Perhaps you’re considering taking on an additional territory. Perhaps you’ve got a major capital expenditure coming up, or maybe there’s just more month than money – again.
Your business success and your finances are always going to be inextricably linked, so it’s important to get your financial decision-making right to sort out any financial issues as soon as possible. No one ever claimed running a business was easy. It’s busy and often demanding, with big questions that don’t always have a straightforward answer – particularly when it comes to financial matters.
Whatever the issues you experience, the first step to facing them is understanding the need to seek advice on finance-related matters. One of the main reasons many businesses fail is due to a lack of guidance and support. Avoid this pitfall, save time and put your mind at ease by enlisting the help of people who have the knowledge and skills to really help your business succeed – it’s worth it.
The answer to financial issues isn’t always a bank loan. Ask yourself if you are charging prices that will deliver a profit and if you can make any efficiency improvements. These are just a couple of considerations that can completely transform a business’s financial situation rapidly. Take an objective look at your business and try to see it from an outsider’s point of view to help get an impartial view.
Before you head to the bank, I recommend you first speak to your franchisor about other franchisees they may have had in a similar situation and how they have helped. Secondly, read your operations manual to ensure you are maximising your business. In my experience, the best-performing franchisees in a network are usually the ones who follow the operations manual to the letter. It’s a proven route to success, so don’t let it sit neglected in a drawer. It is more than likely to contain a wealth of valuable information designed specifically for your business – so make the most of it.
Being open and honest with your franchisor is also key. Make sure you prepare your numbers and if you’re looking to expand or want to suggest a new innovation – remember the Big Mac was invented by a franchisee – provide a well-thought out business plan, complete with the relevant figures to back it up. Not only is your franchisor invested in giving good advice – your success is, of course, also their success – but it’s likely that they’ve come across a similar query before. Whether you want to acquire another territory or the wage bill is impossibly high, your franchisor should be able to understand your situation and advise on the best course of action.
Don’t be afraid to look within your network to seek advice from your peers too. You are all in a similar position – how are others dealing with this issue? Speak to them and find out. Looking at the high-performing franchisees in the network can be incredibly helpful for establishing best practice and making financial decisions.
Another place to look for quality advice on financial issues is your accountant. It’s important to remember that your accountant isn’t just a necessary evil, required only for tidying up past finances. They should be a vital tool for your business’s success. Using your figures, they are incredibly well-placed to give specific and bespoke advice to help improve efficiency, save money, make the most of reliefs, increase profitability and shape your business’s future. Efficiencies and savings can always be made in any business: your accountant will be able to take a look at your figures and see exactly where these can be. Of course, with their financial knowledge, an accountant is also well-placed to advise on issues such as capital expenditure and business structure, so don’t be afraid to ask.
Their advice might also recommend – and often provide – services to help develop your efficiency. For example, perhaps outsourcing payroll and bookkeeping rather than paying someone to do these tasks is the best way maintain your cashflow. Looking at your staffing as a whole is also important. Are you overstaffed? Make sure you’re utilising the full capacity of your workforce: look at their productivity ratios of billable versus payroll hours and try to keep them as high as possible. Maybe you can also take a closer look at your payment terms with current suppliers: perhaps you can negotiate a prompt payment discount, say a few % discount if you pay within 15 days rather than the current 30-day terms you’ve reliably stuck to.
Your bank is, of course, a valuable resource – especially its franchise department. While most departments of the bank will probably be able to help you, the franchising section will understand your specific situation and business model more fully and be able to give more detailed advice on the options for things like leasing, capital purchases and loans that are best suited to you.
Perhaps you already have an independent trusted mentor or advisor; I’d highly recommend you find one if not. Money is a tricky but crucial topic in business. Don’t be afraid to seek out the advice you need. The value of others’ experience and expertise can have a huge impact on the success of your business and franchisees shouldn’t be afraid to ask for it when making financial decisions. It may cost but it may also be the best thing you ever do for your business.