How do I know whether the food business I am running for the past eight years is ready to follow the franchise route?
While success is never a guarantee, you need to measure your food business against a set of predictive criteria. To start with, yours must be a credible business. Aspects like management strength, publicity you have done, consumer brand awareness, size and number of units and years must be taken into consideration. Differentiation is another factor – Everything from your marketing to investment to differentiated products/services comes under this. Other than that, how early you can transfer the business-specific knowledge to franchisees will decide your future as a franchisor. If you are eight years into the business, it is a given that your business systems are documented. You are from food business, and it’s best if it can be adapted to other markets as well.
You also need some capital and resources to implement a franchise programme. Lastly, the two most important aspects contributing to the programme’s success are management’s strength and ROI. Your business should ensure that a franchisee can achieve ROI of at least 20 per cent by second or third operational year. Ensure that the franchisee is earning a good ROI of time and money. Franchise marketing, leads handling, sales, training and ad funds, and multi-unit operations management constitute areas which you as a franchisor should help the franchisee with. Find out if all aspects mentioned above are feasible in your business and only then find a franchisee.
My business is a month old and I have strived to make all changes to have stable operations in place, but I’m not able to focus on getting my revenue targets met. Please help.
Revenue is generated by sales and funds you receive on a day-to-day basis. You have to increase the sales in order to increase the revenue, by getting more customers to visit your business and by getting them to spend more on each visit. Acquire new customers but retaining the ones you already have is also important. Don’t think of the relationship management programmes in which you will simply ask them to sacrifice freedom of choice for discount. Get customers to spend more. The “happy meal” offer at McDonald’s is a good example of how to increase spending by targeting children with a combination of burger, fries and coke plus the gift, a toy. But if the difference between revenue earnings and revenue targets is huge despite your products/services getting paid for, then there might be a problem. You need to identify that and solve the issue at the earliest.
I run a factory in Odisha and I am unable to manage the inventory. Sometimes there is an excess of inventory, which leaves too little cash for other operations; and at times, when I try to reduce the risks involved, I lose my customers to competition instead. How do I manage it and in turn form a sound working capital policy?
The best way to manage it is by using the inventory turnover ratio to determine the optimum inventory you need. The scope of managing your inventory depends on the thin line between replenishment lead time, carrying costs of inventory, asset management, inventory forecasting, its valuation, available space, quality management, returns and defective goods and demand forecasting. You will get the inventory turnover ratio by dividing the cost of goods sold by the average inventory, and its inverse will give you the average days to sell inventory. Just divide the days in a year (365) with the Inventory turnover ratio to get the Average Days to Sell Inventory. The ratio will tell you the times inventory will turn over in a year. The number tells you how much goods are tied up in the operating cycle.
I am doing everything to make my business successful and the numbers are reflecting just that for the last three years. Since a couple of months, I am noticing we are not delivering anything new to our customers. There have been no complaints as such, but I want to provide them a unique experience. How can I provide them with last-inch customisation?
I would say provide a range of choices to your customers that they find a close approximation of what they want and need. I know it’s too early for you to even try doing it, but try to enable them to create a version of your offerings that will serve what they need and want. It will make operations difficult to manage, will rise costs up, but you will have to provide variety and create an abundance of choice, and finally empower your customers to make that choice. Learn from how car brands have made the daunting process of purchasing a car almost a formality given the number of brands and the price-points at which they are available; how the brand Raymond delivers with their customisations and made-to-measure services; how the brand Maggi, with their simple product, enables the creative customer to make something of their own out of it. Imbibe these theories into your own business for the last-inch customisation.
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