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?
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,
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.
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.
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.