Signing up for a franchise can be exciting and promising! It certainly requires an emotional as well as financial commitment. But not all franchise investments lead to great to big profits. There are times when franchisees do have lows in their businesses and that can never be a good thing. Here are some pointers, basically truths of business regarding franchise failures along with tips on how they can be overcome.
- Situations change: Even if you happen to be committed to your business, follow the process perfectly to the finest detail and maintain a keen eye for the growth of the business, change is inevitable. Communication is of utmost importance – are the goals of the franchisor and you, the same? If there happens to be any discrepancy between both your understandings, there are chances that there could be misunderstanding down the line.
- Misunderstanding financials: When it comes to the money aspect, in spite of it being the driving force, it is still greatly misunderstood. The experts compare it to the Emperor’s new clothes. People hardly admit that they do not understand what it is. It is quite common for franchisees not to pick up on what the franchisors and accountants tell them about the numbers. This must be seen as an opportunity to open communication. Generally, franchisees are provided with a toolkit for working out the figures, but not all franchisees use it the same way. This means the figures expected will certainly be different. There can be a discord between numbers on paper and the actual and making sense of them can be a task. What you can do is, check with the franchisor early in the association of all the mentioning of numbers and what kind of emphasis is given on the financials. One must get opinion from experienced accountants who specialize in working with franchises. Basically, your franchisor’s plan should include budget and sales, gross profit, Bank account, net profit, outgoings, and receivable accounts.
- Performing apparently ‘crazy things’: If you aim at splurging during your boom period, you should hold your horses. Overspending can sometimes backfire. Any kind of additional financial burden can make any business tougher. This is why it is important for franchisees to plan their finances well ahead. You should get a thorough understanding of your business cycle in the first year of active business.
- The gap between sales and marketing: The franchisor can provide one with marketing tools or with some form of online marketing support. But how the sales are converted is actually up to you. Remember that over dependence on marketing can make you neglect practical portions of sales. New franchisees must learn to up their selling skills. They must invest, organize and conduct localized offline as well as online campaigns for marketing the course. This can be done by approaching educational institutions where your target audience is concentrated; it can be done in large Government establishments where the influencer marketing can be done. So the marketing campaigns need to be carefully strategized and carried out with the use of both traditional and modern avenues.
- Pride and Ego: A franchisee will always want to be successful but sometimes things may not work as planned, and people do not like being told that their plan isn’t working. So take control of your ego, pay heed to what your well wishers in the industry say, including the inputs that your franchisor gives you. You might actually end up taking crucial decisions that can change the course of your business for the better, so it’s ok to thwart the pride and listen up sometimes.
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