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1: Hire a Bookkeeper, Avoid a Disaster!
From Barry Knepper, founder, The Franchise CPA
Don’t try to manage your books yourself, sitting at home at 11 p.m. That won’t work, and it will create a terrible chain reaction. Consider: If you don’t have organized books, then you make it very difficult for an accountant to complete your audit. If you can’t complete your audit, you can’t update your franchise disclosure document (or FDD), and for most companies, that needs to be updated every April 30 in order to sell franchises. So if you haven’t updated your FDD, you’re in a dark period, can’t sell any new franchises, and can’t even talk to people about new franchises.
I see this happen with new startup franchisors. They have a bunch of enthusiasm in the beginning, they go out to sell locations, and then … they don’t sell any. It’s not uncommon in your first year — you’re competing with 3,800 other brands! But then they feel discouraged, and they think spending money on legal fees to update their FDD is a waste. And they fall into a catch-22; they’re not investing in growing their business, and their business isn’t growing. Here’s my solution: If you have a really great employee who doesn’t have the money but has the knowledge to be your first franchisee, finance them and get them into business. Who does a prospective franchisee call if they’re thinking about joining your system? This franchisee you just helped! So they’ll say good things about you, and you’re on your way. Now go hire that bookkeeper.
2: Things to Remember
From Michael Mabry, COO, Mooyah Burgers, Fries & Shakes
The Dallas-based chain has 85 restaurants worldwide, with plans to open another 20 in the next year. That growth requires a forward-thinking CPA — which Mooyah Burgers, Fries & Shakes found in the firm Moss Adams. They learned to…
Grow and change.
Mooyah Burgers used to work with a small local firm that Mabry loved — but three years ago, he walked away. “They did great work for us, but as we grew, our complexity grew,” he says. “We just needed more support.”
Seek out specialists.
While Moss Adams doesn’t work exclusively with franchisors, it has accountants who specialize in the space — which gave Mabry peace of mind. “They’ve helped us understand not just tax and auditing laws, but also our budgeting and income disbursement.”
Always look ahead.
“In the past, a new accounting rule would come out and we’d find out about it at the end of the year and have to restate our financials,” Mabry says. “Moss Adams tells us what’s coming two or three years out, so we can make decisions now.”
3: Unexpected Success
From Allen Peake, multi-unit franchisee, Fazoli’s
What he expected: Peake has worked in the franchise industry for decades (and he used to be a CPA). So three years ago, when he opened his first Fazoli’s locations in Georgia, he expected his firm McNair, McLemore, Middlebrooks & Co. to help him with changing standards and tax information.
What he got: The firm’s information has helped Peake plan for growth. “If we’re thinking of opening a few more restaurants in a couple of years, but there are really good tax incentives to purchase equipment right now, they alert us to those facts, and maybe we pull the trigger on that expansion a bit earlier,” he says.
December 13, 2018 at 09:09AM