Franchise Business Plan
The franchise business plan is a communication tool to inform and influence the reader towards some action - providing a loan, extending credit or investing in your business.
Before investing your time and money into becoming a franchisee, create a detailed business plan that specifically defines your business, identifies the goals of the business, and includes a balance sheet and cash flow analysis.
The best franchise business plan is a living document - meaning that you continually update it. It also is creative, reflects your enthusiasm, and carries solid information.
Franchise-based business planning and financial forecasting
Opening a franchise-based business requires a significant financial investment to buy the franchise and establish your business.
Regardless of the money lender/investor, whether it be a financial institution, a friend, or a relative, anyone before considering to provide you with funds will want to know something about your business and how you plan to operate it.
Develop a detailed franchise business plan
Create your detailed business plan as soon as you decide what type of franchise business you want to get into and before you sign any franchise agreement. You should work closely with an accountant for the financial portion of the plan.
Many franchisors offer a template for creating a customized business plan specifically for the type of franchise-based business you’re planning to start. Be sure to utilize whatever resources or tools the franchisor makes available to ensure your business plan is comprehensive, accurate, and realistic, based on the type of business you’re planning to operate.
If you hire an attorney and/or accountant to create your franchise business plan, ask him or her for their input. Many, but not all, have experience preparing business plans and can offer valuable advice.
After you have a plan, follow it - don’t file it away. Update it as you learn more.
Why create a franchise business plan?
You should create a franchise business plan for a number of reasons. Some of those reasons include:
Your own thinking process is solidified through the planning process. The planning outline leads you through a series of questions and issues that you may have forgotten about when just thinking about your business. Remember that you are an investor in your own business. You are the first person who must be convinced of the validity of your business concept.
Your bank or lender will need to be convinced of the viability of your business, or your business expansion. The business plan is a communication tool. Inform and influence the reader towards some action-providing a loan, extending credit or investing in your business.
Your franchise business plan provides some guideposts in running your business. You will set goals and then, once you are in business, you can measure those goals against the actual performance. Goals should be specific, measurable, achievable, realistic, and time limited---SMART.
Your business plan has three elements
It prepares you - the entrepreneur for starting the business.
It explains your business and proves the viability of the business to outside parties.
It spells out your business goals in clear SMART terms.
What is in a business plan?
There are as many kinds of business plans as there are kinds of businesses. There are dozens of planning guides and planning outlines, books, audio tapes, computer programs and online planning services. All of them have things in common and all have differences. If you are writing for a bank, then find out which sections are important to the bank. Most banks have excellent information on getting a business loan.
Arguably the most important part of the business plan is:
The Executive Summary, the purpose of which is to get the readers attention by describing and summarizing the key elements of the business plan: the business, products, services, opportunities, risks, strategies target market, competition, competitive advantage, investment and financial overview, and projected return on investment. It must be short, to the point and very well written. It must encourage your reader to keep reading.
If the introduction to your business plan is not exciting and enticing, the proposed investor or lender will often not read any further and won’t provide you with the funding you need.
The business plan should also include the following key elements:
The reader reads what the writer writes
Overview of the business structure
Industry analysis and background
Market analysis and strategy
Description of day-to-day operations
Management and organization structure
Implementation plan and timetable
You cannot assume that the reader of your plan knows anything beyond what you have stated in the plan. You may know what you mean. The question is have you clearly explained it to the reader? Constantly ask yourself if you are making yourself clear to a reader who is not familiar with your industry or business.
Your business plan is often your only representation to an outside party such as the bank!
For details about creating a business plan click here.
Some final thoughts
Dwight Eisenhower once said: “In preparing for battle, I have found that plans are useless, but planning is indispensable.” Starting a business is a great undertaking. You want to be prepared. Here are some tips to keep in mind while in the planning process:
Keep an open mind. Do not try to make something work that cannot work, just because you like the idea.
Be flexible – while developing the business plan other ideas, markets, products or services may come to mind. Explore them.
Make your mistakes on paper – it is far cheaper than making them in real life.
Keep planning! It can be difficult to plan when you are running your business, but it is very useful to re-examine your goals and objectives on a regular basis. Don’t ever let the business squeeze out the creative entrepreneur.
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