Inflation is a force that’s sweeping the nation, but specifically impacting small businesses. As prices continue to climb, small business owners are finding themselves attempting to manage the increasing cost of goods and services. Between the constant rise in prices and unpredictability of what economic conditions will look like post-election, small business owners are being challenged like never before.
The franchise model provides a framework that is designed to weather economic storms and support business owners through periods of uncertainty. Ultimately, the model offers unique advantages and benefits that aid businesses during times of economic instability. There are several actionable strategies for franchisees to navigate inflation successfully, ensuring that their businesses thrive; not just survive.
Utilize Your Resources
One of the biggest advantages that franchisees have is unlimited access to their franchisor’s network of resources. Franchisors typically have strong relationships with approved suppliers and vendors. They are able to leverage this power to negotiate better pricing. This means franchisees can benefit from lower costs on essential products and services. In a time when every cent counts, taking full advantage of these resources can significantly boost your bottom line during economic hardships. It’s important to utilize your resources regularly to maximize savings and maintain profitability.
Know Your Numbers
In times of economic uncertainty, being financially aware is crucial. One of the most effective ways to stay on top of your finances is to complete and review monthly financial statements. These statements provide a clear and vivid picture of your expenses and overall financial performance. By closely monitoring your numbers, you’re able to proactively identify up and coming trends, predict potential conflicts, and plan accordingly. This approach aids in making informed decisions, develop efficient strategies, and avoid being caught off guard by the financial burdens that our country is being presented with.
Hire, Train, and Retain the Right People
Regardless of economic conditions, at the heart of any business is the people. As a franchisee, investing in your team is key to building a strong foundation that can outlast any obstacle that’s thrown in your path. A strong, motivated team can help drive your business forward, even in tough times. After hiring individuals who align with your mission, values, and culture, focus on providing them with comprehensive training to ensure they are adequately equipped to exceed in their roles. Aside from training, you should prioritize creating a positive and supportive environment that helps to foster employee retention. Mentoring and developing your team is invaluable when navigating challenging economic hardships.
Don’t Be Afraid to Ask for Help
One of the biggest advantages of operating within a franchise system is the support network available to you. Not only are your franchisors equipped with a range of resources to assist in any area of need, but you’re also surrounded by other franchisees who are experiencing the same challenges you are. Don’t wait until you are knee deep in a crisis to seek help, proactively create a network to aid in avoiding those crises. Early intervention can be a game-changer and help in preventing minor issues from escalating into major problems.
Prepare for and Adapt to Change
Change is inevitable, but how you respond to that change is what matters. In order to effectively manage potential changes, start by developing various financial scenarios based on different economic conditions that could arise. It can be hard to predict these conditions, but easier to manage if you’ve created a strategic response. Additionally, create contingency plans to address potential issues like supply chain issues or shifts in consumer demand. Having these plans in place ensures that you can respond seamlessly to unforeseen challenges helping to maintain resilience and longevity for your business.
Diversify Revenue Streams
Franchisees can diversify their revenue streams by exploring a variety of strategies that lower risk and maximize your income. One key approach is to introduce new products or services that align with ever-changing consumer needs and preferences. By doing this you have the ability to widen your consumer reach. An additional strategy could be to consider partnerships with other local businesses or community organizations to drive opportunities and widen consumer reach even further. By implementing diversification within your business, you’re able to enhance the model to be even more resilient through economic fluctuations.
All in all, inflation presents significant challenges for small business owners, but for franchisees these challenges can be mitigated through the use of resources and support systems. By taking full advantage of these resources, staying on top of your financial health, investing in the team around you, seeking assistance when you need it, and negotiating terms when it’s possible, franchisees are able to turn economic obstacles into opportunities for growth, stability, and most importantly a chance to learn.
Kelly Tope, Senior Director of Franchise Development at FullSpeed Automotive, one of the nation’s largest franchisors and operators of automotive aftermarket repair facilities – home to flagship brands Grease Monkey®, SpeeDee Oil Change & Auto Service® and Kwik Kar Oil Change & Auto Care. Kelly boasts over two decades of experience in the franchise industry and played integral roles in building brands such as The UPS Store, Supercuts and Cost Cutters, and Taco Johns.