2 Things to Help Ensure Your Business Lasts

There are countless things you can do to make your business successful, and even more to ensure its failure.  There are plenty of lessons independent business people can learn from franchises to help them stay successful, after all, there’s a reason franchises have a much higher long term success rate over independents.  Here are two key ideas to help ensure your business lasts for the long haul.

1. Quality – Can you deliver your product or service well? Figure out a way to produce and sell your product, or deliver your service in a way that meets the expectations of you and your customer.  Do they know what it should be?  Identify its qualities, attributes and specifications.  Be clear about what they are, don’t leave any part of the decision up until the moment it happens. Quality can be done at a low cost, it doesn’t have to imply expensive.  There’s an intrinsic value to doing it accurately and the way you want it done.  Whether it’s a service or a product, the true meaning of quality is whether you are doing it to the specifications you desire – high or low cost, it doesn’t matter.  The classic example is McDonald’s Big Mac. Whether you love it or not, you know exactly what it is.  McDonald’s has created it to an exacting specification, not to the whim of the cook actually making it when its ordered.

2. Repeat-ability – Can you deliver your product or service well EVERY TIME?  Do you have the systems in place to make sure you are executing the production of your product or service every time? Some people get bored with checklists or find them too regimented. Have you ever been on a plane?  Every pilot goes through an extensive checklist before every flight.  It doesn’t matter if it’s their first flight or if they’ve flown a thousand times.  You complete the checklist to make sure every step in your process is completed the way it was designed, each and every time, without exception.  It ensures quality control and helps deliver what your customer wants: the same reliable, consistent service whenever they purchase from you.  You should build a process around the design of your product to make sure you can accommodate its creation and delivery the same way every time.  Make a systematized machine out of the process.  To use the McDonald’s example again – once the Big Mac was designed, they created a system in the restaurant that would allow any one of their employees (once trained) to create a Big Mac the same each order.  The ingredients are the same and in the same place, the equipment is in the right place and set to the right temperature and the packaging is the right size and in the right spot – EVERY SINGLE TIME.  No exceptions. It takes the variability of being ‘people dependent’ out of the equation and makes it ‘systems dependent’ – a much better way to ensure longevity. Customers come to know and expect what the product will be – and that is a powerful way to ensure your customers needs are met consistently and ensures they will keep coming back for more.

Unless you are buying “surprises”, most people want to know what they are getting when they pay for something.  Ensuring your product or service is made to a certain specification and that that specification can be repeated over and over is a sure way to help keep your growing business on the path to continued success.  Remember: create the model to the quality you want and then be able to repeat it over and over. Make your business a machine that churns out success.

I always welcome your comments, please feel free to share your thoughts.


7 Mistakes When Choosing a Franchise

There are many common mistakes people make when purchasing their first franchise. I’ve seen these before countless times, in fact, I’ve been guilty of many of them myself! It’s so easy to get caught up in the emotion of buying a business, that we often overlook important steps in the process.  Don’t lose sight of the fact that this is a long term relationship that must be mutually beneficial.  You are interviewing them as much as they are interviewing you!

Here are some common pitfalls to avoid when selecting a franchise to get involved with.

1. Don’t go too far outside of your knowledge base.  There will be lots to learn, new experiences, new procedures, new people, new everything! Keep some familiarity and comfort by choosing a business that is familiar to you.  Don’t get sold on hype – go with a business you know something about.  Have you worked in this industry before?  Does it provide a product or service you love and are familiar with?

2. Don’t base the decision on the number of units.  Size doesn’t matter!  There are lots of great concepts with very few units, and lots of really bad ones with hundreds of units.  Be aware of franchisors that put too much of their marketing weight behind the number of units they have or are planning to have.  If they’re growing, that’s great…just don’t let it over-influence you.

3. Don’t base the decision on their ‘ranking’.  Ever notice that it seems like every car you see on TV has won an award?  There are lots of organizations that supply awards! Like size, ranking is a piece of the puzzle, but not the whole picture.  There are lots of associations and organizations that rank franchises.  Understand what the ranking is and what its context is.  Best in category? Fastest Growers? Highest satisfaction? Best gas mileage?

4. Does the business align with your lifestyle?  Make sure that you have a clear understanding of the requirements of the business.  Bars and restaurant can require late hours. Coffee shops require early mornings.  Does the expected schedule line up with your personal life – family, friends, activities?  Too much conflict may lead to unhappiness in pretty short order.

5.Not getting a lawyer to review your documents.  This one happens all the time and it’s crazy!  Contracts and franchisee agreements are often over 50 pages of legal jargon, plus amendments, assignments, leases and on and on.  The cost of a good legal review and advice is nothing compared to finding out down the road you missed an important detail.  I’ve seen lots of franchisees that tell me they didn’t know about sales minimums, non-compete clauses, renovation requirements, territory restrictions, trademark infringement, transfer clauses and many others.  You’re making a deal that’s probably 10 to 25 years or more – a little diligence now is well worth the investment.

6. Not calling existing franchisees.  I always wonder about managers that make a significant hire without checking references…are they so sure they’re right they don’t want to risk hearing bad news?  This situation is no different.  You should be provided a list of franchisees, but not until you’re disclosed.  Start earlier in the process – look them up and call the franchisees.  Ask for a few minutes of their time and tell them why you are calling. Have questions prepared such as whether or not projections are realistic, how is the franchisee/franchisor relationship, etc.  You’ll get amazing answers – probably good and bad.  If you hear a lot of negativity though, that should be a red flag.  Be sure to get clarification on anything that comes up.

7. No exit strategy.  Here’s one I have been guilty of.  You get so excited in the process and your new venture you think it’s going to be all rainbows and puppy dogs forever.  You may never consider what happens when things change – and they always do!  Find out now how you can sell or transfer your business.  Will it even have a resale value? Find out if you can wind it down and walk away.  Will your franchisor buy your business back?  Some of these options will be spelled out in your agreement and others won’t be mentioned. Ask yourself “What is the worst case scenario?” and have a contingency plan for that.

Franchising is an exciting way to fulfill your dreams of being your own boss and a business owner.  Being part of a terrific organization can reduce your risk and instill a sense of pride.  There can also be many pitfalls and challenges you may not consider.  Hopefully I’ve shed some light on a few so you can avoid them.

If you have any questions or comments, please feel free to ask!

Please visit us at businessmattersconsulting.com to learn more.

How to avoid employee resentment

What’s the best way to get employees to buy into an idea?  Even more than that: how do we get them to listen and engage without any resentment?

A lesson I learned early from my mentor is the concept of an emotional bank account.  The concept is simple: make more meaningful deposits than you do withdrawals.

I had a general manager at one of my businesses who would complain to me that while he wanted to be strict to keep the staff in line, he felt like it was “babysitting” and all he got back in return was grief, disobedience and resentment.  Doesn’t sound like a happy workplace!  My message to him was clear: make some deposits before you withdraw. An emotional deposit can be done right with a withdrawal, but it’s usually better to build up those deposits over time.  It helps you establish emotional credibility so when you need to make that withdrawal, you have the balance available.

If you spend too much time only making corrective actions, or disciplining for unwanted behaviour, all of your people’s accounts will be over-drawn; and honestly, the ones that aren’t will be against you just by your reputation.

The deposits should be easy, but are often difficult for some managers to do.  Catch your people doing something well, provide plenty of positive reinforcement and recognize them for their accomplishments.  It puts them in a better mood and will almost certainly improve performance in the short term.  If this becomes a pattern of behaviour your emotional balance grows.  The next time there needs to be discipline applied, it will be much easier to take. Just remember to make more deposits!

Do you have a story where you have made those deposits and the tougher discipline conversation has been much easier as a result? Please share!