One of the biggest mistakes an entrepreneur can make is investing all his or her own time and money into their business. Sounds strange, right? Isn’t that a good thing? Surely investing your own time and funds into the business you are building will pay off in the end? Won’t you end up with a successful business model that rewards you financially?
Before you get to this point, there are a few steps that a business owner must have taken in order to leverage these massive and high speed growth strategies.
Firstly a business owner must master where their business is going moving forward, setting clear goals helps to establish this. Then they must be across what is happening with their cash flow at all times. They need to deliver quality products and services and make it easy for their clients to buy from them. And they need to master their time management. Sounds pretty easy right? It is, however never underestimate the effort and hard work that most business owners go through to establish these components of their business. Working with a business coach at this stage can really help with providing clarity and will significantly speed the process up for you.
Before we get to the point of really driving exponential business growth using successful business models like franchising and licencing, there are a few more steps we need to take.
You need to know what your point of difference is in your business. What is it that you have or do that makes it possible for you to avoid competing on price? Targeting the right markets, having the right USP and putting the sales and marketing plan into action basically eliminates the need to always compete on price.
Really strengthening and having strong processes in place so the business can run without you is paramount to business success. Having a business that runs smoothly and reliably sets up the foundation for you to start leveraging off successful business models like franchising and licencing.
Implementing the right team is also critical to your success. Building a strong team culture and hiring the right talent can really set your business up for massive growth.
Once you reach this point in your business, it should be producing reliable income for you and it shouldn’t depend on you being there all the time. You now have the opportunity to shift up through the gears and go from steady growth to real exponential growth!
Unfortunately, many business owners don’t know where those gears are….they know they have a solid business but they don’t know how to accelerate growth from there. Among the reasons for this is their two fundamental constraints – time and money. Everyone is limited to 24 hours and everyone has only a certain amount of capital. Even for a big business with $5billion in the bank, they still only have $5billion….they don’t have $6billion!
The great news is there are ways to drive exponential growth in your business by leveraging others peoples’ time and money.
Once the above steps have been implemented successfully it may be time to start looking at options like using a franchising or licensing business model. These are business strategies that enable you to escape the limits of time and money.
So, let’s look at two of the most popular business models.
Look at franchising as not a business in itself, but a way of doing business. Franchising is a business relationship in which the owner of a business providing a product or service (franchisor) assigns the right to market and distribute the franchisor’s goods or service using the business name to an individual (franchisee) for a set period of time. For a fee, where the franchisee pays the franchisor, this relationship includes the product, service and trademark as well as the entire business concept.
The franchisor shares some combination of marketing strategies, plans, operational standards, systems and formats, training content, quality control and ongoing mentoring, assistance, guidance and supervision. It’s a way of providing a small business (franchisee) with the tools of big business (franchisor).
As the franchisor, someone else is investing their time and money into growing your business; allowing you to grow faster than relying on your own time and money would allow. Your role is that of guide and mentor.
Recent Australian success stories using this model include Anytime Fitness Australia and Narellan Pools.
Licensing is a similar business model but, in most cases, the licensee does not acquire rights to use the company’s trademark or receive territorial rights. There is also less marketing, operational guidance and support from the business owner / licensor. And less financial investment from the licensee.
For example, a company that manufactures and distributes window treatments such as plantation shutters may enter a licensing agreement with a project home building company. The project home building company has the licence to sell, distribute and install the plantation shutters for all their new builds. They pay the licensor a licensing fee for this.
The benefit for the licensor is that another company is investing the time and money into the licensor’s product and service, once again freeing up his time to focus on the growth and development of his own company and allowing him to look long term instead of just getting through the day.
The thing to remember is that everyone who owns a business is limited by time. The amount of money that can be made is limited by the hours the owner can spend on the business.
That’s why leveraging other people’s time and money is such a smart move. It elevates you to a more strategic position within your own business and gives you more reach, capability and cash flow.
Being a successful entrepreneur is about breaking free of the limits owning a business can impose on you. These types of business models are simply a way to take those shackles off.
If you’re ready to break free of limits in your business, click here for further information regarding our 6 Steps to Building a Better Business Workshop. It’s FREE and you will walk away with many new ideas and plans.