Franchises need to think beyond ‘weathering the storm’ and look at how they can leverage changes in customer buying habits and thrive.
All businesses have been impacted by the changes in market forces caused by the global pandemic. The U.K. economy has shrunk by a fifth and we are now officially in recession. So how have franchises fared?
Typically, franchises are more resilient than other business models. According to the latest NatWest British Franchise Association Survey, franchising contributes an estimated £17bn to the U.K. economy. 93 per cent of franchisees are profitable, which is amazing during this time of economic uncertainty.
Looking ahead, the focus for franchises must move beyond how they can weather the storm and ‘survive’, to how they can leverage changes in customer buying habits and ‘thrive’. But first off, let’s look at what franchises should not be doing.
Strategies to avoid
The worst position to take is to be reactive. Yes, some franchises that are cash-rich may think the safest course of action is to do very little in hope of riding out the crisis. Others may be taking a very cautious approach, watching to see what competitors do before considering an adjustment in their service offering or product portfolio.
The fact is franchise leaders can only plan based on facts. And here are the facts of the pandemic: no one knows what the end result will be. The goalposts are constantly shifting – the government doesn’t know and neither do the experts. If they haven’t got a clue, how can a franchise leader base any decisions on an unknown outcome? Franchise leaders currently have two choices: sit on their hands and see what happens or to take decisive action and take charge of their own future.
“Rather than living in a micro period of uncertainty, think about where you want to be in five years and how you will get there”
Franchise leaders work best when they only worry about what they can control. In Sandler we have a phrase – a business is either growing or dying. There is no such thing as the ‘status quo’. The biggest risk is doing nothing and trying to coast in hope of better times.
Planning ahead
Here are some top tips for franchises that want to take charge of their own future, by building it themselves.
• Lead from top: Communicate with staff that you have a robust plan – if you need to pivot some of the business model explain what will be done, the timeline and staff’s involvement. Prove that you act on what you say by following through. Good leaders move forward quickly and make fast decisions. Bad leaders procrastinate and can’t move forward.
• Recruit intelligently: The best and first approach must be on staff retention – make sure existing staff feel valued; talk to them about their development and satisfaction levels. Don’t hold off on expanding and growing – but remember it’s best to promote internally and fill lower roles. If you do recruit, make sure you add some psychometric testing. With unemployment set to rise the pool will be bigger, which sounds like good news, but there is a world of difference between those that can talk the talk, and those that can walk the walk. There is often an over-reliance on experience – think about recruiting based on soft skills and hiring younger workers. Use this as an opportunity to fundamentally change your recruitment strategy.
• Sales protection: The actual sales figures are an indication of what has happened not what is going to happen. Put in place the right leading indicators (e.g., new accounts we have opened, new contacts, new markets, new meetings) so that you get early notification of whether adjustments need to be made. • Stay strong on investment: Don’t hold back on investment and expansion decisions. Why would you stop investing in resources and employees? Having the best company and people gives you the foundation for growth – and scope to overtake competitors who are holding back and win their customers. Even if your market isn’t growing then capitalize on other company’s inertia.
Looking ahead
Rather than living in a micro period of uncertainty, think about where you want to be in five years and how you will get there. Do not allow yourself to become blinkered and distracted by the short term. A common mistake by franchise leaders is that they are over ambitious in the short term and downplay the long term – this results in failure and demotivation.
“Franchise leaders currently have two choices: sit on their hands and see what happens or to take decisive action and take charge of their own future”
The pandemic will most certainly have long-lasting effects, but it’s important to think that this needn’t be negative. When the world changes it opens up new opportunities, which can often be filled by quickly adjusting your business to meet these new customer demands. The key is to act quickly. Just think – if you make 100 decisions and 95 are correct, then you will have moved forwards and enjoyed business growth. If you have spent a huge amount of time agonizing over five decisions, but all were right, you won’t have made any progress compared to that company that acted quickly.
There are reasons why some of the world’s most successful businesses were founded during a recession, Airbnb, Groupon and Netflix to name a few. They capitalized on changes that were happening that legacy companies weren’t fast enough to address. The lesson is clear; keep changing and keep moving forwards. Fortune favors the brave; otherwise, you don’t just risk being left behind – you could become obsolete.
THE AUTHOR
Shaun Thomson is CEO of Sandler Training (UK).
