Simon Vardy, director of Sim Trava, has some top tips if you want to build a successful franchise business
Franchising has become a lucrative venture in the UK. In fact, research by the British Franchise Association has found that 97 per cent of franchisee owned units reported profitability in 2015 - with 56 per cent saying they are ‘quite’ or ‘very’ profitable.
What’s more, the bfa also found that franchising is contributing around £15.1 billion to the UK’s economy - a 46 per cent increase in the last decade. It seems that when it comes to making money, franchising is where it’s at.
What’s the allure of franchising?
It’s hard to deny there is a certain appeal of working for yourself and owning your own business. Having worked for big companies my whole life, it was definitely something that was always at the back of my mind.
But it wasn’t until my wife, Tracy, and I decided we needed a change that our thoughts turned to setting up our own business.
We spent weeks, maybe even months, trying to come to a decision about the business we both wanted to start. Would we start from scratch and build a brand from the ground up? Or would we opt for the franchise model, trading under an already established brand?
It was a difficult decision - and a gamble. Neither of us had ever started a business before, so deciding which route to go down presented us with a problem.
The answer came to us in 2004 when Whitbread announced it was opening its popular Costa Coffee brand to franchising. As two loyal Costa customers, Tracy and I jumped at the chance.
Here we are, 12 years on, having just opened our 26th Costa Coffee store in the north of England. We’ve also added to our portfolio - owning and running two Pita Pit stores, the healthy Canadian food brand. We’re on target to become a £20 million turnover business by 2018, which is not bad for a husband and wife team who started a small business out of the family kitchen.
But it hasn’t been easy. We’ve invested a lot of hard work and time growing our business into a success story. On our journey we have followed three steps - securing the most appropriate funding, investing in our people and ensuring we’ve built our business sustainably
Identifying and securing the most appropriate funding
Funding is crucial for business. Without any capital or investment, you only have a business idea. But, armed with the right funding, a willingness to work hard and a good business concept, success will be in reach.
Here are our top tips for securing the right funding, which are relevant for any business, franchise or not
Be confident when you ask a bank for investment. Make sure you prepare a profitable working business plan that lays out achievable and realistic goals.
Shop around for the best deal. Don’t just settle for the first offer of investment. Go to market, compare deals and make sure you opt for the funding package that’s most suited to your business needs.
When the right funding is secured and things begin to take off, the next step is to identify where your investment priorities lie.
Given that Sim Trava is a family run business, with people at the centre of what we do, we consider investing in the training and development of our staff to be critically important.
Investing in training and development
One of the core values of Sim Trava is growing our people with our business - we want to see the team members of today go on to become the store managers of tomorrow.
In order to do this, we need to ensure our people are fully equipped with the necessary skills to allow them to progress through the business. Not only does having a robust training programme in place ensure there’s consistent excellence across the board in all 28 of our stores, it also means our team members and managers have a clear path to career progression, should this be what they want.
So what have we done? Late last year we launched our Sim Trava Academy, introducing a standardised format of training across all stores.
Through the academy we’ve been able to begin to develop bespoke qualifications that are specific to the needs of our business, including a 12-month apprenticeship programme, as well as NVQs in customer service and team leading.
The academy has grown so much over the past year that we’ve invested in an additional 1,500 sq ft of extra office space to house it.
By investing in the training and development of our people, we’re cutting down staff turnover and adding security to the business. And, in doing so, we’re creating a more sustainable business model, which, incidentally, is our third step to business success.
Growing a sustainable business
Our final step is one that is of the utmost importance to us - as a family business, we want to achieve longevity. For us, growing our business steadily and sustainably is absolutely crucial. We are building something to last.
The most efficient means of ensuring sustainable business growth is to make it your mission to reinvest all cash generated by the business back into the business. As we’ve stuck to this at Sim Trava and borrowed as little as possible, we’re on course to become debt free by 2020.
Securing the most appropriate funding, investing directly in your people and striving towards the most sustainable business model are our three steps to success.