So, you’ve decided to take the plunge into the world of franchising, and you’ve secured your very first location. The ground has been cut, the establishment is up and running, and customers are starting to flow in. It feels like you’ve made it, but this is actually just the start of the journey.
In order to keep things going for the long haul, you’ll need to see some tangible numbers that lean into the black, as opposed to the red. Thankfully, the more you track how well your franchise is doing, the easier it’ll be to navigate into smooth waters. Here are the best methods of keeping tabs on how well your franchise location is doing.
MEASURE YOUR EXPENSES
The standard objective for any business owner should always be to minimize any possible costs, while maximizing profit. That doesn’t mean you have to skimp on what makes your franchise great. A little nipping and tucking at the loose ends of your business can seal up any financial leakages you may not have noticed before. If you’re overspending on materials, ingredients, or even amenities, you’re effectively throwing money away. Cost-cutting measures should be balanced with conventional wisdom, which means quality of product and/or service should never falter. Your responsibility is to find that middle ground, so your franchise can flourish.
COST OF GOODS
It may seem related to keeping track of expenses, but the cost of goods is a bit trickier to pin down. In fact, this number can fluctuate on an almost-weekly basis, depending on which way the proverbial industrial, economic and political winds are flowing. A crisis in the Middle East can send shockwaves through the market, driving up product and delivery costs. Conversely, a new competitor entering the fray could yield to better prices down the road, which is why it pays to keep a keen eye on things. The cost of goods can go up or down, so it’s best to keep the markets in the corner of your eye.
CUSTOMER FEEDBACK
Customers tend to be blunt and upfront regarding their opinions, and that’s a good thing. Negative feedback may sting, but it’s also invaluable for figuring out where your franchise is faltering. Similarly, positive feedback can be a massive morale boost that spurs you to even greater success. That being said, every franchise owner should pay more attention to the former, as opposed to the latter. Not only will the criticism toughen them up, but it will also keep them on their toes, which is beneficial for a franchise’s success.
EAVESDROP ON THE WATER COOLER
Employees tend to have a ground-level understanding of what is both right and wrong with a particular business, which makes them an excellent feedback resource. Your employees are the boots on the ground who see the day-to-day routine, and can predict trends as they develop. If something is wrong, chances are your employees will sound off on it, but they may be afraid to do so in front of the boss. A friendly, open-door policy goes a long way towards encouraging your workers to speak up, so don’t be defensive. You might miss out on some valuable intel.
PROFIT
When all is said and done, your profit margins will speak volumes about the success of your franchise. However, don’t be lulled into a false sense of security. Soaring high on massive profits and top notch word-of-mouth feedback might make you feel on top of the world, but it can also set you up for potential disaster. The more success that comes your way, the greater the chance that complacency will set in. Think Sears, or JC Penney. Now, imagine how greater the risk is for a small franchise location. Profit should be viewed with a pragmatic lens, and as little emotion as possible. Yes, success is exciting, but euphoria should never trump focus.
CONCLUSION
By keeping tabs on these different sources of information, you can track the success of your franchise in real time, all the time. Never rely on one metric in order to guesstimate how well your franchise is performing. Instead, pool these resources together, and step back for an eagle-eyed view of the situation. At best, you’ll be able to formulate long-term strategies to keep the positive momentum going. At worst, you’ll quickly figure out what changes you need to make to turn things around, and turn your franchise into a hit.
