A SMART INVESTMENT FOR BUSINESS SUCCESS

By Lisa Hafetz, Always Best Care

Most franchise owners don’t get into their business because they love to do the bookkeeping. They may understand the importance of regularly reviewing financial statements and setting monetary goals for the company, but they don’t necessarily come in armed with financial acumen. While all owners seek to improve the financial rewards they receive from their business, few know where to start in developing a strong company management strategy. It takes discipline and knowhow to gather the necessary information and integrate effective benchmarking into their process.

At Always Best Care, my role is to support our franchisees in having a better understanding of business financials and increasing their profitability and success. I oversee a Performance Group program, which brings together franchise owners to discuss finances, bounce ideas off one another and create strategies for operational improvements. What it’s really creating is accountability, to themselves and to each other. Groups of 8-10 owners meet quarterly throughout the year. They review a group benchmark report that shows how they are doing in comparison to their peers, their past performance, and the goals they have set for themselves.

Franchisors typically provide a lot of operational, marketing and training support to their franchise owners, but they do not give specific financial advice and guidance. In fact, very few franchisors have an entire department dedicated to helping franchisees with the financial side of their business.

The financial information tells the story about what’s going on in a company. Franchise owners must understand it, invest in it, and know they can use that information to change the way their business is operating. Whether or not they have a formal program to follow, here are the top tips I recommend to get started.

Invest In the Financial Part of the Business

Outsource the bookkeeping so the information you have about your numbers is accurate and reliable. When it’s not, it’s very difficult to use that information to help achieve different results. A payroll vendor is also an important partner to have so you don’t spend valuable time ensuring paychecks and payroll tax deposits are correct. Leave that to the experts!

Educate yourself on how to interpret your financial information. Once you understand that, the data becomes a tool you can use to run the business rather than annoying paperwork you have to suffer through. There are numerous ways to start putting your financial information to work. For instance, you can run a sensitivity analysis to illustrate how certain operational changes might affect your profitability.

Most importantly, you need to make sure you are focusing your time and attention in the places that will optimize your ability to be more profitable and successful.

Measure So You Can Manage

There’s a classic saying in the business world that “what gets measured gets managed.” Key financial data that you want to be able to read and understand includes measuring profitability, productivity, financial position and cash flow. An effective Benchmark Report would provide a summary of this data for your business and follow a standard format that allows you to record goals, set action plans, and assess progress at meeting goals.

This level of detail will show where you have been, where you are now and where you want to go. The one thing that doesn’t change from industry to industry is financial information and what you need to know about it. Once you have that financial acumen, you can take it anywhere you go.

But to actually put a plan in place that will get you there, you must be willing to make changes in the way you operate. That is why I recommend that all franchise systems put together a financial education program.

Create an Accountability Group

Putting together an informal “board of directors” can provide ongoing support and direction, adding discipline, structure, and accountability to keep you focused and committed to your goals. Ideally, this would be a group of small business owner peers, and regularly scheduled discussions would focus on finances and goals.

  The Always Best Care performance groups use accountability sheets. Each person selects at least two items that came up at the meeting that they’re going to implement, and they state on the sheet exactly what they’re going to do, when they’re going to do it and what the expected outcome will be. Then the group holds them accountable to those intentions by asking questions and following up on those commitments at the upcoming meetings. Once the goals are established, the performance groups look at areas that need improvement and prepare activities to help fill in those gaps.

Applying this process with a group of peers provides a pool of best practices, or standards, from which to draw when implementing plans. You’ll achieve your goals far more quickly and efficiently than doing it on your own.

With consistent accountability, you can integrate financial benchmarking into the ongoing process of monitoring and managing your business. By sharing experiences, peer groups can learn new approaches to old issues and develop a network they can call on for advice, support, and as a sounding board for new ideas. By focusing efforts toward a plan, you can go beyond crisis management and actually create the company you want to own.

Lisa Hafetz joined Always Best Care in 2022 as the vice president of franchise financial management. She was introduced to the senior services company as a contractor with Profit Mastery, where she gained extensive experience providing financial education and establishing and facilitating franchisee financial performance groups. For more information about IFA franchisor member Always Best Care, please visit franchise.org/franchise-opportunities/always-bestcare-senior-services.