My friend Edwin and I met up last night to have a chat and visit a nearby Royale Business Club franchise. But when we arrived at the place, the cart was no longer there and in place a pawnshop was being constructed. We don't know what happened to it, it could have moved somewhere else but it really got me thinking about the possibility of losing a business.
I know this possibility is something very real in people's minds. I get asked quite a lot how much risk these franchises pose and if they are sure investments.
While I could not think of any surefire, fail-proof businesses, there are some things we can do to help small businesses take root and survive the first critical months. Some of these come from my experience, some come from business books I've read.
Here are some I would like to share to you.
1. Conduct a Survey
Before we started our laundry/dry cleaning business, my wife Charm made a simple questionnaire about customer preferences regarding laundry. I was surprised by the results but found out later on that they were indeed true. This simple questionnaire could be done for any small business. You can ask your target market if they would consider purchasing your product for the prices the franchisor has set. If you are considering food, you can ask your customers what time of the day they eat your product or if they eat it at all. This survey would give some supporting data on whether your hunch is correct. If you don't have any hunches, you should definitely conduct a survey.
2.Spread the Word
If your business has started, it's not enough to just operate it. You have to spread the word, tell people you exist. I remember the time when we walked house to house, knocking on doors to give away flyers, telling the people we exist. We chatted with potential customers and 80% of them tried us out. Another time, we hired students to hand out flyers for us, this time only about 2% responded. Try streamers, samples, stickers and other affordable marketing strategies to get people to know you. A good book that really helps in this type of marketing is Guerilla Marketing by Jay Conrad Levinson.
3. Deliver
Customers, especially us Pinoys love convenience. It's surprising to note that when you eat in the US or even Hong Kong fast food restos, you are expected to clean up your waste and throw it in the wastebasket. But not here. Here, we got guys cleaning up after us (isn't that cool?). Even if it's just a food cart, delivering the food to offices during lunch can be an effective idea. It expands your market and it beats your competitors who don't deliver.
4. Minimize Expenses
When starting out a new business, cash flow is very important. You can be profitable but still not make it because your cash is not returned (flowed) back fast enough for you to pay for your expenses. This is why cash flow protection is vital. To help you with this, you need to protect your cash vigilantly by minimizing expenses. Just like day to day spending, expenses can really pile up fast in a small business. It's important to separate personal spending from business expense so the business can be sustained by it's own profit and cash flow.
5. (Repeat) Customer is King
Hire someone who can chat with customers well. There is greater chance of success if your customers return for repeat business. And every business is a relationship-based business, even food. I think one of the reasons why Country Chicken is one of the best-selling cart in the RBC main office is Ate Bing, the saleslady. For me, she has one of the best attitudes among those in charge of the carts and she makes a lot of friends who buy from her constantly.
6. Act and React
Once the business is set up, continue making observations about your customers, location and competitors. The more you understand, the better your can fine tune your operations. If your location is not the best, maybe you can request for a transfer to a better place. If a competitor sets up nearby, here is where your customer service should come handy. Contrary to popular opinion, a business is a living, breathing entity and sometimes we need to constantly change the situation for it to succeed.
7. Treat it like a Child
My wife and I constantly refer to our first business, Suds, as our first 'child'. No kidding, it gave us lots of sleepless nights and challenges just like changing nappies for Eli, my son. But it has now reached a point where we could leave it for some time without thinking about it too much. I remember a friend who asked me how to set up a laundry shop and I asked him back who's going to take care of it. His reply was "Gusto ko, remote control lang". Ouch. I told him to forget about it. I don't think any rookie entrepreneur should ever leave his business at the control of others, it's a potential recipe for disaster. Be hands on at least until you get the hang of it. That way, you'll know if something fishy is going on when you leave it. You'll also get to know the biz like a person. And you'll know when it's demanding growth already. Someday, all the hard work will pay off and the business will take care of you.
Good Day!
I know this possibility is something very real in people's minds. I get asked quite a lot how much risk these franchises pose and if they are sure investments.
While I could not think of any surefire, fail-proof businesses, there are some things we can do to help small businesses take root and survive the first critical months. Some of these come from my experience, some come from business books I've read.
Here are some I would like to share to you.
1. Conduct a Survey
Before we started our laundry/dry cleaning business, my wife Charm made a simple questionnaire about customer preferences regarding laundry. I was surprised by the results but found out later on that they were indeed true. This simple questionnaire could be done for any small business. You can ask your target market if they would consider purchasing your product for the prices the franchisor has set. If you are considering food, you can ask your customers what time of the day they eat your product or if they eat it at all. This survey would give some supporting data on whether your hunch is correct. If you don't have any hunches, you should definitely conduct a survey.
2.Spread the Word
If your business has started, it's not enough to just operate it. You have to spread the word, tell people you exist. I remember the time when we walked house to house, knocking on doors to give away flyers, telling the people we exist. We chatted with potential customers and 80% of them tried us out. Another time, we hired students to hand out flyers for us, this time only about 2% responded. Try streamers, samples, stickers and other affordable marketing strategies to get people to know you. A good book that really helps in this type of marketing is Guerilla Marketing by Jay Conrad Levinson.
3. Deliver
Customers, especially us Pinoys love convenience. It's surprising to note that when you eat in the US or even Hong Kong fast food restos, you are expected to clean up your waste and throw it in the wastebasket. But not here. Here, we got guys cleaning up after us (isn't that cool?). Even if it's just a food cart, delivering the food to offices during lunch can be an effective idea. It expands your market and it beats your competitors who don't deliver.
4. Minimize Expenses
When starting out a new business, cash flow is very important. You can be profitable but still not make it because your cash is not returned (flowed) back fast enough for you to pay for your expenses. This is why cash flow protection is vital. To help you with this, you need to protect your cash vigilantly by minimizing expenses. Just like day to day spending, expenses can really pile up fast in a small business. It's important to separate personal spending from business expense so the business can be sustained by it's own profit and cash flow.
5. (Repeat) Customer is King
Hire someone who can chat with customers well. There is greater chance of success if your customers return for repeat business. And every business is a relationship-based business, even food. I think one of the reasons why Country Chicken is one of the best-selling cart in the RBC main office is Ate Bing, the saleslady. For me, she has one of the best attitudes among those in charge of the carts and she makes a lot of friends who buy from her constantly.
6. Act and React
Once the business is set up, continue making observations about your customers, location and competitors. The more you understand, the better your can fine tune your operations. If your location is not the best, maybe you can request for a transfer to a better place. If a competitor sets up nearby, here is where your customer service should come handy. Contrary to popular opinion, a business is a living, breathing entity and sometimes we need to constantly change the situation for it to succeed.
7. Treat it like a Child
My wife and I constantly refer to our first business, Suds, as our first 'child'. No kidding, it gave us lots of sleepless nights and challenges just like changing nappies for Eli, my son. But it has now reached a point where we could leave it for some time without thinking about it too much. I remember a friend who asked me how to set up a laundry shop and I asked him back who's going to take care of it. His reply was "Gusto ko, remote control lang". Ouch. I told him to forget about it. I don't think any rookie entrepreneur should ever leave his business at the control of others, it's a potential recipe for disaster. Be hands on at least until you get the hang of it. That way, you'll know if something fishy is going on when you leave it. You'll also get to know the biz like a person. And you'll know when it's demanding growth already. Someday, all the hard work will pay off and the business will take care of you.
Good Day!
2 comments:
Great advice. I've been thinking about starting a franchise lately. Or at the very least, buy an existing business. Would you be able to direct me to a website where I could find one? Thanks!
@Alex-- have you checked out your local Chamber of Commerce? They should be a good resource for you. I would also check out this website called BizTrader.com. It's a good place to find a small business on the Internet. It's also a good place to sell your business (if you have, or someone you know has one). Anyway, it's a global marketplace for small business, and worth checking out sometime. Good luck.
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