Getting a loan has never been easy, and funding for small businesses has been even more difficult since the financial crash of 2008.  Small business lending is less of a priority for banks nowadays for a variety of reasons:  high transaction costs associated with small business loans, new regulations that call for increased capital requirements against business loans, and a decrease in the number of community-focused banks.  This is responsible for a 20% decline in the rate of small-business lending from before the crash, resulting in 80% of small business owners who apply for a loan being rejected, and small business loans falling to under 30% of total bank loans from previous levels of over 50% (Fundera).

Running a business is becoming easier every day.  Take advantage of these tech tools for small businesses to supercharge your growth and streamline your operations and expenses.

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McDonald’s has been evolving, mostly due to the leadership of CEO and President Steve Easterbrook.  The company is adapting to changing tastes in the market: more millenials who prefer snack-type food to burgers, an increase in demand for healthy food options, and new competitors in the marketplace, such as Chipotle and In-N-Out Burger.  Easterbrook has said “The corner of our System is our powerful and enduring brand…My priorities for McDonald’s as a modern, progressive burger company are three-fold: driving operational growth, creating brand excitement and enhancing financial value.”  These factors led McDonald’s to announce their turnaround plan in 2015, of which all-day breakfast is the most visible (and popular) manifestation.  An important, but often overlooked part of their strategy is refranchising.  The company has raised their global refranchising target to 4,000 restaurants through 2018, with a new long-term goal to become 95% franchised.

But what is refranchising?  Refranchising is the sale of corporate units (restaurants in this context) to franchisees.  There are lots of reasons why companies choose to refranchise.  Often, a franchising business is more profitable and has lower capital requirements, while remaining insulated from volatility in operational costs and sales.  A component of the increase in profits is that franchisees are better business operators, often outperforming the franchisors they took over from.  Franchisees are ideally situated to succeed, as their only focus is promoting the profitability of their particular location, and they don’t have to worry about the success or operation of the brand as a whole.  Franchisees are often entrepreneurial in attitude, and find more success in business growth and development than managers.

This has big implications for you.  Refranchising can be a very profitable business opportunity for the motivated entrepreneur—especially noting the big trends towards refranchising in the marketplace.  Keep your eye out for juicy deals popping up on the horizon as investors put pressure on chains to demonstrate profitability and pay down debt, causing them to increase refranchising efforts.  If you decide to take on the task of purchasing and running a franchise, remember to keep a few tips in mind. 

Take care to not overpay for a store.  Often franchisors refranchise struggling locations to move them off the balance sheet and make them somebody else’s problem.  Generally, the normal market rate is 4-5.5x EBITDA; ask for financial statements to corroborate a valuation.  Detailed and accurate financial information is very important, make sure you can acquire and evaluate it.

Consider more creative ownership structures apart from asset sales with limited representations and warranties.  For example, some franchisees may want the franchisors to distribute assets as regional entities and do a stock or membership sale.  This can often be more efficient and profitable for the franchisor and franchisee.  There are a lot of possibilities today to find a transaction that matches your business interest, risk, and tax requirements.

Note that different franchisors offer different incentives for franchisees.  Some popular ones are royalty relief, advertising funding assistance, deferring franchise fees during new developments, and offering free training services. These can often be make-or-break perks, so be sure you’re aware of the possibilities.  During the negotiation process you’ll be able to maximize your return from the franchisor.

The most important factor is to confirm your franchisor has a well-developed strategic plan for the future that includes refranchising.  The franchisor-franchisee relation is a symbiotic one—ask important questions like how they’ll be handling corporate stores and how changes affect earnings, use of capital, and their relationship with other franchises.  You can be sure of success with an organization with an informed strategic direction.

McDonald’s has already seen some impressive results from their turnaround, recently announcing a 5% increase in global sales for the fourth quarter in 2015 and an increase of 16% in diluted earnings per share.  Now is a great time to explore franchising opportunities at McDonald’s and other companies. To learn more about entrepreneurship through franchising, attend our free monthly webinar, Franchise Ownership as a More Stable Career Path. The webinar is free, but you need to pre-register, which you can do online by clicking on the linked seminar title.

You may also register by calling 866-246-2884.

Advertising is rapidly changing and it’s important for businesses to stay on top of its trends.  So how should you be spending your advertising budget for 2016?  More than ever, digital advertising through the Internet is overtaking all other media categories.  The 4 big trends to take advantage of are digital ad spending, mobile user growth, digital video advertising, and Facebook’s increasing market share.  Check out this infographic for more information.

Creating and managing advertising campaigns can be difficult as a small business.  That’s why many entrepreneurs are looking to franchising as a cost-effective and successful business model.  For many franchise operations, you are given access to regional and national advertising campaigns funded by a portion of the revenue you generate.  These specialized marketing funds create effective campaigns for your business, allowing you to focus on what you do best.   If you would like to explore opportunities in franchising, or know more about the possibilities, contact The Entrepreneur Authority today for a no-cost, no-obligation, no-pressure consultation or call 866.246.2884 to speak with one of our FRANtastic Consultants.

Several weeks into the New Year, we are taking a look at some of the most important trends for businesses to take advantage of.  Our world is more interconnected than ever before, requiring businesses to take a more active role in engaging customers and implementing new technologies.  Although entrepreneurs have a lot on their minds when they pause to look ahead at 2016, here are four trends everyone can get behind.

Selling with Social Media

The importance of social media is increasing year over year as consumers and businesses continue engaging directly with one another.  Everyone knows about Facebook and Twitter, but less established companies like Instagram, Snapchat, Pinterest, and Periscope are big opportunities to create a unique experience for your customers.  It is important to note that 79% of salespeople who use social media outsell those who don’t, 72% of B2B buyers used social media to research their purchase decisions, and 53% of buyers said they listen to peer recommendations before making a purchase.  However, social media requires different marketing strategies that can be unfamiliar to some entrepreneurs.  The key promotion strategy is now…

Content Marketing

Content Marketing focuses on creating and curating content that a customer will consider as a valuable source of information.  Traditional publicity was focused on capturing a customer’s attention to present an image or story (Ads, Posters, commercials) but suffered from several flaws:  low engagement rates, perception as an interruption, and a broad, expensive reach.  Content marketing allows you to more deeply engage with your customer and develop a relationship based on providing value.  This value comes in many forms, but focuses on providing impartial information about a product/service so as to educate customers and help them make an informed choice without needing to go to a third-party.  This information can be distributed through video, image, blog, and viral content, ideally using social media.

Expansion of Mobile Technology

Now where are social media and content marketing king?  Mobile platforms.  Mobile technology will see continued investment and expansion as smartphone market share increases, new technology is introduced into the ecosystem, and the Internet of Things develops.  Engaging with customers through their devices is an important means of distributing useful information and improving customer experience.  Small businesses are in an ideal position to take advantage of this change, as enterprise technology is no longer prohibitively expensive.  Take new online payment options such as Square, Stripe, and Apple/Google Pay for example.  They are easily implementable and relatively cheap alternatives to traditional payment systems that are constantly innovating.

Data Driven Decision Making

Analytics—always an important part of business—is dramatically increasing in power as your ability to access data increases.  Part of this is due to mobile and cloud technology’s dominance, allowing businesses to access real-time information on their customer’s activities.  How you analyze your data will determine how effectively you spend capital and provide key insights into all the processes of your company.  But fear not, although data analysis can be esoteric, several companies (such as Palantir) are popping up that can help you glean insight from all those numbers.

Businesses face a lot of challenges in 2016, but have more tools then ever before to meet and surpass their obstacles.  By incorporating new trends and technology into your business strategy, take advantage of a new level of control over your customers and your company.