By Steve Slowey
Recently, I spoke with a Franchisee made reference to the fact that they were not making any money and were considering closing their store. When asked why, and what the problem was, they said they ‘could not keep a GM’ and that they were ‘having to put money into the business’. They were trying to hire someone to bring functionality and organization into their disorganized dysfunctional operation.
Rarely, if ever, does this work. You must have systems in place that give directions to your staff and your management. You can’t outsource what you need to have in-house. Based on the economics of this store, the owner should be doing very well, rather than looking to close the doors. He is allowing his employees to run his operation. How can you expect someone with little no business experience (like your employees) to protect your investment without your direction?
Why do people go into business for themselves if they have no plan or idea of how they want to run it? It’s their money, and I assume they want to be in control of their investment.
This story will likely end badly and the Franchisee will lose a substantial amount of money. This situation was completely avoidable with minimal effort. Knowing exactly what they expected from a GM, and being able to provide the guidelines to achieve this, would be a start. Designing an incentive plan based on the performance expectations would not have been difficult if the owner had thought through, and outlined those expectations.
In a restaurant, there are only two areas that can be controlled with good management; labor and cost of goods. The remaining costs are controlled by sales, though labor is influenced by sales. This is information the owners should know. They should have a management system in place from day one.
Going into business is a huge step and understanding all that goes into it should be common sense. You certainly don’t want to learn the hard lessons after you open. A Franchise is a business and a concept. It is not a guarantee; you must know the business to provide the systems that guide your management and employees.
Hiring good employees is a plus but, the better you are at providing the proper guidance to achieve profitability will keep them exceptional. If you hire a good employee and bring them into a bad situation, you will likely lose them or bring them down; you certainly shouldn’t expect them to rescue you from yourself.