Harry Welby-Cooke, leading business coach, master licensee for ActionCOACH South Africa and President of Coaches and Mentors of South Africa, offers key business advice.
What would you say a major challenge is for those who have always been in the corporate world when they suddenly become their own boss?
Generally speaking most people leaving corporate and purchasing a franchise have left a reasonably senior position. They are accustomed to managing teams of people, have worked hard and are now ‘tired’.
However, when buying or starting a business, whether a franchise or not, they almost have to start again.
There is no established well-oiled team to manage and drive results. The efforts and performance of the owner now have a direct impact on the results and more often than not, long hard hours are required.
When a person has been used to delegating tasks, it is often daunting to have to relearn a number of old skills while taking on the steep learning curve of new skills. Business ownership has almost a fantasy about it and new business owners come to the quick realisation that they were not prepared for their new venture and the fantasy is quickly broken.
What skills/knowledge do you think a first time business owner needs?
An inquisitive mind is essential. Revert to the days of being a child where you ask ‘why’ about everything. This will ensure that you open yourself up to learn the lessons you need to learn quickly and that you’re continually sharpening the saw.
An inquisitive mind will save you a lot of time and money. The roller coaster of business requires you to be able to bounce back fast and develop the ability to take things in your stride. Once you become comfortable with the ups and downs and see them as part of the course of business, rather than life threatening events, you become a more accomplished business person.
How can a potential franchisee determine whether or not the business will be worth their while financially?
First, assess the new business and make sure it’s in line with your personal goals. The bulk of our time is taken up at work so it might as well allow us the benefit of providing for us personally. Regardless of whether you have a job or choose to go into business for yourself, these are merely vehicles to allow you to achieve your life’s goals.
If the franchise business doesn’t or can’t match your personal goals then stay away. A good example of this would be a retiring, overworked and tired executive who wants to spend time with their grandchildren. But instead they buy into an 18 hour, 24 day retail business. It is flawed to start off with. Make sure the business you choose is aligned to your personal goals and has the potential to be the vehicle to achieve them.
The next step is to decide what your financial expectations are. Many new business owners take the wait and see approach where they will sacrifice personal income in the beginning and hope that it will improve later. This is very noble indeed and not necessarily incorrect to sacrifice upfront.
However, there needs to be a financial target that you’re aiming for. This target should also include a remuneration amount for the actual time and work you’ll be putting in (ie your salary) as well as a reasonable return on investment for the business based on your contribution and risk. You could take your savings and put it into other investments. So if you decide to invest in a business it needs to provide a financial return to you, in addition to your salary.
If a franchise is not achieving the results a franchisee had hoped for, what can they do to improve business?
In these situations there are three very important things to do: Talk, listen and review.
If you’re having difficulties, speak up. Speak up to the franchisor, your fellow franchisees and then seek any outside assistance you may need. Too often we struggle on our own and protect our egos instead of asking for help. Franchises are built for this so make sure you speak up. The franchisor and fellow franchisees all have a vested interest in your success, whether directly or indirectly.
The next step of listening is the most important. Often when we do eventually ask for help we don’t listen to the response. You’re not expected to know everything, no-one does and any assistance may be valuable. Listen to the input you’re receiving and see where this may be able to assist you in correcting what’s wrong and strengthening what’s right. Make sure you focus on both – improving the weaknesses and maximising the strengths.
Lastly, review everything.
Start by working through the operations manual of the franchise and then move onto all areas of the business. There are always areas that we neglect and don’t notice and small tweaks here are often all that is required to make a big impact.
How important is it for the franchise owner to be able to manage other people?
Managing people often starts with managing oneself. Herein lies the root of a number of problems. Often business owners fall into the trap of either not leading by example or not holding staff accountable because they themselves aren’t accountable to a higher level of commitment.
Staff will require management as well as leadership and this cannot be avoided. If you yourself are not the best manager or leader you will need to hone these skills. You can also buffer your inexperience or inabilities by hiring someone who is a natural manager, and delegating the management and leadership, together with sound reporting systems. The reality is, however, that you would still need to manage and lead the senior staff you’ve hired in these roles so it never escapes you.
How much of the franchise owner’s time should be dedicated to working ‘on the business’ as opposed to ‘in the business’?
In the beginning almost everything seems new and therefore it’s quite easy to get overwhelmed and default to 110% ‘in’ the business. However, one should aim for a minimum of 20% (or one day of a five day working week) to work ‘on’ the business. This could be split over the course of the week and will allow you to set a foundation of quality time leading and managing the business. In the medium term the target should be a 50/50 split between direct involvement and taking the business forward to ultimately reaching a point of 80% of one’s time being used working ‘on’ the business.
What are some of the ways franchise owners can overcome the challenge of rising costs and business expenses to remain profitable?
Play the game. Business is a game and although it is a relatively simple one it is not always easy. The rules change and there are a number of factors that influence your performance and success. Part of playing the game is first understanding it and then testing where the limits may be. Always keep a close eye on the financial numbers and review these constantly. Renegotiate consistently with suppliers to ensure you’re getting the best deal and shop around. I don’t recommend jumping around from supplier to supplier but keep up-to-date with what’s happening in the market.
Don’t hire more people to fix performance issues. Rather focus on ensuring performance first from those you have. More staff come with more management, more time and more money requirements and the problem normally lies with the effectiveness and quality of staff and not the quantity. Benchmark your numbers with other franchisees in your franchise as well as industry norms to assess where you may be overspending or where better and more effective ways of doings things already exist.
Business is not about reinventing the wheel. The principles are the same and the more you keep focused on the basics, the better. You never graduate in business beyond the need for a focus on the basics.
What are some of the most important considerations that should get the business owner’s attention on a daily basis?
Testing and measuring as much as possible. Business owners often lack the decisiveness to make informed and quick decisions mostly due to the lack of accurate information about the current state of their business. Reviewing numbers and statistics across all aspects of the business on a regular basis is imperative to its success. The more you know about your business, your clients, your staff, your suppliers, your marketing, your finances etc, the better and faster decisions you can make to take your business forward.