Game On: Using Metrics to Elevate Your Franchise
Nov 19, 2024
My husband is a sports fan. There isn't a day where he does not watch American football, hockey, or a golf game. Aside from seeing them as a way to escape from everyday stresses, he also has a lot of fun keeping track of the scores and team rankings. He even likes to predict which are going to make it to the next level and who will win.
As a matter of fact, if he misses a game, he’d rather watch the whole replay than just catch the highlights and the final score. For him, the exciting part is following the game's progress to see how everything unfolds and the struggle to get to the scoring.
Watching him enjoy his favorite sports makes me reflect on the importance of metrics. Think about it! These particular sports and games would not be as exciting without the ability to understand, through numbers, who’s winning and what each team or player has to do to improve.
In American football, for example, you need to advance 10 yards to get a first down. If you make that, you get four more chances to get to the next downs and closer to either scoring a touchdown or kicking a field goal. A touchdown scores you six points, and you can add an extra point if you make a final kick.
If we didn't have those numbers as a way to keep track of who’s best, these games would be far less interesting and enjoyable. The excitement would not exist if we didn’t have metrics, points, and the accumulation of those scores to win games and, eventually, the season.
The same happens in the business world. Understanding what's your end goal and measuring your progress and how far you are from it will make you feel excited about your business. It will also clarify what you need to do to achieve your profit goals.
As a franchisee, you can use metrics to grow your franchise and ensure the profitability for each unit. However, there are important considerations you must understand when it comes to metrics to be able to build a solid foundation and propel your business toward success.
Subscribe to our YouTube channel and Podcast, and follow us on all social platforms!
What are you measuring?
Your business will generate a lot of information, so you need to understand which data is truly useful and impacts your business and which you should discriminate. The most important metrics that actually move your business are what we call KPIs or key performance indicators.
- As a franchisee, it is critical that you identify, control, and strategize on these KPIs to drive your business forward.
Hint: always monitor your sales and labor cost, how much you are up and down over last year, and how far you are from what you targed.
Keep learning: The 3 most important numbers in your business
What is your goal?
Knowing the numbers is not enough. You need to know what is the target for those numbers.
Going back to the football example, players know that they need to advance 10 yards to get their first down. That’s their immediate goal.
It’s the same in your business. What is your labor cost target that will not only indicate that you don't have waste but that you can provide your customers with proper customer service? And what’s your target for cost of goods, turnover, sales growth, and transaction tickets?
Document each of those targets in your annual business plan. Together, they will give you the ultimate goal of how much profitability you want in your business for that particular year.
Don’t miss: 6 Key Financial Insights for Multi-Unit Franchisees
What’s your starting point?
The next thing you have to consider is knowing where you are today in each of your key metrics, so you can compare that number to where you want to be and develop actionable strategies to address that difference.
Analyzing this will also help you identify what’s the biggest issue in your business. You might be focusing on the cost of goods when tackling labor issues is more urgent. Perhaps the problem lies in sales transactions rather than the average ticket size.
Discovering this will help you focus on the critical drivers that change your KPIs into better numbers.
What information should you share?
Not only do you need to know your metrics as a franchisee. You also must share them with your managers and give your team clear guidance on the actions they need to take in order to reach the targets you’ve set for the business.
When everyone in your team understands that these metrics drive the business forward and they have the necessary systems, processes, and procedures in place to improve those numbers, achieving the business and financial goals will be much easier for them.
I remember that when I joined the franchise industry and was working in a corporate unit of Domino's Pizza as a pizza delivery girl, the manager had the profit and loss statement (P&Ls) taped on his office door.
Little by little, I started to understand and read these information and numbers, what they meant, and what we could do as employees every day to make a difference. This really changed my perception of what my job was because I learned that what I did every day could move those numbers in a positive or negative way.
Franchise MiniTip: Why Share P&Ls With Leaders
Having a culture of metrics is key to moving your business forward and propelling it into great success so that you can achieve the profitability that you want and deserve.
If you need help analyzing your numbers, determining your KPIs, and elevating your operations with high-level systems and processes, the American Franchise Academy is your best ally. We work every day to help and support franchisees like yourself to be successful in the long run and accomplish their dreams of business ownership through franchising.
If you want to explore more about what we do, how we do it, and the outcomes you can expect, click below:
WATCH THIS YOUTUBE PODCAST HERE:
