Are you feeling ready to grow your business?
Many SMEs reach a point where the family store is doing so well; it’d be crazy not to expand. But you’ve got to do it right.
You could benefit from making your business franchise-ready.
You might already be considering franchising, especially if you’re a trading company.
As a method for scaling a business, it’s become so popular that Australia is now the world’s most franchised country – and 90% of our franchises are locally owned. Both franchisors and franchisees are onto something.
But what fewer people realise is that a lot of the true long-term value comes from making your business franchise-ready, even if you’re not quite ready to take the plunge.
I’m going to explain how preparing your business for franchising can set you up for a big business mindset & potentially help you save on tax. But first, a refresher on the subject.
What is Franchising and how does it work?
Franchising is when you provide the rights to another individual or entity to use your brand, your processes and your marketing capability to run a business identical to your own.
It’s a fair exchange. For the business owner (The Franchisor), it’s a cost-effective way to expand your business and your brand without having to micromanage everything yourself. The person who buys into the business (The Franchisee) will get a jumpstart as the manager of a business that’s already up and running successfully. When franchising is done right, both parties stand to benefit greatly.
The franchisee pays the franchisor an initial investment to begin this arrangement, as well as ongoing royalties and fees called ‘Franchise Fees’. The most successful franchise businesses will generally reinvest these fees back into the franchise – so if you’re a potential franchisee, be sure to ask where your fees are going.
How preparing your business for franchising can give you an edge.
To put it simply, preparing for franchising is a great way to test your business – and it’s a perfect opportunity to restructure effectively.
At its core, franchising is just another corporate structure or strategy that allows you to scale effectively. But if you genuinely want to strengthen the enterprise value of your business through franchising, then you need to properly prepare it for this structural change first.
Because franchising involves guiding someone else through your brand, your marketing directives and your systems & processes, it means they need to be literally foolproof. You need to make it as easy as possible for someone to run a copy of your business to the same high standards. This preparation stage can provide a business with the opportunity to tighten all the screws on their operation and narrow in on what works.
What’s more, once you start breaking your business down like this, it exposes the inter-dependence of different sectors like marketing or financing. You need to make sure that each of these sectors functions smoothly on their own but that they still share a vision. Inter-connectedness and co-dependency are fundamental to successfully growing a business.
It’s also integral to consider whether your current company structure is up to the job. Two of the most important considerations for business owners – risk reduction and potential tax savings – both stem from your structure. A good business advisor can help you restructure your taxes and finances to better suit your growing ambitions. Getting this done before you start growing & growing will save you money and help you keep control.
By making sure your business is franchise-ready, you’re already beginning to re-position yourself into a big business mindset. Whether you ultimately decide to franchise your business or not, taking the time to get these foundations right will help set your SME up for growth on your terms.
But it’s important to note that the type of advice you get is absolutely crucial to getting this preparation stage right.
An effective business is interconnected and unified. Your advice needs to be too.
You should always invest in the advice of a franchise consultant or business advisor when you’re considering franchising. But it’s so important to find one that puts the unique needs of your business first, rather than one who pushes a generic package on all of their clients. (Trust me, there’s plenty of them out there.)
It’s even more important to find someone that takes a holistic, unified approach to advising and growing your business. Your advisor should understand that providing equal attention to different sectors – like legal, marketing, personal finances etc. – is an important part of the whole picture. You need someone who understands the whole family wealth pie, not just one or two slices.
Not convinced? Well, let’s say you instead start separating all of your business functions and decide to hire a legal expert, a marketing expert, a personal accountant, etc. Not only will the overhead costs add up over time, but you’ll end up with a lot of frustrating, contradictory, advice – as everybody will only do what’s best for their own sector. Developing a unified strategy that takes in the whole business is the only way to go forward effectively.
Don’t wait – because the future won’t.
I’ll be writing more on franchising in the future, answering common questions, zeroing in on different areas and breaking down some of the biggest risks & rewards.
But in the meantime, I consider the above advice to be the fundamentals for any family-owned SMEs who are considering growing their business in the near future – whether that’s through franchising or not.
Investing in holistic advice and taking these steps to plan, prepare & restructure now will help your SME cultivate a practical big-business mindset and set you up for a successful future.
And the sooner you can get prepared, the better off you’ll be – you never know when that big break will suddenly come. You don’t want to be on the back foot when it does.
Is this the next step for your SME? If you’d like to find out more about setting your business up for growth, then get in touch with one of our business advisors today for a confidential chat.
Disclaimer: This advice is general in nature and does not take into account your personal objectives, financial situation or needs. You should consider whether this advice is suitable for you and your personal circumstances. We strongly recommend seeking out professional advice before acting.