Financial goals should take into account cash flow, savings, net worth, building equity, and spendable income, while quality of life goals should consider lifestyle issues important to you, like having dinner at home three times a week, being able to take holidays, attend your children’s school activities, or make a difference in the community.
Before you research any franchises, you need to determine financial and non-financial (quality of life) goals in order to help you set three- and five-year plans to help you achieve those goals.
Overlooking quality of life goals is setting you up for dissatisfaction because they’re as important as financial goals: They’re the reasons that compel you to get up and go to work in the morning – and money isn’t enough for long.
The cold hard truth about franchisors
Virtually all franchisors have key performance criteria that help you and the franchisor determine whether or not your business is winning.
You’ll be taught how to track sales, labour costs, cost of sales, and other measures. Franchisors design their business and support systems to help you structure your business to achieve these measures and monitor results.
However, we know of no franchisor who measures how many meals you’ve eaten with your children or how many of the kids’ soccer games you’ve attended.
Franchisors measure your success by their definition, not yours. Most franchisors have no clue as to whether or not their ‘successful’ franchisees are living the life they originally desired when they invested in a franchise.
To secure bank financing you’ll need to write a business plan in which you detail the tactics and strategies you’ll execute to drive the sales, contain the costs, maximise the cash flow of your business, and repay your loan.
Imagine that money is tight and you are two months late on loan payments or franchisor fees. The loan officer or franchisor won’t want to hear that you don’t have the money to pay the instalments, but you did attend all your kid’s soccer games.
How ‘success’ helps you choose a franchise brand
Like the bank, the franchisor also wants its money on time; it’s just the way it is. So you want your definition on success, the franchisor wants theirs, the bank wants theirs, and the world turns. It’s solely your responsibility to create a clear definition of what winning looks like for you.
Use your definition as your criteria to compare various franchise opportunities. The franchise where you have the highest probability of attaining both your financial and quality of life goals is the franchise you make an investment in.
Clear goals, whether financial or quality of life in nature, must pass the S.M.A.R.T. test. Once you’ve got this in order it will greatly simplify your search for a franchise opportunity by narrowing the playing field.
S – Specific
Goals need to be clearly articulated and written down. “Making a lot of money” isn’t specific, but making R2 million is. “Having more control over time” is not specific, but “going to ten of my son’s soccer games this year” is.
M – Measurable
You have to be able to create a tracking system to keep score. This lets you know whether you’re on track or have hit your goals. If your goal is to make R200 000 by the end of the year, on 30 June, you should be half way or you’re not on track.
By 31 December, you either hit or miss your income goals and it isn’t open to interpretation. Similarly, if you attend 11 soccer games, you won. If you only went to six, you fell short.
A – Attainable
Goals must be both possible and worthwhile pursuits, or you won’t be motivated to achieve them. If your goal is to make R1 million a year, but you’ve never made more than R100 000 a year, you may not see this goal as possible and won’t take aggressive steps toward achieving it.
As a franchisee you may experience a 20% increase in sales, but if you think it’s going to take working 90 to 100 hours a week to achieve it, you may not consider it worthwhile.
RT – Realistic Timetable
Goals have to have a deadline to inspire commitment. It’s human nature not to take action for things without a deadline.
How long have you thought about starting a franchise? Have you set a deadline to open one? Without deadlines, urgent matters will take precedent and your dream will be pushed further and further back.