Risk Mitigation in Franchising

To mitigate these risks, entrepreneurs must conduct comprehensive due diligence before entering into a franchise agreement. Research the chosen industry and understand its market trends. Engage with existing franchisees and ask about their experiences. Evaluate the franchisor’s track record of success

Risk Mitigation in Franchising

In the entrepreneurial landscape, franchising is often viewed as a more secure path to business ownership. The franchise model offers several advantages, such as established brand recognition, pre-existing business structures, and continuous support from the franchisor. However, like any business venture, it does come with its fair share of risks. Understanding and mitigating these risks is critical for entrepreneurs who seek to thrive in franchising.

Identifying Risks in Franchising
Foremost, entrepreneurs need to identify the potential risks involved in owning a franchise. A franchise is not an automatic ticket to success. It requires dedication, hard work, financial commitment, and operational expertise. Some primary risks associated with franchising include the potential for failure, unmet earnings projections, and disputes with the franchisor.
Other risks could stem from the franchisor’s performance, market saturation potential, and unforeseen business environment changes. For instance, the franchisor’s performance directly impacts the franchisee’s business. If the franchisor fails to provide adequate support or suffers from a poor reputation, it can negatively affect the franchisee.

Strategies for Risk Mitigation
To mitigate these risks, entrepreneurs must conduct comprehensive due diligence before entering into a franchise agreement. Research the chosen industry and understand its market trends. Engage with existing franchisees and ask about their experiences. Evaluate the franchisor’s track record of success, financial stability, and support system. Understanding these elements can give entrepreneurs insight into the level of risk involved.

Financial risk is another considerable concern. To mitigate this, entrepreneurs should assess their financial capabilities accurately and align them with the financial requirements of the franchise. This includes considering the initial investment, ongoing fees, and the cost of maintaining the business until it becomes profitable.

Legal risk is another potential pitfall in franchising. Franchise agreements are complex and can include various legal obligations. Therefore, entrepreneurs must seek professional legal advice before signing a contract. A franchise attorney can help understand the terms of the agreement, ensuring that they are fair and do not expose the franchisee to unnecessary risks.

Proactive Management for Long-term Success
Entrepreneurs should be proactive in managing their franchise operations to mitigate risks. Regularly monitor financial performance and identify areas for improvement. Regular training and upskilling are also beneficial for keeping up with industry standards and ensuring the business operates efficiently.

Maintaining open communication with the franchisor is vital. If challenges arise, discussing them with the franchisor and seeking their advice or support is essential. After all, the franchisor has a vested interest in the success of the franchisee’s business.

Franchising offers a relatively secure pathway to business ownership. However, like any business venture, it carries inherent risks. By identifying these risks, conducting diligent research, implementing strategic financial planning, seeking professional legal advice, and being proactive in operations management, entrepreneurs can effectively mitigate these risks and increase their chances of franchising success.

This approach will not only ensure a successful franchising journey. Still, it will also provide a sturdy foundation for future entrepreneurial ventures, thus making risk mitigation an essential skill in the entrepreneurial toolbox.

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Article written with the support of AI

HOW TO OPTIMIZE GOOGLE ADS FOR YOUR FRANCHISE

Photo by Pixabay

HOW TO OPTIMIZE GOOGLE ADS FOR YOUR FRANCHISE
This article written by: Jam Bonnie

Franchising can be an appealing and excellent first step for people who want to start or open their own businesses. However, because of the huge brands and return on investment associated with it, you should also expect a lot of competition. According to data from an International Franchise Association report, there were 790,492 franchised establishments in 2022, with an economic output of $825.4 billion. For 2023, the report predicts a total of 805,436 franchised locations.

Despite the growth in franchising units, however, experts say the new franchisees coming in or buying has been slow compared to the past. This can be attributed to rising inflation, higher interest rates, and an overall lack of confidence. Today, franchisees can reach out to franchise development services like Franchise Growth Solutions to help their program stand out from the competition. Franchisees can benefit from expert-level insights on franchise development, sales, infrastructure growth, and exit strategy.

That being said, there are certainly internal things within your franchise operations that you can work on to help your franchise unit stand out from the crowd. One such way is by fine-tuning elements of your digital marketing strategy — such as Google Ads campaigns. Below, we’ll look at how to optimize Google Ads for your franchise:

Use Google My Business

Google’s built-in tool Google My Business helps increase your local exposure, allowing your franchise unit to be seen by relevant potential customers. Taking the time to improve your Google My Business profile starts as simple as claiming your profile and including accurate and up-to-date information about your franchise, such as its address, phone number, website, and business hours.

While your Google Ads strategy can run independently of your Google My Business presence, investing time in your Google My Business profile can complement your Google Ads campaigns and provide potential customers with accurate and accessible information about your franchise. For example, if a customer comes across an ad for your business, checking out your Google My Business profile can provide them with further insights through photos, videos, and customer reviews.

Do a PPC audit

Like many other aspects of digital marketing, it’s important not to remain too static. As elements in and out of your business continue to change and evolve, so should your marketing strategy. Pay Per Click (PPC) audits can improve the efficiency of your Google Ads strategy, making sure you are spending your marketing budget effectively. A PPC audit checklist by Ayima includes critical areas such as account structure, keywords, ad and landing page copy, bidding, and tracking.

When conducting a PPC audit, consider your campaign’s structure, such as existing ad groups and negative keywords. You’ll want to avoid keyword overlap so your search terms don’t bounce around. In a saturated market, minor mistakes like typos can impact your franchise negatively. By practicing routine PPC audits, you can avoid simple errors in your ad or landing page copy and ensure your ads reach the right customers.

Stick to locally-focused keywords

Finally, your Google Ads strategy must stay local. As a franchisee, you should be aware that there are most likely other franchisees outside your locale, and trying to cater your ads campaign to areas outside your reach can be counterproductive. Instead, focus on using local Google searches to build a loyal customer base among a local audience. Fun fact: 46% of all searches on Google include local intent.

Similarly, over the years, there has been a whopping 500% surge in local Google searches with keywords such as “near me” and “buy now.” Focusing your Google Ads campaigns on a local level helps display your advertisements within a specific geographic area, taking on a targeted approach to reach potential customers in your vicinity. After all, these customers are more likely to engage with your business, driving greater foot traffic and increasing overall brand awareness to others living or working close by.

Sources:
1) International Franchise Association
https://www.franchisetimes.com/franchise_news/new-research-shows-strong-economic-outlook-for-franchising/article_783c2f10-ddfd-11ed-8249-135bade4a847.html

2) Franchise Growth Solutions
https://franchisegrowthsolutions.com/about-us/

3) Ayima
https://www.ayima.com/insights/paid-media/how-to-conduct-a-ppc-audit.html

4) Google
https://www.entrepreneur.com/growing-a-business/how-to-boost-your-business-visibility-and-beat-the/453521

This article was written by: Jam Bonnie

EMBRACING THE POWER OF SWOT ANALYSIS

Photo Graphic by Gary O.

Through the lens of a SWOT Analysis, businesses can better understand their current situation, thus positioning themselves for future success. The more enterprises understand their internal strengths and weaknesses, as well as external opportunities and threats, the better equipped they are to plan for a sustainable future.

Embracing the Power of SWOT Analysis: A Comprehensive Guide to Business Success

The dynamic landscape of modern business requires decision-makers to adopt various strategic planning tools to navigate its complexities. One such essential tool, widely recognized for its simplicity yet insightful results, is the SWOT Analysis. This article provides a comprehensive understanding of the SWOT Analysis, its importance, and how it can revolutionize your business.

Understanding SWOT Analysis
SWOT Analysis is an acronym for Strengths, Weaknesses, Opportunities, and Threats. It is a strategic planning tool that helps businesses identify the internal and external factors influencing their operations, competitiveness, and market viability.
Strengths and weaknesses are considered internal factors intrinsic to the organization. Strengths represent the core competencies or advantages that give the business an edge over its competitors. Conversely, weaknesses refer to the areas where the company needs to improve compared to the competition or standards of the industry.
On the other hand, opportunities and threats are external factors that arise from the business environment. Opportunities point out the favorable situations or trends a business can exploit for growth. Threats indicate potential problems or risks caused by unfavorable external conditions that could harm the company’s profitability or survival.

The Importance of SWOT Analysis

1. Strategic Planning
A well-conducted SWOT Analysis acts as a compass, directing your business strategy in a turbulent business environment. It helps you leverage your strengths, improve weaknesses, capitalize on opportunities, and develop contingency plans for potential threats.

2. Problem-Solving
SWOT Analysis assists in identifying specific areas of concern within the business. Clearly outlining weaknesses and threats provides a framework for developing tactics to address these challenges.

3. Decision-Making
The insight from a SWOT Analysis contributes significantly to informed decision-making. It offers a holistic view of your business’s current state, aiding in making strategic choices regarding investments, market expansion, product development, and more.

4. Competitive Advantage
Understanding your strengths and opportunities helps internal growth and gives you a competitive edge. By providing insights into competitors’ weaknesses and potential threats in the market, a SWOT Analysis enables businesses to stay ahead of the competition.

5. Resource Optimization
A SWOT Analysis can reveal how to utilize resources best. By identifying strengths, you can strategically allocate resources to areas where you will most likely excel. It also highlights areas that require improvement so that you can make informed decisions about investments.

The importance of SWOT Analysis for your business lies in its capacity to offer valuable insights that enable strategic planning, efficient problem-solving, informed decision-making, gaining competitive advantage, and optimal resource utilization.

It’s worth noting that the real power of SWOT Analysis comes from the discussions and brainstorming it stimulates among key stakeholders. The process encourages collaboration and open conversation, making it a vital tool for fostering organizational growth.

Through the lens of a SWOT Analysis, businesses can better understand their current situation, thus positioning themselves for future success. The more enterprises understand their internal strengths and weaknesses, as well as external opportunities and threats, the better equipped they are to plan for a sustainable future.

THE CATALYST OF CHANGE: INNOVATION’S CENTRAL ROLE IN FRANCHISE EXPANSION

Photo by Matt Ridley on Unsplash

However, in the race for innovation, franchisors must remember to maintain brand consistency, as it is a significant part of the franchising model’s appeal. This delicate balance between innovation and brand preservation can be tricky but is crucial to ensuring long-term success.

The Catalyst of Change: Innovation’s Central Role in Franchise Expansion
By Bill Armstrong

As we journey through the rapidly evolving landscape of the franchise business, one fact stands out: innovation is no longer an option but a necessity for franchise companies seeking sustainable expansion. Stories of franchises harnessing the power of innovation to fuel their growth show us that creativity and change are the new norms in this dynamic business environment.

Take, for example, McDonald’s, an iconic franchise that has continually reinvented itself over the years. They pioneered the concept of “fast food” and redefined customer experience by introducing the Speedee Service System, an innovative assembly line for food. More recently, they embraced digital transformation with their “Experience of the Future” initiative, which included mobile ordering, self-service kiosks, and even artificial intelligence-driven decision engines for drive-thru menus.

Another compelling example of innovation at work is Starbucks, which leveraged technology to transform its customer experience. By developing a cutting-edge mobile app, they offered a seamless ordering and payment system that drew customers in with a loyalty rewards program. Moreover, they dared to step beyond their traditional cafe model by experimenting with express stores, drive-thrus, and high-end Roasteries to meet diverse customer needs.

Innovation within franchised brands is not confined to tech giants and international food chains alone. Companies in various sectors, from retail to fitness to education, have discovered the benefits of an innovative approach. In essence, the main thrust of franchise innovation comes from the urge to deliver better value, enhance customer experience, and differentiate from competitors.

However, in the race for innovation, franchisors must remember to maintain brand consistency, as it is a significant part of the franchising model’s appeal. This delicate balance between innovation and brand preservation can be tricky but is crucial to ensuring long-term success.

Franchisors also need to understand the importance of investing in research and development. Identifying and exploring innovative possibilities can pay off massively when those ideas are implemented and become the driving force for franchise growth.

Innovation isn’t just about products or services; it also extends to franchising strategies. For instance, franchises can explore innovative expansion methods, such as multi-unit franchising, area development franchising, or master franchising. These strategies allow businesses to expand their reach while managing risk effectively.

In conclusion, as the franchising landscape continues to evolve, the role of innovation in franchise expansion becomes ever more significant. By staying open to change and embracing the new, franchise companies can survive and thrive in the face of competition and continually changing market dynamics. Innovation is the catalyst of change, propelling franchises forward in their journey of expansion.

How Business Leaders Can Prepare for a Possible Recession this Year

JPMorgan Chase Survey “Most Businesses Expect Recession in 2023” The good news is that despite these expectations, most midsize (66%) and small business (72%) leaders remain upbeat about their own company’s performance, and are focused on growth, hiring plans and other elements within their control.

How Business Leaders Can Prepare for a Possible Recession this Year

(BPT) – By John Simmons, Head of Middle Market Banking & Specialized Industries, JPMorgan Chase Commercial Banking & Ben Walter, CEO, Chase Business Banking

No matter their size, location or industry, businesses across the country have been hit by inflation in the last year, forcing leaders to use a variety of creative strategies to combat rising costs. While these inflationary pressures show some signs of easing, business leaders’ sentiment around recession expectations raises important questions for businesses on whether they’re prepared for the next big economic challenge.

In the JPMorgan Chase 2023 Business Leaders Outlook survey, we uncovered just how widespread inflation’s impact has been for business owners nationwide and how it and other pressures have contributed to a challenging business outlook. Unsurprisingly, the vast majority of small (94%) and midsize (91%) businesses are experiencing pricing pressures that are affecting their bottom line, while the majority of small (61%) and midsize (65%) business leaders anticipate a recession some time in 2023.

The good news is that despite these expectations, most midsize (66%) and small business (72%) leaders remain upbeat about their own company’s performance, and are focused on growth, hiring plans and other elements within their control. We are encouraged by the optimism and resilience of business leaders after a tough few years, and we know that time and again their mettle has delivered the economy through lean times to propel our economy and communities forward.

As we talk with business leaders about the challenges ahead, there are three main approaches they should consider this year in their preparations for the next economic cycle:

1. Consider Non-Traditional Strategies to Combat Inflation

Small and midsize businesses have had to find ways to meet challenges brought by inflation. Traditional responses, such as raising prices on products and services, have been augmented by some non-traditional strategies. For example, nearly half of midsize businesses have made changes to their purchasing habits, including strategic stockpiling, and more than one-third have turned to automation.

Among small businesses, more than half have said honest and transparent communication with customers is a top tactic for coping with inflation. Because consumers still demonstrate a willingness to shop local, honesty and transparency can help strike the right tone to balance price increases with customer loyalty.

2. Invest in Prospective and Current Employees

The tight U.S. job market presents a challenge for small and midsize businesses; however, economic data show the worst may be behind them. More than half of small business leaders (55%) anticipate hiring full- and part-time staff and 50% of midsize business leaders expect to increase headcount in the next 12 months.

Employee retention and development — always important priorities for business owners — are emerging as even more important in the current economic environment. In fact, more than half (55%) of small business leaders cited retaining top employees as a critical factor for business survival, especially because they operate with less slack from the start.

Likewise, nearly half (43%) of midsize businesses plan to invest in talent development by offering upskilling and training opportunities that increase productivity, improve the quality of work and enhance problem-solving abilities. These programs are hugely important for small and midsize businesses looking to improve retention, limit turnover, boost morale and attract new talent.

3. Optimize Working Capital

Working capital is a key indicator of small and midsize businesses’ financial health, and maintaining it during times of economic volatility is important for long-term prospects. Despite a tough year, the majority of small (69%) and midsize (63%) businesses expect increased revenue and sales in the year ahead, making it important for them to have a corresponding capital plan.

Business leaders are optimizing working capital to finance inventory and accounts receivable through supply chain finance, which helps them move to extended payment terms with suppliers including the option to get paid earlier in their working capital cycle, and dynamic discounting, which enables owners to receive discounted prices in exchange for paying vendors early. They are also investing heavily in inventory management, reworking current debt and securing working capital financing to maintain and even grow their balance sheets.

To learn more about how JPMorgan Chase is helping business leaders build for the future, view the full Business Leaders Outlook survey results for small and midsize businesses.

GROW LEADERS WITHIN YOUR RANKS

If you want to increase retention and expand diversity in the restaurant business in 2023 – especially in leadership, on boards and with founders of growing brands – start with education.
The restaurant industry has an information problem. Historically, most restaurant education is limited to on-the-job (OTJ) training, which presents numerous challenges.

Increase retention and expand diversity through employee education
By Lauren Fernandez

If you want to increase retention and expand diversity in the restaurant business in 2023 – especially in leadership, on boards and with founders of growing brands – start with education.
The restaurant industry has an information problem. Historically, most restaurant education is limited to on-the-job (OTJ) training, which presents numerous challenges.

Traditional restaurant OTJ training is fraught with issues such as a lack of budget, lack of time and no quality control standardization. Accessibility is also an issue: often we see that with OTJ training there is no way to accommodate different learning styles and languages, alienating non-English-speaking employees. A lack of training stems from many problems, such as categorically high turnover rates, high levels of attrition and a general lack of leadership training that plagues our industry.

I’m a Latina and a first-generation American, and my parents saw education as a means for me and my siblings to better our lives. They worked hard to make sure we received the best education in order to create more opportunities than they had.

While I followed a traditional educational path in law and business, my OTJ training operating our restaurants was undoubtedly the most impactful. Experience in the field as an operator taught me more about the restaurant industry than my previous education could, and it closed the information gap on what it takes to be a leader in our industry. But both my educations together – in graduate schools and on-the-job – have equipped me with a unique lens, and it informs my call to action: we as restaurant leaders can leverage education to overcome barriers and as a tool for growth.

When we champion education, we mean restaurant-specific training with a focus on operational excellence, profit and loss management, leadership development and more. Investing in people and their personal and professional development contributes to a culture where people are valued, and ultimately develops stronger leaders that will make the industry a better place to work. We must proactively nurture the next generation of restaurant workers who will see the industry as a long-term career rather than a temporary job.

And this isn’t as hard of a lift as you would think. While I was an operator, I hosted quarterly management team meetings where we not only focused on results and celebrated wins, but we focused on new leanings and sharing best practices. I taught high-level strategies like profit management, but we always-connected theory back to actual practice. These meetings created a collaborative and transparent environment where managers helped each other improve, and they were instrumental in improving the performance metrics of the group as a whole.

Restaurants nationwide employ nearly 12 million workers and account for 4% of the overall GDP in the United States. As an industry, we still suffer from very high turnover and attrition. Investing in education is one key to retention and building long-term, desirable careers in our industry. To address the challenges of turnover and retention, consider some of these additional ideas:

*Innovative incentive and rewards programs like matching payments on student loans. More than 43 million people in the U.S. owe money toward student loans, and the average federal student loan debt balance is nearly $38,000. Offering a program to help reduce that debt can be a huge incentive to draw good employees and keep them. In fact, one study noted that 86% of people between the ages of 22 and 33 would commit to an employer for five years if offered a student loan repayment program. And, through 2025, employers can offer up to $5,250 in student loan repayment benefits without paying any tax thanks to the Consolidated Appropriations Act, which was signed into law in 2020 as part of pandemic relief efforts.

*Volunteer days for a food-related cause like a community food bank. Many studies have shown that offering some sort of volunteer program can boost productivity, increase employee engagement and improve hiring and retention rates. Ask your employees to select a cause, or find something that ties into what your restaurant offers – not only are you giving back to your larger community, you’re also showing your employees that you are doing something worthwhile outside your restaurant’s four walls.

*Encouraging participation. Support your employees to seek out opportunities to learn and engage in the industry. It can also encourage them to grow and thrive in their potential hospitality career. That can be through culinary schools and events, volunteer board opportunities or speaking on panels and at conferences.

*Sponsoring conference membership and attendance. Encourage employees to attend conferences or pay for memberships to restaurant- or culinary-related organizations. This will help create networking opportunities for them, and they will bring back information that could help your business grow, too.

*Teambuilding retreats/exercises. Consider building a program that promotes your company’s mission, vision and goals while also creating an atmosphere for support and encouragement.
With education as the cornerstone of your efforts to retain good employees, expect it to play an even larger role in the future as labor challenges continue. To that end, Full Course launched a new 501(c)(3) nonprofit foundation, Full Course Learning Center, to ensure education and support are accessible to all in our industry, from back of house to operators. You can find educational tools and resources, including more ideas about employee retention, at fullcourse.com/education.

When it comes to employee retention, new ideas and approaches will continue to evolve. By implementing some thoughtful ways to address these challenges, you can make sure that not only will you find good employees, but that they stay and grow with you and your business, too.

Lauren Fernandez is the Founder and CEO of Full Course (www.fullcourse.com ), a non-traditional restaurant investment group created for operators by operators that is changing the way new businesses grow their brands. The company partners with restaurants in the early stages of development to optimize existing operations develop strategies for sustainable growth and bring the right investors or franchise partners to the table. Fernandez is a restaurant industry veteran with two decades of experience. She previously served as general counsel and head of franchise administration for FOCUS Brands, a multi-brand restaurant company with more than 4,000 restaurants (including Carvel, Cinnabon and Moe’s Southwest Grill) in over 15 countries, and was co-founder, president and operating partner for multi-unit franchise developer Origin Development Group, acting as a strategic growth partner for brands such as Chicken Salad Chick. She also is a frequent speaker in the areas of organic business growth, licensing and franchise operations across the country.

HOW TO SELECT THE OPTIMAL VALUATION TECHNIQUE FOR YOUR STARTUP

Revenue multiples are helpful for both private companies (which lack stock prices) and public companies (for which stock prices are readily available). They’re also beneficial for businesses with low sales because they’re less affected by fluctuations in gross margins and other financial metrics that may fluctuate based on industry trends or economic conditions during the analyzed period.

How To Select The Optimal Valuation Technique For Your Startup
By FMM Contributor, Johnny Dey

Introduction

It is simple to focus on the day-to-day operations of your business when launching a business. You should not spend too much time contemplating the value of your business or the amount you could receive if you sold it. However, valuing your venture is crucial to operating a successful business, as it helps you determine how much capital you need to raise to develop and sustain your business. When it’s time for an investor or potential acquirer to make an offer on your company, valuation is an essential part of the negotiation for the selling price.

The Market Strategy

The market approach is founded on the value of comparable businesses. Therefore, this method is optimal for entrepreneurs with a proven business model or who have already raised capital.

The market approach can be utilized to determine the value of either a startup or an established business. For example, an early-stage company has yet to achieve profitability. As a result, it may not have any revenue. In contrast, a mature company has already achieved profitability. As a result, it generates sufficient cash flow to pay its obligations and reinvest in itself without raising additional capital from investors.

Revenue Multiple

Revenue multiples are a straightforward strategy for valuing a business. The multiple revenue formulae divide a company’s annual revenue by its market capitalization, which is its stock price multiplied by its outstanding shares. For instance, if your company has $1 million in revenue and a comparable company has a market capitalization of $10 million, then your company would be valued at ten times revenue, or $10 million.

Revenue multiples are helpful for both private companies (which lack stock prices) and public companies (for which stock prices are readily available). They’re also beneficial for businesses with low sales because they’re less affected by fluctuations in gross margins and other financial metrics that may fluctuate based on industry trends or economic conditions during the analyzed period.

EBITDA Multiple

Multiples of EBITDA are based on a company’s earnings before interest, taxes, depreciation, and amortization. EBITDA is an excellent indicator of profitability because it is less affected by accounting decisions than net income.

The calculation for this multiple is as follows:
Earnings Before Interest Taxes Depreciation And Amortization (EBITDA) Multiple = (Earnings Before Interest Taxes Depreciation And Amortization) / Enterprise Value

Comparable Organizations Technique

The analogous companies method is the most prevalent method of valuation. It’s founded on the presumption that your venture is a “normal” business, so you can use other comparable companies to determine its value.

This method is very time consuming, as you must identify analogous companies and compare them to yours. In addition, this method needs to account for the risk and ambiguity related to your startup’s business model and product/service offering.

Pricing Strategy

The cost approach is a method of business valuation that compares your company to others in the same industry to determine its worth. This strategy depends on tangible and ethereal assets, such as technology, team, and brand, in addition to the customer base.

Identifying competitors with similar products or services publicly traded on Nasdaq or NYSE MKT is the first step in this process (formerly known as OTC Markets Group). Once you’ve identified analogous companies, you can compare their sales figures to determine whether yours are developing at the same rate or quicker. If they’re growing faster than you, this may indicate that there’s room for expansion in your own business; however, if they’re growing more slowly than you, investors may be able to demand better terms from them when negotiating funding rounds in the future, as they’ll know how much potential value lies within each share of stock sold today compared to tomorrow’s market price once news spreads about how well Q1 earnings season went!

Benefits Of An Asset-Based Strategy

The benefit of an asset-based approach to valuation is that it measures a company’s intrinsic value. This is because it emphasizes assets rather than liabilities. Subtract your liabilities from your assets, then divide the difference by one minus your tax rate to calculate this method (1 – T).

The disadvantage of this method is that it does not account for intangible assets such as goodwill or intellectual property rights; however, these can be factored into any potential sale price through negotiation with potential buyers or sellers during due diligence processes before finalizing the transaction.

The optimal method for valuing your venture depends on the specifics of the situation and its characteristics.

The market approach is the most straightforward and intuitive method for valuing a startup. It is based on the value of comparable companies in the same industry, so it can be used for early-stage companies that do not yet have a significant amount of revenue or earnings (if any). The disadvantage of this method is that it is challenging to locate comparable companies; you will need access to an extensive database of private company financials if you wish to employ this strategy.

Conclusion

The optimal method for valuing your venture depends on the specifics of the situation and its characteristics. If you have significant market potential and wish to transfer your company immediately, you should adopt a market-based strategy. The revenue multiple and EBITDA multiple are useful for valuing established firms. In contrast, the comparable companies method helps value smaller businesses with less complex operations. The cost approach can be used when estimating value based on assets or liabilities alone. In contrast, the asset-based approach is beneficial when evaluating a company’s goodwill value.

TIPS ON COMMUNICATING SUCCESSFULLY WITH YOUR EMPLOYEES

When you are in charge of anything, communication is a crucial aspect of the task, but its relevance increases if you are in a leadership role regarding employees. The method in which you interact with your employees may have a substantial impact on how they feel about their jobs and the quality of work they do. You want them to feel heard and appreciated.

Tips on Communicating Successfully With Your Employees

Introduction

When you are in charge of anything, communication is a crucial aspect of the task, but its relevance increases if you are in a leadership role regarding employees. The method in which you interact with your employees may have a substantial impact on how they feel about their jobs and the quality of work they do. You want them to feel heard and appreciated. You also want them to feel free to make mistakes without fear of censure or punishment. However, accountability for their actions should not be overshadowed by communicating in such a way that they are not aware of a mistake. It’s how you use the mistake to improve that count. This is why it is crucial to know how to communicate most effectively with them: you want them to feel heard and appreciated, but you also want them to feel comfortable speaking freely without fear of making a mistake.

Set The Tone

Set the tone by being a good example for people to follow. As your employees will mirror your behavior and emulate how you deal with them if you set a good example, it is crucial that you courteously communicate with them.

Preserve coherence to establish a tone. Ensure that every team member is aware of the expected behaviors while communicating with one another, whether through email or in-person meetings; then adhere to these standards in all of your communications. The use of proper words is critical to maintaining clear and professional communication, particularly in a workplace environment.

When dealing with employee disputes, you should set the tone by being kind and impartial (and even between managers). When there is a dispute between two individuals or teams at work, you shouldn’t let it develop into a full-scale conflict; instead, you should attempt to resolve the issue amicably before involving higher-ups if necessary. If you allow the situation to grow into a full-scale battle, you will only make matters worse.

Communicate In Person

Unquestionably, emailing your workers is an excellent way to stay in contact with them. Face-to-face engagement, on the other hand, cannot be compared to any other kind of communication in terms of delivering crucial information and managing workers’ emotions. When you are face-to-face with your employees, you can read their body language and assess how they respond to your words, and vice versa. You can also convey the tone of voice and facial expressions, which is far more complicated (or impossible), through email.

Due to recent improvements in videoconferencing technology, it is now possible for individuals on opposite sides of the globe who have yet to meet to want or need something from each other (such as comments on performance appraisals) to connect.

Ask Questions, Not Statements.

Ask open-ended inquiries. This can help you better comprehend the employee’s perspective and encourage them to respond more thoughtfully.
People sometimes do not like it when you answer a question with a question, but do it anyway. It conveys an interest in what the other person is attempting to communicate and your desire to truly understand them.

Whenever feasible, you should avoid asking yes/no questions and making “if/then” statements since these queries tend to be too binary for most situations. Instead, you should ask yourself: what else could this person possibly be thinking? What would be different from their vantage point? And what reaction would I get if I told them this?

People Should Be Allowed To Speak Openly

While communicating with your workers, you must allow them to express themselves freely. As a leader, it is crucial that you listen to what people have to say without interrupting or casting judgment on what they say. It is preferable to ask questions when something does not make sense rather than make assumptions or speculations.

It would be best to allow them space to express themselves without feeling compelled by your emotions interfering with the dialogue. For example, when a team member makes a mistake, you may feel angry or frustrated. Nevertheless, it would be best to refrain from responding emotionally since doing so will only exacerbate the problem and distract your teammates from what matters most: how effectively they execute their job.

Practice being an attentive listener (and observer)

The single most important thing you can do as a leader is to listen to the input supplied by your workers. You may decide not to execute on the suggestion, but at least it should be heard and considered

Listen to what they have to say and observe their behavior, not just in the workplace but also in other contexts. This entails studying closely how folks interact in person and through technological means such as email and text messages. You may find that some of your best ideas come from observing patterns of behavior that have not been explicitly brought up but are nonetheless significant (for instance, an employee may always respond to questions about a project with “I’m on it!”; this could indicate that she needs additional direction). Conversely, you may also discover that some of your finest ideas result from recognizing patterns of conduct that have not been expressly mentioned but are nevertheless significant.

Don’t Allow Job Titles To Distract You.

Keep job titles and responsibilities from distracting you throughout the recruitment process. Instead, please focus on the person, their achievements, and degree of competence. Focus on what they can do for your company and how they can help you achieve your goals.

It is easy to fall into the trap of focusing on resumes instead of people when filling a job quickly; this is particularly crucial for recruiting managers with limited resources and time restrictions. This is particularly critical when recruiting managers have limited money and time. Yet suppose everyone concentrates on credentials instead of personalities and character qualities. In that case, it becomes hard for candidates with tremendous potential but insufficient experience to distinguish themselves from others with more relevant expertise but less overall potential. This is because qualifications are objective, but personality characteristics and character traits are subjective (for example: if one person has worked as an assistant manager while another has worked as an entry-level employee).

Clear Communication Is King

One of the essential components of being a great leader is the ability to communicate with others, yet this can be challenging. Please remember that communication is a two-way street; if you want to get the most out of it with your employees, you must be open and honest.

Listening to what they are saying is crucial, so try asking questions such as “What do you think?” or “Can you give me some examples?” Listening more than speaking makes individuals feel more comfortable opening up about sensitive topics. Again, it is essential that you pay close attention to what they are saying. Consider asking, “What do you think?” or “Can you provide some examples?”

Not only does having clear expectations facilitate communication, but it also guarantees that everyone is on the same page regarding how they feel about any given issue or event. For instance, if you tell another individual which tasks must be completed by then, there will be a clear understanding when those dates come up again!

Conclusion

It is important to remember that communication is a two-way process. You cannot just lecture your employees; you must listen to what they say, observe their actions, and ask them questions. Doing this well helps employees feel acknowledged and allows them to provide feedback on what they think needs to be addressed at their workplace.

IS BUYING A FRANCHISE RIGHT FOR YOU?

Ideal candidates for franchising are those who are excited about operating their own business, have no experience in the field, and are willing to accept the duties and obligations of being their boss. Purchasing a franchise could be an effective means of launching a new business. Consider franchising if you have yet to gain experience in the industry and are passionate about running your own business, and are willing to accept the responsibility and accountability that come with being in charge.

Is Buying A Franchise Right For You?
By: Gary Occhiogrosso – Founder & Managing Partner – Franchise Growth Solutions

Introduction
While franchising is an excellent way to enter the business world, it is not the best option for everyone. Consider the answers to the following nine questions before deciding whether or not your business might benefit from becoming a franchisee.

Do You Intend To Pursue Franchising In The Future?
If you want to start your own business, franchising may be an excellent option. However, franchising is also suitable for you if you want to be your own boss and run the show, but lack the competence or skills
required to do it independently. But franchising is not for everyone; if these reasons make sense to you, especially if they inspire and excite you, you should consider franchising as the right decision.

Do You Have A Proper Financial Plan And Ability?
As you begin the process of purchasing a franchise, you must have a sound financial strategy in place.  You will need sufficient funds to cover the franchise fees and any other expenses that may emerge during the first phases of establishing your firm. Even though a particular franchise may be a solid investment, it may still need time and patience before it starts to pay off; you will also need to ensure that your cash flow can sustain your business moving forward.

Do You Have Previous Experience Leading Others?
The terms "management" and "leadership" are not synonymous. Leadership inspires people to come together and move forward with a single goal, while management is about efficiently doing tasks. Leaders take control of a situation, define a crystal-clear vision for it, and motivate others to strive toward achieving that vision with inexhaustible fervor and enthusiasm.  Because most successful franchises require strong leadership skills from the owner or manager at all levels of the organization, beginning with sales representatives and extending to upper management, franchising may not be the best business model for you if you do not feel comfortable in a leadership role.

Do You Have Sufficient Time To Manage Both The Workforce And The Business?
If you already have a full schedule, franchising may not be your ideal choice. Running a franchise requires a substantial expenditure of time and effort.  You must be able to devote a large percentage of your focus and energy to the organization.  Initially, there may be little room for vacations or even weekends off, and you may be obliged to work multiple days a week due to the long hours. There may be little room for either! Things might be challenging for both parties if you are already committed to another job or have family duties. In addition, managing employees might be challenging since each person has unique personality features. Also, suppose a corporate employee is terminated unexpectedly or quits due to a conflict with upper management or ownership within the parent company. In that case, this can cause problems within the franchise system due to a lack of consistency in the practices and policies established by the franchisor.

Is The Industry Category Stable?
You may ask yourself, "How stable is the franchisor and industry; The answer to this inquiry will help determine if acquiring a franchise would benefit you. If the franchise company you desire to join has a high failure rate and does not seem to be growing in the near future, it may not be worth your time and effort to become a franchisee of that company.  For example, if you've always wanted to open an ice cream shop, but there are already twenty comparable businesses in the neighborhood that are thriving, what gives you cause to assume that yours will be more successful?  Also, consider whether other franchisors are entering or leaving the market. That might negatively influence business; the present time may not be the best choice! If, on the other hand, the industry you have chosen appears stable and has ample room for growth and expansion over time (especially when macroeconomic trends are considered), that brand may be a good option for you, provided that other factors, such as the cost structure and overhead expenses, aren't too high when compared to revenue projections from previous years' earnings statements.

Are You The Only Franchisee In The Market?
Although franchising is an excellent business technique, it can also be helpful if other franchised units of the franchisor are already operating in the area. No one else may be familiar with the brand if you are the only franchisee in your area. If other franchisees are in the region, you will find it simpler to build your business. They can help with some legal difficulties and the  Last but not least, these multiple locations assist with advertising strategies and marketing techniques, which are the two most influential factors in determining whether clients would buy from your firm.

Are You & The Business Capable Of Paying The Fees And Royalties?
There are costs involved with franchise ownership, ranging from $10,000. to $1,000,000. You must additionally pay a monthly royalty fee that is computed based on your sales and other company information. The royalty is the fee the franchisor collects; it is usually a percentage of each week's total sales. Royalties are calculated as a percentage of your business's total revenue. 

How Much Support And Training Will You Receive?
You should anticipate a certain level of assistance from the franchisor throughout training and after that, but whether or not they give it primarily relies on the cost of their services and the nature of your connection with them after acquiring their brand name. 

* Training: If you are new to operating a business or need help getting started, you should examine if the franchise you are considering offers any training options.

* Advertising Costs: The costs associated with advertising can vary widely based on the advertising medium used (for instance, TV ads may cost more than flyers or social media ads), but in general, these expenses will likely be higher than those of non-franchised businesses.

How much input do you need and want in determining prices?
It would help if you understood how much influence you will have on the pricing.  While some franchisors allow franchisees to set their prices, others require franchisees to adhere to the same pricing structure as the company's flagship location. 

It would be best to consider whether the franchisor will allow you to alter your product or service, add new items, and make any other required adjustments. Profit is directly proportionate to the degree of operational and marketing control a franchisor offers franchisees. Ideal candidates for franchising are those who are excited about operating their own business, have no experience in the field, and are willing to accept the duties and obligations of being their boss. Purchasing a franchise could be an effective means of launching a new business. Consider franchising if you have yet to gain experience in the industry and are passionate about running your own business, and are willing to accept the responsibility and accountability that come with being in charge. Franchising is a tried-and-true business model that allows business owners to profit from the knowledge and experience of the franchisor while also gaining from their successes. The required investment requires substantial time, money, and effort, but if executed well, it can be rewarding.

Conclusion
Some individuals may find franchising an excellent entry point into the corporate sector.  Yet, not all individuals would profit from doing so.  Before making a final choice, evaluate if acquiring a franchise matches your long-term goals and lifestyle.

ARTIFICIAL INTELLIGENCE WILL HELP FRANCHISORS SPEED UP FRANCHISE DEVELOPMENT

In a report by Data IKU, Korn Ferry stated that 55 percent of staff believed AI had already changed the way their organization recruits. IBM receives about 8,000 resumes a day and is the most searched employer on Glassdoor, an employment site that includes employee ratings for their company. IBM uses an AI algorithm that can predict with 95% accuracy whether a worker is planning to leave his/her job.

For those of you who have followed Ed Teixeira’s articles on FranchiseMoneyMaker.com it is with deep sadness that we report he passed away last week. We will miss Ed’s insights, willingness to help and the kindness he brought not only to our publication but the franchise community and the everyone he touched.

Artificial Intelligence Will Help Franchisors Speed up Franchise Development
By Ed Teixeira

Franchise Consultant, Blogger and Freelance Writer. Co- Author of New Textbook Franchising Strategies The Entrepreneurs Guide to Success. Franchise Executive with 40 years of Franchise Industry Experience.

During the past several years, you have probably read or heard about the increased use of Artificial Intelligence (AI) and its applications. AI has already had a significant impact on Human Resource departments, especially recruiting job applicants. In a report by Data IKU, Korn Ferry stated that 55 percent of staff believed AI had already changed the way their organization recruits. IBM receives about 8,000 resumes a day and is the most searched employer on Glassdoor, an employment site that includes employee ratings for their company. IBM uses an AI algorithm that can predict with 95% accuracy whether a worker is planning to leave his/her job.

Related to AI is natural language processing (NLP) which enables computers to read text, hear and interpret speech and determine which parts are important, like Alexa. A report from Tractica predicts that NLP software solutions capitalizing on AI will grow from $136 million in 2016 to $5.4 billion by 2025.

AI and Franchise System Development
If AI resume software automates resume screening, then AI applications should offer franchisors a major opportunity to improve their franchise system development. Using AI to automate the screening of franchise prospect information could help spot qualified candidates much faster. Also, using phone call speech-to-text and NLP can provide more opportunities to gain information from candidate conversations. Service Score’s Qualifier Call Optimization (QCO) platform uses recorded prospect calls with an analysis engine powered by the latest AI tools to deliver opportunities for converting more calls to applications. A number of franchisors currently use the Service Score application.

Franchise Departments Should List Its Telephone Number
A number of franchisors fail to list their telephone number on their franchise page and require prospects to submit a form. This has become somewhat of the norm rather than offering two ways to contact the franchise department. Hiya’s annual State of the Call report found that more than 12,000 consumers and 2,000 businesses ranked the phone call No. 1 for remote interactions, beating out text, email, video calls, and chatbots.

 During my career I built three franchise systems in different business categories. In each case our phone number for the franchise department was available. I considered every franchise lead valuable and wanted our staff to be able to engage with potential franchise prospects as soon as possible. It was my experience, that individuals who called the franchise department before submitting a contact form, were eager to learn about our franchise opportunity and had important questions. In many cases it resulted in the person submitting a franchise application.

Top franchisors like Service Master Restore, BrightStar Franchising and Neighborly follow this process. Here is BrightStar’s Message: “Our friendly and experienced team is happy to help you get started. Call us at 872-xxx-xxxx or request a call from our team by filling out the form below.”

Franchisor’s Should Prepare for AI
Its time franchisors prepare for the increased use of AI applications in various franchise operations. This should include franchise development. Here are steps franchisors can take to begin the process:

* Compile data to construct a franchisee profile of top performing franchisees or the ideal franchise candidate.
* Incorporate franchisee profile data into contact form and franchisee application.
* Include franchise department contact telephone number.
* Franchisors should speak with several AI software companies to learn about the process and cost of using AI applications for franchise development. Mike Bidwell, president and CEO of Neighborly stated: “We believe employing AI will be key to gaining or even maintaining a competitive advantage in an increasingly informed and sophisticated marketplace.

About the Author:
Ed Teixeira
Franchise Consultant, Blogger and Freelance Writer. Co- Author of New
Textbook Franchising Strategies The Entrepreneurs Guide to Success.
Franchise Executive with 40 years of Franchise Industry Experience.