Yee Trinh

What is the main difference between successful SMEs and franchises?

How does one make the jump from being a successful business owner to being a successful entrepreneur?

User
Loading

4 Answers

Lisa Ormenyessy

Lisa Ormenyessy , Business Coach and Marketing Specialist at Straight Talk Group

Hi Yee, it appears there are two questions here - though related.

The first, in the difference between a successful business and franchises is the business model (which is a given) and, to the untrained, systems. In saying that EVERY successful business has systems, in franchises it is the scale-ability that has been achieved.

The difference between a business owner and an entrepreneur is mindset. As a generally rule, An employee is focused on their weekly pay check. The manager is focused on the quarterly numbers. The business owner is focused on yearly profit. The entrepreneur is focused on Freedom.

So in making the jump from Business Owner to Entrepreneur it is imperative that there are systems in place that support the business so the business owner then has freedom to pursue their next project.

Hope this helps, feel free to ask any clarifying questions,

Cheers, Lisa

Yee Trinh

Yee Trinh, Cofounder at SavvySME

Thanks Lisa. I think you hit the nail on the head when you stated that the entrepreneur is focussed on freedom and building systems.... read more
Thanks Lisa. I think you hit the nail on the head when you stated that the entrepreneur is focussed on freedom and building systems.
User
Roland Hanekroot

Tricky question Yee,

In my experience it's all about two questions:

1) What is the Purpose of this business, why does it exist, and why would anybody care?

2) What is the most valuable use of my time.

To build a successful growth business, you have start to build a model that just works, that offers something unique and different, that addresses a real need. and you have to have absolute clarity about that. Not unless you meet those criteria, can you hope to turn it into a real growth model.

and the second question is all about the calrity that the most important asset/ resource of your business is actually your time (and your brain cells) everything else you can buy or hire or borrow more of but your time is absolutely limited. So you need to develop a discipline to always ask yourself if what you are doing right now is the best use of that most valuable resource of your business.

User
Andrew Snell

Andrew Snell , Director at Coaster Group

Hi Yee,

An interesting thought - and one entrepreneurs face a lot, in my experience. (If I had a dollar for every time I heard "Surely you just need to sell more"!)

I think the first part of your question has been covered, the difference at it's core is control and freedom.

One thing that hasn't been pointed out though is for an entrepreneur there is a big difference between running a SME to founding a business that becomes franchised. It isn't as simple as selling the model to a new person, there is a totally different emphasis needed.

Just about any venture, in its early stages, will be focussed on being different, agile and creative. That's what makes small business great, having that flexibility. As soon as the business is going out to franchise (either under a wholly franchised or company owned/franchised model) the focus of the founder has to change.

The boutique culture the business grew up with needs to be systemised and replicated. By its very nature, the individuality is lost. It is also a very different focus for the founder - one that is all about brand protection, product integrity and predictability in the market place.

For the entrepreneur it is a huge shift in mindset, from being at the cutting edge in every way, to ensuring customers always know what they are going to receive. Of course the business can still aim to be ahead of the curve, but implementing it becomes a much bigger stakeholder management task than when the business is all owned by the entrepreneur themselves.

There are plenty of examples of it happening successfully - to me the key is having a great culture and appetite for growth from the early days of the business.

User
Hitesh Mohanlal

Hitesh Mohanlal , Director at WOW! Advisors & Business Accountants

I agree with Lisa above. T

he main difference between successful small businesses and successful franchises is control and freedom to do as you wish in your business.

If I own a Subway and decided I wanted to stock Cola made by my brother in law the men in suits at Subway might have a few words to say about that.

Not only do you have to use a Franchiser's systems and procedures you have to use their suppliers too. A Nando's store costs $400,000 to fit out. For that money you can build a four bedroom home but at Nando's you get a Kitchen a few ovens, tables and some chairs. Its the same if your till breaks down.

On the upside, good Franchises will give a brand, great systems and procedures and this is where the real value is as it has the ability to save hours of time.

I could never operate as a franchisee simply because If i want to change something i do it. Getting approval from a man in a suit would drive me insane.

When I get into conversations with people considering buying a franchise i talk about the above and if they don't mind being restricted then buying a Franchise makes sense.

Also those in small business tend to be more innovative and are looking for ways to improve and change their business. When your in a franchise you are hoping the big guys on top are doing it for you.

It is also worth remembering that not all franchises are successful. At the end of the day, it is down to the owner and how well they operate the business.

Yee Trinh

Yee Trinh, Cofounder at SavvySME

Given the same system, I wonder what determines why certain branches do better than others. Is it ability/inability to stick with the systems, or more to do wit... read more
Given the same system, I wonder what determines why certain branches do better than others. Is it ability/inability to stick with the systems, or more to do with outlying circumstances such as location.
Hitesh Mohanlal

Hitesh Mohanlal, Director at WOW! Advisors & Business Accountants

Good question. I think there are a number of factors. Good franchisers do not really allow you to change/ ignore their systems so everyone has to follow they sy... read more
Good question. I think there are a number of factors. Good franchisers do not really allow you to change/ ignore their systems so everyone has to follow they system. They generally have good support staff too who are always willing to help their franchisees The main issues could be - Yes location is one. Business do better because they are at a premium location but at the same time they may be paying rent so it does kind of balance out - Local competition. Two subway stores or similar competition close by to each other will affect them both. - Efficiency of running the business. The system might be in place but you have to still run it efficiently. You can still over order and have too many staff. - It is still about customer service and relationships - Our customers will walk away if they do not get what they expect. Not so much in the food industry but critical for something like Snap Printing. You can have all the systems in place but if the end service is poor customers will walk away Just a few to think about
User