You may be a new franchisor with a few units, or a seasoned franchisor with hundreds of franchised units, but either way, key performance metrics are crucial for your business success. The first step to gathering data is identifying your key performance indicators (KPIs) that make sense in your industry. For example, your restaurant franchise KPI standards are food costs, labor costs, weekly sales, average order per customer, and employee turnover. In retail, standard KPIs are sales increase, gross margin, inventory turnover and repeat customers. Good data starts with identifying good standards. Although this sounds simple, this is where many companies go awry.
I worked for a company who had very good intentions and with full energy set out to identify KPIs. They spent hours and days identifying KPIs for each department, allowing input and opinions from key decision makers. The instruction was basically, that the KPI had to be measurable either quantitatively or qualitatively… and that’s about it. A few years later, the KPI data sat in a spreadsheet with lovely graphs. Management enjoyed looking at the graphs for a few months, but soon, lost interest and the spreadsheets became obsolete. The data was too cumbersome to gather, and the action associated with the KPI wasn’t always obvious so making improvements based on the KPI wasn’t necessarily obvious either. This is a very common mistake with businesses.
Many companies flounder when it comes to establishing effective and sustainable KPIs. Partnering with a successful expert in franchise data collection ensures you’ve identified the appropriate standards for your franchise industry. Data collection and analysts are experienced in making sure the problem is identified, a leading indicator is used to measure, success criteria is identified, and the actions to solve the problem are clear.
Once the KPIs are established, you must gather the data on a regular basis and then create reports to display the information in a sensible way. This is possible in Excel or other spreadsheet software; however the process is cumbersome and complicated if done manually. It also leaves room for human error or misinterpretation; however partnering with an expert in data collections makes good business sense to ensure you receive the most current and accurate information.
Having this data at your fingertips with little or no effort allows you to check your daily, weekly and/or monthly business reports to stay current on business performance. Then, you can use this data to make your business more profitable, efficient and ultimately more successful. Take the guessing away, simplify the data collections process and focus on what you do best which is creating a booming franchise success.