Joshua Frick, President of Kiddie Academy Educational Child Care.
It’s a common theme in the corporate world: Business takes off faster than expected and, suddenly, product or service quality takes a hit. What was once a high-quality customer experience, and ultimately the reason growth occurred in the first place, no longer differentiates the company from its competitors as it fails to keep up with customer expectations.
That’s why “smart growth,” or focusing on quality over quantity as you grow, should be important to all companies—large, small, public, private, B2B or B2C. Aiming to be the best at something, not the biggest, is a more sustainable strategy as a business grows and scales.
The franchise industry is particularly susceptible to rapid growth that can affect the level of support a system provides to its franchisees without a scalable plan in place.
Franchising is a business model whereby a business allows entrepreneurs (i.e., franchisees) to sell its products or services while using the brand’s trademark and operating methods in exchange for a percentage of the gross revenues. A franchisor’s goal should be that its franchisees never say, “You used to do this for me but now that you’ve grown so much, you don’t anymore.” For example, I would rather Kiddie Academy, where I’m president, have 500 franchise locations operating profitably with successful franchisees than 1,000 locations with franchisees who are struggling financially due to a lack of support.
An even more specific marker of success in a franchise concept is multi-unit ownership, which can signal that the franchisor has created a brand that franchisees want to continue to invest in time and again.
So, how can corporate leaders develop a smart growth strategy? Create an infrastructure plan, and have a clear definition of success.
Establishing Your Infrastructure Plan
Any company that grows too rapidly can cause burnout for the corporate team and ultimately diminish, in the case of a franchise, the franchisee’s experience and certainly the customer’s experience. Without appropriate infrastructure in place, critical business needs will likely fall through the cracks and create a downward spiral for the organization. Investing in quality human capital is essential to support the needs and wants of your customers. If your business model relies on developing products, make sure you are also investing in the equipment and resources you need to scale effectively and efficiently.
You can create an infrastructure plan by establishing support metrics that you want to maintain during growth. In the case of franchising, a franchisor should consider its current operations support personnel ratio to the number of units that are ideal for providing a great franchisee experience. By defining this metric upfront, you can strategically plan your human capital needs as you grow to meet the ratio you established. If you build a robust growth plan from the start, sudden success will be cause for celebration, not added stress and burnout.
Secondly, it is important to understand your definition of success as a growing entity. If you know what success looks like to your company—which involves having a reliable and high-quality customer experience—you will be more likely to scale appropriately. Establish where the business is today and develop your growth objectives (e.g., gross revenue, bottom-line profitability, total number of units, market share percentage, customer satisfaction, etc.) and timeline (e.g., five years or 10 years) to share with your entire team so that everyone is focused on the same goals and timeline. Make quality your priority, and focus on smart growth so that you don’t lose focus on your mission and become distracted by the numbers.
Kiddie Academy just opened its 300th franchised location, which is a milestone we’ve been working toward for 40 years. Through this, I’ve seen how beneficial it is to a business and its customers when smart growth principles and plans are in place. With so many product and service providers in the marketplace, success is not just about growing your company in size anymore. It’s essential to focus on smart growth to scale and grow at a rate that won’t compromise quality, keeps customers continuously amazed and creates a network of franchisees who are well-positioned for success and excited to help further your mission.