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Growing a Business

What’s the next step in growing my business?

Franchising your business is one way to expand it.

Vera Valasis

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Is my business franchiseable?

Franchising your business can be a very successful way of expanding your business, provided that you have a business to begin with.

Many of today’s well-known brands have used franchising to accelerate the growth of their existing businesses, building national or even international brands in the process. However, franchising should never be seen as a testing ground for a brand new (and unproven) business idea but as a means of expanding an already successful business.

The following characteristics make a business franchiseable:

Credibility and a proven concept

The concept needs to be proven.  The company must have a good track record and an experienced management team.

Potential to establish a memorable brand

The brand should be memorable, registered and capable of being expanded into different parts of the country, eventually perhaps even into other countries.

Profitability and access to capital

To franchise a business is not, and can never be, a means of funding a new business, or rescuing a business that is in trouble. For a business to be franchiseable, it needs to offer more than mere potential.

It needs to have a proven record of success and generate adequate gross margins to allow franchisees to make money after they have paid their franchise fees, repaid their loan and paid themselves a market related salary.

Franchising is also capital intensive as the franchisor needs to get professional advice and build an infrastructure.  The franchisor should have access to capital and shouldn’t sell franchises for survival.

ROI for the franchisee and franchisor

Both franchisee and franchisor should obtain a reasonable return on investment.  The franchisor should receive a return on the investment in the development costs.

The franchisee should receive a return on the investment in setting up an individual outlet.  A good franchise will deliver a return on the initial investment within 3 to 4 years.

Uniqueness and high barrier to entry

The business to be franchised needs to have a unique selling point that will allow it to differentiate its products or services from those of its competitors. This sustainable competitive advantage would allow it to compete successfully in its markets nationally, with possible potential to eventually expand internationally.

Sustainable and growing demand

The franchisor needs to ensure that demand exists in different areas, and that the product has staying power. The market for the product or service should be growing and the demand must be sustainable.

Intellectual property and systems

The business needs to have a set of systems, procedures, expertise, skills and know-how that optimises every operational step.

This, in a nutshell, is the purpose of the operations and procedures manual.

  • To ensure consistency of delivery throughout the network and brand integrity, and to
  • To enhance franchisees’ ability to maximise profitability, this know-how needs to be carefully documented. This will facilitate skills transfer, more often than not to individuals with no prior experience in the industry sector.

Transfer of skills

It must be possible to train prospective franchisees lacking experience in the sector within a reasonable period. This is important because to permit new franchisees to operate a business under the network’s brand before they are adequately trained would be a recipe for disaster.

Practical considerations dictate that franchisees cannot afford to spend long periods in training. Most franchisors recognise this and aim to train their franchisees within three months or less. However, there are exceptions. This needs to be considered when working out the total cost of the franchise the prospect incurs (which needs to include the lack of income during training.)

Support infrastructure must be in place

The franchisor must provide intensive initial and ongoing support to franchisees. This requires manpower, facilities, a veritable set of skills and absolute dedication to the creation of win/win outcomes.

The product should demand a price premium

It’s difficult to franchise a product that is seen as a commodity or that is the target of price wars.  This makes for a difficult competitive environment where franchisees will be under constant pressure.

The margins must also be high enough to afford franchise fees.  The added element of personal service from an owner operator can mitigate price sensitivity to some extent.

The company must have a franchise culture

It’s important to have a culture that is open, learning orientated and participative.  Autocratic companies will find it difficult to franchise, since franchisees are not employees to be dictated to but should be seen as business partners.

Vera Valasis – executive director, FASA Vera Valasis holds the distinction of being the first woman to hold the position in FASA’s 34-year existence. Her experience in franchising spans over twenty years – from her early days managing restaurants and in retailing to holding the position of managing director for leading brands Milky Lane and Juicy Lucy under the Pleasure Foods banner and subsequently as MD of Debonairs for Famous Brands. Now in her 8th year at the helm of FASA, Vera’s experience in all aspects of franchising – both from a franchisee and franchisor standpoint – puts her in the perfect position to steer FASA towards greater growth and stronger representation of all players in the sector.

Growing a Business

How To Grow Your Start-Up Venture When You’re Lost

Advice by Anton Ressel on how to grow your start-up venture to get you on the right path.

Anton Ressel

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Start-up-venture-advice

I have recently started a small business. I would like for my ventures to grow, with some assistance. How do I move forward?

The starting point for any venture is some form of a plan. I am not talking about a telephone-directory thick business plan, nor a plan developed for you by someone else in order to try and raise funding, but rather a tight, concise plan that lays out your core business, your potential customers, your product or service focus and the primary actions you need to do in the short-term to get the concept off the ground.

Resource: Keep it Simple: How to Write a One Page Business Plan

There are many good templates for a simple strategic plan available online, such as the Business Model Canvas. You should also look at what business development programmes, if any, there are out there that may be able to offer some support.

Examples would be the SAB Tholoana Programme, and some of the support initiatives offered by organisations such as Fetola and Edge Growth.

Finally, you should approach SEDA and see what support they could possibly provide. Find more information on SEDA here.

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Growing a Business

What tools will make my small business run smoothly?

As a small business owner, it’s normal to find yourself being an accountant, a salesperson, an operations manager and a PA all at once. Here are five tools to help you wear multiple hats without feeling overwhelmed.

Catherine Black

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Surprisingly, one of the biggest challenges of owning your own business is staying on top of administrative tasks in addition to getting your actual core work completed.

It’s a reality that these admin tasks – from invoicing customers to collaborating on a document – are typically done by the business owners themselves, because there’s not always budget available for any support staff.

We-recommend-tickWe recommend: 4 Signs that your Small Business has Finally Arrived

Here are five tools that can help you manage your business more seamlessly, leaving you free to chase your entrepreneurial dream.

1. Online invoicing software

While creating invoices manually may work in the beginning, this task can quickly become time consuming and hard to control as your business grows.

Manual invoicing also means that things can slip through the net, so you forget to chase outstanding invoices that can in turn impact your cash flow.

A cloud invoicing tool like Freshbooks lets you create invoices online and email them to clients from within the interface.

Besides an easy dashboard showing you how much you’re owed at any point in time, Freshbooks also lets you print reports to use for accounting purposes.

Best of all, your clients can login to their own portal and view invoices, timesheets and more.

2. Cloud file sharing software

Whether you’re on your own or working in a team of 20 people, at some point you’ll need to share documents with another party like a team member or supplier.

Rather than emailing large files back and forth that can quickly clog up your mailbox, cloud file sharing tools like Google Drive and Dropbox are an elegant solution.

These tools allow you to upload and store data (presentations, photos and more) on your cloud-based drive, and then share them easily with anyone you wish.

The best part? The basic versions of both of these tools are free, so it’s as easy as creating an account and you’re off.

3. Asana – project management

A large factor in a project’s success is how efficiently it’s managed internally, because this impacts whether you stick to deadline and how much the project costs in the end.

If you’re sick of sifting through emails relating to a particular project, or can’t keep track of who’s doing what, an online collaboration tool like Asana can help.

With Asana, you can create and assign tasks within a project to team members, and start group conversations that all members can see.

In essence, team members now know exactly what is due when, who’s working on what and whether there are any snags. This keeps work streamlined – and removes the dependence on email as a workflow management tool.

We-recommend-tickWe recommend: 3 Time Management Tips For the Busy Small Business Owner

4. Shared calendars

If you don’t need the full monty in terms of project management, a simple shared calendar can go a long way to keeping employees on the same page.

Using a collaborative cloud system such as Google Calendar that’s shared with everyone on your team means people can quickly find meeting times and holiday weeks that suit everyone else.

Google Calendar can also be synced across multiple devices like your phone and tablet, so you can always stay in touch with scheduling. 

5. Other Google Products 

Several products within the Google fold have already been mentioned above, but there are others that can help you run your small business more efficiently. If you run a business online, Google Analytics is Google’s free analytics software that tells you who came to your site from where, and what their interactions on the site were.

Finally, if you have a business with one or more physical locations, Google My Business allows you to get your business details (address, pictures, videos, opening hours) onto Google’s search results for free.

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Growing a Business

Expand or die?

Tips on expanding a business abroad

James Caan

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Should I expand abroad? I am currently considering expanding my kids’ clothing business abroad, with a view to broadening my customer base. Can you possibly offer me some advice on how to go about determining whether this would be a feasible idea, and if there is profit to be made in foreign countries?

Expanding overseas is seen as a natural step in the growth of many businesses, but there are a number of things to take into account. Only after you feel you have covered all of these areas properly should you press ahead.

Domestic position

First take stock of your position in your home market. If you don’t yet command enough of a market share, you may want to reconsider whether now actually is the time to go abroad is.

Remember you are going somewhere where the regulations, economic outlook and customer behaviour can be totally different, so it is even more of a risk than your home market.

I often see entrepreneurs who have less than 5% of their home market trying to go abroad, which simply doesn’t make sense to me. To put it another way – if you haven’t yet cracked Cape Town, don’t go after California!

Understand the market

Every little detail about the trading environment you are going into needs to be understood. There are some huge, multinational firms that have ventured out of their country only to get a nasty surprise. Think about the manufacturing regulations, which is particularly important for your type of business.

Also look at things like HR laws and tax requirements, and crucially, the relationship between currency and inflation rates. I once had a business in Turkey and my profits were being seriously reduced because of the due to unpredictable inflation and currency. I would say there needs to be around 6-12 months of solid research before you make that move abroad.

A more robust infrastructure

Lawyers, accountants, even translators – these will all be critical figures in ensuring your business copes within a new market. They make up the infrastructure of a business, and the stronger the infrastructure, the better you will be.

These people all need to be experts, and I don’t just mean being able to speak the language! They should know all about the business environment in that country, as well as general customer behaviour.

What types of garments are most popular? What times of the year are best from a clothing point of view? They will essentially be your guides who help you come to the correct strategic decisions.

Partnerships

I would strongly recommend finding an international partner. Don’t try and be a hero and go it alone. Working in conjunction with somebody who knows the industry and country will leave you less vulnerable.

You may have to share some equity with them, which a lot of entrepreneurs don’t like doing – but consider this. Would you rather own 60% of a business that has real value and growth prospects, or 100% of a failing business?

Remember the partner will also be able to introduce you to key contacts, which can increase your pipeline.

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