Multi-Unit Franchisee Magazine Issue III, 2011 | Page 69
Do it yourself
Who can use this expansion analysis process? Anyone—and for any kind of growth,
be it expanding existing facilities or opening new ones. A sales analysis is only half
the story. An accurate knowledge of your
costs and how they behave is really “the
rest of the story.” Further, expansion is
not the only story. The analysis works just
as well in the decision to sell locations—
A sales analysis
is only half the
story. An accurate
knowledge
of your costs and
how they behave is
really “the rest of
the story.”
“degrowth,” you might say.
Admittedly, the process isn’t perfect,
and the risks are several: only doing half
the analysis, being wrong anyway, and not
evaluating whether the growth is accomplished at the expense of increasing levels
of debt. Nevertheless, the process is better
than proceeding blindly. Indeed, sometimes it’s most useful in predicting what
won’t work, rather than what will. Always
keep this in mind: sales alone are not an
adequate predictor; don’t go after volume
for volume’s sake.
My client’s decision? “Well,” he said,
“I’ll admit that the sales volume and market share projections make this look pretty
risky, but I’m not worried… because I can
borrow all the money!” My response? I offered him a huge discount for immediate
cash payment of our bill.
Steve LeFever is chair of Business Res ource
Services (BRS), where he guides business networks
from “Profit Mystery” to “Profit Mastery.” For
more than 10 years, franchisors and franchisees
have improved their financial performance by
following the BRS Profit Mastery process: financial training, performance benchmarking,
and accountability/bankability modeling. Contact BRS at 800-488-3520 x14 or lefever@
brs-seattle.com.
Go Direct and Save!
Save up to 50% off bank pricing!*
www.TranSourceDirect.com
*Based on price comparison of four national banks
©2011 Harland Clarke Corp. TranSource® is a brand of Harland Clarke Corp.
Multi-Unit Franchisee Issu e III, 2011
67