Is it Time to Expand Your Franchise Shop?
Deciding to Rise to the Occasion of Owning Multiple Units
Asking yourself the question of whether you want to expand, and open more units, goes back to the fundamentals of entrepreneurship. The best franchise owners need to ask themselves these questions.
Why did you want to own your business?
Was it to escape the corporate headache? Maybe you wanted a job you controlled and were paid well. This more than fine, it’s great. Business consultants tend to advise that when franchisees are only interested in one shop location they just want a job. The shop pays the bills. Franchisees get their income and they are happy. People can retire proud that they have a shop with their name on it.
The enterprise building franchisee has a different mentality. This type of business owner wants to take the successes they’ve implemented in their shop and spread to other profitable areas. The adage, “if it ain’t broke, don’t fix it,” is remarkably true and pertains to expanding.
Yet the technologically converging world has it’s way of breaking things. Ten years ago small business owners were still sending out armies of salesman to go door-to-door. Today things are done differently. Expanding under the right circumstances can protect businesses. Owning multi units can keep a business updated on marketing trends, innovations in products, and of course boost sales.
Expansion is not a staple of the best franchise unit, but it does offer some interesting advantages.
Open More Units When it Suits Your Business
Identifying your vision is key. Why are you considering opening more units? Is there transparency for your drive to amplify your business?
Franchisees open multi units for various reasons. The main one is undoubtedly to make more money. Before opening another shop is it clear that you cannot simply double the volume of your current unit? This would be pure profit. A shop’s selling cap is a hard thing to quantify. If you’ve been in business for years, and have seen your sales plateau successfully, this may be a sign it is time to open more shops.
The best franchise models will aim for success in every shop unit. It is wiser to have one lucrative shop, than two shops where only one is making money.
You’re Personally Ready
Part of the entrepreneurial spirit is growing yourself with your company. This is part of your vision as a shop owner. When you come to a place in business where you are spiriting over the challenges, then you may be ready for a new pursuit.
Are your business and leadership skills honed?
Running the show of a single unit is challenging enough. It takes an immense amount of hard work and tenacity. The challenges tend to magnify the higher up you grow in the franchise.
Handling a more itinerant workload and coaching your employees toward the transition is the first step. Can you delegate properly and train a managerial infrastructure to handle things? Learning to trust others to do a job you were once doing is hard thing to do, but is essential for a multi unit owner. Your shop needs to be a well oiled machine before you start building new machines.
Can you oversee more employees, and gear yourself toward a regional owner mentality? The entrepreneurial motto, “work on the company not in it” takes it most truest form at this level. Your new role as multi unit owner is a more dynamic job. You will see greater rewards in return for more complex work.
Calculate the Right Timing
Now your vision is clear and you have goals set. The next step is arranging the logistics for application–set the groundwork. But timing is everything and the way to determine this is to review the back office your current shop.
Has your shop reached it’s full potential? Sales need to reach critical mass before proceeding. Many times franchisees have the urge to open a new shop unit without first evaluating room for expansion in their current unit. The best franchise has maximized its full potential in terms of service, sales, and merchandising.
If there are times when you need to cut payroll by sending employees home, you need to work these kinks out before opening more shops. Generally, a sign the business is ready, is when you can allot for employees hitting overtime because it is worth it to bring in the revenue.
Are your employees ready? Is your manager in a position where they’re ready to make the transition?
Your manager will be filling roles that you once held as you both rise in the franchise hierarchy. They should be ready to adopt the responsibility of solely and self-sufficiently running the shop. The shop objective is to have management teams that can fill operations day-to-day and also account for emergencies. The days of you filling in behind the counter when employees don’t show up will be over.
When you and your staff are poised for another unit it is time to start solidifying plans. When all these things are in motion, your team is ready for the move into position as the best franchise.
Control the Stability of Your Future
How will you overcome new and bigger challenges to protect your multi unit investments? How will you diversify?
Owning multiple shops has its advantages in helping to prepare for an unsteady future. For example, the county may start doing construction on the plaza your strongest shop is leased in. For six months, all traffic is going to be re-directed away from your shop. This is when owning another shop within driving distance can supplement your loss of sales.
Owning multi units can also help you cope for unpredictability with experiments in retail. If corporate announces a new line of products, you can test these products in the shelves at your strongest store first, then interpret your sales index to see which products in the line sold the strongest, and where to merchandise these products in your other stores. This creates a model for the best franchise.
When making the jump from single shop, to multi shop, you’re inevitably going to have to make that familiar decision. Where to start construction for new locations?
Never settle for subpar conditions, or a insecure lease agreement. This will diminish the confidence and strength of your new shop. As you research the idea of expanding, pay attention to real estate trends. Research demographics within the area you’re thinking about opening in. Also keep in mind that until the shop is self-sufficient, you’re going to have to be on-site, so pick a place that’s easily accessible. Even for big box franchises, store owners usually try to open shops no more than an hour plane ride away.
Speak with corporate about the idea. Attend multi unit franchising conferences. Spend time networking with other franchise owners. Develop mentors in the multi unit realm that have already gone through the decision. There are many variables to consider when making the decision striving toward the best franchise.
Do it for the right decisions, in the right way.