Simon Vardy, director of Sim Trava, says there’s three ways to create a successful franchise business
For many, the idea of being your own boss and owning your own company is an alluring one. But when starting out it can be a headache determining where is best to begin in order to get things off the ground.
When my wife, Tracy, and I first decided we wanted to start our own business, we researched all the options available to us, weighing up the pros and cons of each. And while we wanted to create a successful business of our own, we didn’t particularly want to start from scratch or do it entirely alone.
Thus, when we happened upon the franchise business model, we realised this was a route that suited us - the help and support provided by a franchise business was exactly what we needed.
Around the same time that we had decided franchising was what we wanted to do, Whitbread, the UK’s largest hotel, restaurant and coffee shop operator, announced opportunities for franchising with its Costa Coffee brand. It seemed too good to miss.
12 years on and we’ve just opened our 25th Costa Coffee store in Manchester, with a view to increasing this to 47 stores by 2020. We’ve also expanded our portfolio - opening two branches of healthy Canadian fast food chain Pita Pit in central Manchester.
We feel Sim Trava’s continuing success and growth is down to our commitment to three core areas - securing the right funding, investing in our people and creating a sustainable business model.
The starting point and lifeline for any business is unquestionably funding. Without it, you’re sunk from the outset.
As a franchisee, you’re in a unique position - you’re starting a business that already has a known brand and reputation, but this isn’t enough to guarantee success. It’s crucial that as a new business, which technically you will be, you have a working business plan in order to secure that allimportant initial round of funding.
For Sim Trava, our success has been based on utilising bank funding and we’ve managed to secure that by presenting our lenders with an in-depth and profitable business plan.
When drafting your plan, set goals that are high enough so that they satisfy the lending bank, but still achievable enough that they can be exceeded. This will act as a powerful leverage tool in securing more funding down the line. It will also help build a good reputation for you as a franchise business.
The initial business plan needs to be solid, sound and, most importantly, one that will make money. Once you receive capital, you need to consider in which parts of the business the money should be invested. At Sim Trava, one of our main investment priorities is our people.
When the banks approve a funding plan for a business, those managing the company decide where best to invest the capital. Investing in our people is so central to what we do that we regard it as one of our core business values. We aim to bring our staff up through the ranks, so that today’s team members can go on to become tomorrow’s store managers.
Training is, therefore, a central component internally within the business. And given the industry we’re in, ensuring staff in all 27 of our stores deliver a consistently excellent customer experience is of the utmost importance.
That’s why we began developing The Sim Trava Academy in 2015, which has helped us map out a clear training journey with direction and purpose for our staff members.
From there, we’ve begun to develop our own bespoke qualifications and accreditations, including a 12-month NVQ apprenticeship programme in customer service and team leading. The academy has grown so much over the past 12 months that we invested in 1,500 square feet of extra office space last year.
In addition, we now enrol every employee onto a learning and development programme upon appointment. This equips all colleagues coming into the business with the necessary skills and training needed to develop and grow into their role at Sim Trava. It also ensures each staff member is, from the outset, in tune with our fundamental business values.
Investing in our people is a long-term plan and helps us create a more sustainable business. Which, incidentally, is another one of Sim Trava’s business focuses.
Steadily building a business will lead to more sustainability. This will in turn mean a business is better equipped to withstand the turbulent forces of the market.
The most effective way to create sustainability is to reinvest any and all cash generated by the business back into the business. By doing this, we have been able to develop our 27 stores with as little borrowing as possible and are on track to be debt free by 2020.
While lending and debt are a good thing for a growing business, it’s important we, as business owners, do not take out cash too early in the business growth cycle and instead reinvest every penny, so that debt and borrowing can be kept to a manageable level. A steady climb is the way forward.
We’re in a fortunate position in that, since refinancing with HSBC, we have secured their full support in our aggressive growth plans. As a result, we now enjoy a pre-approved £3 million facility - meaning we can make business decisions quickly, as and when required, without first seeking the bank’s approval.
We can open as many stores as we want and enjoy a level of flexibility that’s denied to many of our competitors, who instead require board approval from their lenders for every decision or deal they come to.
As a family-owned company, our priority at Sim Trava is creating a successful and lasting business that puts people - both customers and colleagues - at the forefront of what we do.
To be successful at this, it’s important for us to focus our efforts on securing the appropriate funding and using it wisely, which in turn works to help us build a sustainable business model. And long may it continue.