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Scale and volume for adding value to your business

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Scale and volume for adding value to your business

By , November 21, 2008
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McDonalds is a true scale business – firstly it is large ( thought this is not the most important factor ) , it is highly systemised and structured, it’s value lies in volume and it’s owners are not tied to the business day to day. Let’s look at some basic facts that highlight the scale aspect;

Firstly simple size – 31,000 stores in 119 countries – that’s big !  – they serve about 47 Million customers per day and have over 1.5 M staff internationally.

Some of the more interesting details in terms of adding value to your business are that the average age of a McDonalds store manager is just 21 years old – how does this work – because they have policy and procedures manuals for everything, they have a training program second to none  and staff are constantly monitored and measured. The P & P manual includes details on every aspect of store operation – E- Myth on steroids ! If the thick shake machine is not working there will be a  page on how to fix it and if that doesn’t work a page on what signs to put up explaining the issue to customers – does your business have this level of systemisation. McDonalds has done this by necessity  – they have a young inexperienced workforce and they rotate staff often –  as an added benefit it adds incredible value. In terms of scale and adding value these guys are the best!

As anyone who has ever eaten in a McDonalds store will know, they always ask you ‘Do you want fries with that ? “ – this question alone makes them $22MUS per day – amazing number firstly  – also amazing that they know that ! McCafés (actually an Australian idea) are known to add up to 60 % turnover to stores they are added to.

Drive thru’s when added nearly doubled the turnover of stores on main roads – simply another version of adding scale to an existing operation.

As a business owner no-one expects you to have a drive thru or employee 1.5M people – but the lessons are obvious – if you have a scale business volume is the key – and not volume based on discounting,  volume based on working out how you can ask “Do you want fries with that?”

Craig West

Craig West

Managing Director | Succession Plus

Craig West is a strategic accountant who has over 20 years’ experience advising business owners. His background as a CPA in public practice, provided invaluable experience in the key issues of concern to business owners. Following 6 years of study to gain two masters degrees, Craig focused on Capital Gains Tax (CGT) for business sales advising on strategic management of tax issues. This experience formed a very strong view that business owners (and often their advisers) were unprepared and unaware of the steps required to prepare a business for exit.

Craig now acts as a strategic mentor for mid-market business owners and has written four critically acclaimed books on employee incentives, succession planning, asset protection and exit strategies. Craig has conducted numerous seminars and keynote presentations throughout Australia & internationally, including adviser education programs for the Institute of Chartered Accountants and CPA Australia.