What We Have Learned in Owning A Small Franchise Business for Five Years

January 23, 2020 | 7:28 am Leave your thoughts
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  • We have been in business for five solid years! Hoooray!

    But to be honest, it’s not that easy achieving this milestone. It’s no joke. So for today, I will be sharing all what we have learned for the past five years.

    What I’m going to tell you today is proven facts and tips that we have realized, encountered and experienced working as a business owner of a not so well know food cart business franchise.

    I hope you can learn from our experience and to what I’m going to discuss today.

    So to keep you not waiting, I’ll proceed!

    Customer Traffic and Location really matters

    When we conceptualized our business, we didn’t have a hard time thinking where we’re going to establish our food cart business. That’s because the place was readily available. The thing is, the commercial space was offered to us even though we don’t have a business in mind. We were blessed that our land lord offered that to us.

    By analyzing the the location, we can instantly tell that the place has a high traffic area because of the the road leading to EDSA and BGC vice versa. So that’s a plus!

    We settled the payments and signed the contract to start our business.

    What we have learned here is what if we got a place with a little to none potential customer traffic? It is important for a business that there are regular “potential” customers because that “regular potential customers” will convert to actual customer some other day.

    This also means that your potential customer’s traffic and your store location will compliment each other. Obviously, more customer traffic leads to higher sales.

    Customer is not always right BUT ALWAYS WINS

    Having a professional experience in retail industry, I’ve learned the popular phrase “The Customer is Always Right”. These words were taught to us during on-boarding training. They told us that we need to give in to what the hell the customer wants. That’s really a tough one right?

    Though our trainer explicit said to follow this rule, she also pointed out that the customer is always right. Sometimes, customers are a pain in the ass and you don’t have to do anything about it. According to her, all we need to do is to make the customer that she’s winning but in reality she’s wrong. We don’t want to slap them in the face what really is the truth and what is right. So it will end up that we’re just going to “adjust”.

    At the end of her lecture about this topic, she modified the phrase and said…

    “The Customer is not always right but always wins”

    Then it came to us like a blinding light. It was really an eye opening idea.

    During our journey handling our small business, we encountered different kinds of customers. We have handled each one meticulously to avoid having problems with them. We grant special request, extend our helping hands and give in to them just to gain their approval. The logic behind here is, we don’t want to burn bridge with a customer. We don’t want them to experience bad customer service that will result of loosing them. We want them to come back and patronize us.

    Not every one will believe you at first

    This is the first thing you will encounter when you brought the topic that you’re going to put up a food cart business. You will get a seal of approval from few selected people but majority of them will discourage you.

    This is our real life experience.

    Most people will just close their brains out and shut down the idea of supporting you. What we did is we just listened to what they are saying then we filter out the garbage side comments and opinions. We focused on our goal and totally forget about them.

    If you found yourself doubting your business, just look back and think of the reason why you started. It enough for you to continue and fight.

    I am the Boss and the Employee as well.

    You’re reading it right. You will be the Boss and you will be the Employee as well. It doesn’t mean that if you shelled out the capital, you’ll stop working for your business. Consider that the first six months of your small business will be critical. Consider it like a baby learning to stand and you are the parent. You need to help your business to stand on its own.

    In the first few months, we closely monitored our business. We dedicated our time to be there every day just to experience and learn about the nitty gritty of our business. Once we’re confident, we let our employee handle the daily affairs of our business but we’re still visible every night to do our cash count.

    Up until now, I’m still involve in the operation of the business. I’m still in-charge of the purchasing of inventories since this activity involves cash and transacting and coordination with our supplier.

    A Closed Store is not a Profitable Store

    Obviously if your store is close, there is no income that day. My personal advice is make sure that your store is open during your designated operating day and time.

    There are times that you can’t avoid closing down your store due to employee absence but try to minimize it. Keep in mind that every time your store is close, you’re loosing money.

    Also, a close store gives a bad impression from the customers.

    You don’t have to dominate the entire market

    If you remember in our previous article, we have mentioned that the place where our small business is situated is in a community near BGC where an abundant cafe, mid sized restaurants are situated.

    The competition is really tight since we’re small and new.

    But after surviving the last five years, we have realized that we don’t need to dominate the entire market in our community. We just need to have the piece of the pie.

    To explain it better, assume that the total number of customers going to our community that are willing to eat are 1,000 people. For simplicity, we’ll call it Customer Volume.

    And the number of restaurants situated in our community is 20, including our small sisig franchise.

    If we divide it equally, 1000 people divided by 20 restaurants = 50 persons per restaurants. This means that each restaurants in our community will expect a 50 customers.

    But the thing is, this is not true. An equal market share is impossible in real life! This means that few restaurants will get a higher customers than the others.

    You may realize that this is a big risk if you’re just planning to establish your business. Yes that’s true, there might be a chance that you’ll end up zero for the day. Though this didn’t happened to us.

    You don’t need to dominate the entire market, you just need to have a piece of the pie. Meaning, If (assuming) the customer volume is 1,000 customers. You are not required to get them all since this is not realistic. You just need to have at least 30-50 customers to break even.

    Imagine if you have 30 customers and you have a product that costs 50 pesos, you’ll get a sales of P1,500 per day.

    This is the time we’re you need to be creative with your products. Show your product strengths and uniqueness compared to your competitors. If your competitor is selling the same product like Coca Cola for P15 (which costs you P10), why not sell it at P14 pesos. You need to establish your edge against them. One of the favorite teachings that I learned from the book, “Art of War by Shun Tzu” is you need to win each battle but instead win the war.

    This means that, yes, you’re loosing P1 in your Coca Cola product because the others are selling it by P15 and you’re selling this at P14. BUT, everyone will be attracted by your pricing, most of the customers will go to you. This will increase your sales volume since you are offering the product cheaper.

    I hope I got to explain it clearly but I know you get the idea 🙂

    The First Six Days Sales of the Month.

    Our mentor told us “The “First Six Days Sales of the Month” technique. This simply means that the Total Gross Sales we have earned for the first six days of the month must be greater than or equal to the one (1) month rent of our place.

    If our Total Gross Sales for six days is (>=) greater than or equal to our one month’s rent, this means that our business is profitable and can still continue for the next three month.

    If our Total Gross Sales for six days went below the amount of our Rent, then its time to be alarmed and revisit the business and find out what’s wrong. There’s something should be change and modified.

    This technique helped us to assess the potential success of our business. During our first month, we are getting a P1,000 daily sales totaling P6,000 in six days. We were alarmed by this but after carefully analyzing, we still have a chance to be profitable in the next days since we have earned the funds to pay for the next month’s rent.

    The salary of our employee and the inventory purchases will be taken from the gross sales of second to the fourth week of the month.

    Price of your Product is the Key

    As I have previously discussed, the price of your product is the key. The key to what? The key to your Sales. Your product pricing method will be your edge against your competitor. Just I have mentioned, If your competitor is selling Product A for P15, why not offer the same product at P14. Though its cheaper for P1 peso and your loosing a slight profit margin, customers will be attracted to your store because youre selling it a peso cheaper.

    Have you ever heard of the saying from the Chinese businessmen that it doesn’t matter if they have a profit margin of P1 as long as there’s a huge sales volume?

    Yes, they’re trying to win the competition thru sales volume. Imagine what will happen to their competitors will only get a very small portion of the market or customer? They will be forced to close shop or lower down the price.

    Your Employee is the heart of your Business

    Like a human heart, the employee is the central to the survival of your business. Without them, your business will close down immediately.

    I strongly believe that your employee plays a vital role to the success of your business. Money and profit is not the driving force behind your business, its your employee.

    Treat your Employees as one of your family member. Make them happy and establish a positive energy environment to motivate them to love what they do.

    This way, your employee will treat you not as their boss but also someone they call “family”.

    Inventory is the blood of your Business

    In my years as a business owner, I always encounter peers focusing on maximizing sales and profit without even thinking the inventory. As a seasoned Business Owner, I strongly believe that inventory management plays an important role to the success of the business. How many times have you encountered when buying (let’s say for example) a shoe and leaving the store because the sales man can provide the right sizes for you because its out of stock.

    It’s heart breaking for you because you didn’t get a new pair of shoes but its also heartbreaking for the owner of store. Why, because he or she missed a sure sale from you. What if the next customers will come and asks for the same size as yours? The same result will happen right?

    Inventory management is a science that involves monitoring, record keeping, security and the actual purchasing of inventory. I can discuss each one-by-one but I know you’re tired like me reading.

    To keep it short, try to learn the proper and correct way of inventory management before you open your business.

    Theft will make you bankrupt

    Imagine your business as a big water container, if there’s a leak it will drain all the waters inside and it will be dry.

    That is the best example of what will happen to your business. The “leak” is the pilferage within your business while the water is your cash.

    If these events keeps on happening, time will come that your funds will dry off.

    Always have a Contingency Plan

    Contingency Plan is a plan designed to take a possible future event or circumstance into account.

    This means that before starting out your business, you need to make a plan when things go bad or even good.

    For example, we have planned before opening our store that If for the first three (3) consecutive months we will get a break even, we will continue for another three (3) months and observe if it will give us a net income.

    If for the first six (6) consecutive months of our business, we will get a net loss of P50,000 in total, we will close down our business with out ifs and buts.

    If for the first six (6) months of our business, it will return a minimum of P20,000, we will hold on to it and continue.

    That my friend is a general idea of how a contingency plan is. We’ll its not that detail but I’m just giving you an idea how to make one. 

    You can also apply the contingency plan for daily operation like what will you do if your store will be close the next day due to employee absence. Maybe you can hire someone to watch over your store? That is a good contingency plan.

    By having a good and concrete contingency plan, you accept and embrace all the possible things that could happen, Good or Bad.

    Idle Cash is not a good Cash

    When your store is generating enough income, time will come that you will accumulate significant amount of cash in your bank account. 

    This is my personal experience and I am sharing this to you. Our business have been operating for five years and the income are already significant that it can’t be ignored just sleeping in our bank account.

    If you have P500,000 stuck in your bank just earning a very very insignificant amount of interest, what will you do?

    You reinvest it! Yes, it doesn’t mean you have to open up a new business. I suggest you invest it in a very minimal to none risk investment. This way, you can protect your capital as well as generate more income from it.

    For us, we have decided to reinvest a huge chunk of the cash to another business we set up. A portion of it was also invested in lending with a monthly return of 2.5%. While the remaining cash are invested or deposited in a 4% high interest bearing bank account. That way, our money is earning for us without breaking a sweat.


    I know I may be blabbering for a while now but I know you picked up few ideas that you can apply to your business.

    Not all that I have mentioned can be applied to everyone but I hope you enjoyed reading my experience in handling our business.