Fund, invest, train and sustain: How to build a successful franchise
When Simon Vardy first set up his franchise business, Sim Trava, in 2004, his priority was to ensure sustainability and longevity. Fast-forward 11 years, and the company now own and run 25 Costa Coffee stores with more in the pipeline.
Starting your own business can be both exciting and rewarding to have control and the ability to make decisions over how a company is run is an enticing option for many.
But creating a successful business takes time and hard work. And, going it alone can be especially difficult starting from scratch, building a brand and investing capital on a venture which is essentially a gamble.
These were issues my wife Tracy and I had to consider when we decided to start our own business back in 2004. In fact, it was for these very reasons that we opted for the franchise model. The allure of owning our own business, while selling an established brand with support from a franchise partner, appealed to us.
We began to review which brands were of interest and at around the same time, Whitbread announced it was opening its highly popular Costa Coffee brand to franchising. Not only do we now own and run 25 stores, weve also expanded our portfolio, having recently opened two stores of healthy Canadian fast food brand Pita Pit.
Like many other business owners, our priority is to ensure Sim Trava grows sustainably and has longevity. When we were starting out, there were two core things we felt were necessary to make that a reality firstly, identifying and securing the right funding, and secondly, investing in learning and development of staff, which I will discuss in more detail.
Identifying and securing the right funding?
Whether your business is a franchise or not, funding is one of the most important elements, and choosing the right type is imperative.
Here are some top tips for those starting out as a franchisee:
don’t be afraid to ask your bank for money as long as you prepare a profitable and working business plan, you can approach this with confidence.
Feel free to go to market and shop around for the bank offering the best deal don’t settle for the first offer you get.
And, most importantly, you need to create allowances in your cash flow for one-off expenses as well as for peaks for things such as VAT periods, rental quarter days and corporation tax bills.
You must also factor in that VAT collected from customers is not yours but, in fact, the government’s. it’s crucial that you only take the minimum amount of cash out that you need before establishing your business, and only when you can afford it.
While you may be franchising an established brand, it’s important you remember you are still a new business and thus will be treated as such by lenders.
You must ensure that when you draft up that all-important business plan, you create one that is realistic and can make money. Set goals that are high enough to satisfy the bank but also achievable enough that you can meet them or better yet, exceed them.
Once funding is received, the next step is to consider what you’re going to concentrate your investment on. As a family-run business, we decided that our staff would be one of our main priorities, and thus investing in their development was at the top of the list.
Investing in your people
When it comes to owning and running a franchise business, particularly one you hope to grow, creating consistency across all outlets is crucial. Especially if, like us, you operate within the retail and hospitality industries whereby customer service is of the utmost importance.
As we own and run a large number of stores, we decided to invest in the training division of our business, and so in 2015 the Sim Trava academy was born.
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