- November 7, 2019
- Posted by: Corina Vucic
- Category: Audits
You’ve established your franchise, you’ve put all the systems in place, you’ve recruited great franchisees – you’re flying. But how do you avoid falling back into the pack?
Brands will not grow or even survive if they are standing still. They need to be continuously improving. This doesn’t mean that you need to be always looking for a game-changing offering or constantly implementing huge changes. Small, incremental changes, when frequently applied, add up over time to a complete evolution.
So how do you identify which levers to pull, which dials to tweak? Audits. Compliance checks. Health checks. Best practice checks. That’s how.
Audits are the crystal balls of business. Carefully analysed, they can point the way to a golden future of relevant services and wanted products or highlight an impending catastrophe of non-compliance and dated products and services.
The types of Audits:
External audits are those that are completed by the Franchisor on the businesses of franchises:
Why? To identify areas where they can assist their franchisees to improve their operations and to work to optimum performance across all aspects of the delivery of the brand.
Why? To help franchisees adopt new methods, policies and procedures, by identifying gaps and then up-skilling and educating the business owners in these areas.
Why? To support franchisees in realigning their goals and priorities to drive the best outcomes for the business performance.
Internal audits are those implemented by business owners on their own business. These owners are proactive leaders rather than reactive followers.
Why? Business owners who set up internal audits benefit from this routine approach by quickly identifying gaps in processes or skills deficits within the team which need to be refreshed or trained. This leads to improved work methods which increases output and leads to more satisfied clients and improved financials.
Internal audits can help Franchisors can gain valuable knowledge of how the better business owners within the franchise brand operate and they should help these pro-active owners by investing in audit platforms to support the task. Software that will assist in the tracking, scheduling and optimising the learnings through a targeted action item list.
Why? A business that is continually evaluating its processes and implementing improvements will become a well operated, profitable business that will attract the best employees, and, when the time to sell comes, will attract a lot of eager buyers.
“Snack-sized” audits provide the best traction.
Why? Short and sharp audits enable the auditor/ field coach to jump in, review the aspect of the business audited and through the reporting structure leave the business owner an action list of improvement which are manageable, not onerous.
The value of an audit
During my career in franchising, I have found that audit results provide the opportunity for franchisors or business owners to have honest communication around issues. There is also the educational value of audits, the picture they paint about a business. Not just its shortcomings but areas that are going well and can be amplified.
At a macro level, insights from audits are a deep dive discovery mission into trends within the franchise brand. They are a pulse check that enables franchisors to frame their priorities and allocate their resources.
When an audit reveals a knowledge or skills deficit, take this as an opportunity to grow the expertise of your team and therefore the output of the business.
The who, what and when of audits
What do you audit?
• Performance (business plans, operating procedures, compliance adherence etc)
• Promotional (brand, marketing, social media, POS)
• Products (quality, availability, pricing)
• People (skills, KPI’s, culture, entitlements)
• Profitability (cash flow, forecasting, competitor analysis)
All these audits are operational in nature. It’s about strengthening the inner workings of a business and their teams – building a solid foundation based on ongoing oversight.
New legislative and regulatory expectations require tight integration into your systems and practices. They are a high risk to the business and need constant evaluation.
How often do you audit?
• There’s no hard and fast rule as to how frequently an audit must be carried out. But what gets measured, gets done. Audits drive improvements.
• A full audit of your business at least once a year is sound practice. This audit can be completed in one hit or on a rolling schedule to spread resources. What is important is that there is a plan to analyse the results and implement necessary changes and improvements.
Who should carry out the audit?
This is a complex question and there are a variety of approaches.
Field Coaches as auditors
Franchisors invest heavily in their field coaches with their primary role being to improve business performance. Traditionally, the KPIs of a field coach included an audit of all franchisees.
If audits are the tool to improve the performance, does it then make sense for them to carry out the audit, extract key learnings and implement execution of change? The field coach as auditor model has worked well for the franchise industry, but is it the best model? Is there conflict when you are carrying out the audit and then coaching the business owner on remedial action? Does this compromise the relationship? Also, a field coach is unlikely to be an expert on every aspect of the business disciplines including the complexity of the legislation, rules and regulations. Is this an insurmountable problem?
External subject matter experts as auditors
Utilising external subject matter experts to carry out audits has some tangible benefits. They provide an unbiased approach; viewing the business with fresh eyes and carrying no pre-conceived ideas about how something should be done.
They have a forensic level of expertise which very few field coaches possess which can often mean that the conclusions and insights drawn from the audit are more substantial.
Benefits of an external audit for the field coach
Taking the audit role away from a field coach allows them to step into a true coaching, mentoring and training role with the business owner and their teams.
Taking the action items from an external audit report enables the field coach to see what they may have overlooked and, if necessary, re-set the planned outcomes for their coaching relationship with the business owner.
With buy-in from the business owner, the field coach can help implement change and provide constructive follow-up post audit. This structured approach enables business owners to keep improving, holds them accountable and guides them to strengthening the business operations, their team and hence the deliverable to their clients.
Taking away the auditor role from the field coach frees up more of their time for education, support and mentoring. Improving businesses.
Auditing a business is essential. But audits alone are useless unless you have a plan to analyse the results and implement the changes that will improve the business. Without audits and follow-up action there won’t be sustained, viable growth.
Choosing a highly capable subject matter expert to carry out your audits provides you with a fresh, detailed perspective on your business. Choosing an auditor that will not only structure the audit but also analyse the results and provide you with recommendations and action plans is the path to rapid improvement.