past 22 years is attributed to the sentiment that “a profitable franchisee is a happy franchisee.”
What is your current footprint?
220 Stores. We’re looking to increase that number by another 20 stores for the 2018 financial year, which will then bring us to a total of 240 stores. Depending on the economy, we’re looking to grow our footprint even more to around 300 to 350 stores nationwide in the near future.
What are some of your brand’s biggest achievements that other franchises can learn from?
Our ability to read the retail market and innovate to stay ahead of times. We have recently launched an online platform where customers can sell their goods or borrow money — all online. This was a first for online retailing. One other achievement that I would wish to highlight is the launch of our mobile phone range, Doogee, exclusive to Cash Crusaders. Personally, having the honour of opening our 200th store was a tremendous achievement.
Franchisor involvement has also played a big role in the success of the organisation. Our CEO Sean Stegmann and other senior managers are as much involved in the business as any other operations manager or operator.
There is simply no ‘ivory tower’ management in our business and it makes a huge difference.
What are some of the challenges you’ve encountered and how have you overcome these?
Some of our daily challenges include securing a premises at a favourable rental and securing a franchisee with sufficient unencumbered capital, who is credit- worthy. Once the store is open, cash flow management and stock procurement is key.
In addition to this, it’s a challenge to achieve profitability immediately and to meet franchisee expectations. It’s also vital to ensure superb customer service and to retain those customers in the current retail and economic climate. I would say that our single biggest challenge is to retain and to build our customer base.
What attracts franchisees to Cash Crusaders?
Our unique retail model that allows for multiple streams of income through one business. These three profit centres include: New goods (variety of imported quality goods), second-hand goods (which we buy directly from the public, either through customers coming directly to our stores, or via our house-buy system offered by some of our stores) and secured lending (a financial service where customers can borrow money against valuables, determined at store level, and the loan is repaid within 30 days — or the contract is renewed for another 30 days with interest and service fees charged).
Why is it important for successful franchises such as yours to have a strong banking partner and how does it benefit both the franchisor and the franchisee?
Gone are the days where you just got a deposit book or cheque book and a little business loan from your bank. Banking has become more sophisticated and the technology that the bank offers is as important as its service, making life for both the franchisee and the franchisor easier on a day-to-day basis.
5 S-Words Make Your Store Site Pay For Itself
Richard Mukheibir, CEO of Cash Converters recently addressed delegates at the FASA (Franchise Association of SA) conference on the topic of choosing the best location for their business. He spoke about the 5-S technique to assist business owners with deciding which premises is best suited for their business.
The combination of continuing trading uncertainty in South Africa and the new financial year for many businesses can add up to carefully reviewing costs – including leases on premises. Choosing a site to set up or relocate your business can be just as stressful as deciding where to buy a house – and just as fundamental to its health, finances and sustainability, says Richard Mukheibir, CEO of Cash Converters.
This is not the time to snap up the property with the cheapest rental as that might turn out to be something you regret in the long run. Nor is it the time to be dazzled by the swankiest premises you can find. The potential for bragging rights could turn out to be poor value for money.
“This is a time for your head to rule your heart regardless of the industry you trade in.” he says.
The real-estate mantra of “location, location, location” works just as effectively in commercial as it does in private property but you will often be looking for rather different factors. Mukheibir shares his 5-S technique to help you begin narrowing down the areas where you will consider locating your business – first at the macro level, focus in further to the meso level, then look more closely at the micro level before you start weighing up specific sites.
Remind yourself of the medium and long-term strategies you have developed for your business. Keep your understanding of your business’s customers, purpose and growth prospects top of mind when you are selecting the areas where you will start looking for sites.
Within those areas, redline any sections where you feel the competition from other businesses will detract from your potential to grow your market. Greenline areas where there are good synergies between the people who live or work there and the demographic that you have identified as your target market.
Make sure there is clearly a good pool of potential customers for you – size definitely matters when it comes to ensuring that there are plenty of customers available to you. Look specifically for facilities that cater for the kind of customers you want to attract. Sports stores benefit from being close to schools and tertiary colleges, for example.
Although many businesses now have an online element, most still benefit from attracting customers to walk through the door. For your premises to be a good fit for your business, you should be located in plain sight and ensure that your ability to market yourself locally through signage and lamp-post posters is not restricted by local bylaws.
You will attract and retain good customers and staff if they feel they’re secure in the area. This perception includes factors such as easy, safe parking and a welcoming environment.
“Making a success of your business is not just about the product or your branding,” says Mukheibir. “It can be as fundamental as finding a site that ends up paying for itself. To do this, it must offer you a well-calculated gap in the market where the strong demand for the product or service that your business offers ensures sales and profit. If you have considered all these steps carefully, you will never worry about making rent and wages payment again.”
Women Entrepreneur Successes1 week ago
Watch List: 50 Top SA Business Women To Watch
Snapshots1 week ago
25 Of The Most Successful Business Ideas In South Africa
Support for Women Entrepreneurs2 weeks ago
11 Quotes On Hard Work, Risk-Taking And Getting Started From Beauty Billionaire Estee Lauder
Entrepreneur Profiles2 weeks ago
The House That Moladi Built – How Challenging Traditional Building Empowers Local Entrepreneurs
Lessons Learnt5 days ago
How Lorenzo Escobal Bootstrapped His Way To Competing With Titans And Attracting Top-Tier Clients
Leading7 days ago
How To, In Practice, Distinguish Between Executive, Non-Executive And Independent Directors And Their Functions
Entrepreneur Profiles7 days ago
In Touch Media’s Margie Carr Shares How She Made An Out-Of-Home Media Agency A Solid Competitor
Company Posts1 week ago
Smoothie Franchise Opportunity: Puré Frooty Is A One-Of-A-Kind Smoothie Franchise Business