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

Starting and running a small business is a rewarding yet challenging journey, with statistics showing that 80% of businesses fail within the first five years. Many of these challenges can be grouped into four key areas: capital, staffing, maintaining service standards, and managing risk. For small business owners, franchising offers a strategic solution to overcome these obstacles and create long-term growth.

Finding the Capital to Fund Growth

Expanding a business requires substantial investment, whether for purchasing equipment, hiring additional staff, leasing new premises, or increasing fleet capacity. These costs can quickly escalate, often ranging from $100,000 to $200,000, with no guaranteed return on investment. This financial hurdle is one of the most significant barriers to scaling for small businesses.

The Franchise Solution
Franchising shifts the financial burden to franchisees, who fund their business units, including all setup and operational costs. This model allows small business owners to expand rapidly without needing significant upfront capital. At Tereza Murray Franchising (TMF), we help design franchise models that minimise financial risk while enabling you to scale and compete effectively.

The Challenge of Hiring and Retaining Staff

Recruiting and retaining skilled staff is time-consuming and expensive. Employee turnover, which often occurs within 18 months, disrupts operations and eats into profits. Poor-performing employees exacerbate these challenges, leaving business owners with limited options to replace or retrain.

The Franchise Solution
Franchisees are business owners, not employees. They have a vested interest in the success of your brand, making them highly motivated and committed to excellence. On average, franchisees stay in the system for eight years, compared to the short tenure of most employees. TMF supports franchisors in providing training and systems that empower franchisees to consistently deliver high-quality service, ensuring your brand is represented with pride and dedication across all locations.

Maintaining Exceptional Service Standards

As businesses grow, maintaining the level of customer service that initially built the brand becomes increasingly difficult. Rapid growth often leads to rushed hiring and inadequate training, which can harm customer satisfaction and tarnish the brand’s reputation.

The Franchise Solution
Franchisees are highly motivated to maintain exceptional service standards because their livelihood depends on their business’s success. With "skin in the game," they are more likely to deliver consistently excellent service. TMF helps franchisors establish systems that provide franchisees with comprehensive training and support, ensuring the same high standards are upheld across all locations.

Mitigating Risk in Business Expansion

Opening new locations requires significant investment and involves relying on managers to oversee operations. Changes in the market, increased competition, or labour shortages can quickly affect profitability, leaving business owners exposed to substantial risks.

The Franchise Solution
Franchising mitigates these risks by transferring much of the operational responsibility to franchisees. As owner-operators, franchisees can adapt quickly to market fluctuations without the burden of high management costs. TMF works with businesses to create franchise systems where franchisees manage day-to-day operations while franchisors benefit from consistent royalties and scalable growth.

Why Franchising Works for Small Business Growth

Franchising addresses the most significant growth challenges small businesses face: securing capital, managing staffing issues, maintaining service quality, and mitigating risk. By partnering with Tereza Murray Franchising, you gain access to the expertise and resources needed to build a robust franchise system.

Our tailored franchise development solutions are designed to help New Zealand businesses expand sustainably, leveraging motivated franchisees to drive growth while reducing financial and operational risks. With TMF’s support, you can navigate the franchising process confidently, ensuring your business thrives well into the future.