Cash Management Tips for Franchise Businesses
Naz Daud - Owner, CityLocal
In today’s unhealthy economy, one can’t help but wonder how small franchise businesses can effectively achieve cash management. In fact, even medium scale and large scale business are struggling to cut back on their expenditure during the current economic situation.
Everyone is tightening their belts, both customers and consumers. Imagine the consequences if no one wanted to purchase goods other than the essentials. What will happen to the restaurant industry? What will happen to the retail industry, particularly those marketing electronics and those gadgets that people can manage without? It’s not just a matter of reducing expenses. Small franchise businesses need to survive and compete with the lower prices that are offered by their competitors, and good cash management is a must.
Here are some tips to help you to save money and manage your business and cash flow. These will also help individuals to better manage their home expenses.
1. Energy Consumption
Electricity is an expense we can’t avoid, but if you are able to keep your energy consumption lower than normal, you can save a fair amount of money. One way to save energy is through the use of laptop computers. Sure, they can be more expensive than desktop computers, but imagine the great savings you’ll get when it comes to energy consumption. A laptop or notebook computer consumes around 90 percent less energy than desktop computers. Most small businesses use computers, and if these are replaced with laptops when the time comes, energy expenditure will be less. The more computers your business uses, the more money you will save.
2. Telephone Costs
The telephone is essential to all small businesses, whether franchised or otherwise, and many use mobiles as well as land lines. Check up on your monthly plan and negotiate a better deal. As competition is increasing, many businesses are stuck on a deal they started off with, and if they renegotiate they can save a lot of money. Use mobiles only where necessary since they are significantly more expensive to use than land lines. Good cash management involves keeping a close eye on communications costs, especially those that are non-essential.
If you use multiple telephone lines in your business, consider VoIP as an alternative. This can allow you to make huge savings, particularly if you have more than one location for your business. Skype offers a completely free service between Skype users, and it is less expensive than normal to phone non-Skype users.
3. Save on Your Ink
Ink for printers can be another expensive item, particularly when calculated over a year. Try to go paperless and print only what is essential. Use recycled cartridges or buy in bulk to save money. Printer sharing on a network can save on the cost of the hardware and also on ink!
4. Save on Lighting
Most people turn off the lights in their homes when they leave the room, but strangely they rarely do so at work. Make a point of doing so. Switching to energy-efficient light bulbs can save a lot of money over a year.
5. Use the Internet
Small businesses should use the internet as much as possible. It is amazing how many tasks can be carried out online, including business calls, sales calls, online business conferencing, video conferencing, live meetings, instant messaging, seminars and so on.
Owning a small franchise business involves almost constant communication with customers, suppliers and other employees. This can be expensive, particularly if it involves travel. It is just as easy to communicate online as by telephone, and video conference is cheaper than a transatlantic flight! Online seminars can be arranged for training purposes, and advertising costs can be slashed through online advertising. Websites are becoming easier and cheaper to put up with every day that passes. The internet offers many opportunities for you to improve your cash management and improve your overall cash flow.
6. Assess your Office Space
Perhaps you have too much office space and you can afford to let some of it out until you have expanded enough to need it. If you are renting, share the rent with another small business that only needs a desk or two.
7. Bulk Buying
A lot depends on your cash flow situation, but it is sometimes cheaper to purchase office items on a quarterly rather than a weekly or monthly basis. This is particularly true if bulk discounts overcome the problem of tying up your capital in stock. You will save on delivery charges, but make sure that you budget the use of such supplies, since there is sometimes a temptation to use more materials or supplies when stocks are higher than normal.
Although times might seem bad, those with the ability and desire to make savings will come through in a much stronger position than small business owners who do nothing. Don’t let that be you, and by following these seven cash management tips for small businesses, you should be able to make significant savings.
Naz Daud is the founder of CityLocal. This Franchise Opportunity is for people who would like to work from home and be their own boss – Read more about the CityLocal Franchise Opportunity.
Help with Franchise Funding
Brian Duckett - Chairman, The Franchising Centre
Most well established franchisors, whose own business and the business of its franchisees have successful track records of operation, will usually make the franchise sections of the major banks aware of their franchise offering. The banks then take a view on whether or not to lend to new franchisees for that system in principle, and they then put in place a procedure for the franchisor to introduce candidates to them.
The most important part of the process, once the franchisor has satisfied themselves that a candidate is likely to be able to run one of its franchises and has sufficient collateral to obtain the required funding, is for the franchisee to complete a business plan, usually with some guidance from the franchiser or a third party, and submit this for the bank to consider.
Even if you don’t need to borrow money to acquire and run your franchise, it’s a good idea to discuss your proposed venture with your bank because they can get a view on the system in question from their franchise Section. It may be that they wouldn’t lend on it anyway – in which case that’s a warning to you to steer well clear.
Brian Duckett is Chairman of The Franchising Centre with over 30 years experience in the franchise industry. The Franchising Centre helps and supports potential and existing franchisors. Click here to find out more.
Tags: brian duckett, business banking, finance, franchise, funding
British Franchise Association- BFA – National Conference 2009
I attended the British Franchise Association – BFA – National Franchise conference last week. The event brought together around 150 franchisors and affiliate suppliers.
The Conference was titled Built to Last – creating stronger foundations for business to prosper. This conference was influenced by three key factors this year -
1. The recession and franchise businesses response
2. Honing the fundamentals of quality franchise business to help ensure long term success
3. One Vision – focusing on establishing the BFA’s structure for its future
Recruiting franchisees
There were a number of break out sessions during the conference. The first one I attended was focused on franchisee recruitment. Clearly the recession has had an effect on recruitment. Franchisors reported a slowing of lead flow over the first two quarters of 2009 compared to the same period in 2008. Many franchisors also indicated that banks are taking longer to agree and release funds for new franchisees. The result has been a slowing in the number and speed of recruitment.
Obtaining funds
In 2009 banks have made clear that all franchise buyer’s business plans must be bespoke. No standard ‘gap filled’ off the shelf busienss plans will be accepted. This is especially so when it comes to local market research. The would be franchisee must demonstrate a knowledge of the franchise, the market and the local competition in their business plan. The findings of the franchise buyer’s report must be reflected in the projected earning predictions included in the plan. Banks are clearly being banks now. They require assurance before lending. Franchisors need to put increased focus in supporting franchise buyers in business plan development before approaching banks for borrowings.
Integrating new technology
I chaired this break out session. The speaker was Alan Fairclough of Driver Hire. Alan explained at length and detail how Driver Hire has used bespoke software, hosted remotely to improve the flow and quality of management information though the network. The outcome for Driver Hire and its franchisees was faster service and invoice times. The result of this system is a franchisor who is in control of their network, franchisees who are well supported and fast action times in all aspects of business from job processing the invoice generation and collection of payments.
One Vision
The British Franchise Association’s – BFA – one vision document was discussed at length. The vision is being slowly developed via working commissions. The commission’s job is to fine tune how the vision, and those it includes, will be managed in the future. The BFA’s goal is to be the recognised authority on all matters franchising.
At the present time there is no franchisee representation withing the BFA. One key goal of the One Vision proposal is to give franchisees representation in the BFA. This may include membership and board level representation. How this will be implemented is currently being explored by the commission.
Franchise Awards
On Thursday evening of the conference the franchise awards were held. The Brand Builder Award was won by Green Thumb. The Award for Enterprise was won by Home Instead and the British Franchise Association – BFA – Franchisor of the Year award was taken by Countrywide Ground Maintenance. Congratulations to all who were nominated and that won.
Tags: BFA, British Franchise Association, economy, finance, franchise, franchisse awards, funds, integrating technology, nick strong, one vision
