Financial advice
Lean machine
How to streamline processes and cut costs in your business. Derrick Simpson explains
Strange that it takes a time of economic pressure for business owners to look at their overheads, general costs and operational processes as the commercial belts of the nation are tightened. Each time around, as the various economic cycles spin, we trim/cut/modify our operations and we are all now at it again.
What is really amazing is that every time we do it there are processes to streamline and there is always fat to lose - where does it come from - and how can we continue to get even leaner, if not meaner?
The problem is often defined by the thought that "we have always operated in this way". This often is accompanied by a reticence to think outside the box.
Take the concept of in-house processes versus outsourcing. In my early days in franchising one company with which I worked had two solicitors on the management team; one was the legal director and the other carried out the property conveyancing transactions. Which franchisor today, other than the very largest international operations, would have two in-house solicitors? Now we can use the very able and skilled resources of the legal affiliates of the bfa that have developed to support the franchise industry rather than weigh down our business costs with an in-house service. It is the same with property surveyors, IT consultants and HR advice. All can be outsourced, usually with more efficient and effective results, because such specialists have the detailed skills to bring to the tasks to be completed.
So what, when it comes down to it, should we have as the core activities of a franchise that require resources to be tied up? What can be outsourced to trusted consultants and advisers to use and pay for as and when their services are required?
In terms of what can easily be outsourced, conference and exhibition organisation is an obvious one to start with. The time it takes out of a franchisors year to put together a national conference for the franchisees and the lost opportunity costs of doing so are easily covered by the cost of using an external conference organising company. Most enlightened organisations these days pass this type of task out to the experts.
I also know of several franchisors that outsource the delivery of their training courses. The franchisor specifies the course content but the delivery is carried out by external trainers.
Naturally trainers know the business involved and are the same people who deliver every course. This means the training is delivered by professional trainers and not by the franchisors own staff that, mostly, will not be trained to instruct and may not be as experienced.
Taking this route not only means that learning is fully absorbed by the trainees but also means the franchisor's staff can focus on delivering their main tasks ensuring productivity and support are maintained.
The same logic can be applied to the process of planning franchisees eventual exit from your network as their life cycle continues to roll on. Then managing the detailed resales process to secure a clean sale to a new franchisee ready to take the business onwards and upwards. Exit planning and encouraging franchisees to think forward a few years and groom their business for a sale must be better than a knee-jerk reaction and panic sale with all the inherent risk of closure and conflict that brings.
For more on franchise resales click here.
