What’s Ahead for 2023?

A new year always comes with predictions and forecasts. In this blog post, we’ll review the things that may remain the same, what may change, and tips on how to tackle 2023 to make it the best possible year for you and your business! 

• In the previous post, we shared the good, the bad, and the lessons learned in 2022. But now I want to go over strategies to maximize the opportunities and win big in 2023. 

It all starts with facing the reality of what is happening in your business. That means knowing what's real, what's not real, and what you need to deal with because, unless you open your eyes and see what is there, you won’t be able to make it better.

Once you do that, you have to look at “the low-hanging fruit”, meaning, to detect what are the things you can do, that are under your control, to move the needle forward. Only then you’ll be able to win more than others.

That is something that the CEO of Domino’s Pizza taught me a long time ago when he was my boss (one of my favorites, I have to say!)

These are my thoughts on what is to come in 2023 and what you can do to make this year a great one!

Inflation

We were at 1.24% in 2020. By the end of 2021, it reached 4.69%. Throughout 2022 we had tremendous issues with it, closing at an average of about 8.15%. That’s a huge change and a crude reality our customers are facing every day! Sadly, inflation is probably going to remain in the next months. 

As I mentioned in our review of 2022, the cost of capital was low at the beginning of the year. However, it started to rise by the second quarter. The current cost of capital is at 7% on traditional loans. This translates into a slowdown in franchise growth for 2023. 

Large franchise brands are compensating for this by focusing on acquisitions rather than new developments. Why? When you acquire, your business is already operating and has certain predictable results that could improve to have an immediate ROI. 

Contrarily, the risk is much higher when you bet on new franchisees because you don't know what's going to happen. Also, this process takes a lot more analysis, information, and due diligence, which makes it more expensive. 

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Brands are also reducing the cost of growth. That’s why we are seeing a lot of off-premise delivery and fast pick-up models in the food service and in any retail brand. And companies that are multi-brand are turning to co-branding units to have two brands within the same building and maximize their investment and footprint.

Franchisee tip: if you want to grow in 2023, it is very important to have a good relationship with your bank so you can negotiate your interest rates. Also, look at creative ways to find financing so you can keep growing, diversify your investments, and have a positive return.

Staffing

While this issue improved slightly in the second half of last year, during 2023 it will continue to be a challenge. So, you have to figure out how to operate with fewer people because I don't see this problem being solved anytime soon. 

I know that a lot of brands are testing technology, even robotics to replace the people in the kitchen when it comes to food service. This will impact franchising anywhere where technology or robotics can replace a human being, within the next few years.

Disruptions in the franchise industry: where should leaders put their sights on?

Although you can’t implement that kind of strategy as a franchisee, some things are under your control. Analyze what can you do within your power to make things better within this staffing shortage. 

Maybe there is some sort of cross-training or you can adjust your operating hours to offer flexible schedules. Did you know that the number one people resign from their job is their manager? Who the manager is in your units and how well they are trained to lead the team is under your control, so you can look at their leadership and management skills to reduce your turnover.

Supply chain

We’ll continue to hear about various challenges across the supply chain through 2023, including shortages of products and an increase in the cost of goods. 

As a franchisee, you don’t have power over what your supplier delivers or not, but you can control when that product is available and how much you buy. Managing your inventory will be crucial throughout this year. That way, when the customers order something from your business, you’ll be able to provide it to them. 

Customer retention

Keeping your clients is going to be very important in 2023. This will help you have your revenue so you can compensate for the difficult situations and combat all of these challenges. 

Focus on the customer experience. If you can be a place where people have an amazing experience and reliable service, you can win big n 2023. But to do that, you have to train your team toward that goal.

Elevate your guest experience with these tips!

Profit

Profitability has been eroded because of inflation, the cost of goods, and the increase in labor costs to keep the best people. 

2023 will be full of challenges for sure, but there are still also a lot of opportunities. Pricing is one of the ways to combat this, but you need to be looking at that every single month, especially as inflation continues to happen. 

You can also analyze what you can adjust in other line items to improve your financials. Who knows! Maybe negotiating or eliminating one or two of the services could help compensate for the added costs. 

Every line item in your profit and loss statement should be up for grabs. So sit down and think about what you can do to improve your bottom line or at least protect what you have today. 

Bottom line, in 2023 you have to focus on:

• What you can control.
• Making intelligent investments.
• Strengthening employee retention and the manager's leadership abilities.
• Improving product and service quality to keep your existing customers.
• Understanding your financials and what line items can you tackle to protect your bottom line. 

If you look at all those things, adapt, and proactively implement and follow up on these strategies and tactics, you are going to win big in 2023. 

Yes, this year is going to be challenging. But it is time to implement everything that you’ve learned as a business owner and leader since 2020 to be better. You have come a long way, so take this as an opportunity to apply all that knowledge to improve your business in the next 12 months!

What’s ahead for The American Franchise Academy

I'm excited to help and support our clients this year. Our purpose is to protect the American dream of business ownership through franchising and we do that by allowing our clients to understand their business, financials, and opportunities, and guiding them with strategies and tactics. 

We also have a training program for district managers and one for franchisee development. But we are taking a step further in 2023. 

We acknowledge the key role that the unit managers play because they are the ones that have control of the business every day, and yet, they are not trained enough. That’s why in Q1 we'll be launching a Unit Manager Training Program!

This course will give unit managers the leadership and management skills they need to be successful. Stay tuned for more information, don’t miss our social media (Facebook, Instagram, LinkedIn), and subscribe to our YouTube Channel where we’ll be sharing all the details.

Reflections:

• What are your goals for 2023?
• What can you do to obtain the expected revenue and profit results you wish for?
• How can you improve your leadership and management skills?
• How can you protect your people so they don’t leave your organization?

WATCH THIS VBLOG on YouTube HERE.