10 Tips to Prepare for a Rocky 2024Feb 06, 2024
No one can predict the future. However, many people are calling for a rocky 2024, and although it may not happen, as a business owner it is wise to prepare for a potential year of difficulties.
Where do you need to put your attention, especially for multi-unit franchisees? In this blog post, I’ll share the areas in which you, as a business leader, should work this year.
- Many of these things require a lot of strategic thinking, planning, and proactive measures. So, even if 2024 goes smoothly, if you implement them, your business will be better and more resilient to any potential issues that might come.
Here are the top 10 issues that franchisees should address to prepare effectively:
1. Financial resilience
You need to strengthen your financial position and increase your cash reserves so that, if anything happens, you have money to overcome whatever challenges may come.
It also means going over your expenses and analyzing if among them there are some concepts you can improve, reduce, or reassess.
And, if you have plans to grow this year, make sure that if something happens, you'll still going to be okay.
2. Debt management
Carefully review where your debt is and discuss with your banker, or whoever is giving you the financial aid, what are the refinancing options you have and see if you can renegotiate the interest rates.
Another thing you can do to manage your debt is ask for a better payment plan. By paying a little less every month you’ll be able to manage your cash reserves in case anything happens.
And, if possible, pay down some of that debt so that you can alleviate that financial challenge you have in your business because the more debt that you have, the more stress and risk you have in your business.
3. Diversification of revenue streams
Some strategies for diversification of revenue streams within your franchise business are:
- Among all the products you sell, see which are the most cost-favorable ones and promote those to bring in more revenue.
- Expand your sales channels offering options like catering or delivery.
- Create packages of your products or services.
- Design more community center marketing activities to better serve them.
Remember that sales are the oxygen of any business, so if you can look for ways to get more sales you’ll be able to increase your revenue.
4. Supply chain stability
There is huge value in building a relationship with the approved brand suppliers that are directly delivering products for you and your units. But there’s no reason you can’t explore alternative supply sources, especially with those that are in your area.
- By doing so, you can prevent disruptions and access opportunities other people don’t have.
For example, if you have products that are nonperishable and critical for your business, having that relationship with your suppliers could come in handy. That way, if something happens, you can have the products you need so you can serve your customers.
5. Labor efficiency
Labor cost is one of the largest expenses in your business. It even has gone through the roof in the last couple of years and many states have been increasing the minimum labor costs every year. In California, for example, the minimum wage increased to a dramatic level.
That’s why to mitigate risks in 2024, you should see how can you reduce costs and maximize the use of your employees without compromising customer service or employee experience.
One way you can do that is by cross-training your team members. If people can do most of several positions, you’ll need fewer employees to cover certain jobs. Then, you’ll be able to switch and slide them into different positions without having someone permanently in that area.
Another great strategy is training your unit managers by giving them all of the knowledge they need to be as effective and efficient at building a schedule, which is the very first step into having successful labor cost management.
If your managers don't have schedule building and labor management best practices, take this year as an opportunity to share that knowledge and guidance with your leaders. That way, if 2024 is a rocky year in terms of staffing, you can maintain operations with a leaner workforce.
6. Adaptive marketing strategies
Look for adaptive marketing strategies, things that you have not tried in the past and that not only bring value but increase customer retention as well.
In tough economic times, one of the best ways to sustain your business is by retaining your customer base. If you have products or services that make your clients keep coming to your business, double down on them! Promote them and remind them how much they love those things.
If you spend some of your marketing time and budget doing that, you’ll strengthen the loyalty of those customers who already love what you offer.
7. Customer experience focus
Prioritize your customer experience by making sure that every time your customers come into your business and experience your brand, product, or service, they are fully satisfied and feel you are different and special.
- Excellent customer experiences can differentiate your franchise in this competitive market.
As a multi-unit franchisee, you can do that through your people. If you inspire your team to deliver an excellent service that sets your business apart, you're going to beat the competition.
8. Proactive communication with the franchisor
The franchisor has a lot of knowledge, information, tools, and resources to help you increase your sales if you build a relationship with them.
You pay a certain amount of royalty fees, and maybe even marketing fees, to get this type of thing in return, so don’t hide in the corners or isolate yourself from the possibility of accessing that support from them.
Seek support and guidance not only from your franchisor. You can also reach out to fellow franchisees who can help you learn best practices to be a more successful franchisee.
- A great way to obtain these valuable connections is by attending the annual brand conference as well as industry conventions for multi-unit franchising.
During those gatherings, you can learn what’s the state of your industry, get first-hand information on things that are coming, and tips to help you prepare for that. You can also share best practices with other franchisees in the network.
9. Technology and innovation
Another way you can prepare for a potentially rocky 2024 is by embracing technology and innovation to be better and faster, and do more with less.
By implementing or upgrading point-of-sale systems, inventory management software, or digital marketing tools, or learning how to use a new platform, you can:
- Improve operational efficiency.
- Reduce cost.
- Make better decisions.
- Guide your leaders and team.
- Better manage the business.
- Overcome any potential issue that might be coming.
10. Regular financial review and scenario planning
As a business owner, you need to review your finances regularly. Look at your profit and loss statement, and your balance sheet, to see where you are and compare it to your annual plan.
Having a clear business plan will help you know, month by month, where you are supposed to be to accomplish your financial and business goals for the year.
If you do that, then you’ll be able to get ahead and detect any economic issues, industry challenges, or whatever may be happening that’s preventing you from being where you want to be. Not only that. You will be able to adjust depending on the different economic scenarios.
- But if you don't have your eyes and ears open to notice when something is changing, then you might act too late.
These are some of the things that you need to pay attention to this year to overcome a potentially rocky 2024. It may not happen, but if that's the case, doing these ten things will make your business more resilient and you'll be ahead of many people in the industry.
- An extra tip that’s going to help you overcome uncertainty is having great leadership in your organization.
This starts with you as the business or franchise leader. But it also applies to your unit managers and district managers. If your leadership positions are strong, firm, confident, and knowledgeable, the people will follow them. And, the better leaders they are, the better they can overcome whatever happens this year and, if not, grow tremendously.
If you need to improve yourself or your leader’s skills to be better, you should explore our programs to find out how the American Franchise Academy can help. We have designed three best-in-class programs for each of these critical roles:
- COMMAND, for scaling the success of multi-unit franchisees.
- LEAD, to prepare district managers to be effective and efficient at their jobs.
- MANAGE, to give unit managers the leadership and management skills that they need to be successful.
I hope this blog post cleared this year’s outlook and got you some ideas on how to prepare for what’s coming either growth or resilience.
- Are your investment plans for this year financially viable?
- Do your managers have proper labor management knowledge and guidance?
- What can you do this year to improve that customer experience?
- Are you agile and ready to adapt to new challenges?
WATCH THIS VBLOG on YouTube HERE.