Ethel Nyembe To many entrepreneurs a franchise offers a secure opportunity for getting into business on their own.  The headaches associated with identifying a site, shop-fitting, training and even marketing are usually considered and met by the franchisor.  To a budding business person, it is obvious that a franchise is the way to go. According to Ethel Nyembe, Head of Small Enterprises and Franchising at Standard Bank , the world of franchising like that of ‘ordinary’ business is constantly growing and changing.  As a result, potential franchisees have a wider choice of activities to invest in than ever before. It is true that most franchise operations for major brands succeed, with about 80% being successful, but consumer tastes can change so the continued prosperity of a franchise is never guaranteed.  This might seem confusing, but there are tested ways of finding a business opportunity that suits you. “It pays to start taking the passion for business ...

Ethel Nyembe The economy may be under pressure and consumers may be spending less, but the outlook for franchising remains strong for 2016, with increasing competition and the entry of new players such expected to offer franchisees new opportunities,writes Ethel Nyembe, Head of Small Enterprise at Standard Bank . Setting the pace for 2016, will be increased activity within the franchise sector, particularly the fast food franchises, as international brands which announced their entry into the market this year look to establish operations around the country in the New Year. One only has to look at major shopping centres to see that competition in the quick service restaurant subsector is gearing up. There is a concerted effort by new entrants to establish outlets close to those of existing competitors.  For consumers this is great news. Their product choice will expand as competition increases. There is no doubt that 2016 will be a year in which consumers will be spoilt ...

Ethel Nyembe In a few short weeks, another year will draw to a close and thousands of South Africans will begin setting off for holiday destinations around the country. For franchise owners, especially those in the fast food business, their busiest and most lucrative time of the year awaits. But, says Ethel Nyembe, Head of Small Enterprise at Standard Bank, being ready for the festive business boom means making sure that all preparations are in place.  Timely preparations mean planning for all contingencies to ensure, as far as possible, that a successful and profitable holiday season is guaranteed. Unfortunately, being realistic in these times means that precautions are taken to upgrade security, and safe cash management procedures. “The holiday season is all about great sales and increased turnover. This, unfortunately, means pressure on staff that have to cope with increased foot traffic, increased stock holdings to cope with demand and more effort being put in to ensur...

Ethel Nyembe The recent decision by the South African Reserve Bank to increase the interest rate to 6% has impacted on all sectors of the economy from consumers, big conglomerates to franchisees. As with all business enterprises, the economic conditions of the day impact directly and indirectly on the operations of franchises – their production, management, pricing – and so must be analysed carefully and managed strategically.  Ethel Nyembe, Head of Small Enterprise at Standard Bank says, “The recent interest rate hike combined with myriad other economic challenges certainly puts franchisees under pressure, and so, with the rate only expected to rise, they must plan carefully to mitigate the foreseen side-effects for future success.” “Fortunately, there are a number of strategies that can help franchise owners weather this economic storm.” Limit your spending: It is common to underestimate the costs involved in buying, opening and maintaining another franchise, but ...

Ethel Nyembe Buying a franchise may seem like a short cut to business success. However, being a franchisee also comes with great responsibilities. As a result, it pays to ask the right questions so that you know exactly what your long-term obligations will be, especially when it comes to ‘freshening-up’ your franchise outlet. “Successful franchised outlets attract a lot of customers. It is inevitable that over time, the kitchen, and its appliances - and most importantly to patrons - the customer service areas will show ‘wear and tear’ and begins to look worn-out. It is when the franchisee is unexpectedly faced with the responsibility of freshening up the outlet, which can often be costly,” says Ethel Nyembe, Head of Small Enterprise at Standard Bank. “Many people who buy franchises, whether they are new or well-established outlets, do not realise that there are often contractual obligations placed on them regarding the refurbishment of their facilities. These can require that a...

Attracting and selecting the right franchisee – key for success  Recruiting quality franchisees is becoming increasingly essential for every franchise business, as the wrong fit can seriously damage the reputation of the franchise.  Ethel Nyembe As the franchise sector continues to grow at a fast pace, so does the competition as franchisors strive to make their brands more appealing to potential franchisees. This often leaves franchisors with the challenge of attracting and selecting the right franchisees with the right skillset, work ethic, abilities and competencies to back their vision. “One of the success factors for franchise systems is market penetration which is often achieved through expansion, by opening new stores with quality standards that match the brand – through franchisees. The wrong fit, however, can seriously set a franchise’s growth back many years or cause irreparable damage to its reputation,” says Ethel Nyembe, Head of Small Enterprise at Stan...

What to consider when investing in a new franchise brand Many entrepreneurs entering the world of franchising often find it challenging to decide whether to go with an established brand or throw their hard-earned savings into a totally new venture.  “The dilemma of staying with the tried and trusted or going with something new that seems to offer great opportunities is something many potential franchisees face”, says Ethel Nyembe, Head of Small Enterprise at Standard Bank.  “However, if you are considering a start-up franchise operation, it is best to spend some time doing research and also asking a few probing questions,” advises Ms Nyembe.  The points to consider before signing a franchise agreement with a newly launched franchise are: It is an opportunity to invest in a new concept and fresh products The concept and products may excite you, but you need to look at both with a critical eye. For example, you need to know who you are targeting with your prod...

Spouse’s support key when taking the entrepreneurial leap When your partner decides to leave a secure job to start a business, there is often a lot of uncertainly on whether it is a good choice and how it will affect the relationship. One thing is for sure, though: to make it work, to reach entrepreneurial success, you will need to work together, trust each other and most importantly, set financial boundaries. Ethel Nyembe, Head of Small Enterprise at Standard Bank says, “When you are used to a steady income, the unpredictability in your finances can be really stressful and careful money management is vital in this situation. While your partner may be excited about the future, you are perfectly within your rights to get involved with the financial decision-making. For example, if he/she wants to cash in your savings or increase the mortgage on your home to fund the business, you can and should draw a line in the sand.” In most cases, starting a business from nothing can place q...

The correct financing for a franchise can heighten chances for success Ethel Nyembe There are numerous options available to fund a franchise. Careful evaluation and management of these options should see you on the path to commercial success and wealth. Establishing a business requires the investment of a great amount of time, effort and money. Most potential franchise owners do not have the capital needed to launch and run an enterprise effectively, and therefore rely on borrowing. “For many, the opportunity to launch a business is created by a pension or provident fund payment or, very commonly, from retrenchment cheques when leaving the corporate world,” says Ethel Nyembe, Head of Small Enterprises at Standard Bank. “There are, however, other, more conventional ways of finding finance.” Below, Ms Nyembe suggests and explains the more established methods of funding a commercial enterprise, and which approaches to avoid. Friends and family “Many potential franchise own...

Eight common reasons why franchises fail Ethel Nyembe Buying a franchise doesn’t automatically guarantee success; commitment to developing the skills needed to manage a business is key Aspiring entrepreneurs who want to avoid the high risk of failure associated with small businesses often look to franchising, assuming that a recognised trademark and support is a guarantee of success. Although it is true that franchises have a higher success rate, it is not true that they cannot fail. As it is the case with other businesses, there are several reasons why franchises fail, says Ethel Nyembe, Head of Small Enterprises at Standard Bank. “Enhancing your chances of becoming a prosperous franchisee can depend on addressing the common issues that can impact on a franchise by addressing them upfront.” “One of the primary reasons franchises fail is because potential franchisees often rely too much on the professional assistance and systems supplied by franchisors. If you are going to ...

Budget Speech positive for Small Businesses Ethel Nyembe Small businesses in South Africa can breathe a sigh of relief following Finance Minister, Nhlanhla Nene’s announcement that businesses with turnovers of below R1 million a year will have their tax rates reduced from 6% to 3%. Ethel Nyembe, Head of Small Enterprise at Standard Bank says the incentives will help small businesses to establish their businesses more firmly and increase profitability. The practical benefit of reducing the tax rate will be on reducing operating costs for SMEs, who will be able to plough the windfall back into their businesses. “Making matters even more attractive for SMEs is the move by SARS to have small business desks set aside at key offices - this will vastly ease the red tape that previously posed a challenge for SMEs.” Although no details were supplied on how the R3.5 billion being allocated to the Small Business Ministry will be utilised on the ground, it is encouraging to note that...

Staff training builds skills, loyalty and profits in small businesses Ethel Nyembe In many small businesses, training is regarded as a luxury; something that cannot fit into the average day. Although the focus of any small enterprise should be meeting customer expectations, it is training that can improve customer experience and boost profits, asserts Ethel Nyembe, Head of Small Enterprise at Standard Bank .  “When it comes to training, many people think of a boardroom, expensive technology and high-priced presenters,” says Ms Nyembe. “This does not have to be the case; training that is effective is targeted, but that does not mean costly. The beauty of training is that it does not necessarily mean major costs and time off work for people who are needed to drive sales.” Some economical training options that should be considered are: Product training. This can be provided on the job with an expert - possibly the business owner - providing insights on a regular basis t...

Ensuring debit orders are legitimate is a dual responsibility Although recent actions taken to tighten up debit order rules will undoubtedly reduce the incidence of disputed deductions from accounts, there is still a mutual responsibility for both the service provider and the customer to ensure that debit orders are correctly authorised, says Standard Bank. The key to ensuring that debit orders are correct is by using written mandates that authorise a company to process debit orders on a client account on a regular basis, says Ethel Nyembe, Head of Transactional Products and Services Business Banking at Standard Bank.  “It is important to note that banks fulfil the function of a payment facilitator. A debit order is therefore not a contract between the customer and the bank, but an agreement between the account holder and an external company.” Typically, debit orders are instituted against accounts when a company has agreed on dates and amounts that are to be deducted fr...