Budget Tips – Set Achievable Goals and Understand Brand Differences
QUESTION: Which best practices do you use to keep your franchise businesses on budget?
NEEL: “Through my 24 years of franchising experience, I’ve learned that the key to running a successful business is to set achievable goals that ultimately produce results and foster growth. Together with my partner, Todd Dennis, we have been able to grow and develop a franchise portfolio with Front Burner Brands by maintaining the budgets of our existing restaurants, while also trying to trim costs. In fact, we recently expanded our portfolio to open our first Burger 21 restaurant, a “beyond the better burger” fast casual concept, in Charlotte, N.C. – marking the first Burger 21 restaurant in the state.
Through Front Burner Brands’ experienced purchasing and distribution team, we have access to superior national vendors in the foodservice industry, which has helped us to secure the best pricing on a variety of products, even with rising food costs. Additionally, we’ve noticed that our restaurant traffic has seasonal peaks and annual fluctuations, which have made us more cognizant of managing par-levels when purchasing inventory throughout the year.
Another technique that not only helps us to manage our budget, but also keeps customers coming back is building and maintaining a strong team of employees. The long-term benefits of rewarding dedicated workers with raises have ultimately reduced turnover and the costs associated with having to constantly train new employees.
It is important for both new and experienced franchisees to avoid getting caught up in the minutiae that are irrelevant to their success and growth. By setting realistic goals and sticking to an agenda, franchisees will eventually see results. As Todd and I continue to focus on the growth of our businesses, we plan to develop additional Burger 21 restaurants in the Carolinas.”
MOONEY: “The important thing to remember in terms of maintaining a budget, particularly if you are invested in multiple concepts, is that every franchise is different. In our case, BrightStar Care is on a weekly revenue schedule while Massage Envy upholds a monthly schedule and is primarily a credit card business with little-to-no receivables. Due to the vastly different revenue models, we enlist support from accountants who are trained to assist with the financials for multiple owners within a franchise system.
Yet, while we understand how the differences between our two franchise companies will affect our financial planning, we also have instituted what we like to call ‘Mooney Law’ across both systems. These laws are based on allowing budget expenditures for the items that will have a positive impact on our clients, create effectiveness or show a return on investment. For example, we must be able to justify spending as it relates to customer service, a passion for the business or creating brand awareness. Mooney Law is set in place to reinforce our goals and values as they align with the health-care sector.
Lastly, we truly believe that labor is one of the most important variables of a franchise budget. We watch and monitor our staff closely, focusing on merit, and offer an incentive-based pay. To encourage our staff, we gather for a weekly budget meeting which allows everyone to understand our system goals, thus holding staff members accountable and allowing them the opportunity to meet or exceed our expectations. Ensuring labor is a top priority has allowed us to create a proper budget that leaves space for rewarding hard work.”