Are you considering franchising as a potential business opportunity? While franchising can offer many benefits, including established brand recognition and business practices, achieving financial success is not always guaranteed. One crucial factor that can impact a franchise’s profitability is benchmarking accounting.
Let’s explore why benchmarking accounting is so important for franchise financial success and how it can help franchisees achieve their goals. So, whether you’re dreaming of owning a thriving QSR franchise or just want to understand more about the franchise industry, we’ve got the details for you.
What is Benchmarking Accounting?
Benchmarking accounting is a way to measure a business’s financial success by comparing it to industry standards. Companies can see how they fare compared to others in their industry by analyzing metrics like revenue, expenses, and profits.
This process helps identify areas where a business may be underperforming, set ambitious financial goals, track progress, and uncover best practices from top-performing companies. For franchises, benchmarking financial statements is particularly crucial. It gives franchisors and franchisees the insights they need to make informed decisions, take the right steps to boost profitability, and ultimately achieve financial success.
3 Reasons Why Benchmarking Accounting is Critical
1 | Financial Visibility
Benchmarking financial statements gives both franchisors and franchisees insight into their financial health compared to others and allows them to identify areas where their business performance could be lagging.
For instance, benchmarking financial statements makes it possible to identify which expenses are higher for others in the same business and your Financial Controller can suggest ways to reduce them, like renegotiating supplier contracts or streamlining operations.
Financial visibility provides franchisees and franchisors an opportunity to work on focus areas like investing in new technology or introducing new account processes helping to maximize profitability and reduce costs.
2 | Establishing Goals & Tracking Progress
By benchmarking financial statements, franchisors and franchisees can establish realistic financial goals based on industry standards. These goals can then be used to track progress over time and help owners make better decisions about their financial strategies and adjust when necessary.
3 | Growth & Expansion
Want to open more doors? By regularly comparing financial performance against industry benchmarks and best practices, franchisors and franchisees can identify areas of opportunity. For example, benchmarking may reveal that a franchise is underperforming in a particular geographic area compared to industry averages. With this data, the franchise can develop a targeted marketing strategy to increase sales in that location.
Besides identifying growth opportunities, benchmarking financial statements can also provide valuable insights for franchises looking to expand their businesses. For instance, it could reveal that a franchise is particularly successful in a certain location or with a specific product or service. This can help franchises replicate their success in new markets.
How Can Ceterus Help?
At Ceterus, we understand the importance of accurate and insightful financial reporting for franchise success. Our benchmarked reporting and accounting services are designed to provide a clear view of your financial performance and identify areas where adjustments can be made to maximize profitability.
So why not take the burden of benchmarking your financial statements off your plate and focus on your future as a franchise owner? Get in touch with one of our financial experts at Ceterus to schedule a consultation today.
