This is a guest blog post by Steven Aldrich, CEO of Outright, the company behind the popular bookkeeping and accounting software that dramatically streamlines the work involved with running a small business.
Many franchisors require their franchisees to account for their money in and money out (also known as sales and expenses) in a specific method that conforms with everyone else in the franchise. This makes sense. A standard accounting system across the franchise ensures that the correct fees get paid, that there’s no fraud going on, and that franchise performance can be reviewed from store-to-store.
But that’s not the end of the story when it comes to your numbers — or, at least, it shouldn’t be. The issue with these standardized accounting systems is that they are optimized for accounting — recording business transactions. Yet smart franchisees will take steps to use their numbers to actually manage and improve the business, not just report on it.
A smart franchisee can sign up for an easy tracking system, such as the free Outright.com tool. Outright will link directly to key financial accounts that the franchisee holds, such as banks and credit card accounts. The system will pull in financial transactions and automatically categorize those transactions so that franchisees can quickly see key reports, such as spending reports, top customers, and top vendors. Better yet, these reports are visual and easy to read, so you can see your numbers at a glance rather than with a magnifying glass! As a franchisee, this can help you make valuable decisions to transform your business beyond just reporting raw numbers to the franchisor.
One franchisee from a popular fast food chain was able to use this method to significantly reduce expenses. (She didn’t want to be quoted because of restrictions from her franchise about speaking with the press.) She looked at a report of her expenses for the past year and saw one expense that was a lot higher than she expected. She was able to talk to her staff and get that expense reduced by taking action to improve performance.
As the famous management consultant Peter Drucker once said: “If you can’t measure it, you can’t manage it.” and “What’s measured is improved.” Take the critical steps today to define and measure your key metrics. Find a simple and free way, such as an online app like Outright, to keep track of those metrics and make decisions based on what you are seeing. It can mean the difference between a successful franchise and a dud.
Outright helps over 120,000 busy entrepreneurs pay the right taxes, record financial transactions, and keep their businesses on track and growing. Outright was founded in 2008 by Kevin Reeth and Ben Curren, themselves web development entrepreneurs who were struggling to keep up with their own accounting. They started building their own software to easily track income and expenses online, and quickly realized that the 24 million other sole proprietors out there would kill for such a simple, automated record keeping tool.
Backed by leading investors Sequoia Capital, First Round Capital, Shasta Ventures, SoftTech VC, and Felicis Ventures, Outright has one goal: to make accounting as simple as possible so the self-employed can spend as little time as possible on the least enjoyable part of running a business.