How the Right Technology Can Make Franchises More Successful
Franchisees and franchisors often face key challenges around hitting financial targets, deciphering complex financial reports, meeting reporting deadlines alongside managing daily operations, managing client data, and identifying key financial trends to understand what actions can help increase the bottom line. These struggles aren’t unique; franchisees, franchisors, listed entities, large enterprises and small businesses alike report these pain points.
However, with the right systems and technology in place, along with a clear understanding of how to leverage them appropriately, there is no limitation to the processes that can become more efficient. The solution could be as simple as automating bank reconciliations or as complex as implementing new HR and payroll systems to reduce inaccuracies and onboard new staff more efficiently. Even managing inventory can be easier and more cost-effective with the right solution.
Manual handling within core business activities creates an avalanche of issues impacting numerous stakeholders within the business. These activities can result in double handling, inefficiencies, inaccuracies, unnecessary costs, and delays in key stakeholder and franchisee reporting.
For example, a common yet outdated internal process for customer sales within the hospitality or retail sector can result in all of the above negative outcomes:
A sale is raised within a point of sale (POS) system. The sales person accidentally types $1,000 into the EFT terminal but the sale is only for $100. This inaccuracy due to a manual keying error results in a number of knock-on effects.
At the end of the day, the manager extracts the daily sales reports and prepares a manual reconciliation. Unfortunately, the keying error is not picked up. The reports are consolidated into a weekly report to be emailed to the book keeper. This process results in double handling as well as failing to pick up the initial error.
The book keeper, charging by the hour, receives weekly takings reports in Excel and enters these into the accounting platform. The accounts, however, are not reconciled until the end of the month. This compounds the issues around double handling, inaccuracies and inefficiencies, and unnecessary costs. And, since the accounts aren’t reconciled until the end of the month, issues aren’t identified in a timely manner.
The book keeper has finally identified the typing error during reconciliation. However, they must produce the month-end accounts by close of business tomorrow. Only by way of elimination will they be able to find the answer. This leads to significant further inefficiencies since the book keeper must backtrack and investigate issues involving processes with multiple manual handling steps.
The book keeper is unable to find the source of the problem and, consequently, the business now misses the reporting deadline, leading to a delay in stakeholder reporting.
All of these issues could have been avoided with the right automated solution in place. For example, ensuring the POS system is connected to the EFT terminal means sales representatives don’t have to key in amounts manually, so the initial error would have been avoided. Choosing a POS system that presents a cash/EFT variance report at the end of the shift would have meant that, if the issue had occurred, it would have been identified immediately.
A cloud-based POS system would have let the book keeper log on and extract reports automatically, reducing double handling and making it easy to see where any discrepancies may stem from. Streamlining each of these steps through automation and technology enhances the chances of achieving reporting deadlines.
Implementing a cloud-based operational system and accounting platform significantly reduces inaccuracies from manual handling, inefficiencies caused by additional processes required to transfer data from one system to another, and delays in reporting.
With cloud-based systems, reports can be generated in real-time, rather than at the end of the month. This lets you identify risks and opportunities throughout the month and use that information to make better business decisions sooner.
The key is to integrate systems so they work together. There are four key steps to achieving process improvements through technology, and none of them require you to become technology experts. The key ingredients are: knowing the business; understanding where the issues lie; being patient to see the process through; and consulting with the right people.
The key steps include:
1. Identify the pain points: it’s important to understand what the business needs to achieve and who this will impact. Understanding this will help identify which team members should be involved in this process. Involving key staff in these decisions will increase the chances of proper use once the solution is implemented.
2. Review the available solutions: every business is unique and not all systems will be suitable. Decision-makers should compare the old process to what the new system will achieve to ensure it will make people’s lives easier, save on operational costs, and benefit all parties who will be required to use it.
3. Get the implementation right: too often, software is pushed on staff with no support, guidelines, or even appropriate training. Getting staff involved from the start, following a project plan, assessing it at all stages, and using a consultant if necessary is crucial. A failed implementation will only cost more in the long run. Training is an essential part of the technology implementation plan, not an added bonus.
4. Measure the project success: it’s important to identify whether the project achieved the aim of the change management process and determine how much internal processing time it saved, whether there are savings in obsolete software systems, whether the new system has improved staff morale, etc. Reviewing the project’s successes and failures will lead to further improvements.
Franchisors who don’t know where to start should find a technology adviser who can help with the change management process and who has the resources available to step the business through all of these stages. Advisors understand that technology is a vital key to improving operational processes, and engaging employees.
It’s important to remember that the best results come not from just buying a solution and installing it. Instead, it’s about carefully considering the business environment and choosing the right technology ecosystem for the franchise. This is likely to be different from other businesses even if they work in a similar industry. Taking advice from the right people will help manage risk and avoid wasted investment.
Aleesha has worked with numbers virtually all her life. She stumbled into bookkeeping in the early days whilst managing the family business which led her down the path of a career in chartered accounting. With significant experience advising small and medium sized businesses and franchises on complex issues of financial administration including mentoring and assisting in-house finance teams through outsourced CFO services, Aleesha works with her clients to help streamline internal processes, focussing on changing operational systems, management accounting and budget/forecasting projections. Aleesha was previously at William Buck and Mazars.