First Things First
Darryn McAuliffe, Industry Solutions Executive, NAB Business highlights some key, but sometimes overlooked, pillars of success for new franchisees.
Importance of your local community
NAB research has demonstrated that 45 per cent of Australian businesses receive the majority of their sales from local customers and identified ways franchisees can cushion themselves from the effect of the current economic environment.
The results of the survey highlight the need for franchisees to leverage their local communities and encourage ‘shopping locally’. When looking to buy an existing business, a good customer base is an important criteria and strong community support forms part of that.
The effect of spending locally also has a ripple effect. If a drop in the water represented a single purchase, then the ripples would reflect how the benefits would flow through to the surrounding businesses. This is something local communities can positively influence and can feel good about.
In addition to the local community support, businesses also rely on the support of fellow businesses to navigate through these challenging economic times. Forty one per cent of Australian businesses consider the success of their business to be dependent on the success of their neighbouring businesses.
Interestingly, those businesses which relied on their local community for continuity weren’t making the most out of the potential connections that are right on their doorstep. Only 16 per cent of Australian businesses were members of a local business network. Of these network members, 64 per cent reported the ability to build greater business connections as a benefit of networking. Also, 51 per cent saw the ability to seek new opportunities to grow their business as a key benefit.
Get by with a little help from your friends
Good advice from good people is one of the most important ingredients for business success, all business owners need to surround themselves with people whose primary business is their business. Having the ‘right’ professionals, such as lawyers, accountants and bankers, in place is essential. These relationships are generally longer-term, so it is important you find the ‘best fit’ for your business. Business owners should not be afraid to ask for what they want from their service providers from the outset.
There are plenty of professional services firms out there that want your business. Think about what you value in your business relationships and look around until you find the right match.
When new customers come in to a NAB business banking centre, our business bankers take the time to really get to know their business. This time should be given by all your support services, to give you the chance to get to know who you are entrusting your business to.
Also, now more than ever, is a good time to be talking to your team of experts, like your accountant, your financial adviser and your business banker, about your business, where you want to take it and what the economic environment means for you. The broader your network, the more likely you are to be connected to someone who can help your business.
Building a strong support network is essential for all franchisees, with advisors and business professionals now more accessible to the business community than ever before – in the form of online business networks, chambers of commerce, business
advisory councils and franchise and industry groups.
Have you considered a mentor?
Whether you are established or just starting out, you should also consider seeking advice from an outside business mentor. This might be someone with a strong knowledge of starting up small businesses or experience in your industry.
There are a variety of advisory services, programs and networks offered by government and community organisations and franchise systems that are free or of minimal cost.
Your support network should not only be there in times when business is strong, but more importantly, be there to help you through the tough periods. This includes when your business finds itself without sufficient funds over a period of time.
Cash flow is probably the single biggest challenge for small businesses. Making sure your funds coming in and going out are balanced and ensuring a profit, is often easier said then done. Speak to your accountant or business banker about options that can help you manage your cash flow. Even talk about managing peaks and troughs in your business with your mentor – chances are they have been though the same thing themselves. Having robust outside business support will motivate you to perform, keep momentum and make sure you do not get so caught-up with internal issues within your business that you lose grip on the bigger picture.
Use your networks
For franchisees, it’s vital they tap into local networks to take advantage of businessbuilding opportunities and capitalise on the natural synergies that exist between businesses. Simple tips like taking your business cards everywhere, speaking to new
people and making the most out of every networking situation will get you on your way to building mutually beneficial business connections.
Networking allows you to learn from other local business leaders, create partnerships with likeminded entrepreneurs and help you keep up to date with local issues. All these things will assist franchise owners. Businesses should also give a lot of thought to local marketing to build awareness in their local business area.
Organisations that contribute to their local communities through sponsorships, monetary donations and in-kind support, also have the opportunity to feel good about themselves and promote themselves as active members of their local communities.
Stay close to your customers
Staying close to customers is a good practice at any time. It becomes increasingly important when conditions tighten. Improving customer relationships can create opportunities for new and repeat business – especially from your most loyal customers.
There is a reason why someone chooses to buy from you and not a competitor. Knowing your customer, and the reason they purchase from you, allows you to plan for the future. It helps you project future earnings and plan for what your business will need to not only survive, but prosper - regardless of the economic environment. It’s our experience, that businesses that continually focus on understanding why their customers choose them, don’t generally get caught out when those consumer needs change.
• Ask your best and most loyal clients for referrals. It’s these people who most recognise the value in your product or service and will be most willing to refer new business to you.
• Don’t underestimate the power of referrals. Take the time to identify who your key advocates are and why they are advocates. You should be asking these customers for referrals and potentially emulating what you do for them to build satisfaction and more advocates.
• Start making calls personally to customers to set an example for your sales team and front office personnel.
• Get connected to your industry leaders via seminars, local franchise events or online blogs. This will help expand your network of contacts and possibly create new sales opportunities. For example, State and Local Chamber of Commerce, Franchise & Industry Associations and other networking groups.
• Read trade and industry journals, speak to industry bodies and take advantage of any resources to available to you.
Darryn McAuliffe is Industry Solutions Executive responsible for the franchise sector at NAB.
Darryn oversees NAB’s Regional Franchise Banking Managers and a national team of more than one hundred accredited franchise bankers.