Is your franchise still doing business the “old way”? Here are 4 tips for franchises to upgrade to digital accounting
If you’ve owned and operated a franchise during tough times, such as throughout the 2008 financial crisis or the COVID-19 pandemic, you’re aware firsthand how important cash flow management is to continued success.
In a year like no other, the pandemic took a tremendous toll on the franchise industry. According to the International Franchise Association (IFA), the industry shed 940,000 jobs and employment declined 11.2%. However, there is a silver lining for franchisors (and franchisees) this year. The IFA reports that the franchise industry could contribute an additional 800,000 new jobs in 2021 and add $477 billion to the overall U.S. GDP.
Given this forthcoming industry rebound, the ability to track both inflow and outflow of cash in real-time as well as make quick business adjustments on forecasts, budgets and plans can save you time, money and potential missteps. Newer accounting tools for small business make these tasks seamless.
If you find yourself operating a franchise that has been in business for a while (e.g., 10+ years), you and your team might be comfortable with the “old way” of doing business – including utilizing older products or maybe even conducting business on paper and through physical filing.
While upgrading existing technology is a significant financial investment (and requires a sometimes difficult mindset shift), it is also an investment in the future of your business. Entrepreneur recently cited a 2019 report from FranConnect, a software-management company, that found that while 1-2% of gross sales from franchise companies went to technology fees, companies that paid these fees grew 36% faster in a two-year period.
With the acceleration of digital transformation due to the pandemic and so many businesses now operating in the cloud, your business can optimize efficiency and productivity as well as information-sharing between franchise locations across the country.
Even though the business might appear to be doing well at the master franchise level, cloud technology such as Xero – a global small business accounting platform – can help business owners quickly identify specific franchise locations that might be waning in revenue. This is especially important right now and in the coming months as different states and countries reopen and recover at different paces.
As a franchise owner who might be looking to adopt new digital accounting technologies, migrate to the cloud or transition from desktop and local network accounting software, here are four tips to get you started.
Mapping business workflow
Mapping your current business workflow and paying close attention to how these workflows will be impacted by the implementation of new technology is the best way to kick off the process and start productive conversations within your team.
This process can range from mapping all the logistical details, like who has access to the current technology and how often they use it, to the bigger-picture details like what the potential cost savings on replacing said technology are and how migrating to a new process affects potential employees and stakeholders. These details will be helpful as you begin considering new technologies, what might be best fit, what the ultimate goals are and how the partner(s) you select can help make sure no details are overlooked in the process of setting up a new workflow.
Assemble a test team
In order to successfully roll out new processes, it’s crucial to test the waters and also make sure you have employees on board who are supportive of (and educated on) the changes that are going to be made. I’ve worked with several franchises that have all had great success through devoting technology teams to identify and test new products. The initial team can be a small group of employees or tech experts who can serve as guinea pigs to identify any flaws, concerns or questions before rollout.
As such, when the time comes to bring the product to others, you will already have a select group of people who can vouch for the product and help others get up to speed.
Make a migration plan
Ahead of implementation, having a migration plan is key. It’s important to make sure that your migration plan incorporates what to do with old data, a timeline for transition, whether the new product will be required or chosen by the team as well as goals and benchmarks.
They say timing is everything and that’s certainly true for choosing when to transition to new technology. Mid-year and end-year points are often natural transition times for franchises, or between quarters if your franchise can’t afford to wait.
Consult an accounting firm or accountant
A strategic accounting partner, who can be found within your franchise network or with a firm like Xero, can provide invaluable insight, advice and guidance during a transition period. Working with a trusted partner helps to widen your network of experts and get strategic advice during the transition to digital and on other financial matters for franchise management.
Taking the initial leap towards digital or a new technology in general can be daunting but can reap rewards for your franchise and put you on a path towards financial success. During this pivotal time of industry growth and recovery, consider all the options available to you and don’t forget the powerful franchise network at your fingertips.