“Without a plan, even the most brilliant business can get lost. You need to have goals, create milestones and have a strategy in place to set yourself up for success” (Yogi Berra, American professional baseball catcher and entrepreneur)
A business plan is an essential document for any business. It sets out what the business’s objectives and offerings are, how the business will operate from day to day, covers sales and marketing strategies, management and key personnel, and financial forecasts and goals. Having a clear plan helps to keep the business on track and moving forward, aids strategic decision making as the business grows, is a measure of success and is also a vital tool if the business is looking to secure funding.
For a prospective franchisee looking to invest in a tried and tested business model with systems and processes already in place, writing a business plan might seem a waste of time and energy. But in fact it’s just the opposite. Preparing a detailed franchise business plan is an incredibly valuable exercise. Doing so will help you to determine if the franchise is the right business investment for you, both financially and as a great fit in other ways too.
The process of drawing up a franchise business plan as a potential franchisee will differ from drawing up a business plan for an independent start-up however. There will be certain facts and figures that are already known and established. The franchisor will provide a lot of the information around product and services, processes, systems and financials. These will then need to be assessed by the franchisee and adapted or tailored where appropriate to the local market and proposed territory.
Preparing a franchise business plan doesn’t need to be a complicated exercise, but it is important that the plan covers the following key considerations:
The history of the franchise and its core business activities
What is the structure of the franchise, its corporate background, mission statement and what products and services does it offer? Who is the franchise’s target market?
Assessment of the brand’s key strengths and weaknesses
What is the brand’s USP (unique selling proposition) and what attracts consumers to buy its products or services? How are market trends and consumer buying habits evolving and how could this impact either positively or negatively on the franchise and what it offers?
Your background, experience and skillset
What is it about this particular franchise opportunity that attracted you and what skills and experience will you bring to the business to make it a success? Apart from the franchisor’s own training program, are there any additional qualifications or requirements that you need to possess to be able to operate the business successfully?
An analysis of the local market
Where geographically do you plan to operate the franchise? What is the extent of the territory? What are the demographics of the local area, specifically in relation to the franchise’s target audience. In a nutshell, what makes the planned territory an ideal location for the franchise?
An analysis of the local, regional and national competition
Who are your competitors in the marketplace? How does what your franchise business does stand apart from the competition and what competitive advantage will you have?
Your plan for your franchise – how do you want it to grow and what goals do you want to achieve
Any business plan should always be subject to regular review. It is important to recognise that a plan of this nature is not set in stone. It is a roadmap to take the business forward but a change in circumstances, market, financial climate or a whole host of other scenarios may require a change of direction or strategy. However your franchise business plan should clearly state what your short and long term objectives for the business are, ensuring that they are both specific and quantifiable.
Management and personnel plan
Franchise opportunities of course vary wildly in scale, from owner-operator models to franchises requiring a team significant in size. Identify who will be involved in both the management and day-to-day running of the franchise business, the skillsets and qualifications required of the people involved and how you will carry out any recruitment activities to get the right people on board.
Sales and marketing strategy
The franchisor will of course carry out national marketing initiatives. But in addition to those, how are you going to reach out to your target market in your local area and attract them to your business? What training, support and resources will the franchisor provide to assist you in this? What sales and marketing goals will you set as part of your strategy?
Costs
What are the costs involved in buying and then setting up the franchise to become operational? How will you be financing the investment – will a funding application be required? The franchisor will provide the bulk of this information, however be sure to analyse it closely and keep an eye out for “hidden costs”. Speaking to established franchisees can help with this.
Financial projections
This can often be the most daunting part of any business plan – looking ahead to how the business may perform financially, in line with your short and long term goals for the franchise. It should include an analysis of the business’s forecasted revenue, costs and profit during year one, year two, year three and beyond. Looking at how other franchisees within the network are performing should assist in compiling these figures. It’s important to be realistic and err on the conservative side in putting together these projections, and to consider seasonal variations.
Spending time researching and writing your franchise business plan should be the first step in your franchise business journey. But once done, don’t just lock it away in a desk drawer and forget about it. Your franchise business plan is just as important as your business grows and develops – treat it as a living document to measure if and when you are meeting your business milestones, to help you with decision making along the way, and to keep you on track for success.
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