Business Performance – Not a shot in the dark

There is an old saying in business,” if you cannot measure it, you cannot manage it”. How true this is for so many franchise systems and for franchisees who operate within those systems.

I spent many years managing and supporting franchisees businesses, sometimes it felt as though I was the only one interested in how a business was performing – often because I needed a franchisee to grow so that I could reach my targets for my region. Having access to the Key Performance Indicators to show how that business was working was vital to help me ensure my franchisee maintained a healthy and profitable business. Once you have the data few franchisees resist the logic of reviewing the performance of their business. But getting the data is sometimes the hardest part.

In my role with The Franchise Centre I’m often asked to review a franchisors business and am regularly surprised at the lack of sophistication being used to manage some very large networks. I’ve seen all levels of support being employed, from a basic sets of spreadsheets and a general database of key contact details to total reliance upon weekly or monthly accounts returns or invoice summaries to show a networks health. Other businesses have adapted their accounts systems and employed analysts to monitor spend /turnover and incomes. This method is often time consuming and slow, reports that come out after the fact are great for explaining what just happened, but less so for providing insight into what is needed now to prevent a problem becoming a disaster.

In this age of cloud computing and mobile applications it surprised me just how few companies employ a properly developed system. Many businesses will be put off by the thought of commissioning a dedicated software solution for their business, but the reality is that a good and robust system can be set up from less than a thousand pounds and by adding elements that bespoke this one at a time costs can be managed to fit both the businesses budget and requirements

I’m not here to direct you towards one system or another – at The Franchising Centre we have our own system, I expect that once you have accepted the need for a solution of this nature you will as part of your research look at our solution and reach the conclusion that it is the right one for you – but I’m getting ahead of myself.

What should you be measuring?

How about recording accurately start dates of the franchise agreement, when renewal notices must be issued or even if the franchisee has moved house since the contract was issued.

With turnover, how does this match the budget or business plan? So many franchises fail to check accurate turnover against the plans or forecasts. Why do this, well without it how do you know that the franchisee can make his next VAT bill. Are his costs out of control, is he building up too much debt to allow the business to trade in the future. What is he doing with his profits – if they are making any, does capital equipment need to be replaced, are leases coming to an end, can they afford a rent review

How is franchise A compare to franchises B & C? Are you gathering and then sharing best practice. Can you measure like for like performances across different parts of your network?

What to do with it?

Few businesses succeed without the need for performance review and monitoring and just because it is not you running things on a day to day basis but a franchisee, should make no difference. Reviewing performance with a franchisee should take place on a regular basis, it should not be put off by other business related imperatives. I know that sometimes doing the work gets in the way of running the business but to have a business in a few months’ time is one of the points of being in business in the first place.

Set some goals for the franchisee, do these with them, make sure they buy in and are fully accountable for them. If your network has a franchisee recognition system use it to support these goals.

Regularly check, great if you have a system for this, send the franchisee progress reports from your own management system to show that you doing so. If they start to get behind finds ways to bring them back on course. Do they need training? Do they need to recruit staff with a different skill set? Are they operating from the right location? Could they be mentored by a top performing franchisee?
To do any of the above you need to support your position with data, and as your network grows getting this from random systems throughout your business is going to take you time and could lose your competitive advantage.

If you want to grow and develop your franchise network start by looking at the data you currently collect, and see if you can’t improve it. Maybe you should think about talking to a franchise consultant about how best to manage what you are already collecting – maybe you need a computer software package that will do it for you.

Its worthwhile checking

Steve Tarbard Franchise Development Consultant The Franchising Centre