Mistake 1: If you want something done Right, Do it yourself
This is probably the biggest mistake franchise owners make. They seem to want to be the chef AND the bottle washer. Owners want to be behind the counter serving customers all day, then work on marketing, advertising, ordering, billing, hiring, and finally closing the store at the end of the day. If this sounds like you, you may be a control freak. “If your business depends on you, you don’t do business, you have a job. And it’s the worst job in the world because you’re working for a lunatic” Michael E. Gerber, The myth E revisited. I’m not implying that you should blindly surrender the keys to the castle and be on your merry way. But if you can’t trust your employees with the keys, which would allow you the freedom to come and go as you please, you should look for new employees. Most employees WANT to do a good job, and if you show your appreciation for the work they do, THEY will keep trying to please you. Don’t need employees? Can’t pay an employee? Then go back and reread the quote from Michael Gerber above. You, my friend, have a job. You can’t grow your business if you’re working on your business. An entrepreneur knows that he may be able to do everything, but he won’t be able to do everything well or for long. It’s okay to work hard, but you have to balance your work with family time and play time (hobbies, travel, you know…fun). That’s why you wanted to own your own business in the first place, right?
Action Step 1: Go to work Us Your business, Nope In Your business
If you want to grow your business, get out of your business and start working on your business. Start by attending networking events, join a BNI (Business Networking International) group, or even join a community volunteer organization, where you will not only help others, but be known in your community for giving back. Only the goodwill you create will help your business. Start boosting corporate business if that’s something you can do. Once you hire someone and train them to work with your clients, you can start working to attract more business.
Mistake 2: I’m Buying a Franchise They’ll Teach Me Everything I Need to Know
The franchisor will teach you everything IT wants you to know about running YOUR franchise. Be sure to educate yourself on what it means to be a business owner. It means that you must have some business knowledge BEFORE you buy a franchise, including marketing, advertising, human resources, accounting, negotiation, purchasing, sales, management, training, networking, etc. It means you must have some business experience or training. Time and time again, when a franchisee fails and has to close their doors, they are called a “Bad Operator”. Well, in some cases they are. These “bad traders” are often wonderful, hard-working people, but ultimately bad business people. A franchisor can train you to run a store, in the week or two of training they offer, but they can’t teach you everything it takes to be a good business person in that short amount of time. That requires experience.
Action Step 2: Ahhh grasshopper, there is much to teach you
If you haven’t bought a franchise yet, do your homework. Your best source of information will come from other franchisees.
- How long have you been in this franchise system?
- What can I expect to spend on a build?
- What can I expect the annual sales to be?
- What was your biggest unexpected problem with the franchisor? How did he handle himself? were you satisfied?
- Does the franchisor offer support? Do you hold annual conferences or conventions?
- If a franchisee were in difficulty, how would the franchisor help them?
- How many locations does it have?
- How long did it take to become profitable?
- How often do you visit the corporate office? Are there field representatives or district managers who check on you regularly? Are these visits useful?
- Do you advertise or trust foot traffic?
- What profit margin does the corporate office say you should be looking at, and are you?
Do not ask for specific dollar figures. If the franchisee wants to share, they will. Also, if you find a franchisee who is particularly helpful to you, you might consider treating them to a nice dinner for a chance to “pick their brains.” Some franchisors will even offer a cash incentive to a franchisee who refers another franchisee. Ask if it’s available and tell the corporate franchisor that your new franchisee friend recommended it. This will get you off to a good start because you never know when you’ll need your new friend’s support. Find out as much negative information as you can about the franchise system. If you think you can live with the bad, then the good should be great. Remember: The more you give, the more you receive!
Mistake 3: If you build it, they will come
Of course, location is important, but you know what’s also important? Marketing and publicity. Unless you’re opening a McDonald’s or Burger King, you need to advertise. Even McDonald’s and Burger King advertise. An employee of a corporate candy franchise told me, “In our kind of business, advertising just doesn’t work. You need through traffic.” To that I say, if advertising doesn’t work for candy, why is M&M’s™ spending millions of dollars on advertising? Because it WORKS! We all know the M&M’s™. We know that we can buy them almost everywhere. But unless they’re “in your face” all the time, you can “forget” about them and grab a Heath Bar. It’s your responsibility as a business owner to let people know about your product. And once they know about your product, it’s your responsibility to get them on board. The fact that you pay a marketing fee to your franchisor does NOT relieve you of your own advertising and marketing. It’s YOUR business.
Action Step 3: If you build it, tell people about it
So now tell people what you’re doing. Make promotions and publish them. Have a weekly or monthly special. Start a customer newsletter, offer a senior discount, distribute coupons, offer employee incentives to tell your customers what you want them to know, offer recovery coupons, cross-promote with another business, join a BNI group (www.bni.com) , or have a sale (sale, end of season, sidewalk, tent, back to school, firecracker or whatever catches your business attention). I saved my favorite for last, because many people underestimate its effect. Get involved in the community where your business is located. If you have a business association other than the Chamber of Commerce, join it. Becoming an active volunteer in your community will let other business owners know who you are right away and earn their business. Once you gain the support of other business owners, they will tell people about you. You have to take charge of your business. That’s how it is. It’s your business, not the franchisor’s. How much should you spend on this? I think you should plan to spend a minimum of 1% of your total annual gross sales. If you’re just starting out, plan on a minimum of $5,000 your first year and make sure you don’t use it for cost overruns. You’re going to need it.
© Copyright 2010 Jean Kuhn
