Business planning is critical for any franchisee starting up to gain funding, but it also serves as a roadmap to refer back to, as trading gets underway
The battle to control the global pandemic continues. Closer to home, businesses are working hard to get back on track, with many needing to adapt to changed trading conditions. For those who can agile and pivot their offering, the rewards can be hugely beneficial. However, by avoiding one fight you can’t win, it’s important not to end up in another. Therefore, planning is key.
Have you ever written a business plan? Perhaps when you first started your franchise? Often these plans are a series of factual statements including strengths and weaknesses, opportunities and threats, directors’ CVs, plus, details about the structure of the business. While this information is certainly relevant, the key information to develop a true, workable and realistic business plan requires a significant financial analysis based on current data.
Financial information can be used to model different scenarios. For example, if I do X how will that affect Y? Here, it’s really helpful to get input from experts who are used to calculating how much impact asset finance to purchase additional equipment will have? How does a Bounce Back or CIBILs loan fit into the equation? How much will that new marketing campaign cost and how many leads will ensure it is successful and can be repeated? Importantly, when will the break-even point will come?
Business planning is critical for any franchisee starting up to gain funding, but it also serves as a roadmap to refer back to, as trading gets underway. However, if you are making changes to your existing franchise offering to address and respond to the different working and living conditions we all now find ourselves in, then a new plan may be required.
Modelling various financial scenarios will enable you to make informed decisions on when and how best to move forwards. Is it financially better to purchase a new van this year, taking advantage of the various government loan schemes available or is it better to wait until you have reached a threshold of turnover which confirms your new offering is viable? At what point is it safe to take on new staff? When can I afford to expand and purchase a new territory?
In this way, cashflow forecasts can be invaluable as they take the guesswork out of planning. Working with an expert who can calculate the cost of loan repayments and balance this against other outgoings and income, means you can be clear about taking appropriate action to move forwards.
For businesses looking to pivot their offering or to expand, a full-blown business plan is not always necessary as much of the information may already exist. For example, d&t is currently working with several franchise organisations on what it calls ‘business plan light’ projects, where it is helping them evaluate new ideas or the financial implications of approaching customers in a new way.
It’s incredibly rewarding to be helping franchisees get back in business in this way, and give them the confidence to fight the good fight. For many business owners focusing on the day job is their passion and where they excel. However, having a clear handle on the numbers and planning carefully for the future from a financial perspective will ensure they don’t end up in a losing battle and can continue doing the job they love.
James Thomas, QFP is the commercial manager at d&t.