Bootstrapping growth for the single-unit franchisee.

By Joel Walker

Before you even opened the doors of your first unit, you likely aspired to open a second. After all, you’re in business to make money and if one unit can generate a profit, then multiple units can generate more profit. The logic is simple and obvious.

But now that you’ve opened your first franchise you are the heart and soul of your business, integral and seemingly inseparable from your day-to-day operations. You interact with as many of your customers as possible to ensure that they’re happy. You do this because happy customers mean more customers coming back to see you more often and referring you to family and friends.

Conversely, if you can’t provide your customers with the experience they’re looking for, they’ll go somewhere else. It is clear to you that customer satisfaction will lay the foundation for your growth. That’s why you personally look after the things that impact customer experience.

And that’s just your day job. In addition to assisting as many of your customers as possible, you also handle all of the administrative tasks that have to be done to keep your business operating: inventory management, advertising and promotion, hiring and HR, throw in an occasional crashed hard drive or some other technology issue that stops everything in its tracks and makes you pull your hair out. You do these jobs in between taking care of customers, or more likely, after the close of business, on weekends, holidays, a 3:00 a.m. OMG moment and other unexpected challenges.

It’s Complicated

What was simple and obvious is no longer so clear. Sure, the math still works. Multiple successful units can generate more profit than a single successful unit. But growth is complicated and success isn’t guaranteed. You can’t just replicate your first unit because you can’t replicate yourself, so growth means that your business must change how it operates, even if only because you can no longer do everything.  

Your second unit will likely be the most difficult you will ever add to your portfolio because you must transform as an operator in a way that won’t feel as drastic in subsequent expansions. In the future you will be accustomed to parsing out responsibilities but now is the time you must learn to take a step back and observe others doing what you used to do. This transition is important because you have to come to terms with handing over important tasks, while your responsibilities will begin to change from those involving hands-on execution to training, supervision and review functions.

Seven Things to Consider as you Grow

  1. Never lose sight of the customer. Growth can only occur if you’re able to create happy customers! Your ultimate challenge in adding units will be preserving, as closely as possible, the level of customer satisfaction that exists with you as the primary customer interface in your first unit. As a multi-unit owner one of your most important functions in your organization will be managing a consistently excellent customer experience across your units.

Your first consideration as you move towards opening your second unit must be to ensure that the customer-focused tasks that you perform on a daily basis continue to happen, because the more your operation changes the less similar the customer experience will be to the current experience — the customer experience that has helped make you successful to this point.

  1. Be financially ready. If you started your venture with a single unit, then perhaps it’s because you weren’t able to fund multiple units at that time. Even if you have a development schedule your franchisor doesn’t want you to expand if growing will starve you for cash and jeopardize your existence as a franchisee. If you aren’t sitting on a mountain of money, then take your time. You need to plan for your growth. Before you open that next unit make sure that you can pay the expenses of the first unit and cover your personal expenses.

In addition to expenditures that you will incur to get your next unit open, you’ll also need to fund ramp-up losses until your new unit can pay for itself. Make sure you know where this funding will come from and that there will be enough of it before you open your next unit. Although your franchisor doesn’t want you to grow yourself to death, it may not do backflips if you ask for relief on your development schedule. If you don’t know where your growth capital will come from then don’t enter into a development agreement in the first place.

  1. Stretch yourself. Letting go doesn’t mean you have to drop everything all at once. If you can’t afford to throw the kitchen sink at adding infrastructure then you have to hold on to the most important tasks until those tasks expand beyond your available time (the trick, then, is to maximize your available time). The first tasks that you will assign to others will probably be those that are closest to the customer because you can’t be two places at once, but you don’t have to hand those responsibilities out entirely.

Keep yourself on the schedule at both units as much as possible to minimize payroll expense. You can handle some time working in your business and keep your arms around your other duties. If you’re not putting in 60 to 70 hours per week of honest work you’re not bootstrapping correctly.

  1. Hire great people. Your business is nothing without the people you hire. Only great people can deliver an excellent experience to your customers so look for people who are smart, energetic, communicate well, and who enjoy taking care of others. Further, growth will put stress on everyone in your organization. As you grow you will place increasing responsibility on the shoulders of your employees so hire people who can handle the stress. Your people will make decisions in your absence so the people you hire must be comfortable making decisions and you must have faith in their decision making abilities.

This does not mean, however, that you need to overpay for someone with an extensive resume. Everyone has to start somewhere and there are great people among us that have yet to be discovered. Find them and bring them up through your organization. This will build loyalty to you among your employees that will result in lower turnover than you might experience if you hire industry mercenaries. Plus “inexperienced” people won’t have to un-learn habits that run counter to your vision for customer satisfaction.

  1. Train, Train Train! Once you have the right people in place you’ve got to show them what they’re supposed to do! Many franchisors provide training platforms for your employees and your employees should learn the information contained therein backwards and forwards, but they also need training on the things that are particular to your operation. You’ll be tempted to just provide some loose on-the-job-training, wind ‘em up and turn ‘em lose. And this might work in your early stages of growth while you’re still involved in your daily operations closely enough to keep each individual employee pointed in the right direction. But this telephone-game training strategy will become less and less effective as you grow because the operation of each additional unit will drift further and further from the model that you established with your first unit. Eventually you will have to rely on the people you trained to pass on what they have learned through subsequent OJT to future hires, like some tribal legend passed down to your employees through generations of oral tradition.

Instead, you must formalize your training. Have knowledge requirements for your employees. Take full advantage of the training provided by your franchisor to address general and industry knowledge requirements and develop your own training to address knowledge requirements specific to your operation. You must track the progress of each employee through your training program and then test them to make sure they have retained the information they need to know. Then once an employee is fully trained and ready to go, rinse and repeat. Training is a never ending process and no employee is ever fully trained.

  1. Delegate and decentralize. Your ability to grow successfully is directly correlated to your ability to delegate. As we have already established, you can’t be two places at once so growth forces your hand at delegation. This is why you hire and train great people, so that you can put as many responsibilities on their shoulders as they can handle.

And as you delegate tasks you must also define the authority afforded to your employees to make decisions about their execution, especially as those tasks relate to customer satisfaction issues. Not all situations are the same and your employees need flexibility to respond differently in different situations. You must empower them as decision makers but let them know their limits. Delegate simple administrative tasks that will decentralize your operation and thereby, free up time for you to accomplish important things that only you can do.

For example, if you make a daily bank deposit as a single-unit operator then additional units can multiply the time you spend collecting, preparing, and making deposits. But your time is better spent on other critical functions. Pass tasks like these down to your employees in order to create time for yourself.

  1. Supervise and review. As you grow you will delegate more of the critical hands-on functions of your business and do less of those things yourself. So now it’s time to hit the beach with margarita in-hand as you occasionally stroll up to the mailbox to collect your check, right? Well, no. Not exactly. Although one of the reasons you went into business for yourself may have been so that you could move closer and closer to that existence, it is elusive because just as surely as you delegate responsibility to your employees you create work for yourself in the form of supervision and review.

Even with your extensive, formalized training program you must supervise your employees to ensure that they are managing their assigned tasks as you intended them to be done. Further, you didn’t give your employees carte blanche authority to handle any conceivable issue so you must be accessible to them so that you can make decisions where you have prohibited them from doing so.

Finally, now that you have hired, trained, delegated and supervised, you must circle back and review the execution of the tasks that you delegated, offer feedback and correct where necessary. This will nurture the consistent excellence in your operation that will keep your customers happy and coming back.

Joel Walker is a multi-unit franchisee with Interstate All-Battery Centers. Find him at fransocial.franchise.org.

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