A Struggling Franchises To-Do List
Monday, July 30 2007 @ 09:36 AM MST
Contributed by: psinewman49
Contributed by: psinewman49
Submitted by Jim Herst on Mon, 2007/07/30 - 13:36.
Actions for a Franchisee to Take When They Find Themselves in Business Trouble
During the week of July 23, my article, A Struggling Franchisee, drew much attention, for which I am grateful. It related to dwindling sales, expanding costs, and personal perplexities. I suggested most problems could be abated through taking direction from a professional.
In trouble? Recognize there is a problem as early as possible. Cash flow is the machine driving the business process. If your cash flow isn;t covering cash outgo, action of one kind or another must begin. This includes working to increase sales, cutting costs, delaying payables. Simple, huh? You knew this, Im sure. Lets look, one step at a time.
Sales increases can come from seeing how others in your field have done it. If you know a friendly competitor, ask for ideas. If you don't, find a sales pro and challenge him/her to achieve a predetermined sales goal in a specified time. Offer a commission based on results. Don't wait, more sales at a profit is the best way to stimulate cash flow.
Cutting costs is obvious. Look everywhere as you go about your business. Look for waste, employee hours, ways to buy product cheaper, these are examples. Consider placing a bigger product order for staggered delivery and billing for a lower unit cost? If feasible, can one or more employees be put on commission? If you advertise, seek remnant space, telling your publication it's that or you must go elsewhere. If you lease space, talk to your landlord; seek a moratorium on rent for three months. He'll probably already know you're in trouble, thus he'll not be surprised. There's more, but cost cutting is cost awareness coupled with action.
Delaying payables by approaching vendors is not so difficult. If you're going to initiate a sale, tell that to your vendor. If your product/service is seasonable, tell him that. Your action here is to be up-front with vendors, doing so without making (or signing) any commitment. Admit business is bad and you are applying.
Concrete strategies to turn things around. Even invite the vendor to stop in and see what's going on. The worst thing is to stop paying while avoiding payment demands. Not knowing details of your agreement with ZOR, carefully look and see if there exists cash-saving delays there.
Best of all, create a plan on paper. Think through and add to these ideas. Keep your thoughts on paper because writing stimulates thought and thought creates action. Keep the paper handy and do what you thought. The word is action and it should be preceded by another word, creative.
Put it all together, it is Creative Action. Look at this backwards: When threatened, it is how you react that determines the result. If you react creatively, you most likely will win. If you don't, well, that's a subject of another article, soon.