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How to Build a Business Plan for Your New Franchise Location

How to Build a Business Plan for Your New Franchise Location 1016 528 Sprockets

Currently, a lot of people are venturing into franchise opportunities. One of the many benefits of setting up a franchise location is that you will be riding on an idea that has already proven successful. However, just like any other business, setting up a new franchise location can also come with the same challenges facing any other business startup.

For instance, you’ll need a solid business plan. Building a good business plan for a new franchise location is essential. It helps you think through the obstacles you might face, strategies for overcoming them, and your intended investment’s overall sustainability. A good business plan is also essential if you need financing for your business. Most lenders and investors will demand to see your business plan before considering financing your business.

Building a Business Plan for Your Franchise Location

While some franchisors will help build your business plan or simply provide you with one, that is not always the case. Don’t worry, though. Below is an outline of a franchisee business plan example outlining the various sections included in a business plan for a new franchise location.

1. The Executive Summary

This portion of your franchise business plan should give a clear description of your business’ goals and its purpose in the short and long-term. This section includes basic information such as your business’ name, details of the founder, and location. It also consists of the mission statement, a list of products and services, and the target market. Please ensure you also state your credentials and experience in the field and an overview of your business success factors.

2. Business Overview

In this section of your business plan for a new franchise location, you must provide an overview of your business’ main aspects. For example, you might need to explain why your new startup is better and unique from the existing establishments.

It should be as forthright as possible so that anyone reading it will get a clear understanding of the scope of your business. This section highlights your business’ legal structure, the franchisor’s company history and success rate, and a complete list of all the products and services, inclusive of their prices.

3. Industry Review

Understanding the industry you want to venture into as a franchise is critical to your success. This section of the business plan can be divided into two parts: the industry’s general overview and the position your franchise intends to hold or fill in the overall industry. Consider current trends, the industry’s growth rate, major players, and national revenue.

4. Management Summary

The management summary section of the business plan should include a list of members responsible for running the business. These are the employees that will be mainly responsible for the day-to-day operations of your franchise location. Be sure to put as much of the members’ background information as possible. You can include past experiences, professional qualifications, past successes in the field, and any other information pertinent to their position. 

5. Consumer Analysis

The consumer analysis section of the business plan focuses on the target audience. In this segment, you must start by identifying who your potential customers are, express a clear understanding of the customers’ needs, and show how your products or services will meet those needs.

You need to be very specific when writing this section and exhibit a clear understanding of who your intended customers will be. For example, it would be too vague to say that your company is targeting middle-income earners. Be as in-depth and precise as possible. You might need to specify the exact range of income, age, and location of the customer, among other traits.

6. The Premises

Every business needs to operate from somewhere. You must agree with the franchisor on your business’ most appropriate location before writing this section. Some of the factors determining your choice of premises may include the location, expansion projections, cost, and planning consent from the property owner.

7. Sales and Marketing

In a franchise, strategies for sales and marketing are typically laid out by the franchisor. When writing this section, you will need to research their sales and marketing strategies, advertising, and any other kind of support they may offer you. You can also confirm with your franchisor if it’s alright for you to play a role in local advertising and marketing.

The following are areas you might want to consider when writing your business’ sales and marketing plan: marketing channels used by your franchisor, strategies for different business seasons, an overview of the sales process, and customer retention strategies.

8. Financial Projections

The financial projection plan is one of the most crucial business components; it is more of your business’ financial forecast and acts as a roadmap. Potential investors and lenders will look at this section more to determine their interest in having a stake in your investment. Most financial projection write-ups are appealing on paper. However, it can be of no value if actual returns do not justify it once the business starts running.

Avoid writing this section with the sole intention of impressing investors and lenders. Make sure you do thorough research to establish the real potential of the business you are venturing into to avoid losing money.

9. Financing

It is essential to prepare this section even if your venture is funded from your savings. This section describes the financial needs for starting up the business and how you expect to fund it. It is one of the last items on the list in your business plan. This segment is where you make your case to investors and potential lenders if you are trying to get funding from them.

Have a Hiring Plan

A man and woman shaking handsIf you are looking to hire employees and have difficulties identifying the right applicants, please feel free to contact us at Sprockets to learn about our AI-powered Applicant Matching System. We pride ourselves on helping companies hire applicants that are the precise fit for their needs, ultimately reducing costly employee turnover. Our sophisticated solution ensures that you hire people who will collaborate well with your other team members and stay long-term to see your company grow — and contribute to that growth.

Schedule a demo now to see how it works! It will be the best 15 minutes you spend on your business. Just ask some of our happy customers in a variety of franchise industries!

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Achieving Success: Tips for New Franchisees

Achieving Success: Tips for New Franchisees 1016 528 Sprockets

Are you ready to launch a new franchise location? Between now and then, you must overcome many obstacles. Luckily, in this day and age, the answers are easier to find than ever. By checking out the following tips, you’ll have a leg up on the competition. That way, finding success with your franchise business will be easier than ever.

7 of the Best Tips for New Franchisees

Let’s look at a few of the most common traits of successful franchise owners. Of course, everyone’s situation will be different. Nevertheless, by comparing notes, you’ll notice there are some core commonalities. When you are ready to start a new endeavor, doing the research is more than worthwhile. By putting in the time, you’ll reduce the odds against you. Then, success is just a matter of commitment. At that point, it might as well be guaranteed.

1. Ensure You Have the Starting Capital

Without the money, you can’t launch anything. Therefore, ensure you have the starting capital. Otherwise, your time would be spent better on other ventures. For example, suppose you have limited funding. If that is the case, we suggest you pursue finance partners rather than customers.

2. Choose the Optimal Location

Even though your business has a well-known brand name under a franchise, that doesn’t mean it can succeed anywhere. Any experienced business owner knows that location is a significant factor in success. In certain areas, poorly ran enterprises might prosper. However, in other locations, even the most efficient endeavors might fail. By researching different locations, you can find one that fits you best.

3. Network With Other Successful Franchisees

Who said that you could not learn from other people? Of course, not everyone can give you good advice. However, by speaking with successful franchisees, you can find out what they have learned. Over their career, they’ve made many mistakes. Since you can ask them what they learned, you won’t have to go down the same road they did. That way, you can skip over some of the bumpier sections of the journey.

4. Continuously Seek New Information

You can compare yourself to other people all day long. However, you would get better results if you were to look at people who were successful. Generally speaking, they are all fast learners. Because they can pick up on things quickly, they can also adapt rapidly. In the business world, that is essential. By adapting to new circumstances, their companies thrive while others fail. If you’d like to follow in their footsteps, then it would be best if you were to emulate that trait.

5. Grow Your Business

Both you and your business should always be growing. Every year, set new goals. That way, you can have something to use while you measure your progress. By doing so, you’ll have a reason to stay motivated throughout the year. Unfortunately, many entrepreneurs fall off track after they get started. However, a small bump in the road doesn’t mean the entire journey must be derailed. Instead, use this as an opportunity to find out what went wrong and improve. Then, get back at it. Otherwise, you’ll have to learn the old adage: Failure is only permanent when you quit trying.

6. Maintain a Work-Life Balance

Besides your new business, you must also focus your time at home. At its core, your home life helps motivate you in the morning. When you wake up, rushing to work on that new project might not be exciting. However, if you have a balanced life, then working won’t be so aversive. Instead, you will be ready to seize the day each morning. By living a balanced lifestyle, your efforts will be rewarded when you focus on work.

7. Build a Strong Team of Employees

Two people working at a restaurant franchise locationWhile you are central to your company’s success, other people make your business run. As you are building your crew, evaluate each individual for their talents. You should only choose applicants who will thrive in the workplace and mesh well with the rest of your team members. The stronger you can make your team, the more successful you can make your business.

Luckily, there’s a convenient tool that makes hiring the ideal applicants a breeze. It’s Sprockets, an AI-powered solution that quickly and effectively creates a “fit score” for your applicants, empowering you to see who will drive success and stay long-term. It’s not magic — it’s logic.

Schedule your demo today to learn all about how Sprockets helps you hire the right applicants and reduce costly turnover!

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What Are the Steps to Becoming a New Franchisee?

What Are the Steps to Becoming a New Franchisee? 1016 528 Sprockets

If you think the business world is hectic, overwhelming, and confusing, you are not entirely wrong. It is probably worse when you are inexperienced about your venture. The franchise venture is rapidly becoming more popular, and it is easy to see why.

Becoming a new franchisee eliminates the costly expenses that come with starting your own business from scratch. For example, you will not need to generate a business model or patent it for trademarks. Other perks include advertising and product promotion, staff training, and support services.

Learn How to Become a New Franchisee

But how much do you know about becoming a new franchisee? Restaurants are quite popular in the franchise industry, but you can also venture into other industries. You could opt into real estate, the education sector, health and fitness, pet care, just to name a few. 

Is a Franchise Enterprise Right for Me?

The purpose of getting into entrepreneurship is different for each person, and so is the capital investment. If you are not so excited about taking business risks, franchises offer a decent safety net. However, there are several factors at play, and success is not a guarantee. 

Here are some things you should consider before you start a franchise process:

  • Take time and weigh the pros and cons of buying a franchise location. Does it serve your purposes in the way you intended? What are the cons to such a goal, and how will it affect your finances?
  • The markets are a decent guide on where to put your money, but it is highly advisable to settle into something that matches your skills, personality, and goals. Money is a huge motivator, but interest and skills are what get you through the tough times.
  • In addition, think about the future. Is this what you want to be doing ten years from now?

Understanding the Franchise Process

When all is said, how do you get the job done? What is the process of becoming a new franchisee? What are the new franchisee requirements?

We will break down the process into seven simple steps:

Step 1: Research Franchise Concepts

As we had mentioned earlier, there are many more concepts you can look into that are not restaurants. The International Franchise Association has over a thousand registered franchise businesses you can look into. Alternatively, you can look up other opportunities at FranchisesForSale.com. Talking to a professional will help clear the air in terms of what you want.

This research is instrumental in finding business opportunities that fit your budget, geographical specifications, and skills. There are some websites that will help you narrow down your options based on these factors and other preferences. Alternatively, you can talk to a professional about it.

Step 2: Send an Application/Request for Consideration

Have you found a franchise concept that sets your soul on fire? Do you have several options you are seriously considering? Submit your request for information. You will hear back from the company within a week or so, either via phone or email. They will also link you to a representative.

Step 3: Consider Legal Obligations

Now you are getting more invested with your company of interest, so it is time to take it to the next level. At this stage, you are learning in-depth information about every aspect of the industry. This will include the company, the business model, and the roles of both the franchisee and the franchisor. This information is delivered in the Franchise Disclosure Document-FDD. Go through the document with your lawyer and accountant.

This is a legal requirement by the Federal Trade Commission, and it serves to elaborate on the relationship between you and the franchisor, including required fees and commitments. The FDD can be pretty detailed, but ensure you read through it all. Start with what interests you. The document will also guide you on your obligations, and it dictates what the company will and will not offer.

Step 4: Training and Support

This might be the best thing about the franchise concept — all the heavy lifting is someone else’s obligation. The franchisor has researched the market, developed the concept, and created the product and service. In addition, the franchisor gets to share their trading strategies, training, and marketing programs with you. Of course, this often comes at a fee. 

At this stage, your franchisor should outline in detail the support you should expect in terms of training, marketing, and operations. Depending on the company you are working with, you might have to travel for training programs while others will come to you instead. Also, some companies only offer online support to their franchisees.

The advertising and marketing strategies will vary significantly between franchisors, and some will offer online or phone support only. At this stage, you decide how much support you’re comfortable with and whether you can survive with what’s on offer.

Step 5: Review of the Franchise Disclosure

If everything is going smoothly, then it’s time to take it to the next level. You will have a serious conversation with the representative to review the FDD and territory issues.

Review every section of the document and make sure to ask any questions. A franchise will cost you time and money, so don’t be hasty. To be on the safe side, have an accountant look through the financial statements to estimate the accuracy of projected returns. 

Another important person you should see at this stage is a franchise lawyer. As a legally binding document, you want to ensure that your rights as an individual and business person are not tampered with or diminished. In addition, a lawyer will be able to identify any unfavorable clauses that might hurt you in the long run.

Step 6: Due Diligence

At this point, you understand the industry like the back of your hand. However, restrain from making any rushed decisions. Talk to different people at a corporate level and the other franchisees. Ask about the company and whether their expectations have panned out. Ask about any regrets or wrong decisions they think they have made. If your franchisor is hesitant to share a complete list of their franchisees, then perhaps it is better to take your business elsewhere.

Step 7: Finalize Plans

If everything has gone according to plan, then congratulations! You are at the final step of the franchise process. At this stage, you have completed the evaluation, and you are ready to sign the Franchise Agreement. Ensure your finances are in order, including management service fees and cuts to the marketing and advertising funds. Do you have enough cash to sustain your franchise until you start making profits? Also, you get to meet with executives and heads of departments who will be your close associates as you start on your new franchise business.

As an entrepreneur, it is crucial to create a business plan for your franchise. Even though it is not a mandatory accessory, it is an important tool that helps to assess your business. How is the progress of your franchise in comparison to your goals? Your accountant or franchisor could help you develop one, but ensure you stay in the loop and are aware of the figures. Review your business plans regularly.

Jumpstart Your Business With Sprockets

A new franchisee using a computerAre you ready to achieve success as a new franchisee? We’re ready to help you make it happen! The Sprockets platform empowers you to hire employees that are the precise fit for your needs. It combines natural language and artificial intelligence to determine, with absolute accuracy, the right new hire for your team (in a matter of minutes!)

Contact us for more information today or schedule a brief demo to see Sprockets in action!

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The Most Common Mistakes When Opening a New Franchise Location

The Most Common Mistakes When Opening a New Franchise Location 1016 528 Sprockets

Some people have always wanted to start a business, but they fear going through the daunting process of starting from scratch with an independent company. As a result, they set their eyes on a franchise opportunity with relatively low entry costs and helpful franchisors. They carefully line up their finances and prepare to hire a team of employees.

However, running a franchise unit requires you to consider a variety of factors to ensure success. Although it is crucial to abide by your franchisor’s conditions, there are several common mistakes people make with franchises. Don’t worry, though, because we’re here to help you sidestep these pitfalls.

1. Failure to Fully Understand the Franchise Business

You probably know what people say about those who assume. Many aspiring business owners assume they know everything concerning their chosen franchise and overlook important details. They fail to inquire with their franchisor about topics such as business plans and recommended hiring tools. As a result, they limit their success.

2. Failure to Use Your Franchisor’s Resources

Franchisors often have resources that can be helpful to you if you meet the requirements of their franchise. For instance, they have detailed information about particular locations, and they understand how their business has performed in different areas to help you select the ideal spot. However, many people rely too much on their own information-gathering efforts when opening a new franchise location. This can lead to you getting incorrect data about the market you’re venturing into.

3. Failure to Negotiate Leases

The lease terms of your intended location might be complicated. Many landlords have leases that are only favorable to them. You might fail to negotiate better lease terms that can favor your business more. In many cases, people end up signing lease agreements with hidden charges or those that require you to pay rent based on revenue. This mistake eventually becomes too costly, limiting your ability to sustain the business.

A woman looking out the window as she analyzes her franchise's competitors4. Failure to Analyze Competitors

It’s crucial to do a comprehensive analysis of your competitors to have a viable business plan and be successful. Take note of other companies selling similar products and think about how you can set yourself apart (while following your franchisor’s guidelines, of course). Simply setting up a business in an area with stiff competition doesn’t automatically mean yours will fail, though. Just make sure you do the proper research ahead of time.

5. Failure to Consider Your Target Demographic

Another common mistake with franchises is that owners don’t keep their potential customers top-of-mind when planning. Setting up a business in an area where people show no interest in your products is one of the worst things that can happen to your franchise. Take the time to conduct an in-depth analysis of your target clients in the area to understand their preferences.

6. Failure to Research Local Regulations

Opening a new franchise location requires you to agree to specific local rules and regulations, including tax and federal license obligations put forth by the area’s municipality council. These laws oversee the franchise’s registration and administrations, sales and offers, and the relationship between the franchisee and the franchisor. Conduct comprehensive research on these legal requirements. Be wary of high tax burdens and other expenses associated with owning and running a business in the area.

7. Failure to Contact Nearby Franchisees

Contacting other franchisees who have similar franchises in your target area is crucial. They can give you firsthand information detailing what they have experienced. You can ask them to give an honest opinion of what they think about the location to make sure you make the correct choice and plan properly.

8. Failure to Hire the Right Employees for Your Team

Two men in an interviewLast but not least, you’ll need an effective team to make your business operate effectively. In today’s day and age, more and more franchise owners and HR professionals are looking toward technology to do the heavy lifting for them. Consider implementing Sprockets’ sophisticated solution to hiring. It’s an easy-to-use platform that utilizes artificial intelligence to determine the best applicants for your business within a matter of minutes. It’s not magic — it’s logic.

Schedule a demo today to learn more about the Sprockets solution!

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The Fundamentals of Employee Discipline

The Fundamentals of Employee Discipline 1920 1080 Sprockets

Employee discipline isn’t easy for most managers. It typically involves verbal and written warnings regarding tardiness, no-shows, or disregard for the dress code or behavior that result in an employee write-up. Escalating from warnings to a write-up can be intimidating for most managers. But, it is important to follow a formal structure when moving an employee through the warning system to employee discipline to write-ups and termination. Follow these fundamentals of employee write ups to ensure you get it right.

 

#1 Take a Breath

Before taking any disciplinary action, it is important to take a step back and take a breath. It’s best not to take any actions while you are still angry at a person or situation. Write down what you experienced and who was involved. The next day, revisit what you recorded and decide if it stills needs to be acted on.

 

#2 Document the Problem

One of the most important fundamentals is documenting the problems that arise. From verbal to written warnings and write-ups, it is crucial to document and date each warning and store it in a secure space within an employee’s existing documents folder. It’s important to note when the incident occurred, who was involved, who else saw what happened (or didn’t happen), and what warning or notice was given to the offending employee.

 

#3 Cite the Employee Handbook

Another fundamental that can be easily overlooked is to actually cite the employee handbook or onboarding materials that were given to an employee when beginning their job. By citing that they have used one of three no-show warnings, the employee will need to acknowledge that their actions have consequences that they were aware of. Also cite what is outline for employee discipline, like less hours or a probationary period.

 

#4 Set Expectations

It’s not just enough to give a warning regarding no-shows, lack of proper attire, or poor customer service. It’s important to set expectations with the employee to measure progress and correct any issues that have been forming, when applicable. If a server is not routinely checking on diners or presents a poor attitude with other staff members, create a plan together to fix this and let them know how it will be monitored. For example, over the next two weeks, we expect [staff member name] to visit each customer’s table at least once every six minutes to refill water, take orders, check in on their satisfaction related to the food, and offer dessert. The shift supervisor will monitor the level of service their tables are receiving.

 

#5 Provide Proof of Warnings

After providing a verbal warning, it is important to follow it up with a written warning. These will be needed when progressing to a write up by showing that the specified number of warnings were given before a write-up was issued. From there, after the write-ups are issued, these documents are important to keep if they are used to terminate an employee, even in an at-will state.

 

#6 Follow Up

Lastly, it is important to follow up on the warnings or write-ups given to see if the employee has taken them seriously. Are they still showing up late? Providing poor service? Getting into arguments with management? If so, it’s important to follow your set guidelines regarding when to write up an employee. A bad employee is worse than no employee and can be detrimental to a restaurant’s bottom line and other staff members.

Overall, it’s important to follow a routine system when moving an employee from warning to write-ups to termination and stick to the fundamentals along the way to avoid legal trouble. It’s important to keep track of which employees aren’t adhering to their job requirements and are costing the restaurant lost customers, poor productivity, and even lower staff morale. 

Before making your next hire, learn how Sprockets’ Applicant Matching System ensures you only hire candidates who are like your best employees.

What to Know About Stimulus Funding for Your Franchise

What to Know About Stimulus Funding for Your Franchise Sprockets

During uncertain times, it’s truly heartening to see the federal government step in to help small business owners. It can be difficult to navigate a new stimulus program, especially when you need to stay focused on operations, so we wanted to help provide a simple breakdown for our clients.

 

What’s happening now?

Last week the federal government approved a $2 trillion stimulus package that in part gives aid to small businesses impacted by the COVID-19 pandemic.

 

How does the stimulus package help my Home Health franchise?

On Friday any small business with less than 500 employees can apply for the Paycheck Protection Program. The program allows for small businesses like Home Healthcare providers to obtain a loan equal to 2.5 times their people costs, which include payroll, benefits and taxes. If you keep all those employees for 90 days (through June 30th) the US Government will forgive 100% of the loan. The intent is to help businesses, like yours, weather the COVID-19 storm and keep you people so that you will be best positioned for the recovery.

 

What should I be doing right now?

Only a small number of banks will be approved to issue these loans, so check with your local lender and be careful for scams. Jonathan Morris, President and CEO of Titan Bank, an SBA Preferred Lending Partner based in Texas recommends that, “It is important that you apply early on. There are 30 million small businesses in the U.S. and $350 billion allocated to the program. We expect funds may run out before everyone can receive a loan.. I’d suggest only applying to FDIC-insured bank for PPP loans. Many non-banks are taking applications, but in almost all cases they are simply trying to broker this information to banks in return for a fee.”

 

What are some strategies and caveats I should think through?

  1. Laying off employees: Many industries have reacted by laying off employees. The Paycheck Protection Program was specifically designed to encourage businesses not to use this strategy. Also, consider the obstacles around health insurance when laying off or furloughing employees. Speak to your broker to understand if your current health insurance plan allows for temporary furlough.
  2. Loan forgiveness: Make sure you meet the requirements to have your loan forgiven. If you reduce the number of staff members or payroll costs are reduced by 25% or more after the loan origination, you’ll likely get a reduced dollar amount back during loan forgiveness.
  3. Payback period: If the full amount of the loan is not forgiven, the unforgiven portion will need to be paid back in two years. This comes with a six-month deferred payment window.
  4. SBA Economic Injury Disaster Loans: This may be a better option for your business if you don’t carry a lot of payroll or need funds in excess of what you’re eligible for under the Paycheck Protection Program. The downside to an EIDL loan is that you will not be eligible for any loan forgiveness.

 

When will I get funds from the loan?

Previously, getting a loan through the SBA was cumbersome and took a lot of time. That will not be true for this stimulus package. Lenders are already expanding their staff in order to handle the millions of claims that are expected to come through. In addition, they are reducing the normal amount of paperwork required. The prevailing thought is that checks will start rolling out by the end of next week. (April 10th)

 

Links to other helpful resources

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Why You Should Care About An Employee’s Financial Wellbeing

Why You Should Care About An Employee’s Financial Wellbeing 1558 754 Sprockets

Organizations have only recently understood that employee wellbeing is an aspect that affects both employees and employers. Financial wellness, in particular, goes hand in hand with emotional health and too many employees in America are worried about money. With millennials making up the largest generation in the U.S. labor force, 65% of them are worried about their finances. It’s no wonder then that many are looking for employers who offer student loan repayment assistance as 44.7 million Americans owe a total of over $1.56 trillion in student loan debts. And with 56% of workers with loans and other debts indicating that they worry about repaying their loans either ‘often’ or ‘all the time’ it’s affecting their work and costing their employers.

With roughly one in two employees worried about their finances, many suffer from depression, panic attacks, and lack of sleep, which can lead to chronic physical ailments. Clinical psychologist Carla Marie Manly explained that the burden of debt has been shown to take a major toll on mental and physical health. She noted how chronic stress can lead to long-lasting harm like greater rates of heart disease, diabetes, and chronic sleeplessness due to elevated levels of stress hormones like adrenaline and cortisol.

This is because when we’re stressed the body’s fight-or-flight response, which developed as a survival mechanism to allow our ancestors to react quickly when faced with immediate danger, kicks in flooding the body with stress hormones. The Link Between Physical and Financial Health’ by Marcus quoted financial coach Elisabeth Donati, who said that money is “tied to our basic, hardwired drive to survive.” In fact, as Donati explains, “Financial stress seems to trump almost every other kind of stress except health stress.”

In turn, it also ends up costing millions in productivity for their employer. A survey by Salary Finance indicated that American businesses are losing $500 billion every year due to employee financial stress. Lost productivity is costing employers 11% to 14% of their payroll expense, or $2,000 per employee every year. On a national level, lost productivity due to financial worries comprises 2.5% of the U.S. GDP and it’s a problem that gets worse every year. Mental wellness quickly deteriorates if financial solutions aren’t made available.

Now more than ever employers understand that by investing in the general and financial wellbeing of their employees they can net a substantial ROI. While most employers focus on aspects like flexible work hours, remote work, good work-life balance and employer-matched 401(k), for example, to keep employees happy and help reduce their stress, there is a growing need to help employees with financial wellbeing. It starts with financial literacy education in the workplace. Nearly two-thirds of Americans could not pass a basic financial literacy quiz, so teaching them how to budget and save is a step in the right direction to prevent employees from getting into crippling debt in the first place.

Second, an employee assistance program that helps connect employees with financial and mental health services they need has minimal yearly costs to the employer. Other options include setting up a rainy-day fund by partnering with zero interest loan providers that can help your employees in times of need. Although these initiatives have costs involved, over time they can pay dividends in employee retention, engagement and increased productivity.

 

Post made only for the use of sprockets.ai

By Lana Deron

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Three Major Factors That Contribute to Customer Satisfaction

Three Major Factors That Contribute to Customer Satisfaction 2048 1365 Sprockets

Customer satisfaction is comprised of numerous factors that are important to stay on top of. Customer satisfaction is important because it determines many factors that impact your business. The first impact is whether someone will be a repeat customer. In addition, customer satisfaction has an increased importance in the digital age with concern to what customers post online. Another factor, that is commonly overlooked, is how much they may spend with your business in the future. The first step in improving your customer satisfaction is by understanding the factors that impact it, which is followed by learning how to act on those factors. Let’s dive into the most common factors that contribute to customer satisfaction across industries.

 

Perceived Quality

If a customer gets a burger once per week and expects the same quality each time, they will notice when it is off. When their favorite burger isn’t cooked the same, has a soggy bun, or contains wilting lettuce, the perceived quality won’t be the same. When this incident occurs, customer satisfaction goes down. By being aware of instances of product/service inconsistencies, you can be proactive about reaching out to those customers and letting them know the steps you are taking to remedy the inconsistency they experienced. 

 

Perceived Value

If someone gets a burger from a steakhouse vs. at McDonald’s, the perceived value is different. The McDonald’s $2 burger is good, because it’s only $2. But, if they got the same burger from the steakhouse, that perceived value won’t be great. By understanding when a product or service has not met a customer’s expectations, you can proactively provide a remedy. For this example, if someone wrote a poor review/completed a feedback survey writing that they expected a $20 burger but felt it lacked the value, offer them a voucher towards their next meal to make up for their poor experience. 

Perceived Service 

The service a customer receives can be a big contention point for people. Were they greeted with a friendly smile? Did they receive receive their order quickly? Were they thanked for their business? Or did they sense a bad attitude? Did they have to wait 10 minutes before anyone helped them? While it may seem like one unsatisfactory action – like not understanding someone clearly at a drive-thru should be masked by getting their food quickly and thanking them for their order, that’s not always the case.

Understanding that one step of your business process being less than satisfactory is crucial to improving customer satisfaction. A good practice to understand where your business process may be falling short. The way to understand this is through a customer satisfaction survey. Reading through the responses of those with poor experiences can help you learn how to either improve your process, train employees better to create a consistent image, and/or learn you need to let go of certain employees who may be costing you business.

Take Proactive Customer Satisfaction Steps

Once you understand how the factors that contribute to customer satisfaction in your business, it’s important to be proactive. Being proactive can include having a “playbook” for scenarios for which customers are not satisfied with value, quality, or service. Below are a few of our suggestions to be proactive in the case of customer satisfaction.

 

Offer Customer Feedback Surveys

Unhappy customers love to complain. Whether it’s in-person to their friends on Google Reviews, social media, or in customer feedback surveys. By offering customer feedback surveys (with an incentive to take them – like enter to win free product/services), you can redirect an unhappy customer’s negative feedback while gaining insight into improving your business.

 

Train Managers to Handle Dissatisfied Customers

If you know that a customer is unsatisfied on the spot, it’s important to allow them to speak with a manager regarding their frustrations. People like to be heard.

 

Incentivize Your Employees

In an ideal world, employees would give 100% to each person that they speak to. However, that isn’t typically the case. By incentivizing your employees to give great customer service, you increase the likelihood that they give great service to everyone. Popular incentives include cash bonuses based on a set number of positive customer feedback surveys for the business and individual level. 

 

Arm Your Employees with Resources

When you are dealing with a dissatisfied customer, whether on the spot or online, it’s important to arm your employees with the resources they need to resolve the problem. Resources may include coupons, gift cards, email templates to respond to customers with.

Learning the basics of customer satisfaction factors and the strategies to improve it is important for all businesses. By being aware of where your business falls short in your customer’s eyes you can better utilize strategies to improve customer satisfaction. Using the strategies outlined above can assist you in improving your customer satisfaction rating and ultimately, your customer lifetime value.

Leaves and text reading "give thanks"

How to Show Your Employees You’re Thankful

How to Show Your Employees You’re Thankful 2048 1365 Sprockets

As we near Thanksgiving, gratitude is top of mind for many. Learning how to show employees you’re thankful is key to making them happy not only around the holidays, but for keeping them engaged year-round. Employee engagement is key to retaining great people. In addition, when employees are happy and engaged in the workplace, it increases productivity. It’s not too late to show your employees that you’re thankful for them this holiday season. 

 

Write Thank You Notes

As simple as the idea may seem, who doesn’t appreciate getting a handwritten thank you note? Taking the time to write thank-you notes unique to each team member is a cheap, effective tactic. When writing thank-you notes, be sure to include everyone on your team. When doing this, be sure to check your list twice. Even if you don’t interact with all of your employees, take the time to speak to the managers that do. Having people recognize both big and small accomplishments leads to a sense of belonging. This tactic holds yearlong benefits for both the employee and employer.

 

Host a Thanksgiving Potluck

Sharing a meal is always a good time to strengthen relationships. The same idea applies to the workplace. Gathering your team for a meal during the day is a great time to spend extra time together and create memories. By providing the main dish, you put forth the effort to create a positive environment for your employees. In addition, during the meal is a good time to acknowledge the contributions of each team member. In fact, a Cornell study found that teams who share meals are more effective than those that do not.

 

Implement a Monthly Recognition Program

A key to reducing employee turnover is to let people know they are valued. One strategy to do this is by creating a monthly reward system. These are typically structured by creating 3-5 categories, dependent on company size, that people can be nominated for. Category ideas may include innovative ideas, best teammate, exceptional work, and more. From there, ask employees to nominate their co-workers for the awards through an online system. Tallying up scores is all that’s left to determine who the monthly winners are. The awards for each winner should be announced in a company-wide manner, whether in-person or mass email, to reinforce the recognition. Awards for these winners may be gift cards, movie tickets, cash, PTO, or other ideas relevant to your business.

When doing these recognition programs, think beyond actions. These monthly meetings are also a good time to recognize work anniversaries. Have someone who’s been around for 5 years? 10 years? More? Let them know that you’re glad they’ve stuck around and give a brief recap of their contributions to the company. Showing new employees that the company values when people stay is an important message to convey.

Overall, when taking the time to show employees you’re thankful is easy, yet effective. Letting employees know that you’re thankful for them and their hard work is something that all managers can do – regardless of budget. From buying $1 thank you cards at the Dollar Store to starting a monthly reward system, when employees feel appreciated they are happier. When employees feel happy and connected to their work, they become even better employees! 

 

Let us know if you try out these tactics for showing employees you’re thankful and what works for your business.

A woman on a laptop researching management styles

Are These Management Styles Holding Back Your Business?

Are These Management Styles Holding Back Your Business? 1920 1279 Sprockets

If you take a step back from your restaurant and peer in, you may see a friendly cashier or a glimpse of a cook in the back. These frontline workers have a large impact on your business, but those who give them direction impact them. This is why it is important to routinely take a step back and evaluate if your management team is effective – their work and authority trickles down into every aspect of the business. We encourage you to identify whether these management styles are occurring in your business and hindering growth and causing other employees to quit.

 

Stuck in the Mud

Managers have typically gotten to where they are because of their experience and hard work. However, years and years of experience can make people apt to avoid changing their ways – and the way the business works. If a frontline employee brings up a new idea for automating the process of relaying orders to the cooks, what does the manager say? “No thanks, we already have a system in place” or “Interesting, tell me more about that”? Understanding if your management team is stifling innovation and putting down other employees is important to recognize and act on.

 

Short Tempered

Managers with a short temper can be detrimental to any business. Yelling at staff members, making snide remarks, and/or ignoring employees are all signs of a bad manager. These kinds of actions, even if rare, can cause other employees to quit, leave a bad impression on customers who may overhear, and simply stifle growth. By not allowing this type of behavior from the management team, or any employee, it conveys the message that your business does not tolerate bad behavior and allows you to find another employee that better fits your culture. 

 

Distant and Dazed

Do you have managers who sit in the back office their entire shift? They don’t know the names of the other employees? They don’t communicate effectively with employees or customers? Managers who act distant from their employees or dazed during their shifts can be difficult to detect. These managers often don’t receive as many complaints and don’t anger the employees they oversee. However, by not actively being engaged, they are stifling the growth of the business by not overseeing daily operations. They may be missing out on ways to automate processes, diffuse arguments, give an extra level of customer service to guests, or simply learn from employees which shifts they prefer. 

 

What You Can Do

While each of these management styles are different, none of them are helping your business. The first step to fixing a bad management problem is to discover that it exists. To do this, it is important to regularly get feedback from your employees and customers regarding management. Check out this guide for feedback slips. 

In addition, pop-in to a shift unannounced and simply observe. Is the manager on duty out with the other employees? Are they in the back office? Communicating with customers? You can learn a lot by sitting back and watching your operation occur. 

If you discover that you have one of these management styles occurring in your business, it can be fixed. You’ll want to first determine whether you are going to let them go or try to correct the behavior. If you decide to let them go, check out this advice first regarding letting go of employees. If it’s determined you will give them another chance to correct their behavior, be sure to track their progress by getting regular feedback from employees and taking note of when they may be mentioned in customer feedback surveys.

When it is time for you to make your next hire, whether at the management or frontline level, Sprockets’ hiring solution can help ensure you only hire people who match your positive company culture. Learn how Sprockets can help.