An effective business plan is a valuable tool for both starting and growing a franchise, Mark Scott, franchise director at NatWest, says
Most company owners understand the importance of creating a comprehensive business plan. Without one, a business will usually find it difficult to obtain funding - and going forwards can run into a host of problems.
Writing a business plan is a big task and is often an ongoing process - or it should be - but it is manageable. Effective planning ensures your businesses is on track and serves as a guide for both growth and succession strategies.
Many prospective franchisees ask why they have to bother with a business plan and some even think it is just a time-wasting exercise to keep their bank manager happy. Never can a franchisee be more wrong.
Setting out a business plan is more about establishing guidelines and goals. The time you invest in creating one will pay off later in your business journey. Some of the key benefits a business plan can provide include:
* A clear direction and vision for your business, including a road map and timeline for achieving your goals.
* A set of values and goals that can help you through challenging times.
* Benchmarks to track performance, as well as any marketing strategies.
* Analysis of your industry and the opportunities and challenges that could arise.
* An overview of your target customers and their demands/habits.
* A profile of your main competitors and the strategies for competing against them.
* An assessment of your company’s strengths and weaknesses.
* Projection and analysis of your revenue, costs and profit.
A strong business plan will look at all the aspects involved in running a franchise - from the market in which it operates to the price of the goods sold - as well as being the key to unlocking any financial support you need outside of your own resources. It is also important for your own use to track whether you are meeting key milestones and that your business is progressing as expected.
It is essential that, once written, a business plan is reviewed from time to time to ensure any declining trends are adjusted as soon as possible, with the assistance of the franchisor. The franchisor should be interested in your performance compared to your plan, as its income should depend on the success of your business.
Although still a vital part of planning and strategy, a business plan for a franchise is often very different to one for a new independent start-up. In many ways, franchisees are at a huge advantage compared to start-up businesses in that they are able to demonstrate figures and performance for real time, comparable operations.
A franchise business plan needs to reflect what numbers other franchisees in the group are achieving. If yours predicts a turnover of £1 million in two years, you need to be able to provide evidence that another franchise in a similar area has achieved those figures.
Creating your plan
In our personal lives we all research and plan ahead to a greater or lesser extent - from booking holidays to arranging pensions and life insurance. But in business it’s even more crucial. You need to be clear in your own mind what your objectives are and how you’re going to achieve them. Business planning is about understanding risks and how you are going to manage them to achieve your objectives.
Why they are so important
If prepared and used properly, a business plan can help you successfully develop your franchise, as it can highlight what is working and, more importantly, give you early warning of what is not.
Having a business plan is not just relevant at the start of your life as a franchisee - it is just as important as the franchise develops. You should update it with any unexpected changes and determine whether the franchise is developing in line with your original plan. It is also good to have a document that can be presented to a bank or franchisor when thinking about expansion.
The most important thing to remember, however, is that a business plan is there to put you on the road to success - and keep you there. Many franchisors can assist in completing a business plan and will have a template available to get you started. A suitably qualified accountant may also be in a position to offer advice.
WHAT SHOULD BE INCLUDED IN A BUSINESS PLAN?
The best ones cover:
* Details about the franchise.
* The sector it operates in.
* Local, regional and national competition.
* Your marketing plan.
* Projected financial information.
* Your CV and details of any key staff.
* Assets and liabilities.
One of the most important sections of a business plan is the information about the franchisee. This is because the success of the franchise will be determined, in most cases, by the franchisee and the effort they put into the business.