• Expert Advice

For those franchisees who have not done so already, Global Money Week (22-28 March) offered another opportunity to take a close look at the expenses in your pandemic-ravaged business. Remember the adage “If you don’t ask, you won’t get” – you probably have been giving customers discounts to boost/increase sales, isn’t it time to get the same from your suppliers and service providers.

With few exceptions, operating revenues have been severely impacted by the pandemic, and business owners are having to make tough decisions to keep their businesses competitive. It is important to align costs to revenue without affecting the future quality of your business – it will give your business the momentum it needs to emerge from this dark period stronger than ever.

Cutting non-essential costs is vital and offers a quick win. Then essential expenses have to be looked at and sometimes money needs to be spent to save money. It may seem counter intuitive, saving money can cost money. A good example of this is marketing (increasing marketing spend in tough times on effective marketing campaigns should yield good return on investment i.e. increased sales).

Where to start?

A good starting point is to make a list of your franchise business’s variable expenses. Cut those that will not impact service delivery or negatively affect employee morale, and postpone any projects or initiatives that you are not unsure of or are not immediately seen as essential. List out each supplier and renegotiate pricing with each, or get alternative quotes from other suppliers (you can get your franchisor and the support team involved to assist with this). Redirect expenditure to where it can have the highest impact right now and that you know you’re good at. Alternatively, use the money you save to strengthen your balance sheet and cash flow.

Having addressed your variable expenses, now turn your attention to your fixed overheads, listing them out and ranking them from highest to lowest value. It makes sense to target the biggest as offering the highest potential for savings. Remote working is the big trend today and likely to remain so. This offers the potential to downsize office space or sub-let and reduce your rental expense; if your industry and market allow for this.

Other things you could renegotiate for instant savings include:

• All leases you have – everything from premises, printers to a fibre connection, etc.
• Shift from on-premise software solutions to cheaper cloud-based accounting and payroll solutions if your franchisor would be open to it

Spend on automation and upgrading technology

We are rapidly entering the world of automation and artificial intelligence. Today’s business management solutions give franchisees direct access to their information and provide mobile, real-time access to business-critical information for improved decision-making. Such systems significantly reduce the workload on small businesses’ administration, allowing you to multitask and tackle more important customer-focused tasks. This alone is what differentiates you from other businesses.

Other technologies that could help you take control of your costs include:

• Customer relationship management (CRM) software – reduce the cost associated with lost invoices, neglected clients, and wasteful marketing activities.
• Teleconferencing software – reduce costs associated with employee travel and workspace needs by enabling them to work remotely.
• Energy-saving technology – reduce your energy bill by installing PV solar panels; identifying wastage; and install energy-efficient lighting and appliances.

In conclusion

Work closely with your franchise support team i.e. the field service consultants or franchisor to assist and guide you during this exercise as they have extensive knowledge and experience not only in the industry but with the business model.

All the while, collaborate with your support team to identify areas of the business where technology can take over mundane, rote, or admin-intensive tasks, to hone the focus on the projects and activities with the highest potential impact. Communicate any cost-cutting measures to your support team and have each take ownership, guidance and implementation of further cost-cutting possibilities in their area of the business for all franchisees.

By Eamonn Ryan