So, you want to buy a franchise?

Part 2 of 7: THE BUSINESS PLAN

Have you ever built a house or done extensions? I have, and I can tell you that it can be one hell of a job, especially if you don’t have a decent set of plans. Plans for this, plans for that. No matter what one does in life somewhere along the line you will have to make a plan, excuse the cliché.

Planning is part of life, whether to be single, married, have children whatever we do as humans needs to be thought out. So why is it that I come across so many people who want to be in business but have never thought of the importance of having a plan, a business plan?

In days gone by before GPS, or OK Google, we used maps. To get to A to B we would look at the map to work out the best route for our journey, otherwise we’d get lost. Coming from London a massive city, there are maps for the underground (tube train), maps for busses, maps for car journeys. Anyone from that time can tell you to find an address from one side of London to another would be just about impossible without a map (A to Z).

Think of a business plan as a map. It will tell you where you are starting from and assist you to get to a finishing line. It will no doubt be challenging as your journey will be fraught at times in deciding which way to turn but at least you’ll have a destination, a goal to head towards.

I find banks and the like make business plans a mission when in fact a business plan can be quite simple:

SWOT analysis: Strengths, weaknesses, opportunities and threats to the business

  1. Make a list of your strengths and weaknesses, be honest with yourself
  2. Determine your objectives, short term, long term
  3. Analyse the demographics of where you want to trade
  4. Make a list of competitors, visit them, spot the weaknesses, do price comparisons
  5. Know your COG (cost of goods)
  6. Look at where your business can fit in to add value to the area
  7. Determine your marketing strategy. (Marketing is one of the most important overlooked aspects of starting a new business)
  8. Financial requirements (franchise fee to business opens, landlord deposits, etc)
  9. Cash-flow requirements for at least 2 years (Don’t overlook the importance of cash-flow as most businesses fail due to lack of cash-flow)

Whilst your business plan is critical nevertheless it’s your determination to succeed which is going to make the business work. In part one of this blog I reiterated the importance of having a passion for what you have chosen. Without the passion many businesses fail simply because the owners don’t spend the time to nurture and build their business. Don’t think for one minute that a manager, employee is going to love the business as you would, it’s not going to happen.

In the movie ‘The Founder’, the first franchisees of Ray Kroc’s McDonalds were failures, why? Because they didn’t run the businesses themselves, they were investors. When Kroc turned to owner operators’ things started to look up. The same principle applies today.

Over the years I’ve seen many business owners who wonder why their business have gone broke, usually they will blame everybody except themselves, here are three primary reasons a small business can fail:

  1. Lack of owner participation, dedication to serve the business
  2. Lack of cash-flow to pay salaries, rent, suppliers etc
  3. No understanding of the fundamentals of running a business.

‘It’s like trying to drive a car without experience, chances are you’re going to crash’

My advice to budding entrepreneurs who are looking to be in business without prior experience is learn the basics of running a business first. There are many courses, on-line and others that teach the basics of Cost of Sale, Income Statement, Break-even, Cash Flow etc.

So many people jump head first into business without any basic understanding. It’s like trying to drive a car without experience, chances are you’re going to crash!

Put in the work, put in the time to learn.

Chris Dunn

Buying a franchise is not a sure-fire recipe for your success. Yes, a well-established franchise will have brand recognition, but the bottom line is how well that franchisee runs that business. Notice I say runs the business, to many times the business runs the franchisee!

So, you want to buy a franchise?

Part 1 of 7 PASSION

The first question you need to ask yourself is ‘do you have the passion’? No matter what your planning, if you don’t have a passion for it, don’t do it.

Ninety Five percent of all franchises succeed, so that’s what they have been telling us for decades. It may well be true, but it could also be a fallacy.

So, what makes a good franchise? There’re literally hundreds of businesses to choose from, Restaurants, Take-aways, Estate Agents, Business to Business, Beauty, there’s even a franchise that walks dogs, the list is endless.

There is an enormous amount of literature of what to do in reviewing a franchise, mostly written by people who have never run a franchised business or indeed been a franchisor. It’s all text book stuff but to my mind the most important ingredient they leave out is LOVE YOUR BUSINESS! Without that important ingredient there’s a very good chance you’re not going to make a great success of it. You may plod along as if you’re in employment, but you’ll never be a shining example.

What seems like ten lifetimes ago I was employed as an apprentice Tailor working in Soho, London. Ben Brown, my boss was an escapee with his seven brothers from then Nazi occupied Poland, his name was actually Bronowski but shortened it to Brown. Every January after the Christmas rush, new suits for Christmas was the thing then, we completely changed the front of the shop. New paint. Move the work benches around, new pictures of the latest fashions, mannequins dressed with updated fabrics etc. The idea was that when a client came in from the previous year the store looked new, spick and span. Sadly, a lot of operators don’t see the relevance of updating or revamping their businesses, same old stuff year in year out. The bottom line is you don’t wear the same clothes every day, so nor should your business.

'he picked his name out of the London telephone directory'

One  of the originators of Wimpy UK, from the old Lyons Tea Rooms (see pic) was a chap named Harry Guest, he picked his name out of the London telephone directory soon after escaping to the UK. Lyons had to change its business model thus Wimpy was born. I always suspected they chose the name from Popeye’s friend Wimpy who loved burgers. This all happened at a time when Ray Kroc of McDonald’s was establishing the brand across the United States. If you ever get a chance go see the movie.

There is no doubt that franchising has its successes but each one of them came with a cost plus an idea by an entrepreneur who put just about everything they owned, loved and cared for into the original concept. Spur originator, Allan Ambor would love to recite that he spent six months without seeing daylight when opening Golden Spur, Newlands back in 1967. Making sauces at 5 am for the days business was just one task. I know the feeling only to well after leaving the same store at dawn only to be back at 5PM to take over the rest of the day’s shifts.

I was also tasked with opening Spur at the V&A Waterfront, I never saw daylight for three months working seven days a week.

Being the first in and last out, seeing things that others don’t see that’s what makes the difference especially in a retail store. The first greeting to the last ‘see you again’, never say goodbye! As an example, I can visit any restaurant and very quickly I can see if there is a love for that business. In the day’s way back when, we used lighting, music and most of all waitrons that could be taught to serve. The weekend business was crucial, so the trick was to get the customer in as fast as possible and then get them out as fast as possible, without losing anyone from the queue, ambience and energy was the tool. We ran a queue for hours and to hold them there we would hand out a free glass of wine. We would appoint a lively person to specially hold that line. If they lost a customer, we would send him or her chasing down the street to drag them back.

The music in the store was especially selected to be fast paced, the waitrons would stride with the beat making sure their clients were fed, served and most of all happy. As the evening progressed the lights would dim, the tempo slowed to keep people sitting. Nothing worse than an empty restaurant.

The managers job is to keep the flow going, tweaking everything and everyone to run a smooth operation with oomph, customer satisfaction is paramount.

Ever been into a store where there’s a queue. Stood there for five minutes or so, can’t recognise who are a staff, who are not, frustrated you walk out in disgust? Happens every day in stores across the country. What a difference it would make that firstly the staff are in uniform you can recognise, maybe even a name tag. ‘I’ll be with you in a moment, just finishing up here’, that plus eye contact is all it needs to bring you to a comfort level that you have been recognised. Where possible never have your back to the front shop!

That’s the difference between just doing a job to loving the job with passion.