Ensuring Growth in a Tough Economy
Growth in a tough economy demands an entrepreneurial mindset to drive innovation, company culture, brand initiatives and maximize the use of resources wisely.
A company never stops evolving, but in a tough economy, the emphasis to do so is even greater. I have lived through many financial cycles and have learned that tough times provide more opportunities for franchises to learn and grow.
As the president of a national early childhood education franchise, The Learning Experience, I’ve learned a few principles to live and run the company by that have led to its projected growth of 410 percent this year. A stagnant or downward trending economy is not a climate anyone would wish for, but it certainly separates the strong companies from the weak and allows those that stand to stand-out and grab market share.
Believe in the Brand
It is important to have clear goals in mind and not allow external forces to deviate from the mission. While it is vital to watch the economy and the competition carefully, focusing on the negatives of the market or trying to match the marketplace can lead you “down the rabbit hole.” Stay your course at all times.
Optimism must come from within the four walls of the company, not from news headlines, and it must start at the top. One of the worst things a franchisor with a solid brand can do during a bad economy is to take its foot off the accelerator and hope for a better day. Instead, the wise choice is to rely on the system in place to drive utilization and leverage the full potential of the company. The Learning Experience has taken the unprecedented approach to accomplish this by reinvesting in company infrastructure that increases productivity and allows for unveiled communication.
Reinvest in the Company
Many franchisors are too constrained by stakeholders’ demand for bottom-line performance to believe that progressive action toward combating a challenging economy is cutting costs related to research and development, technology and human capital. In reality, growth requires reinvesting in company infrastructure during all economies of scale, especially in an economy where several companies, including the competition, are feeling forced to do the opposite.
Consider the importance of R&D under normal outside economic circumstances. It involves investigating the best practices or latest technologies necessary for the company. Likewise, a company’s greatest asset is often its employees, particularly those who demonstrate a strong belief in the brand.
Most often, the problem is not the franchisor’s desire to reinvest, but it’s the question of “Where will the funds come from?” Finding money in a bad economy is admittedly more difficult, but smart business leaders should constantly look for alternative capital. Realizing the importance of corporate reinvestment during uncertain times takes prudent cash flow planning and a leader with clear vision.
Growth in a tough economy demands an entrepreneurial mindset to drive innovation, company culture, brand initiatives and maximize the use of resources wisely. Franchise leaders who are entrepreneurial know that difficult times are not the only time to “watch the pennies,” but the best time to grab market share.
It is one thing to have clear vision to reach company goals, but executing those goals takes tenacity and a team as driven as the visionary. Entrepreneurs must be able to spread buy-in by training leaders throughout the enterprise to create a synergistic environment and company culture that allows the business to improve. Motivation sparks innovation and guarantees a stellar product or service.
Franchisees and employees at every level should be encouraged to maintain an open line of communication and share ideas with corporate management. Over the years, the valuable input from our partners and employees has led to the development of innovative proprietary academic programs and cutting-edge social enrichment programs, including manners and etiquette, Spanish, and philanthropy, our newest-launched program and the first of its kind developed in partnership with the Make-A-Wish Foundation.
Motivation sparks innovation and guarantees a stellar product or service.
Beyond what is taught, how it is taught has also come from open idea sharing. We are the first early educator to utilize interactive whiteboards for both the classroom and for business to assist in delivering dynamic lessons and improve student learning outcomes using a digital screen. Additionally, we created a proprietary app – unique to our industry – that allows franchisees to track daily business operations from a smartphone or tablet.
Lead by Example
Good leaders are not expected to have pristine track records, but how they respond to both successes and failures should be worth emulating. Ensuring franchise growth requires a willingness to make mistakes, endure the repercussions with dignity and have a mind to learn from the situation without allowing employees or franchisees to suffer the negative effects.
During the recent economic downturn, our management team wanted all The Learning Experience centers to see executive management personally when delivering a message. We partnered with a firm to design an on-demand communication and video conferencing system. The system proved effective during training and weekly franchisee calls, and we were able to visually show our partners and employees that our confidence as leaders was unwavering.
When it comes to franchisees, trust is to be gained when company leaders are accessible and present during uncertain times.
Trust is also built when corporate thoroughly tests programs and processes before they are rolled out system-wide. It shows that everyone’s time and efforts are valued, and they are not forced to feel the burden of demands that don’t work.
McDonald’s is one of the franchises that does particularly well at positioning franchisees for success through its real estate model. To ensure best rates and ease of operations, McDonald’s either owns the real estate or controls the real estate process, thus eliminating the burden from franchisees and allowing them to focus on developing profitable businesses.
Maintain Healthy Relationships
The significance of a leader’s impact is judged only by the impressions made on others. Therefore, it is imperative that strong relationships are maintained internally, as well as outside the organization.
Our “open door” policy reigns; no question or concern is too small to deserve my attention. Another key component to healthy management-employee relationships is to recognize and respect their value. During a tough economy, employees will likely work even harder to push for company success, and when extrinsic benefits are scarce, those who feel heard and valued by management will remain loyal.
The fact that the success of any franchise depends on the success of franchisees should not be taken for granted. Keep franchisees satisfied by making decisions that demonstrate genuine care for their individual bottom lines. Keep them motivated by acknowledging even small victories.
My father was instrumental in teaching me skills I have today, but he also realized that true success comes from educating oneself. He set up meetings for us to attend when we first started franchising in the early 1990s, one of which was with renowned businessman and entrepreneur Wayne Huizenga who founded three Fortune 500 corporations and was responsible for six New York Stock Exchange-listed companies, as well as several franchise concepts.
Huizenga stressed one of his chief philosophies regarding the franchise business: “Take under advisement all recommendations from franchisees, but ultimately do what you as a leader know is best for the organization, even if it’s not popular.”
Richard S. Weissman is president and director of The Learning Experience, one of the country’s fastest growing early learning academies for children six weeks to six years old. Find him at fransocial.franchise.org via the directory.