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October, 2015

Are You Ready To Open New Stores?

Brian Keen from How to Franchise Simply talks to Renew Design and shares three decades experience working within the franchise industry. We discussed a simple strategy to set your business up for growth.0aeebbc

There are a handful of key ingredients that must be in place before a business is ready to expand. When a business owner first looks at expanding the business, they need to look closely at whether they have the right ingredients to open a new store.

The first one is the demand for the product. You have to make sure that there are enough customers who are hungry to buy your product. Secondly, you have to make sure that the business is profitable. A lot of people go out to franchise because they’re desperate to grow and they can’t grow their existing business because it’s not profitable enough. This should be a warning signal. Lastly, once you know there is a demand for your product and that you can sell your product at a profit, you have to know your business model can handle volume.

Preparing your business for expansion is a process of refining your existing business model. As you move through the stages, you will define and clarify your ideas.

  1. Firstly, you have to design the concept of your business. This is your brand messaging, customer experience, marketing strategy and your organizational chart.
  2. Then you need to define your business model a bit more by developing budgets and your territories.
  3. Once you have a clear understanding of your business model and figures, you can develop the detail of your operations manuals and store style guides.
  4. Finally, you are ready to deploy and open new stores.

Develop the Concept for Your Business

Expanding the business is basically taking what you have done and learnt and starting from scratch and saying;

“How will I change this?”

“What will it be like now?”

You may find you need to eliminate some things because they are not profitable. When you expand, keep it really simple. Most successful businesses that grow have a simple flow to them. Break it down to the minimum.

To simplify the operations of your business, start by putting an organization strategy in place. Usually in a small business, the business owner will be wearing several different hats. Before the business is ready to expand, you need to break it down into different segments. For instance, they may be administration, marketing, sales, production, and so on. You then need to describe very simply what those roles are and then list down the key five or six tasks under each one.

Breaking the business down and understanding the key tasks will form the beginning of the operations and procedures manuals. However, before you sit down and write your operations and procedures manuals you need to make sure everything works as effectively as possible.

Define Your Business Model

Once you have simplified your business model, the next thing you need to do is test your business model. Really look at the processes and expenses for your new store and how this will differ in the new stores to your existing store. Consider store setup costs, suppliers, wages and overheads. Allow for an additional marketing and advertising budget for each store.

For store setup costs, some of those figures won’t be viable when you are doing your preliminary budgets and you will need to revisit them later. Budgets for store fit out will vary for different sites however you should start with a realistic budget figure and refine this as you develop your business model.

Who are your customers? The key thing that most people overlook when opening a second store is understanding the demographics of the area in which you are opening. You need to do some research on the demographics, on the statistics, find out about the profile of the customer you are looking to attract.

There is an idea that is often used in marketing called your avatar.  Your avatar is your ideal customer. Profiling your ideal customers before you set up another store allows to look at the demographics in the new area and see how many of your target customers are in the area around your new store. Understanding who your customer is helps you to define your brand messaging and create the experience you want to offer to your customers. This will affect your marketing messages, the language you use to talk to your customers, and the look and feel of your stores.

Develop an Operational Strategy

Once you have defined your business model and customer, you are ready to document your operations manuals. The purpose of your operations manual is to allow you to communicate and train your staff in the operations of your business.  You will usually need two types of manuals, comprehensive training manuals and quick reference checklists.

In Franchising, it is pretty much accepted that you need to open a pilot store when you open your first franchise.  When you open your first business you still have things to fine tune. You need to test your store design and operational systems with staff. You need to see what works and pressure test your systems to find the holes and the things that you have overlooked.

Open New Stores

In the first few months of opening your new store you will be testing and modifying things. You will test the manuals, equipment, layout and business model to make sure it works as effectively as possible. When you open new stores, you need people who can assume significant responsibility, these may be managers or franchisees. You want them to step up to the mark, not because you’re paying them but because they love being involved with your business.

When you have opened your second store, you need to treat it like a newborn baby. What I mean is, monitor it very, very closely. Bad habits set in quickly, and having a system for monitoring the performance of the business will allow you to have the peace of mind everything is on track.

Expanding your business and opening new stores can be rewarding. Asking the right questions and planning in advance will help to keep the process simple.

Just Opened: Beefy’s Pies Mango Hill

Since opening their first store in the Sunshine Coast in 1997, Beefy’s commitment to creating award winning pies and connection with the local community has seen the business thrive. Last month, Beefy’s opened their eight store in Mango Hill  with a fresh design inspired by the history of the brand.

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Taken during the construction of the new Beefy’s store.

Designing the new store was not just about selecting colours for the walls, rather it was uncovering what works for the existing stores and creating a new store design that tied into the existing brand. Renew Design worked with Beefy’s Managing Director Mark Hobbs to define the experience Beefy’s create for their customers. Rather than starting with a blank canvas, we looked at the tradition and values of the brand to define what Beefy’s were already offering to their customers to make the stores a success.

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The new Beefy’s store in Mango Hill.

The Beefy’s experience is first and foremost about enjoying a great pie. The idea of the pie is the subtle inspiration for many elements of the fitout. From the detailing of the entry to the warm timbers, the experience is designed to feel warm and homely. Quirky touches with a sense of humour  include the “ floating pie” lights above the shared tables.  The inspiration for the detailing of the new store interior came directly from the product.

Counter

Since opening their first store, Beefy’s have built strong connections to the local community. Regularly sponsoring local sports teams, schools and charities the stores are local in the way the operate at every level. Each of the Beefy’s stores are family-owned and operated and this sense of family extends to staff and customers. Supporting local charities and events is a big part of what allows Beefy’s to connect with their local community. This was something we wanted to convey in store to make it visible to customers

The new store sees a fresh take on the experience of visiting a Beefy’s store and the friendly welcome and first delicious bight of a Beefy’s pie as as good as ever.

 

Elizabeth Gillam on Food Franchising

A couple of weeks ago I sat down over a cup of tea and asked Elizabeth Gillam from Franchisee Success to share some of the insights she has gathered from ten years in Food Franchising. Liz bought her first Boost Franchise in 2004 and has gone on to open a Health Habits Franchise and Bucking Bull Carvery. I asked her to share some of her experiences starting out in Franchising and the keys that a business must have in place before they are ready to franchise and open new stores.

The Brand Story

Your need to communicate the value franchisees are getting upfront. Before you franchise a concept, you have to not only have a business model that shows profit but also you have to have a brand story. That is what people are paying for, you can’t just sell a dream.

“When I start working with business who are wanting to franchise, I ask, so what is your franchise model going to be?  We go through what their goals and aspirations are, what they feel they have to franchise and what their point of difference will be. Why is somebody going to buy a franchise over setting up a business on their own? They must be able to define what they will bring to the franchisee.”

The stores need to look similar and communicate the same story to the customer. When you are selling a franchise, you are selling not only your operations manuals but also the story behind your customer experience and brand.

Business Systems and a Leadership Team

To expand your business and open more stores you first need to free your time from the business. This takes an initial investment of time to record and systematise your business systems and test these systems with your leadership team. If you don’t have a leadership team in place your stores are not autonomous.

“You have to know your business inside out and upside down, what works, what doesn’t. You will need to systematise what you do and what makes you successful and then test that. The only way to do that is to put a leadership team in place that is running under those systems.”

In franchising, you are asking for a premium because your business is systematised. What is the system your franchisees will be buying?

The Pilot Store

In Franchising, you are selling a product, that product is your brand, store design and business systems. Setting up a company-owned pilot store will allow you to prove your business model and store design. You must come to the Franchisee knowing exactly what your product is. By the time you are opening stores for Franchisees, your time of trialling is gone.

“Your pilot store must be running at around 20% profit because by the time you franchise and lay out for marketing there must still be enough profit in each store that someone sees the value of investing in them.”

Elizabeth shares more insights into food franchising and tips for franchisees to increase profitability in her book  “Upsize Your Profit”.