With the new financial year craziness wearing off and we settle into our new normal, now is a good time to rethink your strategies. For this year in particular, it is essential that you do this. It is essential that small businesses are on the ball in thinking creatively. Here are some simple tips to Read More…
How to improve your business through unpopular but necessary decisions
Thu 16 July 2020 - 6:08 amExpert | Featured
Sometimes it takes an outsider to see things clearly. That’s how I felt as a former physiotherapist building a network of allied health businesses into a franchise. When I first started practising in 2004, I trod the well-worn path of becoming a practitioner owner believing, like many, that I could do it all.
Recently however, I’ve changed my mind. Building a good business is a separate practice from providing quality service, and it is this realisation that set me on a journey involving many difficult business decisions to change the way we operate. I decided to change how we franchised my business, Physio Inq.
Thinking from the outside
The first inkling I had that things could be different was when I took a closer look at the traditional franchising model. Not coming from the franchising sector actually freed me to see that the model didn’t suit the kind of business network I wanted to build, one where practitioners served clients, the business supported practitioners to do the best job of serving clients and the franchise supported the business in that endeavour through assistance with everything from branding and marketing to training and leadership development.
This servant mentality seems to be an outlier concept in franchising, where it’s far more common for a franchisor to see themselves at the top of the hierarchy with franchisees supporting them. In order to upend the hierarchy, I had to flip the model, and perhaps it will be an unpopular decision in the eyes of both the allied health industry and the franchising sector.
Specific to the allied health sector, we have an extraordinary number of physios who are high achievers, with the confidence to take on the dual role of practitioner owner, which means most believe they can do it without help. The reality is the vast majority of physio clinics will fold within a few years because they can’t do it themselves.
Because it was the path that I followed, I initially believed that recruiting practitioner owners for my franchise was the best course of action. Now, I’ve decided to open up franchise opportunities to non-physios, which is unusual enough to attract criticism. What I’ve realised, however, is that non-practitioner owners will have more time to work on, rather than in, the business. Practitioner owners can be and are successful, but the more time spent on the business side, the bigger the opportunity to grow the business beyond practising capacity.
It’s not about the money
Fees were also a problem. Excessive fees presented a barrier to entry that meant potential owners were people with enough money first, not necessarily people who would be the best franchisees. I ran the numbers and found out that we didn’t need much to onboard a franchisee, so we reduced the cost of signing on, which works out as about 85% less than the average franchise fee.
I won’t be surprised to receive backlash for this; the franchising industry thrives on selling a brand and securing money for that upfront, before they’ve shown value to the franchisee. I’ve also heard franchisors say that fees have to be high enough to keep the ‘tyre-kickers’ out. Personally, I would rather screen franchisees than create an artificial barrier for people who might be perfect for the role.
The punitive measures to exit a franchise are also prohibitive to a productive franchise relationship. If a franchisee is locked into the network because of the exorbitant costs or legal repercussions to leave, it doesn’t help anyone. An owner who doesn’t want to be there but is forced to hang around is poison for the franchise.
Once I realised how backwards this was, I decided to get rid of exit fees and lock-in contracts. Any franchisee of ours is free to leave the network if they don’t feel committed. Of course, there’s flak from this as well, with people in franchising saying it encourages franchisees to be fickle. I don’t think so. I just don’t want exit fees and contract obligations to be a bad reason for them to stay.
There is an element of short-term pain for what I believe will lead to long-term gain. We’re now in a teething period where we’re about to be onboarding non-physios as clinic owners for the first time, so we are relearning how much they will need to know about clinics in order to be a successful Physio Inq franchise owner. Additionally, since we’ve lowered our buy-in fees, we’re taking an upfront hit to our franchise capital while expanding our marketing and development programs. These programs work best at scale, so the numbers need to balance in what is a transitional period for us.
And lastly, I take it in my stride that doing something new may attract sideline criticism, but in the end we will be the evidence for our own success or failure. These difficult but necessary decisions are simply risks that a business must endure to advance, otherwise we would be stuck in a template doing the same things as everyone else. Are you brave enough to make an unpopular change to your business?
Jonathan Moody is the founder and CEO of Physio Inq.