3 Common Mistakes First-Time Franchisees Make and How to Avoid Them
First, congratulations on joining a franchise! You've avoided many startup headaches, and now development work, brand building, systems development, and business model refining are all off your plate.
But don't settle in just yet. Simply being a part of a franchise by no means guarantees financial success. A new learning curve is ahead of you, and it's a steep one. There's still plenty of blood, sweat, and tears to be shed before you can claim a first-time franchisee trophy.
Common franchisee follies
Two key investments are required before your franchise launches: marketing and hiring. Successful marketing builds much-needed momentum during the franchise's infancy, attracts business, and promotes a positive reputation. Meanwhile, the first employees to represent the brand must make it a top priority to give the best first impression to your new customers.
When it comes to your franchise's success, investing in the right team members who have strong mindsets focused on impeccable customer service can make all the difference. So recruit wisely and focus on employee retention from the start. Value your employees because nothing is more detrimental to a franchise than a constantly revolving door (not to mention the costs and time involved in recruiting and training new employees).
How to avoid first-time franchisee mistakes
For the less experienced first-time franchisee, here are three under-the-radar mistakes I commonly see.
1. Assuming you know more than the franchisor
You might be a great business person, but keep in mind that being a franchisee is different. The franchisor will know more about running the business. It pays to shelve your ego and heed their advice. Doing so sets the foundation for long-term success. Only with some operational experience under your belt will you be able to pinpoint areas for improvement. So when starting out, keep it simple and rely on the established business model and best practices from your franchisor. Once you feel confident enough to outperform the franchisor's model, you will then be on to something that should be easy to duplicate if you decide to scale.
2. Procrastinating with the general ledger and P&L statement
This is business 101. You can't know what you make and spend unless you track it. Get your financials set up quickly, and use them to test the viability of your financial model. Only by tracking revenues and expenses can you properly identify how much money is coming in and going out. I have seen operators take 3 to 6 months to set up their financials. Delays in logging transactions will lead to inaccuracies. Expenses get lost, revenue records are misplaced, and backfilling data becomes time-consuming. Entering data once a month is a suitable goal for solid financial management practices. If you mess up with the basic administration, it begs the question why you did all the legwork in the first place.
3. Failing to put your heart and soul into the business
It's a cliché, but you have to be "in it to win it." When selecting a franchise brand, consider the impact it will have on other areas of your life. Does it reflect your passion? What is your time frame for the investment? Put in your due diligence by number crunching and investigating scalability. Afterward, ask yourself whether the endeavor is still an attractive proposition. And before jumping in, also gauge your hesitation. If you don't believe this is the best decision right now, your commitment will falter and success will dwindle. Of course, even if you are 100 percent sure, always develop an exit strategy. Also, when selecting a franchise don't forget to consider work/life balance. Investing with passion will keep you enthusiastic through difficult times. Working hard on something you enjoy will feel like an extension of your personal life, rather than a detractor.
Overall, be fastidious in every aspect of the franchise. Dot every "i" and cross every "t" -- every day. Operating a franchise is an opportunity to follow your passionate heart. Just remember to use your head at the same time. Listen to those with experience, and use tried-and-true formulas. Soon you'll be running down the other side of the learning curve with the winner's trophy in sight.
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