The franchise model has long been a way for companies to rapidly expand beyond what might be possible if they opened every location on their own. But rapid expansion can be just as much of a curse as it can be a blessing if a franchisor rushes into an unproven concept without the ability or the gumption to assist unhappy franchisees in hard times, according to serial entrepreneur Marcus Lemonis. Four common pitfalls to avoid are: don’t rush to expand an unproven concept, don’t ignore fanchisees, don’t under-equip franchisees, and don’t try to franchise something you’re not passionate about. When converting, a store into a franchise don’t do it until you have a proven model. Your business isn’t to just sell franchisees, it’s to have a model that you can first turn a profit and then build a system around. If you focus on expanding too quickly you could be left with a lot of debt that can’t be paid. When you have someone buy a franchise from you, you are obligated to be available to make sure they are successful. They are investing their money, time, and energy to buy your system, and they’re doing it to replace their current income or supplement income. Franchisees want to succeed. Ensure that you equip your franchisees with enough tools to succeed, and be willing to take in the franchisees input. A franchise is a business system and if that system isn’t working properly then the system will over time fail. Marcus makes a good point when it comes to any business you start, and especially one you want to franchise. “Why get into a business that you’re not excited about?” Lemonis asked. “You just want someone to feel passionate about what they’re doing. If you don’t have passion for it, it’s going to show to the customer,” and ultimately any potential franchisees.
Retailers looking to replicate the efficiency of bigger players like Apple would do well to focus their attention on one key measurement of success, according to entrepreneur Marcus Lemonis. Advising struggling New York-based Bowery Kitchen Supplies on the latest episode of CNBC’s “The Profit,” Lemonis reveals straightforward ways for any merchandiser to improve profits and evaluate its progress. Three simple techniques to increase sales are: develop a merchandising plan, lead with recognizable brands, and simplify the store’s layout. In the case of this business, the company experienced a loss due to having too much inventory that was spread throughout the store, and the products were acquired based off the desires of the owner vs. profitability of each department. A way to develop a merchandising plan is through analyzing sales data and from this data determine what departments are necessary and structure inventory around this data. After identifying the key departments customers appreciate most, Lemonis develops a strategy centered around “anchor tenants” — products meant to boost profits for a entire department by establishing the product offering’s legitimacy. By anchoring a department with well-known brands, you can then add brands that aren’t established with good margins. The final step is simplifying a store layout through clear signage and organization which will make the shopping experience easier for the customer. The more comfortable and visible the experience, the more likely you will generate sales.
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For this week, I’ve included Design Your Dream Life Through Passive Income from TEDx Talks YouTube channel.
“If you think you know it all, you’re a fool for sure; real survivors learn wisdom from others.”
Proverbs 28:26 MSG