How to scale your business: 21 steps from the International Centre for Social Franchising
You want to replicate your business successfully. The International Centre for Social Franchising ran a week long training for 10 of our most exciting social enterprises, and here is a brief outline of what we covered:
1. What does success look like?
Get clear about what you are trying to achieve before you start. It will direct your decision making and help you to prioritise your actions. A clear Impact Goal may lead you to choosing a path that you had not previously considered, because it meets your Impact Goal better than your original plan!
2. Assess how ready you are to replicate
ICSF has developed a ‘replication readiness test’ that checks where your organisation stands. You can take the test online by clicking here and going to their Social Replication Toolkit. The toolkit also covers the sections outlined in this blog! What issues do you still need to work on?
3. What growth and replication model suits you and your organisation best?
Often the fastest and easiest is to use an indirect model such as training others in your system, influence public policy or create resources on an open source basis.
To maintain control or make money from your replication, you might use a direct method such as spreading your product or service to new markets, offering new services or products to the same market or increasing the amount you sell within an existing market. You could do this by franchising, licensing, accrediting or setting up new branches of your business. You can also combine direct and indirect methods to maximise your effectiveness.
4. Get clear exactly what you are replicating
Identify the core, flexible and bolt-on elements of your business model. The core is the key to achieving your impact and allows you to assess whether your model can be used or adapted in new contexts. Flexible elements are essential to your service, but could be delivered differently in a new context. Bolt-ons are completely optional.
Think about not only what you are scaling (the product or service) but also how it is delivered. Is it important that others also use your processes, staffing structures, CRM systems or training programmes? If so, include them in the core.
5. Who is your ideal implementer?
The ICSF uses the word ‘implementer’ to describe the person or organisation you choose to replicate in a new area. The business you are already running is known as the ‘originator’.
Defining an ‘Implementer Profile’ is worth investing of time and effort. It is like a ‘person specification’ you would draw up before recruiting for a job, except here you may either recruit a person or an organisation. Define the essential and the desirable characteristics of your ideal implementer including experience, connections, qualifications, language abilities, premises, equipment, technology, legal structure, financial position, branding, motivations and values.
6. Decide the roles and responsibilities of the implementer and the originator
What do you expect your implementers to deliver? Do they only deliver the service, or do they also manage finance, marketing and evaluation for their area?
What can they expect from you in return? What training, support and marketing are you offering? Do they have exclusivity in a certain geography? How do the legal and governance structures work? Support can include manuals, training, online guides, supervision or shadowing. You might find it useful to split this support into categories: initial support vs. ongoing support.
You need to balance the support with the cost of development and delivery. You may need staff, IT infrastructure, training resources, systems and processes. How are you going to manage and fund these?
7. Make sure your offer works as a win-win-win?
To attract and retain the best implementers, it must be worth it for them to pay you to use your model. After all, if your implementer succeeds, then you are also succeeding and so do the customers. If you were the implementer, how attractive would you find your offer?
8. Develop your financial model
Is your replication model viable? How and when is funding needed? And by whom? How much will you charge implementers? How much you might finance centrally? What do you offer in return for the fee? Here are some options:
- Dissemination: the implementer pays a one-off fee to the originator for materials, training or consultancy
- Central Fundraising / Large Contracts: the originator pays the implementer to deliver its programme
- Social Franchising: the franchisee raises the start-up cost and pays it to the franchisor, and then pays a regular contribution to the franchisor every cycle.
9. Pricing your replication offer
What does your competition charge and how does your offer compare? What can your implementer afford? How much do you need to generate from an implementer to make replication viable? You may need more implementers to make the sums add up. As a social venture, you may be able to access other sources of finance, such as grants, donations or government backing, to reduce the amount you charge implementers.
Typically, start up fees are charged at cost price to the implementer. Ongoing fees in the commercial sector range from 5-12%. Where grants are involved you may charge a fixed fee instead, or you could charge a monthly minimum with a percentage on top to ensure your costs are covered, but those who are doing better contribute more. Commercial franchisors often sell additional products, such as training or consultancy, and add a 1-2% fee for national or international marketing campaigns.
10. How to maintain quality at scale
To maintain quality, pilot successfully and transfer your model to implementers, you need to systemise what you do. Think through what you can systemise and test in your existing enterprise. This includes your recruitment, legal agreements, operations manuals, training, IT systems, quality assurance and other documents.
11. Decide how you will recruit
The more rigorous your recruitment, the more likely you are to pick the right implementer, but it also increases the costs to you and to them. McDonalds, world-famous for their franchising, spends over a year recruiting each franchisee! It considers this to be a worthwhile investment in the people that it will make a 20-year agreement with.
Even without this level of investment remember the tools for job recruitment are all available to you, and more. As well as advertising or using headhunters, you could run events or only recruit alumni of your programme. As well as using an application form and interview, ask potential implementer to develop a business plan, undertake work shadowing and get references.
Remember your potential implementers should sign a confidentiality agreement before fully engaging with your model.
12. Developing your operations manual
As well as being good for your implementers, the ops manual acts as a reference point for your existing organisation and makes your replication offer more valuable.
Developing an operations manual is a major job. Start with processes and practices you have already documented. Involve relevant team members in writing and testing the sections, but have one person in charge of driving its development, delegating sections as appropriate.
Sections are likely to include an Introduction, details for setting up the business, details of the ongoing operations and a section for admin policies and procedures. The Operations and Management heading may have sub-headings like: quality standards, running the programme, IT specification, premises, products, services and pricing, monitoring impact, customer records and risk assessment / crisis management.
Make sure, despite being long, your manual is engaging and easy to follow and use a format appropriate for your implementers. Might you use pictures, videos or checklists as well as text? Make it clear which parts of the manual are obligatory, and which only recommended.
13. Develop your training
Your training should mirror your operations manual, and ensures the manual is used, not just put on a shelf and ignored. Include details of how to operate your franchise, maintain quality, marketing, mission, vision and values. The more you get your implementers to participate, rather than being lectured at, the more they will learn.
14. Create legal agreements
A contract between you and your implementer provides assurance for both parties by clearly setting out the commitments you both have to one another, and what happens if those commitments are not met. It should mirror the minimum operating requirements in the Operations Manual. As well as a franchising agreement, you may have other legal agreements for your franchise, such as property leases, software licences, confidentiality agreements and so on.
15. Put in place the other systems you need
These might include monitoring and evaluation, quality assurance or financial systems. You might, for example, insist that your implementer uses your CRM and invoicing system, to ensure quality and auditability of their systems.
16. Resolve your branding questions
A brand is not just a name, logo and colours, it is really everything your company communicates when it interacts externally. The visual and verbal communication you use should reflect your culture and practices, and work in other cultures if you are scaling internationally.
17. Consider key issues for international scaling
Before replicating internationally, make sure you have proven your model domestically. Decide what is non-negotiable and must form part of the product or service in every country. Assess the feasibility of the product or service culturally, legally, operationally and financially before designing a model that works in that market and recruiting suitable implementers.
You may keep your model the same, or adjust your model to meet local conditions. You may choose to have a master franchisor, responsible for replicating your business in a whole country or region.
18. Create an implementation plan
Develop a proper plan, with milestones, resources and an understanding of the dependencies of each action. Allow contingency time, decision time and time off for holidays. Ensure the plan fits with other important activities in your organisation. Assume that things will take longer than you would like them to.
19. Pilot, pilot, pilot!
Every expert emphasised the importance of piloting. Each time you decide on a new franchisee, pilot it with them, until you are confident that you know how to pick your perfect implementer. Each time you go into a new country or develop a new service, pilot it first.
20. Finance your growth
How will your replication be funded? Do you expect your implementer to find the money? Or might you fully or partially fund them to get started? Perhaps their ability to find funding is one of the selection criteria for your implementer.
What help are you willing to provide? Contacts with a bank that already knows your business? Materials that will help them create a persuasive pitch? A guarantee for a business loan?
21. Do it again!
You’ve replication your business successfully. What did you learn from the experience? How would you do it differently next time? Who else is interested in implementing your services in a new territory?
The International Centre For Social Franchising (ICSF) helps organisations with proven, successful solutions to social issues scale their programs to reach more people. ICSF’s vision is to see innovative social solutions scaled to address the world’s most pressing social issues. Headquartered in London with offices in San Francisco and Melbourne, the ICSF is a registered non-for-profit with niche consultancy expertise in social sector programmatic and organisational scaling. Find out more here and join the conversation on Linkedin and Twitter