Learn the One Method Wealthy Franchisees Use to Improve Themselves and Their Business Wealthy franchisees understand the importance of involvement in every aspect of their business, from marketing to operations and employee management, that's why many use this method.
- Continuous improvement and goal-setting is key.
- SWOT stands for "strengths," "weaknesses," "opportunities," and "threats."
- Successful franchisees regularly engage in SWOT analysis to assess their business's current state and to strategize future steps.
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This is part 2 / 4 of The Wealthy Franchisee: Section 3: Mastering the Wealthy Franchisee Skill Set series.
Top franchisees are constantly looking for ways to enhance their business, which includes setting newer and higher goals. They relentlessly look to raise the bar. There's always more your business can accomplish. Sales and profit are only the start. Try improving your online reviews, boosting your team's skills, improving employee retention, or doing more for the community. Maybe the business has already met your personal needs— in that case, you can use it to help others. Remember, this isn't just out of altruism. It's also about preventing backward movement. Stay ambitious to ensure you stay engaged. We've already discussed the importance of inner reflection to ensure you're thinking productively. Wealthy franchisees also take time regularly to assess, adjust, and optimize their operations. There's an easy, well-established process to do this: a SWOT analysis.
Conducting a SWOT Analysis
One of the most useful tools often overlooked by small business owners is a SWOT analysis. "SWOT" stands for "strengths," "weaknesses," "opportunities," and "threats." This is a basic strategic planning method many companies use regularly to assess where the business stands and what their next steps should be. You can conduct the analysis alone or with a group.
Start by reviewing your goals, then begin the brainstorming process. Determining your strengths and weaknesses requires looking inside your business, while defining your opportunities and threats requires you to look outward.
This is a basic strategic planning method many companies use regularly to assess where the business stands and what their next steps should be.
Make a list of all four. If you're doing this as a group exercise, I recommend recording your lists on a flip chart or a whiteboard so everyone can see them. Under "Strengths," you might list things like your credit line, your skill set, or your strong relationship with your franchisor. You could also add something about your employees, such as their team culture. In the "Weaknesses" column, you might list a shortage of cash, your fear, or any dysfunction within your team.
You're basically brainstorming four lists to assess the current state of your business. Don't forget to include your mindset and other human factors. Some would argue that feelings of fear, impatience, or mistrust aren't weaknesses, but essential survival tools. That's for you to decide.
If these things are leading to measurable improvements in your business, then include them under "Strengths." But if they're distorting your perspective or hindering operations, they belong in the second column.
Your combined analysis should culminate in a final list of action items. You want to leave with things to do. A great way to generate this final list is by answering three more questions, in light of your brainstorming. To achieve your goals, ask yourself:
- What must we CONTINUE doing?
- What must we START doing?
- What must we STOP doing?
A SWOT analysis is only one of many ways to evaluate your business. There are other approaches. Figure out what works for you. But whatever you choose, do it regularly. Ask lots of questions about your business, and decide what action you need to take. Repeat the same process a month later, because some of the answers will change, and those changes will point you to places where you can improve your business.
There are certain parts of the business franchisees sometimes neglect. Each of these areas needs constant attention if you want to get wealthy. While reading the sections below, consider where you could use some improvement.
Operationally, marketing may be the area where franchisees differ the most. Some are aggressive, actively advertising and going out into the community. Others just run an occasional ad and wait. Many franchisees neglect marketing because they think it's enough to pay into their franchisor's advertising fund and resent being told to spend even more. "What are you doing with my marketing dollars?" they complain. "Why don't we have more TV commercials?" Or they see the national ads but don't experience a resulting increase in business activity in their market.
Marketing at a national level is not the same thing as marketing in your neighborhood. Your franchisor can create large-scale brand awareness, attract customers to the brand, and facilitate a few of the six to eight touches needed to influence consumers to buy. But they can't drive customers to your storefront, build relationships in your community, or target their message to your specific demographic. All that's on you. You and your franchisor are marketing partners. They do their part, and you do yours.
Marketing at a national level is not the same thing as marketing in your neighborhood.
Don't think for a second that a national advertising contribution will be enough. It's tempting to cut your marketing budget when sales are down, especially when you don't see an immediate response to your efforts. Your desk may be stacked with bills for payroll, supplies, and utilities. Why not skip advertising for a few months and save a few bucks? But ceasing marketing when sales are down is like a farmer trying to save money by not planting crops. It may solve your immediate needs, but you'll have trouble down the line. You are a farmer growing a customer base. You must plant seeds and consistently nurture them, even when they don't sprout immediately. That requires foresight, patience, and faith. And, of course, it requires money. Don't think of marketing as an expense; it's an investment. It's the only way to keep your doors open. No one has ever saved their business by decreasing their exposure in the marketplace. So how much should you invest?
Wealthy franchisees don't wait for customers or rely on their franchisor to supply them. They're out in the community, reminding people they exist. They advertise. They promote. They pull customers in. They don't stand at the shoreline waiting for the fish to bite, they jump in the water and grab them.
The only way to evaluate the state of your business is to look at the numbers. Activity isn't solvency, and sales aren't profits. You must look at everything, including sales and expenses, the reduction or increase in debt, and sales trends. Numbers tell the truth, and accounting software and good data entry habits make accessing your numbers easy. I'm shocked by how many franchisees ignore this.
Increasing sales but decreasing profit is not a success; neither is providing mediocre service to customers because you're so swamped with business. Your goal as a business owner is not to be busy or to maximize sales. Your goal is to maximize profit, and the only way to do this is to look at the numbers all the time. Your numbers will show you trends and help you identify problems and opportunities.
Your franchisor may require you to purchase from specific vendors. Hopefully they've negotiated good pricing. You probably have control over some expenses, and those need to be watched and periodically reviewed. The cost of goods can quietly gobble up more and more profit without you noticing.
Cheap is not always best. Quality and reliability also matter. So does anything that saves you time. Still, you need to be conscious of how much you're spending. High pricing isn't the only way your expenses increase. There's also waste, which means you must buy more. A lot of franchisees will look at their invoices but won't track how their goods are being used. Even when employees aren't negligent with your supplies, they can still be overly generous with them. I can't tell you how many times I've been given straws or coffee refills I really didn't want. Someone's paying for that stuff.
High pricing isn't the only way your expenses increase. There's also waste, which means you must buy more.
For example, when I ran my Edible Arrangements franchises, we carefully tracked how many melon balls we could extract from a cantaloupe. We counted how many strawberries went into an arrangement. We monitored the consistency of our melted dipping chocolate. It wasn't just about saving pennies it was also about engaging employees in a profit mindset. We were already training them to increase sales, we also wanted them to help control costs.
It requires constant oversight. Watch where your money goes. Talk to other franchisees about what they're spending and which suppliers they're using. Go over your P&L and look at every expense. Your franchisor should be able to recommend benchmarks to help you determine what percentage of sales should be going into every item. Remember, pennies matter. Profit is in the details.
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If you give employees 100 percent of the pay you promised, they should give you 100 percent of their effort, right? That sounds fair, but it's not realistic. Compensation isn't motivation. Employees need something more. As their manager, you must work continuously to keep them engaged — that's management's primary function. That means providing encouragement and feedback, as well as giving reminders, reviews, praise, and reprimands on a regular basis.
Struggling franchisees often feel burdened by this: "Why can't my people just do their jobs?" But wealthy franchisees understand that motivating employees is their job. People need to be led. Good employees must be pushed to greatness, and great employees must be kept that way. Neither will happen without consistent, ongoing management. The time you put into your employees is an investment that pays off. You'll spend less time motivating yours than struggling franchisees spend "dealing" with theirs. Never think of your employees as a burden. They're your greatest asset. They can serve and sell and do all the other work that needs doing, but only if they're regularly reengaged in the business. That's on you. They don't need much, but what they do need matters. Never take them for granted. If they're worth keeping around, other employers will happily steal them away from you. Trust me—I'm one of them.
Physical Condition of the Business
Capital improvements are painful. It's not like marketing, where you feel your investment will increase traffic. Remodeling and repairs require a major cash outlay with no immediate ROI.
Or do they?
I can't say that was my experience when I remodeled my first store. I was given similar statistics, but I was suspicious. My feelings were borne out in the end: The remodel didn't lead to a measurable jump in revenue. But as a consumer, I'm turned off by tired-looking stores. When the paint starts chipping and the signage looks faded, I lose interest in shopping there. And when something new and shiny opens in the neighborhood, I'm more likely to try it out.
As a consumer, I'm turned off by tired-looking stores. When the paint starts chipping and the signage looks faded, I lose interest in shopping.
Sometimes franchisees must do things that aren't about increasing sales, but protecting them. A business that loses its luster will also lose customers. Keeping your location looking clean and new is an important way to maintain what you have achieved. The appearance of your business sends a message to customers and employees about your standards. Keep it impeccably clean, up-to-date, and irresistibly attractive.
When you do something long enough to become a habit, you stop thinking about how you're doing it. There are thousands of things you do reflexively every day, and many of them are opportunities to improve. Most of them are little things that might not even look like they need to be fixed unless someone points it out. For example, I'm right-handed. At Edible Arrangements, I used to cut fruit wedges by hand and place them on a tray to my left. I did this for three years before a new employee (who had a fresh perspective) pointed out that if I put the tray on my right side, I wouldn't have to stretch across my body with my right hand to reach it every time. It was obvious, but it had never occurred to me.
Some people love to say, "If it ain't broke, don't fix it." Like hell. Don't wait for things to break, employees to get bored, or a more efficient competitor to pass you up. Keep getting better at what you do, and never stop tinkering with your operations.
It's interesting that so many people stop trying to improve themselves. You are the biggest factor impacting your business, so you need to stay sharp. Getting too busy to be your best can easily lead you to being your worst. Carve out a portion of your day for your own development. Read books, listen to podcasts, or watch TED Talks.
For learning things specifically related to your business, go to your franchise convention. It's not just about getting new ideas—it's also about recharging your batteries. You need an infusion of fresh energy to fight off your own entropy. It's also important to connect with colleagues and strengthen those relationships. Wealthy franchisees always go to conventions. If you want to be among them, be among them.
Impassioned franchisees are excited to do these things I've described. Others are totally over it. That's OK, too, but you need to respond accordingly. If you're burned out, sell the business. The fresh energy your franchise needs might be a new owner. You should be an asset to the business, not a liability. Guard your business with love, ambition, and a little paranoia. If you keep taking care of it, it's a lot more likely to keep taking care of you.