There are long-term real estate experts who will stand at a site within a market under consideration and just ‘feel’ whether it would or wouldn’t work. At the other end of the spectrum there are finance experts looking for a model to perfectly forecast the sales and returns for each potential location. Admittedly these are the extremes and I genuinely believe real estate development is both an art and a science as has often been said.
When emotion-filled debates occur as each person’s gut is telling them something different, you know there must be another way; there must be the potential to reach a more fact-based decision. For those of you who tend to be more science-based, whilst modeling solutions continue to become more sophisticated, I challenge any forecast model able to consider absolutely everything affecting the success of a specific unit and subsequently predict a future unit’s sales and returns perfectly.
In my experience, even if forecast models don’t provide the exact answers, the chance of success is far improved when franchisors and franchisees arm themselves with all available data and models and assess the resulting insights against their gut feelings.
For this to occur, all measurable performance-impacting factors need to be tracked and taken into consideration for each location. Each factor needs to be tracked consistently and collated across as long a timeframe as possible. With COVID impacting consumer behavior as much as it has, and with the uncertainty around future consumer behavior, I’d recommend considering data from both pre and during COVID times and ensure the ability to update analyses frequently over the next year until a new norm is reached.
As a franchisor, the first step in the process of assessing a new location is ensuring you have solid alignment on development and financial goals (internally and with your franchisees). You also have to identify the questions you need to answer to help achieve those goals.
Next, you need the right tools, funds, and resources to answer those questions, to:
Collect and collate a plethora of data consistently and longitudinally
Analyze the data and correctly draw out insights
Understand the limitations of those insights (and watch for potential false inferences)
The last step, without which all the data and analysis in the world is worthless, is to ensure you have a team with a trust-based relationship with your franchisees. This team needs to be able to share, collaborate and discuss the findings and subsequently agree on next steps. With the right franchisee/franchisor relationship, franchisees will not only listen to the insights and your perspective, but also add to them by sharing data and information only available to them. Once you have achieved this level of engagement, the ability to align on the path forward is far more straightforward. Collaboration and fierce alignment provide the quickest path to action and hence growth of your brand.
Remember there are no guarantees, and there will always be factors able to impact results you’re unable to fully measure. A struggling store manager can cause a great site to underperform, and a strong manager can make a marginal site incredibly successful. It’s important to evaluate and understand any unpredictable and unmeasurable factors and refine your perspective over time. With those additional learnings combined with solid data analysis, you’ll be in a far stronger position to make informed and reliable decisions.
Growth is predicated on past results and an ability to predict the future. Optimizing the use of data will light your path to success across any industry and geography.
Comentarios