Successfully operating a multi-unit franchise--typically generating millions of dollars in revenue from many locations--requires a keen awareness that leading multiple units is fundamentally different than leading a small operation. Unfortunately, too many multi-unit franchisees rely on the leadership approach they used when they were a small business, running the business themselves or promoting from within without the proper training. The result? Derailed profitability, stunted growth, and high management turnover.
The only way for mid-sized multi-unit franchisees to grow and prosper is to plan for and invest in a trustworthy and competent leadership team. As proven time and again, the bigger the investment in leadership, the bigger the potential return.
Having an all-star team doesn't happen on demand. Start by envisioning the organizational chart you will need three years from now. Focus in on the top two to five positions beneath the owner/CEO. Sketch out the experience you would want and the key responsibilities for each. This is your dream team. If you truly want to grow, do the same for the CEO's position--you may have some work to do too.
Next, look at your current team, and identify how many employees already qualify to be in the organizational chart of the future. The rest are gaps that should be filled over the next 18 months.
Many owners tolerate poor leaders on their team. The most common cause is misplaced loyalty, where owners are more loyal to a person (usually who performed well in the past or has long tenure with the firm) than they are to their company's mission. Yet the right place for loyalty is between the company's mission on the one hand and each member of the team on the other. As humans, we often feel loyalty as being between a boss and an employee, but this can be distracting and problematic over time.
An executive that is acting with loyalty to the company does and continues to do such things that help the company achieve its mission. In return, a company that is acting loyally to its team members does, and continues to do such things to help the team member achieve their own personal goals.
There are many owners who are amazingly creative, hardworking, and entrepreneurial, but who are not committed or confident enough to develop their own leadership team, or who can't afford to wait the year or so that it takes to see a new leader become effective. These owners should hire leaders from the outside.
The search for these team members should be thorough and well executed, finding multiple quality candidates and choosing the best fit. Hire for experience doing the job at hand for a company two to three times your revenues. These larger firms tend to have the systems, processes, and management that you need to develop to fuel growth. Selecting a new leader from such a firm makes it likely that their experience is most relevant.
Bringing in outside leadership can seem unfair to loyal employees who desire those positions, but if they're not qualified, they need mentorship in order to develop. That's exactly what reporting to a top notch, experienced leader will do. They'll learn best practices and quickly develop a solid foundation for their management career.
As you build the top team, roles should be written and clear; expectations must be measurable so that the executives are accountable. The CEO must change his or her approach to working with such a top team; leading executives is different than leading managers. Operational planning and structure is crucial to allow these executives latitude to do their job and bring their expertise to bear, but keeps them focused on the company's strategy and agreed upon performance targets.
While this shift in leadership approach is critical to the success of a multi-unit operation, it's not without barriers. The first is money. Many owners can't bring themselves to pay market salaries and incentives for executives. Yet without them, the business underperforms and growth stagnates. Great leadership is the foundation of success for a mid-sized firm. Cut or postpone other projects or expenses, or take a cut on owner's pay to afford one incremental executive. Within six months, they should have created enough value to cover their costs or more. Then bring in the next one.
The second barrier is a flawed business model. Some franchises are best suited for owner-operators where the owner must work in the business to earn a fair return. In these cases, becoming a successful multi-unit owner may be impossible. There must be enough increases in efficiency (and thus margins) to be able to cover increased amounts of management overhead as a franchisee's operation grows. If there's not, then the only path to success may be to exit the concept and find another.
As many businesses grow into mid-sized operations, owners who want growth will invest in training a strong leadership team or will hire executives with deep, relevant experience. Make a great executive team your top priority.
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