When to add a District Manager to your OrganizationJul 07, 2021
Going multi-unit is the fastest way to obtain financial and time freedom, and have a sustainable business. If you choose this path, eventually you won’t be able to do everything on your own and you’ll need to delegate tasks. That’s when a district manager can help you.
Taking this step won’t be easy: you’ll go from running your operations directly to giving someone else the responsibility of your overall business. So, you have to be certain of when it is the right time to bring this professional to your company to help you scale your operations.
Before hiring a district manager, consider these 5 factors
To help you with the transition, here are five considerations you need to analyze:
1. The size of your business
How many units should you have to hire a district manager? There’s no right answer for this question because it depends on how many units you have now, how much you’ll want to grow, and your cash flow.
If your goal is to have three units and that's all you want, then you can adjust and hire external team members, like accountants and payroll companies, to help you with the management of your business, and you can play the role of district manager. If your goal is to run 10 or more units, you definitely need to hire a district manager to help you. But deciding when would be up to you and the complexity of the business.
Another tip: it would be better to promote from within your organization when searching for this position.
2. The cash flow of each unit
Since you’ll be paying the district manager’s salary from the cash flow of your units, you have to take into account this factor to determine at what point you can hire this professional.
Ask yourself: how much cash does each unit provide? At what point do I have enough units to take out the salary for this position and still have enough left over for me? For some brands, that might mean up to three units but for others, you may need to have six or seven to be able to invest in this role.
3. Location of the units
You also have to consider the distance between the stores. Think about it: it’s one thing to have them in the same district area than to have them hours away from each other, because that drive time is part of the work and the time you spend, during the week, to manage your business.
The mapping of the units will help you establish how many stores one district manager can run. The average number of units per district manager is six. But every brand is different, and you’ll have to make your own calculations based on what the brand dictates, the complexity of the operations, and the number of people they’ll have to supervise in each location.
Remember that the district manager is not responsible for doing the operations, but for inspiring the people to do the work and making sure the management systems are effectively applied in every unit.
4. The status of the business
In an ideal world, all your units will run smoothly. But the reality is that each store will have its challenges, that can go from staffing to maintenance to financial chaos. And when the district manager comes in, he or she would need to spend time in each location to make a diagnosis and detect what needs to be fixed to improve them.
This may mean getting the management team in place and training the staff to have the operations done correctly. But to do it the right way, the district manager would need to supervise fewer units. Sometimes investing in more district managers or fewer units per district manager will bring you much better results.
5. How much is your freedom worth
Some people are willing to give half of their cash flow to a district manager even if they only have two units because they want to take a more passive role in their multi-unit business. And that's fine, as long as they have a district manager and the people are trained to run the business properly.
What is your goal and how much do you want to be involved in the day-to-day operations? By having a district manager, you’ll be able to delegate a lot but this will cost you. How much of your cash flow and your profit are you willing to give, or to invest, for your time freedom?
You also need to take into consideration that the more freedom you have, the more you’ll be able to focus on the strategic planning for your business, so you can grow faster and better and keep multiplying your profits.
The best time to hire a district manager
As you can see, the best time to bring a district manager to your organization will depend not only on the business itself but also on every franchisee and their personal and investment goals.
Growing your franchise business by opening more units and, eventually, hiring a district manager, will bring you financial freedom and job independence. If you want to learn more management systems tips and tools on how to run a successful multi-unit business, visit us at American Franchise Academy and follow us on our YouTube channel.
- How many units do you have now and how many do you want to have in the long run?
- How complex is the supervision of the business’ operations?
- Are you willing to spend a lot of drive time to oversee your multiple locations? Or do you rather spend that time more productively?
- If you have more freedom, what would you invest your time in?