1 – Be comfortable working with the people within your franchise sector
When you choose a franchise, it’s important to choose a business that enables you to engage with your target audience. For example, if you want to work in the corporate world and deal with professional buyers and business people; then it makes little sense to buy into a fast-food business.
Equally, if you love being in the homes of customers and dealing with people on a very personal level, then a franchise that allows you to do that would be well suited. And this could include a care franchise, a kitchen business – or an estate agency, for example.
With estate agency, and other close relationship franchises, you will develop very deep, professional and personal connections with your customers. This means that you will need to be very comfortable with this. Having the ability to adapt your style and approach for different kinds of people in these cases is critical.
As everyone knows; buying a house is one of the most stressful life experiences that people have to deal with. So a franchisee in agency will need to have the interpersonal skills and emotional strength required to help guide people through their journey without being affected by all of that emotional energy.
2 – Understand your numbers: cashflow and profitability
When you start and run any business (and it makes no difference to which sector you find yourself operating in); knowing your numbers is critical to ensure long term success.
It starts with understanding your revenue goals which, in turn, enables you to set your sales goals and pricing strategy. Then your sales conversion skills will kick in, and understanding this will tell you how many new customer enquiries you’ll need to generate, in order to hit your top line numbers.
Once you have an understanding of this: it will help you develop your marketing strategy all of which needs to be paid for; as this investment in marketing will drive the enquires you need to convert into revenue.
Don’t lose sight of all the costs associated with running your business. Ensure that you are charging the correct price to customers to make sure you end up being profitable. That’s what it’s all about after all!
The last thing you want to do is find yourself in a sales meeting with a customer having nearly won their business – only to agree to a price discount to secure that instruction. Because later on; you’ll likely find that your discount has actually resulted in zero profit being made on the sale. You’ll end up being a ‘busy fool’; serving everyone else – and making no money.
Let’s say (in agency world) that it costs you £250 to sell a house in advertising fees, and your fee to the customer is £4,000. You might, at first, assume that you’re making a profit of £3,750 on each sale, achieving a margin of almost 94% which is HUGE!
But after you consider ALL of your business costs and let’s assume for example that these are £50,000 a year; you’ll need to allocate that £50k across your unit sales volume for the year. So, for simplicity’s sake; let’s assume you sell 1 house a week (i.e., £1,000 per sale).
This means your true profit is £3,000. This delivers a 75% profit margin which is still very healthy.
But what if the market slows, and your sales numbers drop to 25 a year? You’re now looking at a cost per sale of £2,000 per property. And then you get nervous and halve your fees from £4k to £2k to chase volume in the hope of regaining lost revenue.
One thing is certain. You’ll drop in terms of profitability; but you won’t see a resultant increase in volume. So you end up selling 25 houses at £2k each; but make zero profit over a year.
This is a mistake I see business owners making all the time, as they don’t know their numbers (or the dynamics of those numbers when volumes increase or decrease).
The upside is clear though. Careful management of your costs and pricing strategy, combined with self-development in sales skills, will stand franchisees in good stead for increasing their personal wealth and income.
3 – Have clear sales goals – marketing, lead generation and sales conversion
There are two ways to set a sales goal. The first is to understand what revenue (keeping costs in mind) you want to achieve. This tells you how many new contracts you need to sign, and how many opportunities you need.
But there is potentially a better and safer approach.
Instead – consider what you ‘could’ extract from your local market. If your revenue plan suggests you need to sell 1 house a week, and you are able to achieve that; great! But what if your local market could support 2 sales a week for you and your business?
Well, nowyour sales plan is DOUBLE what you first thought it might be. But you might need to hire some staff to help with the increased volume. Which means your £50k annual costs are now [say] £80k (taking account of a decent staff member’s salary). But you have doubled the revenue from 50 x £4k to 100 x £4k. So £400k revenue and £80k of costs now improves your margin to 80%; and your cash situation improves from £150k to £320k annually. Which, you may note, is MORE than double – as you are now ‘sweating your asset’ (to use the crude term); which means making your franchised business work harder for you!
4 – FOLLOW THE FRANCHISE PLAN – Don’t reinvent the wheel
A classic mistake many franchisees make (and this applies to all franchises) is that new franchisees come along who are engaged and enthused by the brand and proposition on offer. But once they get started, they begin to ‘unpick’ or ‘add to’ the customer offer or don’t follow the tried and tested processes that lead to success.
Essentially, they think they know better.
So, buying into a franchise means exactly that.
After all; you wouldn’t go in Subway to find that local franchisee had purchased bread rolls from the local bakery down the road, instead of using the signature ‘subs’, specified in the franchise agreement.
So. Before you buy a franchise: examine how fixed or flexible the rules of that franchise are (as they do differ); but do be prepared to listen to the franchisor and follow their plan. Because this is one of the things you’re paying to access as part of your franchise joining fee and ongoing licence fees.
With EweMove, we have what we like to call our ‘Lean Green Marketing Machine’ which is a tried and tested mix of marketing tools to drive new opportunities into our franchisees’ businesses.
This marketing strategy is quite unique and very powerful; yet we still see franchisees trying to change it (as they want to ‘try their own thing’), only to find that it doesn’t work. So I discourage franchisees from wasting time and money on unnecessary tests of new ideas when we’ve tried them all before. And our distilled and focused methods include everything you need to generate new business – so just use them ‘out of the box’ and enjoy a simpler route to success.
5 – Train, Learn, Train, and learn again. Continuous learning and development
CPD is something everyone should focus on (whether an employee or self-employed business owner). In regulated occupations such as Gas Safety, Electrical work, legal work, medical work; ongoing training and development is a requirement to remain registered and approved. And that’s a good thing too.
But in other industries: there is no formal training or licensing required. But the need for training doesn’t disappear. To be the best version of yourself (and that’s reason enough); you should focus on a lifelong learning strategy. It will help you no end both in and outside of work.
And as for your customers, they’ll gain greater confidence in you as will any staff you employ. It’s an inevitable upward spiral of ongoing development that everyone should adopt.
6 – Have fun and enjoy what you do. What’s your passion?
Life isn’t a dress rehearsal. We’ve all heard that many times before.
“I wish I’d spent more time at the office” isn’t something we’ve ever seen inscribed on a tombstone either.
But we all need to earn money to do the things we want to do. And we also know that self-employed people tend (not always) to earn more over their working life than employees do.
And whilst running a business can be more stressful, more stretching and more demanding of you than being an employee; it’s incredibly rewarding.
Focus on those rewards. If fun is your motivator; make your work life fun and exciting as this will help you leap out of bed each morning to embrace the day ahead.
Nothing is more important than self-satisfaction when it comes to your work life, which will likely consume 40+ years of your life. So, make it count – and give yourself fond memories to look back on when you’ve retired to your yacht in the Caribbean, enjoying the spoils of all your hard work!!