Essential Qualities for Franchise Success
Every business starts with a dream; however every dream doesn’t necessarily become a business. At the outset the dreamer needs to establish if they are the right person to turn that dream into a reality. Do you have the skills and qualities required to run your own franchise business?
Purchasing a franchise and running your own business may be one of the most exciting things you ever do. It can offer lots of potential rewards however you need to understand the risks involved in running your own enterprise, both financially and personally. Ask yourself if you have what it takes to be your own boss; why do you want to be in business; is this really for me?
Above all you will need passion and a love for the franchise business you choose to get into. Then, there are certain attributes that someone starting their own business ideally has:
- risk appetite – you should be comfortable with a certain level of business risk;
- numeracy – while you don’t need to be a mathematical genius, you do need to understand numbers and be confident in dealing with cash flow;
- aspirations – without a boss to guide you, you will need to be self-motivated and have the ability to inspire and lead others;
- resilience – because ‘the buck stops with you’ you need to have the stamina and persistence to work the hours needed; and
- innovation – it will be up to you to anticipate potential problems or opportunities, to think logically about those situations and look for successful outcomes.
Small business owners and franchisees need to understand or be willing to learn about day-to-day business management, planning, and sales and marketing. There are short (and longer) courses you can take to acquire any skills you may be lacking. Don’t forget that one of the best skills is to ask questions and seek advice. One of the benefits of buying into a franchise system is that the franchisor often provides regular training opportunities for its franchisees. However, don’t just rely on the franchisor. Find an accountant, lawyer and bank manager that you trust and respect, and make sure you research material on how to manage your business – you may be surprised how much you already know and how many skills you already have, though you should always be willing to learn more.
Whether you are getting into your own business because you have identified a gap in the market, or you simply want to be your own boss, it is good practice to flesh out your ideas on paper. Many small business owners fail to write business, marketing and financial plans which can lead to the business under performing. Your first job then, is to gather sufficient information to help you write these plans.
Ask yourself these questions:
- do you fully understand the franchise business you want to get into?
- does the franchisor have similar goals and values to you, because you will need to work effectively together?
- do you know who your customers are, and who your competitors are?
- do you know why your customers would choose to buy from you rather than your competitors?
- what are the opportunities for the business, and what strengths will help you make the most of those opportunities?
- what weaknesses may potentially threaten the business?
- do you have sufficient funds to pay for opening costs and cash flow needs for, say, 12 months?
- do you have access to more funds if you need them? and,
- how much money and time are you prepared to risk on this business?
This list is not exhaustive but may help you get started.
Take time to develop your business plan, outlining your goals, your strategies, your prospects and how you will achieve them. Each business will have its own unique plan so while it is good to work from a template, discard any headings that don’t specifically apply to your business. Don’t treat it as ‘homework’ but as a serious analysis of how your business will work. Planning will help you to test your ideas and decide on strategies to reach your goals.
The nature of markets and consumer needs change rapidly, and planning can help you to recognise potential problems that may require external sources of information and assistance. While it cannot predict change, planning can help you recognise changes more quickly enabling you to adapt. Planning can also help you to avoid unexpected crises and achieve smooth business growth.
Your plan is your roadmap to success. It helps you to regularly monitor your results against a set of goals and performance standards and, if you find yourself taking a detour away from your objectives, your business plan will help you find your way back to the main road. Above all, keep in mind your purpose for going into the business. At the end of the day, what is it that you want to achieve out of running a business? For many this will be wealth creation to provide a lifestyle.
Remember though that in a business the ‘wealth’ is tied up in the business until such time as the owner decides to exit that business. It is therefore critical to have a strategy for how that ‘wealth’ is going to be maximised and then extracted from the business at that time. Anyone going into a new business or franchise should always do so with an ‘end’ in mind.
THINGS TO REMEMBER:
Your key plan ingredients:
- Direction: A business plan should establish your business’s priorities. Don’t try to do everything, and don’t try to please everyone. Be specific about what you want to achieve.
- Milestones: A business plan should detail objectives to be achieved with deadlines, budgets, resources available, standard to be achieved, measurements, and what success looks like. This will help keep you on track.
- Cash flow: Cash is the lifeblood of every business and is different to profit. A business plan should show month by month projections of the cash needed to operate and compare actual cash flows regularly to help ensure it has the cash available to survive.
- An ‘end game’: A business plan, even for a new business, should also address what the owner eventually wants to achieve from the business and how that will be realised.
While the prospect of a new business or franchise is always exciting, any foray into the business world should be approached with caution. Information will be your best friend so find out as much as you can about the market you will be operating in, the franchisor and brand, business management, and your own skills and strengths. The Davidson Institute’s Ready for Business guide may be a useful starting point as you embark on your journey.
Additional insights into business financial management are available from the Davidson Institute. The Davidson Institute, a Westpac initiative, is committed to providing financial education that will make a real difference in helping Australian’s achieve their financial goals. Our education is designed for businesses, individuals and not-for-profit organisations, offering a comprehensive range of topics from cash flow to business planning and superannuation to investment. As part of Westpac’s commitment to building long term sustainable businesses and communities, the Davidson Institute has developed a range of financial and business education, insights and tools that may be helpful in your business.
Ian Watt is the Senior Business Development Manager – Franchising, NSW & ACT at Westpac. He specialises in the franchise sector, working closely and assisting many franchise brands grow and maintain their network. He holds a Bachelor of Business, Diploma in Franchising and is a CPA.
Westpac continues its long-term commitment to franchising in Australia through a national network of franchise specialist business bankers who are able to deal with the specific needs of the franchise sector.
Contact Ian at: