The Best Way to Manage Financial Performance for Franchises
One of the most compelling reasons to open a franchise is the opportunity to scale quickly. With a viable business model already established, franchise owners can focus on opening locations anywhere and everywhere the market supports them. For entrepreneurs with big ambitions, franchises offer a unique opportunity to hit the ground running without worrying too much about things like working capital or operating cash flow.
But there’s a downside, too. Whenever a business grows rapidly and operates across multiple locations, managing that business becomes vastly more complex. Franchise owners need to understand how each location is doing within the context of overall business performance. Sound financial decision-making depends on knowing how the pieces affect the whole – and the more pieces there are, the more confusing things get.
With each new location that opens, franchise owners have to collect, integrate, and analyze more data just to understand the fundamentals of business performance. Financial statements, operating expenses, inventory turnover, accounts receivables, accounts payables… It can get exhausting. And since much of the data entry and integration happens manually, errors are inevitable.
Managing all the financial data for a growing franchise business can be challenging, frustrating, or even unsustainable. Worse, successful businesses want to focus on planning and preparing for the next expansion, not on getting the data in order. That’s why savvy franchise owners use dashboards and financial reports.
New Tools for Decision Making
Dashboards collect key performance indicators (KPIs) in one location and update them automatically. Like the automotive equivalent, dashboards provide a snapshot of business performance at any given moment throughout the franchise systems.
Financial reports are documents that include data, metrics, analysis, and visualizations designed to answer certain questions or illustrate specific trends. Compared to dashboards, financial reports are more flexible and in-depth.
Both of these tools working in tandem make it perfectly clear how a franchise business is doing, whether it’s one location or one hundred. Dashboards put the most accurate, updated, and important numbers in front of decision makers every day: gross profit margin, net income, turnover ratio, total assets. Meanwhile, financial reports offer a detailed and nuanced look into whatever aspects of financial performance merit exploration: return on equity for a specific store, cost of goods sold, the net profit margin for a department.
A Shortcut to Clarity
Dashboards and financial reports don’t just illustrate financial information. They also do the extensive work necessary to analyze the data.
Instead of manually updating metrics, franchise owners can rely on dashboards to find the updates automatically. And with financial reporting tools, creating detailed documents is as simple as indicating what data to include. Time that used to go into managing data can now be redirected towards better purposes. Namely, using an insightful understanding of finance and accounting to navigate a business through turbulence and towards prosperity for the long term.
Franchises are better-equipped to expand with dashboards and financial reports in their toolkit. Dean Dorton can add those assets, along with the resources to maximize how they benefit a business. Don’t let inefficiency and uncertainty constrain your growth. Instead, unleash your full potential using dashboards and financial reports as your guide. Contact us to get started.
Philip Massey, CPA
Software Services Director
pmassey@ddaftech.com • 919.508.6062
