Martin and Co Franchise

 A Business Plan is not just essential to securing the necessary funding for a new franchise venture. It is also an absolutely invaluable management tool that can help deliver long-term success - particularly when markets are tough.

Whatever line of business you plan to get into, without a detailed Business Plan in place, your chances of success, even in the medium term, are seriously compromised. Glaringly obvious? You'd think so - yet thousands of new business ventures founder each year for the lack of such a plan.

This may well sound a bit daunting. However, one of the great advantages of choosing the franchise route is that you should get help in drawing up your business plan - and even in presenting it to the bank. (If this isn't the case, and you are left to your own devices, then you should very quickly ask yourself whether you've chosen the right franchise!)

Many people regard drawing up a business plan purely as a necessary step towards securing funding. Certainly any bank will require one before it will even entertain the idea of financing your venture. Having a properly-constructed plan already in place when you first approach the bank not only enables you to be confident about your intentions and your financial projections, but will also help to impress your bank manager with your business acumen. In other words, you are more likely to receive funding if you prepare in advance.

However, rather than just a one-off document designed to impress others, the real value of a good business plan lies in its ongoing role as a management tool designed to help you monitor and analyse your market; identify and target specific customer groups; price your products and services; and manage all your costs, sales forecasts and marketing.

In other words, it not only gives you a blueprint for success, but also enables you to keep tabs on every key measure of your business on an ongoing basis, and structure the financial side of your business accordingly. It can help you spot potential pitfalls before they happen, as well as providing a template for future development and expansion.

Above all, for your business plan to deliver all of these benefits, it needs to be treated as a living document that needs constantly feeding with new data, expanding, changing and updating as your business grows and develops.

When drawing up a business plan, remember that in essence it has 3 main purposes:

• To identify your business opportunity and your target market
• To set out exactly what products and services you plan to offer, and your strategy for persuading people to do business with you rather than anyone else, and
• To demonstrate how you plan to make money.

Within this framework, your plan can be as simple or as complex as you choose. As a general rule of  thumb, however, it needs to contain the following:

1. An Executive Summary. This is basically a synopsis of all the main points of the plan, and is particularly important when it comes to approaching banks. Given the number of applications they receive, they will often make initial judgements on the basis of this summary alone.
2. A brief description of the business opportunity - who you are, what you plan to sell or offer, why, and to whom.
3. Your marketing strategy - who you are up against, why you think people will buy what you want to sell, how you plan to persuade them to do so, and how you plan to adapt to any changes in the market.
4. Your management team and personnel requirements - identifying your own credentials as a manager and business-owner, the people you need to recruit to work with you, and any training issues.
5. Your operations - your premises, and the advantages/disadvantages of their location; your management information systems; and your IT requirements, both current and projected.
6.  Last and by no means least, your financial forecasts. This effectively means everything you've already said, translated into numbers. In many ways the single most important element of your plan, this should include:

• A statement of how much capital you have, or will need to raise; how you plan to repay any loans, and what security you can provide
• Your planned sources of revenue
• Projected cash balance and cashflow patterns for at least the first 12-18 months
• Sales forecast
• Profit and loss forecast - a detailed statement of the trading position of the business; the level of profit you expect to make (given your projected sales volume) and the costs involved in providing goods and services.

Once you've completed your plan, the important thing is to keep referring to it, and using it. If your franchise business is not performing to your expectations, then re-assessing your business objectives and plans will help improve your results. It doesn't matter how many years you have been in business, a robust and flexible plan will help you improve your profitability and build your business in a structured and achievable manner.

(Taken from the article featured in The Negotiator 11th July 2008 - Comment: Franchising by MD of Martin & Co (UK) Ltd Ian Wilson)