Franchising your Business

Many entrepreneurs dream of building their businesses to the point where they need to expand their businesses into other territories or regions.  Franchising, if correctly done, provides a very effective form of leverage to expand into other regions.

However, many entrepreneurs believe that franchising your business is an easy way to riches.  This is not the case and requires careful thought, preparation, planning and execution.I would like to share some key insights into the factors that need to be considered for successful franchising.

  1. Proven Product and systems

As Franchising is all about leveraging products, services and systems it is imperative that you ensure that your idea , products and systems have been thoroughly tested.  You cannot start Franchising your business while still testing whether the product works or not, neither can you franchise your business until you are absolutely convinced that there is a need in the market for the product.  In addition, you need to be able to demonstrate that the business is able to operate profitably for a sustainable period prior to Franchising your business.  This is best done by first running a test model successfully.

2.   Duplication

Operating a successful business is one thing – being able to duplicate the business successfully is quite another.  Ensure that you have drafted a set of detailed operating manuals, brand guidelines and financial models that any potential franchisee is able to use from the start of the franchise being opened.

As your Franchise expands, you start experiencing a certain loss of control and one area that you would want to have clear guidelines for is in the area of brand guidelines.  Failure to give attention to this element could very easily result in the dilution of your brand and or proliferation of unauthorized brand logos and products and services

3.   Legal Agreements

Make sure that you appoint an attorney that understands franchising and ensure that all Master Franchise and Franchise agreements have been properly drafted.  In South Africa, you may want to consider consulting the Franchise Association of South Africa (FASA) to ensure that you have covered all the requirements for registering a Franchise.  

In addition to the above, use the services of the above experts to draw up your Franchise Disclosure Document as well. If there are patents that have to be registered, make sure that these are handled and lodged by experts in the field.

4.Controlling the Numbers

As your franchise starts to expand you want to ensure that you have access to the key numbers (financial and non-financial) that will determine your success.  Set up proper accounting systems and software that allow you to have access to the key numbers for each Franchise operation.  Having access to these numbers will provide you with the opportunity to identify which of your franchise operations are performing well and which are not performing well.  Timeous access to the correct information is critical to addressing non- performance and being in a position to coach the franchisee in the areas that he needs support.

5.   Franchise Support

One of the keys to successful franchising and one that is often overlooked is the support structures that need to be put into place to be able to roll out franchises at the pace that you are planning.  Areas that need to be put into place are as follows:

  • Training and Post training support.  Whilst the success of any franchisee will largely be dependent upon the initial training a franchisee will receive, it is critical, that the appropriate post training support and training structures are put into place.  This is an area where the strength of the “community of franchisees” is built and as a result one needs to look at regular support structures – weekly, monthly, quarterly and annually.  
  • Refresher training – Whilst Franchisees will receive initial training and post training support, I would recommend that you conduct annual refresher training to ensure that your team are kept abreast of any developments within your markets and or products.

6.   Franchise Selection

The success of any business is built on the strength of the team that you surround with.  The same applies to franchising.  Define what it is that you are looking for in a franchisee and communicate what you are looking for to all those involved in finding the best possible candidates.  

Equally important is to define your franchise sales process.  This should be designed to ensure that the process achieves two main goals:

  • Put the prospect in a position to be able to make an informed decision about whether your opportunity is the best business opportunity for the franchisee
  • secondly, to ensure that you are confident that the franchise prospect has what it takes to be successful in your business.

Often, corporate executives want to leave their highly pressurized corporate roles, and whilst being successful in their corporate roles, they might not have the personality, drive and tenacity to be successful as an entrepreneur.  Whilst it is easier to succeed within a franchise model it still takes hard work. If you want your franchise model to grow at the pace that the market requires, ensure that you select franchisees that are absolutely committed to their success as well as your brands success.

7.   Cashflow

Starting out in any business takes cash.  There is a very well know quote that states – “at the start of your business, it takes twice as long and twice as much cash”

This is equally true for you as you start to roll out your franchise operations. The set up costs relating to product development, developing systems, testing your concept store, brand development, developing Franchise training manuals, legals, research and development, IT systems as well as head office support structures are require large amounts of cash.

As a result it is critically important that you develop a proper cashflow model and budget and ensure that you track your actual expenses versus planned expenses on a monthly basis so as to be able to take corrective action timeously.

8.   Marketing and Branding

One of the key reasons Franchisees decide to join a franchise is because they lack the ability to do effective marketing and branding for themselves.  As a result you need to develop a detailed marketing plan for the brand as a whole whilst also developing a marketing plan that any Franchisee can use at the start of his franchise operation.

Head Office’s responsibility is to drive brand and or industry awareness of your franchise or product whilst it is the responsibility of each franchisee to drive their local area marketing.

As the marketing environment is constantly evolving it is the responsibility of the head office marketing team to ensure that the entire team is kept abreast of developments is this space.

9.   Relationships

Franchising is essentially about relationships between Franchisor and Franchisee on the one hand and franchisees and their customers on the other hand as well as relationships ith your suppliers.  It is therefore important that appropriate communication structures are put into place to drive and improve all the relationships that exist in the business models.

In conclusion, Franchising is an exciting way to expand your business whilst not losing control of your brand or your products.  `This can be a rewarding way to drive and achieve your financial goals if careful attention is given to the points identified above.

 

How to build bulletproof business systems for your SME

So you want to put your business on autopilot and finally take an unplugged vacation where you can safely step away from your laptop, phone and other devices, do you? Then you need business systems and they need to be good. Unfortunately, there’s no shortcut around this – it’s not a task you can fast track or delegate to someone else, because it’s you you’re trying to replace with these systems. But a nod in the right direction might help you to kick-start the process. Take a look at these nine steps to nailing down the perfect business systems for your SME:

 

  1. Take inventory

Make yourself some snacks and find a comfortable seat, because this could take a while… you’re about to draw up a list of everything you do for your business.

  1. Simplify

It’s probably a long list, but you can make it a lot shorter by prioritising each task according to importance. Start with daily tasks and move on to the less frequent tasks as you go.

  1. Get your flow

For each task, create a flow-chart or map out the necessary steps that must be taken to achieve it.

  1. Installing…

Now comes the challenge of finding someone to fill your shoes. But before you do, make sure you check to see if any of these steps can be automated. The face of technology is changing every day and you never know how many new technologies you’ve missed while trying to steer your business. These technologies may help you to let go of the wheel now.

  1. Do the math

For the rest of the steps, you need to assess their resource requirements – how much coin, effort and manpower will they take?

  1. Test the water

Come up with a plan based on your calculations and put it into action, keeping a close eye on where you can improve and streamline the system.

  1. Document the process

Having business systems in place won’t give you much freedom if it takes almost as long to explain them as it does to do them. You don’t want to be wasting your valuable time explaining them over and over again, so create a System Action Plan for ease of reference.

  1. Pass on the baton

You will need to assign accountability and establish standards to gauge the performance of your systems and the staff running them as well.

  1. Create contingency measures

The perfect system is one that knows perfect systems don’t exist. Things change, accidents happen and people make mistakes. This is unavoidable, but preparing for it could give you and your staff the upper hand in tackling these issues, as and when they arise.

 

 

This isn’t the army: Why it’s important to focus on teaching instead of punishment

When you’re in the army, the lines of power are set in stone. Your commanding officer is your superior in all ways. Bad behaviour is punished swiftly and severely, and through an atmosphere of bureaucratic fear, recruits quickly learn to toe the line. Until surprisingly recently, your average workplace would have worked in much the same way. Performance was encouraged through the desire to avoid punishment and little else. But today’s employers and their employees are different.

Though many business owners and managers probably wish they could revert to the military system from time to time, power dynamics in the workplace have changed. Through decades of research, it has come to light that employees perform better with encouragement than punishment, and that their level of personal happiness leads to improved productivity, fewer sick days, and lower staff turnover.

Punishment or Correction?

Everybody makes mistakes. We’re all human, after all. Sometimes an individual’s slip-up has far-reaching consequences for the business, and at other times performance has been slowly but steadily declining over months. Chances are, whatever the case may be, that the employee in question isn’t feeling great. In fact, they’re probably already engaging in some sort of mental self-punishment anyway.

The real secret to successful disciplinary procedures is to dispel the negative and the destructive, replacing it with something positive and productive – and that’s where teaching and correction come in. Failing to do this will do nothing to make the employee feel better, and their misery will only cause their outlook and performance to degrade further. What’s more, the general vibe in the workplace will suffer, as will the business-owner’s (or manager’s) image in the eyes of their employees.

Conditioning: Psychology 101

The old adage “you catch more flies with honey than vinegar” could not be more accurate. “Conditioning” is a concept first described by Ivan Pavlov, a Russian physiologist, in 1903. The premise is simple: You can change behaviours over time by simply rewarding desirable traits and punishing undesirable ones. This is pretty straightforward if you’re training a dog, but people are significantly more complex, and it has been shown that positive reinforcement, rather than negative (punitive) reinforcement, is what generates the best results among employees.

Classical Conditioning in the Workplace

In the above example of our underperforming employee, punishment alone will probably help avoid repetition of the same behaviour in the near future. But it will also create a disgruntled, unhappy and resentful employee (which almost always leads to them returning to their negative behaviours, resigning, or eventually getting fired).

However, if a manager were to take that employee aside, explain what went wrong (and why), and suggest methods of improvement through teaching and mentorship, the employee will not only improve their performance (in the long term this time), they will also feel valued and understood, and develop a more positive attitude toward their employers and the company as a whole. A win-win situation if ever there was one.

So although a swift punishment might be the quickest and most straightforward disciplinary avenue, it is by no means the most effective. Punishment does nothing to improve morale, employee satisfaction or workplace performance. Guidance and mentorship focussed on correcting bad performance, on the other hand, not only fixes the problem over the long term, but also encourages open channels of communication between employer and employee, as well as developing skills and reinforcing behaviours that make a repetition of the mistake a lot less likely.

Do you even SWOT?

Regularly assessing your business’s strengths, weaknesses, opportunities and threats is a vital component of managing your business effectively. Every enterprise is limited, to a lesser or greater degree, by its resources, so it is unlikely you will be able to concentrate on improving these areas all at the same time. This is where frequent SWOT mapping can prove most effective. By charting your progress over time in each of these paramount areas, you can determine which requires the most input at any given time. It’s also the key to unlocking the secrets that will help you blitz the competition. Here are a few pointers to keep in mind when drawing up the ultimate SWOT analysis:

Sticking to your strengths… or not

A lot of business owners will put most of their focus on the ‘Strengths’ segment of the SWOT analysis, because they perceive it as more valuable in terms of competitive positioning. This is not correct. All of the areas of your SWOT analysis are equally important and concentrating more on one area – even strengths – is a major oversight that can cost you some serious gains in the long run. You know those guys at the gym who spend way too much time pumping iron and not enough on leg day? This could be your business. And imagine you were trying to strengthen your body, but you didn’t bother to take into account a previous injury or the chance of a future one. You’d be more likely to hurt yourself, which would just set you back in achieving your goals, wouldn’t it? This means that strengthening your business is a lot like strengthening your body; you need to be discerning about when it’s time to build, maintain and take a break to focus on other things.

Why you want weaknesses

In business, we all like to think that our company is doing the best it possibly can with the resources it has, but this is often not the case. Inevitably, you will drop the ball somewhere along the line because well, running a business isn’t exactly a walk in the park, is it? The good news is that having weaknesses is beneficial. Why? They instantly provide you with a way to improve, because they can and should be turned into future strengths. Just keep in mind not to point the finger when mapping your company’s weaknesses. It’s not about figuring out where your problems come from so you can assign blame. Your goal is to identify the opportunities lying beneath the surface of these weaknesses and propose solutions to harness them.

Opening new doors

We’ve all heard that when one door closes, a window opens. But have you ever noticed how climbing through a window is a lot harder than walking through a door? While you need to seek out new opportunities for growth, it’s worth keeping in mind that this can take considerable resources and investment, so you don’t want to be too boisterous in chasing every opportunity that pops into your head. Instead, be selective and realistic in identifying a few where you can funnel all your focus. Don’t spread yourself too thin pursuing opportunities that are unlikely to have much impact on your business in the long term, especially if it’s the kind you have to crawl through windows for.

Tying up loose ends and plugging holes

Threats in a SWOT analysis are the risks outside of the company’s control, such as an economic downturn or a change in consumer demand. Although there is little to nothing that a company can do to prevent these things from happening, contingency planning for the future could mean the difference between your business’s survival or eventual demise.

You should be conducting a thoughtful and thorough SWOT analysis once a year and then reviewing it as frequently as every few weeks for adjustment and improvement. After all, it’s a fluid document that needs to change and develop as your business does. Be careful of tunnel vision though; you shouldn’t be basing your analysis solely on criteria that apply only to your business. If you are too industry-, geography- or product-specific, you might miss strengths, weaknesses, opportunities and threats that are floating around in the broader business stratosphere.

Think of businesses like Nokia, who started out selling paper, and Lamborghini who had their beginnings in tractors. Where would any of these companies be today if they didn’t look beyond the horizon of here and now? Will you follow in their footsteps and forge a brighter future for your business? Take a look at your SWOT analysis and find out!

Adopting habits to make you more innovative

It’s tough out there. There are new ventures popping up on a daily basis, fighting for a piece of the same pie as their competitors. If you’re hoping to get ahead of the pack and challenge your innovative mind, you should try adopt these habits.

Start with a question. Why? Why did you start? Why do you get up in the morning? If you cannot answer these questions, your heart might not be in it. Keep the purpose of your business in mind at all times and ensure that you are constantly working to achieve this ‘why’.

Stay plugged in. Keeping your finger on the pulse of what is going on around you is essential. Research your market, understand what they want, and tweak your idea from there. Just because your first – or even tenth – idea didn’t work out, doesn’t mean you should throw in the towel.

Find a sense of purpose. Great innovators have the habit of being powered by their passion and using it as a sense of purpose. Their purpose is to make an impact. Never ask permission to change the status quo. Push boundaries. Take risks. Challenge yourself, daily.

Banish nay-sayers. Someone who never takes no for an answer is more likely to become a great innovator. The reason? They will always find a way to make it work, in order to prove people wrong. There are a few theories that say you shouldn’t do something in order to prove someone wrong, we believe that this is a great reason. Delete ‘no’ from your vocabulary and replace it with ‘how’.

Make innovation part of your routine. Make a habit of learning and innovating, daily. Try new things on a daily basis, even something as small as doodling. You’ll be surprised how this kind of change can push you to explore your capabilities.
Always welcome failure. Elon Musk famously said, “If you’re not failing, then you’re not innovating enough”. That’s because while failure does not guarantee success in the future, it’s a common precursor. The aim should always be to use your failures to find the formula for triumph.

 

Sisters are doing it for themselves

If the first few names that spring to mind when you think ‘innovative businesswomen’ are the Oprah Winfreys, Marissa Mayers and Martha Stewarts of the world, you obviously haven’t been keeping an eye on what’s happening closer to home.From big brand boardrooms to the helm of SMEs rapidly skyrocketing to success, there are heaps of female business leaders innovating on a massive scale right on our doorstep. If you’re not already following their lead, here’s why you should be.

Look for inspiration hiding in plain sight

South Africans had been drinking Rooibos unquestioningly and without speculation for close on two centuries before the late Dr. Annique Theron, who passed away just this year, thought to dig a little deeper to find out why we couldn’t get enough of this sweet tea. What she discovered was that the Rooibos plant, which is completely indigenous to the south-western tip of our country, seemed to have powerful healing properties. It would be years before this claim was verified but that didn’t stop women everywhere from picking up a few Rooibos-based Annique Health and Beauty products, turning this humble tea leaf and Annique’s business into an overnight international sensation.

Make the ordinary extraordinary

Teacher turned iconic South African designer Carrol Boyes is another entrepreneur who has found a way to leverage something unique to South Africa as a major selling point…but with a twist. Her self-titled brand produces upmarket home and lifestyle items that echo many elements of traditional African art yet embrace the clean lines and sculptural focus of modern art, creating a signature trademark style. The beauty of her products is that they appeal to both international buyers who are attracted to exotic African elements and to a local market that finds the modern take on this style refreshing.

Don’t always give people what they want

Africology CEO Renchia Droganis is virtually dominating the health conscious beauty industry. Why? Well it probably has something to do with her approach to the brand’s consumers which is very much like the approach a parent takes to raising their children; instead of spoiling them by giving them what they want, she’s schooling them on what it is they actually need. So in a time when a buzzword like ‘organic’ on product taglines is almost guaranteed to send stock flying off the shelves, Renchia has steered clear. Instead she has voiced her concern that organic ingredients drive up the price of products with little trade-off considering that they are still permitted to contain a small percentage of chemicals. This ethical approach is what has catapulted Renchia’s business from its small beginnings in her very own kitchen to an internationally sought after and trusted brand – a status every business leader strives for.

These are just some of the women who have taught us here at ActionCOACH a thing or two about building an innovative business and yet there are still hundreds or thousands more – from Sally Williams, Barbara Mallison and Lucilla Booyzen, who will continue to inspire us and our business coaching philosophies.

Franchise Enquiries – Pieter Scholtz / Harry Welby-Cooke – pieterscholtz@actioncoach.com/ harrywelbycooke@actioncoach.com

Harry Welby-Cooke is the Co-Master Licensee in Southern Africa for ActionCOACH, the fastest growing and largest business coaching company globally. Harry and his partner, Pieter, developed ActionCOACH across Southern Africa, which now boasts over 30 franchisees. He is also a certified, leading business and executive coach. He has successfully assisted countless business owners and executives to significantly grow their profits and develop their entrepreneurial skills. www.actioncoach.co.za / 012 665 1015.

Embracing informal teams within your workforce: Why is it important?

A sense of belonging goes a long way among a team. For more and more employees, feeling like they fill a significant space within a team is a strong motivating factor, and this often reaches beyond their normal daily duties.

While formal teams within your workforce are hugely important – specifically to fulfil work-related goals and needs – it’s also crucial that managers embrace the informal groups that form on their own, even when they have nothing to do with the task at hand. They fulfil very specific needs for a workforce and cannot be ignored. Here are some key benefits to informal ‘cliques’:

A pillar of strength

When people come together on a regular basis outside of their normal work duties, an informal team might form. These groups provide a sense of solidarity in situations when frustration levels are high. Being able to look to an office friend for support is a great source of strength for employees who feel under pressure.

A new communication network

Informal teams often form over a quick smoke break or a catch up over coffee. This is the perfect opportunity for likeminded people to discuss passion projects, interests and brainstorm ideas they have been having. These groups provide employees with the ability to destress and catch a couple of work-free minutes to refresh their minds.

A way to develop skills  

One extremely beneficial factor relating to these informal cliques has to do with people coming together to work on personal and career growth. For example, a group of women could come together to chat about the unique challenges they face in the workplace and how to overcome them.

While these groups are bound to form within your workforce, it’s important to ensure that they are healthy and promote cohesiveness. If you find that a team is becoming too cliquey and making people feel uncomfortable, it would be a good idea to step in and put a stop to this behaviour. Other than that, there is nothing wrong with people forming bonds outside of their immediate teams. It provides them with a purpose and a way to relate to others in their office.

Franchise Enquiries – Pieter Scholtz / Harry Welby-Cooke – pieterscholtz@actioncoach.com / harrywelbycooke@actioncoach.com.

Pieter Scholtz is the Co-Master Licensee in Southern Africa for ActionCOACH, the fastest growing and largest business coaching company globally. Pieter and his partner Harry Welby-Cooke developed ActionCOACH across Southern Africa, which now boasts over 30 franchisees. He is also a certified, leading business and executive coach. He has successfully assisted countless business owners to significantly grow their profits and develop their entrepreneurial skills. www.actioncoach.co.za / 0861 226224.

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