Performance data is a crucial aspect of running a successful business. However, collecting data can be tedious and time-consuming. If you are consistent with it, the effort will end up pulling you away from your business, proving to be a catch-22 situation.
Paying close attention to your performance in the small things is essential if you want to build a lean and profitable company. You must put as much time and effort into developing your franchise as you do running it. Changing your perspective may teach valuable lessons that can help you grow your business and money account.
To what extent, then, do you monitor the progress of your franchise? Although there are many more, these six pieces of information should get you started. This may require some of your precious time, but it will be well worth it in the end when you can use your newfound understanding to build a more efficient and effective company.
In all likelihood, you already know this number. Although sales numbers alone can’t guarantee your store’s success, rising sales over time can reveal regional tendencies, especially if your expansion is on par with what’s typical for a franchise opening. Even if your franchisor gives you a good ranking for sales and expansion, that doesn’t guarantee anything.
Profit. The bottom line is the most crucial metric, of course. And if everything else is operating at its greatest potential, it will have the highest total and highest profit margin. More money will come in as you monitor, analyse, and enhance your performance metrics in every other area. In the franchise business, this is the key to long-term success.
For the same reason that increasing sales is essential, so is keeping costs low, as every dollar spent cuts into profits by a factor of 100. Since franchising royalties are often calculated as a percentage of total sales, it is in the franchisee’s best interest to keep operating expenses as low as possible. A good franchisor will help you set financial targets based on what others in your sector are spending on similar franchises. They’ll also give guidance as you work to ensure that your own numbers are competitive or better. Keep your rent, inventory, and personnel costs low while investing where you’ll see a return (such as promotion and employee retention).
It would help if you had a breakdown of the costs involved. You need to know how much it costs to deliver a service to set a fair price for it. By breaking down every expense, you can increase our profits.
Regardless of their business, franchises need to track client information such as totals, averages, and acquisition costs (to see if they are spending enough to keep them around). Customers who buy from you repeatedly are the core of the business, and they may do more for you than whatever amount you spend on advertising. Always track your marketing efforts and the effectiveness of word-of-mouth by asking new customers how they heard about you. The next step is determining where your marketing budget will most impact attracting and retaining clients.
Industry-specific data is essential, yet all franchises need basic consumer information like total number of customers, the cost to acquire them (to determine if they spend enough to stay around), etc. The foundation of any successful business is its loyal customer base, who, in addition to the company’s marketing efforts, may assist in spreading the word to potential new clients. Find out the source of all your new business by inquiring about the source of each new consumer. The next step is determining where your marketing budget will most impact attracting and retaining clients.
By sending out surveys or keeping tabs on customer feedback, you can learn more about your own business and how it stacks up against competitors. Customers, repeat buyers, and revenue all benefit from 5-star ratings and reviews. If you want to maintain an outstanding reputation and devoted client base, you need to understand how the customer views your franchise.
Your dedication to your company matters, but you must also monitor key performance indicators and put this information to good use. With your performance statistics in hand, you can go forward with confidence.
If you want more franchising information, contact the experts at The Franchise Institute. You can call us on 1300 855 435 or fill in this contact form, and one of our experts will contact you as soon as possible to answer all your questions and clear any doubts you may have.
Thanks for reading,
The Franchise Institute Team
1300 855 435
