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Franchising - Business plans

Franchising can prove highly successful for agents needing support through the market downturn, but a comprehensive, achievable business plan is crucial,

A business plan is a prerequisite for securing funding for a new franchise venture and also an invaluable management tool that can help deliver longterm success, particularly when the market is tough. Whatever line of the business you plan to enter, without a detailed business plan in place, your chances of success are seriously compromised. Glaringly obvious? You’d think so, yet thousands of new business ventures founder each year due to a lack of such a plan. This may well sound a bit daunting, but any good franchise will help you create a sound plan and even assist your presentation to the bank. If this isn’t the case and you are left to your own devices, you should very quickly ask yourself whether you’ve chosen the right franchise.

Multi-functional

A well-constructed business plan enables you to be confident about your intentions and your financial projections, and will help to impress your bank manager with your business acumen. So, the more prepared you are, the better. But rather than simply being a one-off document designed to impress, the real value of a good business plan lies in its ongoing role as a management tool, designed to help you monitor and analyse your market; identify and target specific customer groups; price your products and services; and manage all your costs, sales forecasts and marketing. Therefore, in addition to being a blueprint for success, a business plan enables you to keep tabs on every key measure of your business on an ongoing basis, and structure the financial side of it accordingly. It can help you spot potential pitfalls before they happen, as well as provide a template for future development and expansion. But for your business plan to deliver all of these benefits, it needs to be constantly updated with new data.

Action plan

You business plan should:

• Identify your business opportunity and your target market;
• Clarify the products and services you plan to offer and your unique selling point;
• Demonstrate how you plan to make a profit.

Within this framework, your plan can be as simple or as complex as you choose. As a general rule of thumb, however, it needs to contain an executive summary. This is basically a synopsis of the main points of the plan and is particularly important when it comes to approaching banks. Given the number of applications they receive, they will often make initial judgements on the basis of this summary alone.

A brief description of the business opportunity is essential, outlining who you are, what you plan to sell or offer, why, and to whom. Your marketing strategy should identify your competition, explain why you think people will buy your products and services, detail how you plan to persuade them to do so, and how you plan to adapt to any market change.

Your need to include your management team and personnel requirements, identifying your own credentials as a manager and business owner, the people you need to recruit to work with you, and any training requirements.

List your operations – your premises and the advantages/ disadvantages of their location; your management information systems; and your IT requirements, both current and projected.

Last and by no means least, you need to include your financial forecasts. This effectively means everything you’ve already said, translated into numbers. This is the single most important element of your plan, and should include:

• A statement of how much capital you have, or will need to raise;
• How you plan to repay any loans, and what security you can provide;
• Your planned sources of revenue;
• Projected cash balance and cashflow patterns for at least the first 12 to 18 months;
• Sales forecast;
• Profit and loss forecast – a detailed statement of the trading position of the business and the level of profit you expect to make, given your projected sales volume, and the costs involved in providing goods and services.

Once you’ve completed your plan, the important thing is to use it. If your franchise business is underperforming, according to your original plan, reassess your objectives. It doesn’t matter how many years you’ve been in business, a robust and flexible plan will help you improve your profitability and build your business in a structured and achievable manner.

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