Andy Brattesani, HSBC’s UK head of franchising, summarises the vital elements of an effective business plan
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 - your route map to future success and a document that will help you secure finance.
Don’t be daunted
Many potential franchisees are daunted by the prospect of compiling a business plan, but it should not be an intimidating process. Taking time to complete it before you start your franchise will help you think methodically and develop and sharpen your ideas about your business.
What are the key elements you’ll 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, 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 you’re considering investing in a resale franchise, 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.
Strengths could include the brand name, quality of product or management. Weaknesses might be a lack of finance or dependency on a few customers.
Opportunities could be increasing demand or a competitor going bankrupt. Threats might be a downturn in the economy or a new competitor.
To summarise, here are our 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 describing the current situation.
- Be realistic.
- Waffle or include unnecessary detail.
- Include over-optimistic assumptions.