Franchise, a business model in which people would explore. Yet you may have the ingredient and pick the right franchise. But you are frustrated why it did not achieve the financial result that you set for yourself. When you engaged yourself into this franchise, you are clear about the financial return, be it payback period, the profit margin and expansion program. But all these are on paper only.
Plan needs people to execute. You say to yourself, you have put in the hours as expected.
Did all highlighted by franchisor. Selected the right supplier but still can’t make it big.Execution of plan needs guide. Guides need indictors. For example, financial outcome needs financial indicator. Operations efficiency needs operation indicators. You may even witness the budget provide the utilization of manpower at 50% and transfer the balance 50% of staff cost to fixed cost. Fixed cost need to be absorbed into the cost of good sold. That’s hurt your margin. This leads to another area of our discussion - staff productivity.
Your customers are sensitive to your price. Your price strategy must be right.
You noted that we mention about – financial indictors, operation indicators, manpower indicators and lastly about customers. All these form part of your KPIs.
Let us start with Financial KPIs with you on your franchise business. Your franchise business indicated that your daily intake of business would be from $60, 000.
But you don’t receive all of them are paying cash. So you need to take note how long the credit cards are paying you. The cash-in and cash-out is your concern to make sure, they are positive cash balance.
For operations efficiency in your small business, you need to look at the actual figures. Your expense and its percentage to sales provide useful info. Which are the big ticket items? You focus on these items and it should not be more than a market benchmark percentage, % of sales.
Review the people indicators – training investment per employee. The time for coaching, counseling, mentoring, briefing and meeting shall be captured as a percentage of your payroll. Evaluate the effectiveness of training for the return of investment.
Likewise for the customers, they would experience with your staff regarding how they respond to your client’s request and level of service through customers’ satisfaction survey. The result will be collated and subsequently become KPIs for client measurement. KPIs help people like you in the small business.
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