Building a Management Mindset: 5 Keys to Multi-Unit Success

Building a Management Mindset: 5 Keys to Multi-Unit Success

By: Rod Bristol | 13,071 Reads | 230 Shares
Featured in: Multi-Unit Franchisee Magazine: Issue 4, 2019

Building a Management Mindset: 5 Keys to Multi-Unit Success

%3Cp%3ESome+franchises+work+best+with+multi-unit+ownership.+But+what+makes+multi-unit+ownership+work%3F+It+has+little+to+do+with+how+well+franchisees+cut+hair%2C+make+sandwiches%2C+or+scoop+poop.+Even+the+best+operators+will+fail+at+multi-unit+ownership+without+an+enterprise+management+mindset%26mdash%3Bfrom+both+franchisor+and+franchisee.+Multi-unit+success+depends+on+these+five+capabilities%3A%3C%2Fp%3E%0D%0A%3Col%3E%0D%0A%3Cli%3EMaintaining+scalable+systems+%28delivered+by+franchisor%2C+executed+by+franchisee%29%3C%2Fli%3E%0D%0A%3Cli%3EScreening%2C+training%2C+and+coaching+%28franchisor+and+franchisee%29%3C%2Fli%3E%0D%0A%3Cli%3ELeading%2C+not+doing+%28managing+the+enterprise%29%3C%2Fli%3E%0D%0A%3Cli%3EUnderstanding+financial+drivers+and+results+%28monitoring+the+enterprise%29%3C%2Fli%3E%0D%0A%3Cli%3EManaging+the+financial+risks+and+rewards+%28planning+the+growth+pathway%29%3C%2Fli%3E%0D%0A%3C%2Fol%3E%0D%0A%3Cp%3E%3Cstrong%3EMaintaining+scalable+systems.%3C%2Fstrong%3E+When+I+owned+my+own+company%2C+we+had+19+locations%2C+served+by+our+corporate+office+and+production+center.+Adhering+to+prescribed+systems+saved+us+many+times.+Beyond+the+obvious+%28proficiency+%2B+consistency+%3D+efficiency%29%2C+our+systems+revealed+when+staff+were+attempting+to+steal+from+us%2C+which+stores+were+profitable+and+growing%2C+which+needed+a+management+change%2C+and+ultimately+enabled+me+to+stay+married+and+sleep+at+night.+You+cannot+be+at+all+sites+every+day%2C+so+%3Cem%3Esystems%2C%3C%2Fem%3E+not+verbal+directives%2C+are+the+structure+for+the+team.+Enterprise+managers+embrace+them%2C+maintain+them%2C+and+monitor+them.%3C%2Fp%3E%0D%0A%3Cp%3E%3Cstrong%3EScreening%2C+training+and+coaching.%3C%2Fstrong%3E+In+the+rush+to+grow%2C+franchisors+may+not+carefully+screen+prospective+franchise+candidates%2C+or+may+offer+multiple+units+to+the+wrong+person.+Effective+screening+%28meeting+defined+criteria%29+and+onboarding+%28training%2C+shadowing%2C+and+mentoring%29+are+essential.+Preparing+to+own+a+first+location+is+very+different+from+preparing+for+your+second%2C+third%2C+or+fourth.+The+successful+franchisor+recognizes+this+and+has+specific+training+for+management+and+leadership+skills+for+enterprise+managers.%3C%2Fp%3E%0D%0A%3Cp%3EFinally%2C+engagement+with+franchise+business+consultants+who+support+and+coach+franchisees+is+critically+important.+This+requires+both+the+franchisor+and+franchisee+to+invest+time+and+effort.+Franchise+systems+lacking+field+teams+with+consulting+and+coaching+skills+risk+letting+franchisee+problems+snowball.+Similarly%2C+franchisees+must+coach+their+management+teams.+Successful+enterprise+managers+and+successful+multi-unit+franchise+models+embrace+a+strong+coaching+culture.%3C%2Fp%3E%0D%0A%3Cp%3E%3Cstrong%3ELeading%2C+not+doing.%3C%2Fstrong%3E+An+enterprise+mindset+requires+giving+up+operational+responsibility.+For+the+franchisee%2C+this+may+mean+giving+up+what+they+do+best+in+exchange+for+leading%2C+motivating%2C+and+coaching%2C+which+may+not+be+their+strong+suit.%3C%2Fp%3E%0D%0A%3Cp%3EOne+strategy+is+to+assign+a+spouse+to+each+location%2C+which+can+work+because+of+the+direct%2C+hands-on+approach+of+the+couple.+However%2C+this+is+not+enterprise+management+and+can+cause+the+marriage+to+suffer.+Further%2C+when+they+add+more+locations+and+run+out+of+family+members%2C+things+can+quickly+go+sideways.%3C%2Fp%3E%0D%0A%3Cp%3EEnterprise+managers+must+release+operational+duties+to+a+competent+team+and+focus+their+energy+on+hiring%2C+training%2C+monitoring%2C+and+coaching.+Setting+goals+for+KPIs+and+allowing+the+managers+to+manage+is+critical.+When+there+are+problems+%28and+there+will+be%29%2C+remember+that+putting+out+fires+is+not+enterprise+management.+Brainstorming+solutions+with+key+team+members+and+coaching+up+their+performance+is.%3C%2Fp%3E%0D%0A%3Cp%3E%3Cstrong%3EUnderstanding+financial+drivers+and+results.%3C%2Fstrong%3E+Multi-unit+owners+must+routinely+review+financial+statements%2C+budgets%2C+and+KPIs.+They+must+master+breakeven+analysis+to+establish+meaningful+sales+and+profit+goals%2C+and+to+predict+the+timeline+to+breakeven+as+each+unit+is+added.+Location+2+is+funded+by+profits+of+Location+1+and+new+debt.%3C%2Fp%3E%0D%0A%3Cp%3EHow+much+capital+is+needed%3F+How+will+the+new+location+costs+differ+from+the+original%3F+What+sales+are+needed+to+support+the+profit+goal%3F+By+when%3F+What+activity+goals+will+keep+your+team+on+track+with+building+your+new+customer+base+in+the+time+required%3F+Enterprise+management+is+management+by+the+numbers.%3C%2Fp%3E%0D%0A%3Cp%3E%3Cstrong%3EManaging+financial+risk.%3C%2Fstrong%3E+The+higher+reward+%28additional+profits%29+of+multi-unit+ownership+comes+with+a+trade-off%3A+higher+financial+risk.+In+simple+terms%2C+growing+sales+and+profits+requires+more+capital+or+debt.+It%26rsquo%3Bs+the+way+wealth+is+built%2C+but+only+if+the+enterprise+is+successful.%3C%2Fp%3E%0D%0A%3Cp%3EHow+long+will+it+take+to+produce+enough+profit+to+repay+the+debt+and+pay+a+reasonable+return+to+the+owners%3F+What+if+it+takes+longer+than+expected%3F+Where+will+the+money+come+from%3F+What+if+you+do+better+than+expected%3F+Where+is+the+next+opportunity+to+invest%3F+Successful+enterprise+managers+have+written+financial+plans+%28Plan+A+and+Plan+B+at+least%29+that+align+with+their+personal+financial+goals+and+capacity.+They+take+risks+and+then+manage+the+drivers+of+their+success+to+assure+their+rewards.%3C%2Fp%3E%0D%0A%3Cp%3EAs+a+past+franchise+executive%2C+I+received+phone+calls+from+franchisees+facing+bankruptcy+and+divorce+as+a+result+of+their+business+failure.+Too+many+franchisors+pass+these+off+as+failures+of+the+franchisee.+Many+failures+of+the+franchisee+begin+with+a+failure+of+the+franchisor+to+incorporate+the+five+competencies+in+their+multi-unit+development+process.%3C%2Fp%3E%0D%0A%3Cp+style%3D%22border-top%3A+1px+solid+%23DDDDDD%3B+padding-top%3A+5px%3B%22%3E%26nbsp%3B%3Cem%3E%3Cstrong%3EEditor%26rsquo%3Bs+Note%3A%3C%2Fstrong%3E+The+author+will+be+presenting+a+full-day+session+at+the+IFA+conference+on+February+8+in+Orlando+on+%26ldquo%3BAdvanced+Financial+Essentials%3A+Driving+Profitable+Growth+Through+Multi-Unit+Expansion.%26rdquo%3B%3C%2Fem%3E%3C%2Fp%3E%0D%0A%3Cp%3E%3Cem%3E%26nbsp%3B%3Cstrong%3ERod+Bristol%3C%2Fstrong%3E+is+the+director+of+business+development+and+a+presenter+at+Profit+Soup%2C+a+financial+education+organization+specializing+in+franchised+companies.+He+can+be+reached+at+rod.bristol%40profitsoup.com+or+at+206-427-5333.is+the+director+of+business+development+and+a+presenter+at+Profit+Soup%2C+a+financial+education+organization+specializing+in+franchised+companies.+He+can+be+reached+at+rod.bristol%40profitsoup.com+or+at+206-427-5333.%3C%2Fem%3E%3C%2Fp%3E
Published: November 29th, 2019

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Multi-Unit Franchisee Magazine: Issue 4, 2019
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