Many people understandably think that owning a...
You may have dreams of owning several locations one day, but it's wise to start your Canadian franchise with some goals in mind. These goals should be for the short and long-term, with the immediate goals being getting your doors open and customers through them. Exact goals may vary by industry and personal preferences, but there are three goals every franchisee should aim to reach in their first year of operations.
Cash flow is not the same as profits. Even if you are profiting, your investment and expenses could cause you to have a negative cash flow, which means you need to borrow money to keep your doors open. A neutral cash flow means your profits are just enough to cover your expenses. In a franchise, it's best to measure the cash flow on a monthly basis since your bills are likely due monthly.
When you are cash flow neutral, it means your business has the ability to sustain itself over a longer period of time. Once you reach neutrality, you can then aim for a positive cash flow going forward, when you begin to earn actual income from your franchise.
Inventory is a part of just about any franchise business. From customer items to retail and dining, it's necessary to have items on hand to satisfy customer demand without causing any hitch in their usage cycles.
However, many newer franchisees make the mistake of having too much inventory during the first year of business. This often stems from optimism about how many customers or clients they will receive in the first year, particularly because their franchise is part of an established brand.
While the strength of a franchise's brand is certainly an advantage for a new franchisee, your new location is still new to the area. Be cautious about the amount of inventory you order so you don't end up with costly waste or too high of a product bill. Observe your sales each month and adjust your ordering accordingly.
Your business reputation is crucial to your success now and down the line. Check how your location is doing online by looking at its rating and reviews left on websites such as Yelp and search engines like Google. If you see issues there, be sure to address them as soon as you can. The second area to explore is your customer retention rate, which is the percentage of your customers who return. When customers are coming once but not coming back, you need to find out why.
The three foundation goals above should be a part of your franchise's overall goal set for its first year of business and beyond. When you set yourself real, tangible goals, it's much easier to work on ways to reach them.