The business format prototype is without question the most important single factor in profitable growth. Over the course of one year, business format franchises have reported a success rate of 95%, in contrast to the 50% failure rate of independently owned businesses.
Where 80% of businesses fail within ten years, 80% of franchises succeed. The reason is that the prototype becomes the model of a better idea, constantly tested in the real world until the numbers prove the idea works.
Once the systems developers have completed the documentation, they have the tools to teach others how it works. The system becomes the solution to most of the problems in the business. If this process is completed in every area of the business, the manager becomes the trainer of the systems. Once an employee learns the system, he/she is given the key to that position.
If each employee has all the required systems to do their job correctly, the business runs on automatic pilot, which is called turnkey. A turnkey business valuation can be worth 10 to 20 times more than a non-turnkey business. Why? Because a turnkey business is proven to work.
The power of turnkey really comes into play when the business focuses on their proprietary operating systems. All a business needs to do is to build their systems one at a time and measure each system’s output to ensure results are achievable. Standards must be created to make sure quality control is in place and being met.
In a turnkey business, all systems are interrelated so they work together seamlessly to achieve a desired result. Employee retention also increases because people develop real skills and an opportunity to be all they can be.
The business development process to create a turnkey business includes:
- Defining your Strategic Objective.
- Developing your Organization Chart and Job Descriptions.
- Creating Marketing, Management, Operations, and Financial Strategies.
The first step is to set a 3 to 5 year goal that gets everyone excited about the direction of the business. The goal answers the question for the owner of how much in assets “money” is required for the business to be a great investment. You must then identify the obstacles that are preventing you from reaching your goal and develop and innovate systems to overcome them.