By Romal Bryce
As the COVID-19 pandemic continues to put financial strain on businesses across the country, franchise owners are considering two distinct techniques to ensure they remain viable now and in the future.
The former involves adapting existing business models to the new normal, while the latter embraces new techniques, processes, marketing, and distribution models to discover new growth opportunities available to them.
The first place to start for any business is to analyze the revenue stream. This will vary depending on the type of business, for example, a fitness franchise, restaurant, or health and wellness focused.
The revenue stream analysis should be based on a detailed understanding of the franchise’s customers. Additionally, it will be important to determine how many customers should visit the business (in-store or virtually), how many will actually buy, and how much a franchisee should sell to them. Once one has an idea of this, one can look at different options to help achieve these goals.
Color (just) outside the lines
Due to the pandemic, most franchise operations have been halted. Revisiting the business model and looking for new ways to meet the needs of current customers or attract new ones will identify ways to stabilize revenue and maintain market share.
For a restaurant, leveraging delivery can be a great option as it can be a good way to increase sales and introduce the product to more customers. This can also present a good opportunity to cut costs; an increase in delivery means that the physical location of the business may be reduced.
Virtual cooking classes are another potential option for keeping customers engaged.
For franchises focused on fitness or wellness, a digital/online presence could present an opportunity. With people spending more and more time at home, it’s a way to encourage activity and conduct virtual workouts. If a business aims to bring people together for physical activity, consider holding classes in the park during periods of warm weather. The key is to find opportunities that are an extension of the area in which the business operates.
When you revisit your business model, e-commerce will benefit virtually all businesses. An e-commerce platform will help a business access more virtual consumers while allowing the business to offer a more robust menu of products or services.
think about growth
The financial effect of the pandemic has led many franchisees to go out of business, consider selling, or in some cases close.
For franchisees who are in a strong financial position, there may be an opportunity to acquire other businesses and increase their presence in the market. The advantage here is that with multiple franchises, they can overcome revenue declines in one location if another performs better. In addition, owners of multiple dwellings have the opportunity to scale and grow quickly. This can be in an existing market to increase market share or in different regions or provinces.
Franchising continues to present an excellent opportunity for business success. But as everyone continues to navigate the uncertainty that COVID-19 has brought, it’s more important than ever to review your business model and find opportunities to keep the business intact and, if possible, develop it.
Romal Bryce is Director of Growth and Strategy, Diversified Industries, for BMO Bank of Montreal (BMO). Visit bmo.com/franchising for more information.