A well written business plan can help you secure vital funding and map your future success, Andy Brattesani, HSBC’s UK head of franchising, says
You’ve carried out your research, visited an exhibition, spoken with franchisors and franchisees and sought professional advice from consultants and solicitors. What do you do next?
It’s time to develop a business plan. It’s your route map to future success, as well as a document that will help you secure finance.
Many potential franchisees are daunted by the prospect of compiling a business plan, but it shouldn’t be an intimidating process. Taking time to complete it before you start your franchise will help you think methodically, plus develop and sharpen your ideas about your business.
What are the key things you need to consider when preparing your plan?
- Business description - details of the franchise being purchased and the financial needs.
- Market analysis - research and identify local competition and assess what the likely demand of the product or service will be in the specific region.
- Market strategy - outline intentions for marketing the product or service and how the sales figures shown in the projections will be generated.
- Management plan - include details of the type of business (eg, sole trader or limited company) and outline the structure and key skills of the management team and staff.
Financial data - at least two years of projected figures are required, including a balance sheet, cash flow and profit and loss statement. It’s important projections correspond with the information outlined in your business plan and that they’re realistic.
If it’s a resale franchise you’re buying, include details of the existing business being sold. A copy of previous years’ accounts should also be included. Be confident about your figures and memorise any vital facts about the business.
- SWOT analysis - a one-page breakdown of strengths, weaknesses, opportunities and threats. Strengths might include brand name, quality of product or management. Weaknesses might be lack of finance or dependency on a few customers.
Opportunities might be increasing demand or a competitor going bankrupt. Threats might be a downturn in the economy or a new competitor.
Rules to remember
To summarise, here are my fundamental rules for writing a business plan:
- Think about the purpose of the business plan before you write it.
- Focus on the key information the reader will want.
- Highlight future plans, as well as describe the current situation.
- Be realistic.
- Waffle or include unnecessary detail.
- Include over-optimistic assumptions.
- Ignore competitive threats and weaknesses.
When requesting finance, a well researched and written plan will show a bank you are committed and understand the business, meaning your request is likely to be looked at more favourably than those who are unprepared.
Don’t be afraid to talk to your bank - it can help develop the right financial package suitable for your specific needs. Working together can help to ensure your business develops to its full potential.