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Don’t rely on turnkey solutions and last year’s answers, new business owners warned

The steps prospective startup founders and franchisees must take to hit the ground running, and the common mistakes they should avoid, were revealed to Dynamic Business in a recent Q&A session with Dan Newton, the CEO of Snap Fitness Australia.

Since joining Snap Fitness nine months ago, Newton said he has made it his mission to transform the company’s internal processes and expand its offering to ensure it, like its members, remains a healthy business for years to come.

Part one: running a business

What are the biggest mistakes business owners make?

In today’s market, new business owners, including franchisees, launch a business operation with the intention of experiencing significant success, but it is only the smart and committed that end up making it. The two most common mistakes I see are:

One: franchisees who are disconnected from their operations

Those who come with the dream that their business is a ‘turnkey solution’ (i.e. that a new business can be left to perform on its own just with the simple application of a good location, a quality fit out and a competitive price point) are normally met with a firm dose of reality.

In today’s market, the most successful franchises have high engagement from their owners. Those owners who have a careful watch on the customer experience/satisfaction and those that always stay on top of presentation and upkeep of the facility are normally the examples that set apart the great performers.

Two: owners who believe what worked last year will work this year

I see it time and time again. Innovation and staying ahead of the competition has to be part of any new business owner’s strategy.

Our business moves very quickly, and if an owner is not the one adding value to a franchise with evolving opportunities, then it is a given that the competition will be.

Stay ahead or fall way behind is the best advice to any new owner wanting to be successful.

What was the best business advice you were ever given?

Business is a game of people. The best advice I have had to date is to surround myself with people that are smarter and more experienced than myself. It is always proven that a team of engaged experts should be a leader’s first and most important focus.

What are your tactics for managing growth?

Growth is not always just about spinning the sales wheel as fast as possible with aggressive promotional campaigns/incentive plans. I find when managing a multisite business, and especially as it reaches maturity, it is crucial to balance a targeted acquisition program where you can be specific enough to attract and appeal to new business in a targeted way while ensuring new interest flows steadily and yields high conversion.

This is coupled with a constant ‘value add strategy’ to the current asset or business. Whether that is managing the current satisfaction of accounts, finding ways to evolve the core product or always challenging the internal stakeholders to introduce technology that either improves the experience or finds business efficiencies.

How important is it to keep abreast of industry trends?

In our industry, like many others, we work through cycles or macro trends whereby every 6-8 years there are huge changes to products, programs and demand for the service type evolves. Smart business’s ride the acceleration phase in those trending areas, but those who are able to stay ahead with innovation and those who find ways to be first to market (in given areas) are normally the business owners who are able to maximise performance and outlast the competition.

How important is marketing for start-ups?

Marketing for any start up is essential, not just for traditional interest generation to drive sales, but to appropriately position the product or service in the given local market.

Being a part of large chain like Snap Fitness is helpful, as the brand comes with certain credibility and stature, but this does not solve all problems; as the fight will always be at the local level. This is why it is so important to market the core USPs and features / benefits of each facility clearly to the market, to ensure the prospect or member see’s the value clearly above the other choices they have in their market.

What are your 5 top tips for running a successful business?

  • Know your product and what makes it superior, and be able to clearly articulate this to all stakeholders
  • Choose your staff carefully, develop them often, measure engagement daily and celebrate often.
  • Create a compelling scorecard for success. Ensure the scorecard looks at multiple areas (not just commercials). Ensure this is quantifiable and regularly communicated.
  • Know your competition. Always make time to investigate what your customers are inevitably comparing you against.
  • Always have one eye on the future. Business is about creating value in the form of a transaction for a better future, creating value is a dynamic journey that will never end.

Part two: franchising

What are the benefits of investing in a franchise as opposed to starting your own business?

Franchising is the investment into a proven business solution and an aligned roadmap to direct a franchise to success. A franchise system is set up to ensure an operator can benefit from the brand equity and scale and as part of the investment, pass over proven systems and processes to individual business units to maximise performance and sustainability.

What should you look for when investing in a franchise?

A new franchisee should be extremely clear with the current status of franchise operations, and should also mark this against year on year comparisons. It is important to get a clear understanding into;

  • the top performers (to understand the upside to a given franchise opportunity)
  • the average or (median) performance of the entire network.
  • the bottom end; to clearly see the trend of club drop offs and closures.

It is also very important to understand where the business is going, what the macro business strategy is and how is it planning to get there. Clearly understand the business investment and the direction as it applies to the future development of the brand.

Where do many franchisees go wrong when investing?

Calculated investment into machines and physical assets are important, but without continuous investment into people; which includes strategies around recruitment, incentives and development programs, it will not create the optimum ROI.


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