Cost cutting can be a part of any business venture. It is not uncommon in franchise businesses as well. We often find franchisors and franchisees curtailing investments instead of curbing their expenses to suffice financial crisis. This may lead to disast
Success and failures are a part of every business endeavour. Investments are often seen as expenses in hard time. Rather than feeling pity, a franchisee or franchisor should try to come out of this stressful situation. Many a times, the franchisee in order to save his business may try to restrain the spending costs. Everything that costs money is viewed as an expense. In such situations, new and even experienced franchisees may dilute the differences between expenses and investments.
Neither spending too much nor cutting down the expenses in any franchise business will guarantee success. Expenses are additional spending which can not benefit you or your business, while investments can bring huge profits to your business in the future. Expenses need to be curtailed in order to attain profits. However, curtailing on investments may lead to disastrous results for any franchise business.
This article would enlighten the aspiring as well as experienced franchisees about the areas in which spending are an investment for their future growth. These are as follows:
Marketing and brand building: Any franchisee who saves money on advertising can never taste success. Franchisee that tries to curtail on marketing costs at the time of business start up can face heavy loss. Marketing is the best tool for brand building and should be employed at every stage. Thus, advertising is a profitable investment both for the developing and developed franchises.
Franchise location: It is a common sight to see a franchisee shifting the location of his franchise outlet in order to save money on high rentals. It may seem profitable for short time, but in the long run, this can be a disastrous step. This way a franchisee may lose his regular customers. A location always depends on the franchise concept; and an apt location is the prerequisite for every successful business. For example, a play school works better near residential areas while an apparel outlet runs well in high-street or malls. Therefore, shifting a franchise midway can be ruinous for any budding or experienced franchisee.
Training employees: Many franchisors and franchisees hoping to save money may stop providing any training to the employees. It should be understood that investing in technical or soft skills to enhance the knowledge of employees makes a franchise run more successfully in the future. These skills may range from enhancing counter selling, negotiating with clients and customers skills, using software or other equipments to improve the franchise. Moreover, employees also become more loyal to the company if they are treated as a part of the business and are given training for developing their skills. Therefore, restraining on the training expenses at tough times may lead to more failures.
Latest equipments and technology: In this techno-savvy world, nothing is functional without technology. All branded outlets are well-versed with the latest equipments and technological developments. In such a situation, it may be rightly said that technology is an investment that pays back in a multiple ways. Even in hard times, franchisees should always consider how technology can help the business perform better. Be it on income-generating and income-producing aspects of the business. Making investments in technological advancements may be expensive but can reap high profits in the long run.
Hiring employees: The first thing any franchise owner considers when faced with financial problems in business is reducing his employees. This is because franchisors as well as franchisees have a misunderstanding that employees are an overhead expense rather than an investment. Whenever, you are thinking of reducing your staff consider whether you will be able to carry out all the tasks being performed by your franchisees. Therefore hiring efficient employees is an investment rather than an expense.
Keeping in mind the benefits of the above given points, it can be summed up that investing in some of the core areas will definitely fetch high returns in the future. During financial crunch, curtailing money is not the only solution. Rather, wise investment is the necessity of a successful business.