Five Tips for franchisees to adapt to a changing business environment
One often hears the cliché that the pace of business change is fast and getting faster. However, a 2015 report by The Economist magazine found that this was more perception than truth: “Business people feel time is accelerating—but the figures suggest they are largely talking guff.” The common feeling among business people is that a giant wave of disruption is always just about to strike.
Creating that illusion is the regular doubling of computer processing power known as ‘Moore’s Law’ which has driven decades of exponential growth in computing power. The result is that information technology is ever more integral to efficiency. But many argue that speed of information does not necessarily equate to anything really happening outside the IT industry itself.
Change can therefore be a double-edged sword: an overly-sensitised anticipation of imminent change can prompt panicked business decisions, while complacency can see one blind-sided by actual change. There’s no doubt that technology and the pace of business start-ups is certainly speeding up – and all businesses today have to become more competitive.
Franchisees and franchisors alike need to walk this fine line. The following five steps should help:
Work more ‘on’ the business than ‘in’ it
Business owners need to see the wider trends affecting their enterprise, and this can only be accomplished by standing back from the day to day routine to get a holistic overview of the market. This isn’t easy: most franchisees like to be ‘on the floor’, and most franchisors like them to be there too. They must nonetheless remain focused on the main priorities, constantly scanning the environment for threats and opportunities that may affect the business in the near, medium and long term. Technology is the area where most change occurs, so franchisees need to aggressively work at breaking down mindsets that fear technological change.
Run the business responsibly
When times are good and the business is making plenty money, don’t assume this will continue forever but put aside reserves to enable the business to adapt to future changing circumstances. Never lose sight of the importance of cash flow and profitability. Avoid impulsive decisions which could be to the detriment of profitability, such as taking money out of the business for luxuries.
Encourage staff participation
With a more detached view of the business, the franchisee should encourage staff participation to ensure he/she does not lose sight of the coal face of production and the market. It is staff members who grapple with the everyday challenges of production, and is tuned into some of the big changes that are taking place. Many of the most practical ideas come from this source. There is real value in getting the entire staff to participate in long-term planning, and they should be encouraged to do so. The franchisee’s main priority, however, should always remain watching and listening to customers at the counter. So have a positive attitude and do not feel threatened by suggestions from staff members on how to do things differently.
Stop, look and listen
Franchisees might think their business is entirely ‘locally focused’ while changes only happen on the far side of the world. Franchisees have a joint responsibility with the franchisor to read the market and therefore need to take an interest in the world beyond their immediate business, community and target market. To this end, be prepared to ask meaningful, intelligent questions rather than nurse fixed viewpoints.
Work according to a plan
The need to anticipate change never does away with the need for annual structured business plans. The
business plan is in fact the place to institutionalise adaptation to changing circumstances. It avoids actions which would otherwise be ad hoc, impulsive, and done without the necessary strategic thought and financial planning.
Whether ideas come from the franchisee’s own research or the observations of staff, they need to be written down, discussed first with staff and then with the franchisor. The challenge for most franchises is striking the right balance between time spent operating today and planning for tomorrow, and ensuring they have the right skills to be future-focused.