How the Right Bookkeeping Support Can Increase Franchisee Scalability as the Industry Sees More Growth
The pandemic has accelerated the trend of people quitting their jobs to shift careers or become entrepreneurs. The U.S. Bureau of Labor Statistics (BLS) released data stating 4.3 million Americans quit their jobs in August 2021 alone, increasing the nationwide quit rate to 2.9% of the workforce, the highest percentage the BLS has ever reported.
The trend has become known as the “Great Resignation,” fueled by the growing desire for people to align their professional aspirations with their life’s purpose amid the current life-altering event that is affecting the entire world. As a result, there is a skilled and motivated workforce looking for a fresh start and finding it in the franchising world.
As the franchise market continues to grow, current owners have the opportunity to reevaluate their plans for scaling their business and staying a step ahead. Additionally, while new franchisees buying into a franchise system are essentially purchasing a playbook for success, it’s important for them to identify and understand the right tools that will help them stand out and achieve that desired success long term.
One often underestimated operational tool that can make or break a franchise business is bookkeeping. The digitization of traditional professional services, such as bookkeeping and accounting, is playing a major role in helping franchisees reach the next level in their businesses as the world undergoes digital transformation. Unless a franchisee has a strong accounting background, and even if that is the case, digitally outsourcing in this area is an important consideration to ultimately save time, offer financial peace of mind, and provide insight for better decision making. Also, it increases the likelihood of franchisors receiving financial reports in a timely manner, therefore, allowing the opportunity to coach or guide franchisees based on the information.
While traditional accounting services can be useful during tax season, particularly for IRS compliance and reporting, a traditional CPA may lack specialized knowledge in franchise bookkeeping, technological connectivity, and time to support the franchisee. Additionally, “one-size-fits-all” accounting software still requires high proficiency and time from the owner or staff to accomplish necessary accounting tasks just to stay up to date, which takes time away from sales, marketing, strategy and other activities to grow the business.
As a result, finance and technology have advanced and merged in many ways, creating new cost-effective solutions that incorporate the best of both digital and traditional bookkeeping services. The goal is for technology to help simplify and automate everything from accounting, expenses, revenue, procurement, reporting, and other bookkeeping activities, while delivering franchise-focused, personal one-on-one advice. For the franchise owner, it’s like having a team of accountants without the hefty overhead.
Every moment a franchisee is engaged in activities they are not formally skilled in or have the potential to be overly time-consuming, they take on a tremendous mental burden while being pulled away from a better use of output. Without sufficient support in certain areas, such as bookkeeping, franchisees can also run the risk of not executing those tasks properly, which could ultimately have dire financial consequences.
Knowing and understanding your numbers is vital for a business to achieve sustainability and success. Your financials provide insight into profitability, income, and cash flow, the lifeblood of your business. Franchisees that engage the right tools for their business position themselves to make productive short- and long-term financial and operational decisions. And, when evaluating return on investment, time savings and peace of mind are priceless.
Growth looks bright in the franchise world. According to the International Franchise Association, more than 26,000 franchised locations will be added in 2021, projecting franchise employment to grow by more than 10% to nearly 8.3 million workers. Overall, franchising contribution to the economy is forecast to grow by 7%, reaching pre-pandemic levels by the end of the year.
Franchising continues to be big business. With one in four people quitting their job to date in 2021 – a number that could increase before year-end, according to data from people analytics firm Visier – the franchise industry could see even more growth as workers reassess their priorities.
Apart from the industry uptick, the secret sauce for individual franchisees realizing true success in franchising is in identifying the most efficient and effective operational tools for achieving maximum profitability while creating an entrepreneurial opportunity that drives passion and purpose.
Lil Roberts is CEO and founder of Xendoo, a cloud-based fintech company that specializes in online bookkeeping and accounting for small businesses. Roberts is a serial entrepreneur with a passion for small business, and is known as an innovator with an enviable ability to foresee market trends. For more information, visit: www.xendoo.com