Will Your Franchise Be a Turn-Key Success, or Failure?
Winning business ideas aren’t easy to come by and that’s a major reason that purchasing a franchise can be so tempting. If a company has been selling franchises for many years, it must have a successful business idea and model, right? There is indeed some truth in this, but within any franchise concept there will be very successful operators as well as many failing or struggling operators. This means you must be very careful, whether you’re licensing a franchise directly from the franchisor or buying an existing franchise business from its current operator. For example, I remember a successful local deli that had multiple locations and decided to franchise its concept. They did all the legal work required to start a franchise business and soon had several franchisees up. However, the company was jointly owned by a husband and wife, who ultimately divorced. Like their marriage, their business went belly up and the franchisees lost their investments, which for many was their entire life savings. Turnover rate alarming Franchise operations can be a very mixed bag. Even the most successful franchises have their share of duds. Further, a recent analysis of turnovers within the industry revealed some alarming statistics. The turnover rate for the four years beginning in 2010 and ending at the end of 2013 was 122 percent, with more franchisees leaving than opening. “Turnovers” include terminations, transfers, non-renewals, re-acquired and ceased operations. During this period of time, 135,289 franchises opened while 164,832 franchises closed their doors. The data indicate that many franchise operators, like the victims of the failed marriage/business that I mentioned above, end up going out of business well before their contracts are up. Contracts are often for periods of about 10 years. Certainly there are many problems that contribute to this alarmingly high number. The economy has been tough on small operators across the country. Also, some critics say franchisors need to focus more on supporting their franchisees than selling more franchises. Further, some operators go into the business without appreciating what it will take to achieve long-term success. Tragically, those who don’t make it can lose much more than their franchise fees. Buyers beware People can get a franchise location through the original franchisor or when a current franchisee decides it’s time to sell the business. In both cases it’s critical that buyers truly understands what they are getting into. When establishing a new location, it’s always an educated guess if the territory will ultimately support the franchise. Buyers need to find similar locations and see how well owners are doing. When existing owners are selling the critical thing to know is why. Are they successful but just ready to move on or retire, or is the business struggling? Owners won’t tell you that their business is a dog and they desperately want out. Buyers need to be very thorough in their analysis. If they have experience turning around poorly managed businesses, they might be able to negotiate a good price and do well. However, losing their money is probably a more likely outcome. The takeaway here is that despite being often advertised as “turn-key” operations, the franchise door that the “key” opens doesn’t always lead to profits, so be careful and get guidance from experienced and trusted...
read moreHow to Recognize Workplace Bullying to Protect Your Small Business
Each year October is National Bullying Prevention Month and the first step toward prevention is being able to recognize bullying, its early warning signs, and the conditions within which it often arises. While the press often focuses on tragic cases of youth bullying, it also occurs in the workplace. Review this infographic to remind yourself of the signs that can indicate bullying among coworkers. Then check the statistics at the bottom to get a better picture of the bullies and their victims....
read moreCan We Put ‘Affordable’ Into the Affordable Care Act?
Many of us are familiar with Rick Harrison from the hit reality TV show Pawn Stars and for years we’ve listened to him gripe about the amount of work he’s able to squeeze out of his son Corey and his employee ChumLee. But on his recent Fox & Friends visit, it was the Affordable Care Act that took his first salvo of criticism. “It’s really difficult to do business sometimes. Just for my little pawn shop the insurance for my employees went from $19,000 to $30,000. Last month,” Harrison explained. “I have 60-year-old women working for me who have to have pregnancy coverage now. I have some of the squarest ex-cops working for me who have to have drug rehab (coverage),” he added. It doesn’t take a rocket scientist or a Harvard MBA to look at those numbers and realize that they make expansion virtually impossible and workforce cutbacks almost inevitable. I’m reminded of a recent headline about Walmart cutting medical insurance coverage for employees working fewer than 30 hours per week. Earlier the retailer had cut coverage for employees working fewer than 20 hours. Rising rates, Smallbiz pain Rick Harrison and Walmart aren’t alone. The ACA seems to be causing a lot of pain for small business owners and individuals across the country. According to a Manhattan Institute study, the ACA increased the actual cost of health insurance by 41 percent in 2014 compared to 2013. Looking to 2015, early data show health insurance premium rate changes varying wildly from state to state. Rate drops of as much as 22 percent to rate increases as high as 35 percent have been reported. Being able to adequately predict costs from year to year is important for small business owners. When the economic climate swings so radically, they tend to entrench themselves and put off expansion and hiring plans until stability returns. When Federal Reserve Banks study local businesses, they are finding that the uncertainty is causing management to make major changes to their future plans. A survey in Dallas revealed that the ACA is prompting 25 percent of respondents to fire employees and nearly 17 percent say they have more part-time employees than full-timers due to the cost of required health insurance. Ask the candidates There are enough issues before the American public in the upcoming midterm election to make voters’ heads spin. But as you consider candidates’ positions on fighting ISIS and Ebola, don’t forget to ask how they stand on supporting small businesses. And if you’re at a town hall meeting, see if any of your candidates would support this modest proposal: Anytime a law doesn’t live up to the name politicians have given it, the law is automatically repealed. For example, if the Affordable Care Act doesn’t make healthcare affordable, it’s gone. I can dream, can’t I? Image: By Mike Salvucci (DSCN0507) [CC-BY-2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia...
read moreBe More Than Just Ready For a Harsh Winter
Are you planning for a mild winter, or a long, cold and snowy one? Before we get into the details of what I want to share with you, I’d like to ask one more question: What do you think is the most important word in my first question? If you think it’s one of the words related to the kind of weather that might hit your community, I’m going to deduct one point from your score today. The important word is “planning.” As a small business owner, you should be considering how the weather will affect your business, whether it’s a fairly mild winter or another polar-vortex-driven deep freeze like last winter. This is true for a few reasons: A harsh winter can hurt many businesses, if they’re not prepared. A harsh winter can enhance some businesses, if they are prepared. A mild winter can be a boon for many business, if they are prepared. Let’s look at these points from two different angles: marketing and operational. Marketing Extended cold weather can help many small businesses. If the cold winter weather seems like it doesn’t want to end, ask yourself this question: Do I offer a product or service that will help people break the monotony of the cold, gray weather? If you do, work this into your marketing. I’ve read several accounts of gyms that made a killing last winter because folks were going stir crazy and needed an outlet for their energy. Of course, when we’re stuck inside during a long cold winter, we also tend to put on a few extra pounds. (Anyone out there sell nutritional diet products?) In the case of a mild, or delayed winter, those of you who own a business that relates to outdoor activities should work that theme into your promotions. Finally, if your business has nothing to do with the weather and we end up suffering through a long winter, consider a “Beat the winter blues with a blast of super hot sale prices” ad campaign, or something similar. Operational If the cold weather extends beyond what is expected in an average winter or the storms that blow through are much more intense than usual, there can be impacts on the operational side of your business. Just ask the folks in Atlanta who had an unexpected snow storm pass through their area last year. Many businesses should have contingency plans in place, especially if transportation is a factor for them. Do your employees know what to do during a winter weather emergency? If your business requires special winter supplies, such as sand or salt for deicing, be certain you have enough on hand. Take keeping your business “open as usual” as a challenge. Be the most dependable business in the neighborhood. Some businesses, such as grocery stores and pharmacies, can deliver to elderly customers who don’t want to brave the icy roads. Maintain superb customer service during challenging weather. It will set you apart. The most successful small businesses are those who anticipate change. We can’t always foresee the emergence of a “disruptive” technology, but we should be able to anticipate the changes in weather that come with with each of the seasons! Image: “Miniskirts in snow storm” by Unknown – wea00957, Historic NWS Collection. Licensed under Public domain...
read moreThe Workday is Short: Here’s How to Make the Most of It
When I’m on the road and talking to small business owners, one of the biggest problems they seem to face is a lack of time. Throughout history, the invention of time-saving devices usually ends up creating more work for us. When the time required to complete one task is shortened by a new invention, another task springs up to fill the void. Nature – and small business owners’ schedules – abhor a vacuum. However, this isn’t a hopeless situation. The key is to organize and concentrate your tasks so they can be completed efficiently. Fortunately, we have technology-based tools that can really help us out. Let me illustrate with some examples. Social media can control you, or you can control social media. I suggest the second approach. If your business is making good use of social media, set aside a block of time to get it all done at once. If you go back and forth all day, just pecking away at it each time, your social media program will prove to be a huge time waster. Apps bundle your tasks Free TweetDeck lets you compose and schedule tweets as well as take other actions within Twitter. Hootsuite, also free, lets you easily compose and schedule posts to most of your social media accounts. Further, for a reasonable fee, TweetAdder can automate Twitter “thank you” messages and retweets, and make a variety of other tasks easier as well. These apps allow you to concentrate your social media work into one solid block of your day. Many of them also allow you to take care of social media tasks in places where you might otherwise be unproductive. (Like waiting in line to get the new iPhone?) Now, there is one more thing you need to do to make sure you’re investing your time wisely: Be sure your efforts are truly focused. Let me make two true statements: First: Business tasks deserve your complete attention. Second: You deserve some breaks throughout the workday. The tricky part is to work out the balance between these two truths and a system that allows you to fulfill each. A real tomato Consider a Pomodoro timer. The Pomodoro technique is basically 25 minutes of uninterrupted concentration on a task followed by a five-minute break. Every fourth Pomodoro period is followed by a 15-minute break. The name, by the way, is the Italian word for tomato, from the old, tomato-shaped kitchen timers. The Pomodoro period is uninterrupted. If you get interrupted, you need to start over with the timer. The idea is to get your work flow maximized through unbroken focus. There are free and inexpensive web based timers as well as smartphone apps. Let’s compare investing our money with investing our time. If you collect your loose change each day and then put it all into a savings account, you wouldn’t toss random slugs in with the quarters, would you? It’s the same with our time. Keep it pure and focused on important tasks. And when it’s time for a break, enjoy it. Image: “Il pomodoro” by Original uploader was Erato at it.wikinews – Transferred from it.wikinews; transferred to Commons by User:Fale using CommonsHelper. Licensed under Creative Commons Attribution-Share Alike 3.0 via Wikimedia...
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