A Management Mindset - Managing Financial Risk

Building a successful multi-unit operation is difficult for any entrepreneur. Doing it successfully comes down to having the right management mindset, says Rod Bristol, a former franchise executive and financial expert.

He recently wrote about what he says are the 5 critical capabilities that multi-unit franchisees must master in order to be successful.

Here's the fifth and final of his 5 competencies:

Managing the financial risks and rewards (planning the growth pathway)

Managing financial risk. The higher reward (additional profits) of multi-unit ownership comes with a trade-off: higher financial risk. In simple terms, growing sales and profits requires more capital or debt. It's the way wealth is built, but only if the enterprise is successful.

How long will it take to produce enough profit to repay the debt and pay a reasonable return to the owners? What if it takes longer than expected? Where will the money come from? What if you do better than expected? Where is the next opportunity to invest? Successful enterprise managers have written financial plans (Plan A and Plan B at least) that align with their personal financial goals and capacity. They take risks and then manage the drivers of their success to assure their rewards.