The 4 Biggest Growth Challenges for Small Businesses and How Franchising Can Help

Starting and running a small business is no easy task, and it's no surprise that 80% of businesses fail within the first five years. The biggest challenges small businesses face can generally be grouped into four main areas. However, franchising your small business with the help of a franchise consultant can provide solutions to these challenges and help set you up for long-term success.

Capital to Fund Growth

One of the main barriers to growth for small businesses is finding the capital to expand. Whether it's adding another vehicle, leasing new premises, purchasing equipment, or hiring more staff, these costs quickly add up. Before long, you're looking at a $100,000-$200,000 investment with no guarantee of a return.

The Franchise Solution

By transitioning to a franchise model, franchisees take on the responsibility of funding their own business unit, including all setup and running costs. This means franchising your small business allows you to expand rapidly without the need for significant capital investment. Franchise development consultants and our franchise consulting services can help you design a franchise model that enables you to compete with larger companies while mitigating your financial risk.

People

Hiring and retaining the right staff is often one of the most time-consuming and costly aspects of growing a business. Investing in recruitment and training and then losing employees within 18 months not only disrupts your operations but also eats into your profits. Worse, when you have poor-performing staff, the process of replacing them is both expensive and lengthy.

The Franchise Solution

Franchisees are business owners, not employees. They're passionate, committed, and heavily invested in the success of your brand. The average franchisee stays in a system for eight years, compared to the average employee’s 18 months. With the right franchise consulting services, you can ensure your franchisees receive the training and support they need to deliver high-quality service consistently. As leading Franchise advisors in New Zealand, we can help you create a franchise network filled with motivated owner-operators who will represent your brand with pride and dedication.

Maintaining Service Standards

As businesses grow, maintaining the exceptional customer service that helped build the brand can become a challenge. Increasing demand can lead to rushed hiring decisions and inadequate training, resulting in poor performance and reduced customer satisfaction. Many small business owners tolerate subpar employees because they feel they can’t afford to lose them.

The Franchise Solution

Franchisees have a vested interest in maintaining high service standards since their livelihood depends on the success of their business. With "skin in the game," franchisees are less likely to cut corners or deliver subpar service. As Franchise advisors, we can help you structure your model to ensure that all franchisees receive comprehensive training and support so they maintain the same high standards across all locations. Through our franchise consulting services, you can also establish a system that helps franchisees grow sustainably and maintain quality as demand increases.

Risk

Expanding a business by opening new locations is inherently risky. You’re investing significant capital and relying on managers to run day-to-day operations. Market changes, competition, or labour shortages can quickly affect your profitability. When you’re managing everything yourself, flexibility is limited, and your exposure to risk is high.

The Franchise Solution

A franchise model reduces the risk of expansion by shifting much of the operational responsibility to the franchisee. As owner-operators, franchisees can adapt more quickly to changes in the market or workforce because they don’t have the overhead of management salaries. By working with TMF, a leading franchise consultant in New Zealand, you can create a model where your franchisees handle the operational risks while you continue to earn royalties based on their success. This allows you to scale without the financial exposure and risk of running every unit yourself.

Conclusion

By addressing key challenges like capital, staffing, service quality, and risk, franchising offers a viable solution for small businesses looking to grow. With the support of experienced franchise consultants and franchise development consultants, you can build a franchise system that leverages the strengths of motivated owner-operators to expand your brand efficiently and sustainably. Whether you’re looking for franchise consulting New Zealand or need expert advice on how to structure your franchise, the right franchise consulting services can help you overcome growth barriers and achieve your business goals.