From gyms to cleaning, from fast food to accounting services, franchises are everywhere and come in all shapes and sizes. In fact the franchise industry turns over £13.7 billion in revenue and there are over 39,000 franchisee outlets in the UK alone (Franchise statistics UK – 2013 bfa franchise report).
What they all have in common is that they follow a systemised set of business processes that allows for greater efficiency, productivity and scalability.
However, there is no reason why small and micro businesses cannot apply these same rules and business processes to improve their productivity and ultimately scalability. In this article we discover the various strategies your business could explore to make it scaleable and therefore franchisable.
The key for any new business is how much effort it takes to grow, become established and prosper in today’s competitive environment. You may have the best idea in the world, but if your business cannot be scaled up then it is going to struggle in the long term.
If you take a platform such as social media giant Twitter, the cost of increasing their share of the market is relatively small compared to their running costs — in other words, they can grab more customers without having to invest in additional infrastructure. On the other hand, something like a restaurant chain is far less scalable — each new property you move into adds cost in terms of a mortgage and staff salaries.
According to Inc.com, businesses that tackle the problem of their future scalability at the outset have far more chance of making it than others that avoid the issue. It doesn’t mean your restaurant business has less chance of success than a social media platform but that you need to be clear how you are going expand successfully.
How To Be Scalable
Your business needs to operate perfectly without your presence. If that sounds a little strange and even frightening, then consider this: You cannot work every hour of the day and you cannot be in two places at once. If you want your business to grow then you are going to need help and that means infrastructure and resources, especially people.
Yes, the most scalable option would be to have a business where the computer does everything for you ,but most SMEs don’t have this option. Whilst a computer only needs to be plugged in and programmed, people need to be trained and motivated. Great scalability is the difference between you having a cottage industry that has a small turnover to one that produces millions or even billions in profits.
Here are just a few questions to ask about your business and where it goes from here:
- Is your company dependent on a particular talent or skill that you possess and can it be passed on to other people — if so, how much is it going to cost to train someone up and what do you get in return?
- What are your margins? If you produce X amount of your product for £Y, will your margins decrease or increase if you up the stakes and try to sell to more people?
- Can you automate and standardise certain aspects of your business that cut the growing costs? One of the buzz words around business today is providing a bespoke solution — if your business grows it is going to become increasingly difficult for you to do that.
The Benefits of Considering Scalability
In an ideal world it is best to address the issue of scalability before you forge ahead and start to build your business for real.
- If you need to attract investors then you have to demonstrate scalability.
- If you want to move beyond a cottage industry and become a major player, you need to be sure that the sums add up once you start to expand.
- What seems great when it is small, may have numerous problems once it begins to grow. Being realistic now could save you a lot of time and money in the future.
Do You Really Want to Scale Up?
Any business can be the victim of its own success. On your own or with a limited team you might just provide the service that your current customers are looking for. The workload increases, the stress increases and maybe that business idea you were so enthusiastic about in the early days will start to become less attractive. Of course, you may like it like that. After all, this is your passion.
On the other hand, you might want to start benefiting from the success and enjoying your life a little more. The only option is to expand, to scale up. But then you won’t be doing the thing God put you on this earth for — you’ll be paying other people to do it for you. Yes, scalability needs to be considered when you first start up a business but it is also a choice.
If you are expecting to grow and have not yet thought too deeply about it, then you need to develop a strategy urgently to decide on the scalability of your business. Even if growth is some way off, at least you will have the goals and processes in place and there won’t be any nasty surprises around the corner.