Owning and operating a franchise company requires a lot of extra legwork to ensure each franchisee is set up for success. From gathering the right marketing resources to putting together an operational guide for each storefront, a lot goes on in setting up a franchise business. That’s why, for a lot of individual franchisees, bookkeeping and accounting processes tend to fall by the wayside.
Bookkeeping Tips for Managing a Franchise Business
Local business owners and franchisees could benefit from more education, resources, and support for their fiscal operations. It’s no secret that franchisees deal with more fees and up-front financial obligations than most other businesses, making it doubly important that every individual learns about the best accounting practices for their franchise.
Stay informed with these top bookkeeping tips for managing a franchise business and learn about your top finance options today.
The Advantages and Pitfalls of Franchise Accounting
In order to establish some of the best accounting practices for your franchise business, it’s important to be aware of what built-in benefits you are getting with the type of business you have – as well as the inherent risks.
- Many of the services, products, and packages you can offer through your franchise are already popular and tested in the market, so you can start selling successfully right away.
- You are likely to avoid typical business teething problems other industries may face (inadequate funds, raw material shortages, etc.).
- Instant brand recognition means you don’t have to worry too much about marketing or advertising on your end.
- Franchisees often face the risk of higher startup debts due to industry-specific franchise fees and taxes.
- A new franchise location must already be equipped with a full team of staff before the business can fully open.
Navigating these obstacles at the very beginning of a company’s life can contribute to the neglect of that company’s accounting and bookkeeping processes. You should learn about some ways that you can improve the financial management of your franchise so you don’t get in over your head right when you set up shop.
Bookkeeping Basics for Franchises
Whether you have already hired an accountant or you plan on doing most of the bookkeeping work yourself, it is imperative that you start tracking your company’s transactions and monitoring its financial health as fast as you can. Below, there are a few methods that you can start familiarizing yourself with.
Manage Debt Right Away
A lot of new franchisees start out with some overhead as the natural course of opening up this type of business. Small business owners usually face a signup fee upon joining the specific franchise group. On top of that, the individual franchisee is responsible for sourcing a physical storefront, paying for it, finding staff, and paying them all wages while they are trained. This all has to happen before you can start earning a profit from this business.
While these expenses may be unavoidable, there are different financing options that you can opt into so you can mitigate some of that budgetary damage. The more frequently you monitor and keep track of your debt, the easier it will be to keep it from building up.
Monitor Cash Flow
It doesn’t take a certified accountant to understand that cash flow is the lifeblood of any type of business. Therefore, it makes sense to keep a close eye on all of the activity that is taking place in your company’s budget. On top of that, cash flow is particularly important to keep track of as a franchisee because there are always payments that need to go out. Between franchise fees and monthly expenses, your cash flow will always look different.
It might take some assistance to keep track of all these moving parts, especially since your revenue can drastically change week by week. Make sure you prioritize things like payroll and building rent so you can keep all operations running smoothly.
Track Important KPIs
While key performance indicators are a dime a dozen, there are specific key performance indicators for franchises that you should be tracking intently in order to have effective bookkeeping. There are many important factors to look out for daily, including:
- How much of each product you sell or will sell
- How many people enter the building versus how many people make a purchase
- How long people have to wait to be served or for their purchase to be complete
- How much money do you earn per each dollar spent in revenue
If you are still wondering about the most important KPIs that you should be tracking for your business, you can get in touch with a professional accounting solution to help you manage your company’s finances adequately.
Try Indevia Accounting with Automated Bookkeeping Today
As a franchisee, you already have a million and one job tasks on your plate. Establishing and opening a new business is no easy feat, even if you already have the popularity of the franchise’s products and services to depend on. When it comes to keeping track of your own financial operations, it seems like there isn’t anyone around to help.
That’s where Indevia’s affordable outsourced accounting solutions for quick-service franchisees comes in. Our bookkeeping programs allow you to automate the most important part of your business – its budget. Track your monetary performance, manage bills, take care of payroll, and stay apprised of your company’s financial health without having to stray away from the more important tasks of your day. Contact Indevia today to learn more!