Top Financial Slip-Ups Amateur Franchisees Tend To Make
The word ‘journey’ is oversaturated, as readily applied to talent show singers as those regular people who are looking at a career change. Yet, when franchising is a real, viable option, we think the learning curve is worthy of such a label… It’s a thrillingly intense prospect to face up against.
In practise, that means a franchisee – who may be doing this for the first time – is prone to a few mistakes, oversights, or misconceptions regarding their earning strategy. Before you take the plunge on a franchise offer, we’ve pinpointed some issues that could trip you up in those opening months.
Failing to forecast
Key to any business plan is the solid timing of income and outgoings. You have to be able to afford any investment or operational bills, well prior to the funds leaving your account. Otherwise, you’ll eventually slump in a certain month, and fall behind on your payments.
Forecasting is the antidote: with a clear sense of what you’re due to bring in, as far into the future as you can reasonably predict, all of your spending will be controlled. It’ll lead to a robust (and reliable) financial model, whereby you can always afford stuff like rent, utility costs and new equipment.
As a starting point, we’d advise you to spread your income channels over the year, so you don’t have to catch scattergun chunks of cash.
Refusing a second opinion over your documents
Franchise owners have to report their earnings to HMRC, as well as keep their bookkeeping tight for expenses, transaction dates and the staff payroll. In this capacity, a second pair of eyes is really valuable – just a single error can undo hours of careful accounts work, if you send a document off without getting someone to double-check it.
This may be a professional accountant, or a trusted partner with an hour to spare… There’s no kudos in attempting solo money management when you know, deep down, their assistance would go a long way.
Err on the side of caution when those financial documents are being prepped, and you’ll have to less to worry about, freeing you up for the task of leading a franchise team.
Leaving late penalty fees out of your work
Any service, whatever the franchise, will run up against lax clientele. These are people who’ve thoroughly appreciated what you’ve done for them, but (for one reason or another) they haven’t paid on the agreed timescale.
Missed deadlines may only be a small problem when they’re isolated. However, several of them at once can seriously undermine your earning projections.
To prevent this happening, include a late penalty fee on your invoice small-print. Tell clients about it before they give the green light: they’ll have no recourse for saying they weren’t informed, and you’ll be getting at least what you’re owed, plus a little extra to compensate for errors on their part.
When stepping into the shoes of a franchisee, you have to be a confident fit – and a lot of that boils down to how you care for the territory’s finances. Join one of our Discovery Days [LINK] to learn more about the challenges you’ll encounter, and take on fearlessly, with a Rainbow International bid…