Multi-Unit Business Planning Techniques

Multi-Unit Business Planning Techniques

           As businesses mature, many become multi-unit businesses. Basically, a multi-unit business has more than one location selling products or services under the same business name. Franchising is well established in the multi-unit business. Many of the individual franchisees have multi-units with the same organization across the city or even across the state. I have heard of large multi-unit businesses with units across many different states and regions. An entrepreneur mindset is needed to continue to grow. That is built into the personality traits of a business owner.

           Expansion into a multi-unit business will bring many different types of challenges to face along the way. Entrepreneurs new to the franchising industry might believe that a single unit franchise is the best option to start. Single unit franchisees are typically owner operators, which means that in addition to being the owner, they will also function as the primary operator or manager at the store level. A multi-unit business franchise is one in which the franchisee owns and operates more than one unit, traditionally in the same general region or across different states. When businesses expand to more than one location, they will face opportunities and challenges.

           Two or more locations might be similar in operation, such as two or more restaurants or retail stores in a chain, or serve different functions, such as a production facility and an administrative office. Whichever is the case, you will need to look at the similarities and differences to effectively run both locations. Look to create strong managers and take advantage of economies of scale when running a business with multiple locations. When managing multiple locations, you will need to make sure a trusted manager is in place to monitor and supervisor the employees.

           Part of your responsibility is hiring and training site managers you trust. Write detailed job descriptions for managers; let them know these will be used for their annual reviews and make it clear that you do not want to have to deal with their nonperforming subordinates—that is the manager’s responsibility. When managers know they will take heat for the performance of others, they will be proactive in managing their staff. To see how each location is performing, a master budget for the company will be created. Each location will have a budget to follow for their location. But, all locations will be rolled into the master budget.

           This makes more work for your finance people, but it provides invaluable information that lets you see how each site is performing that you can share with the managers of different locations. In terms of accounting, the same chart of accounts for revenues and expenses will be used. These revenue streams and expenses will be captured by location and then summarized into one set of books to oversee how the entire organization is doing. Our advisors have the opportunity to monitor each location and compare the results and trends for each location and identify trends within the organization. We will identify that the price components, the cost of labor, the operating costs, and the net profits are comparable.

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RMH Tax & Financial Advisors, Inc.

12805 Highway 55, Suite 412,
Plymouth, MN 55441
T: (763) 557-2818
E: bobh@rmhtax.com

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