Tips for writing a franchise business plan
Writing a business plan is a critical step for any business, including planning to own a franchise. Think of the business plan as a detailed map that outlines your journey, helps you identify any potential roadblocks, and paves the way to successfully arriving at your destination. Creating a business plan can help you in anticipating potential challenges and assist you in tempering any unrealistic expectations you may have. It is difficult to bridle enthusiasm when working out a business strategy, and the business plan is an excellent tool to channel that drive. If you are going to be seeking financing, banks and other lending institutions will certainly ask for a detailed business plan.
Many franchises offer their business plan templates that you can use and adapt. Another perk of a franchise startup is that most of the financial information you will require can be found in their Franchise Disclosure Document (FDD). Hiring a business plan writer to develop your business plan, reviewing it, and providing feedback, is a wise decision. The money you spend at this step is considered a business expense.
Lenders are busy people and don’t want to read novel-length business plans, so use restraint while being clear and concise. Your work should make the lenders confident that you’re able and ready to take on the franchise and that it will turn a profit in a reasonable amount of time. One of the advantages of franchise ownership is that franchisors have already done the legwork to address lenders’ concerns. While business plans aren’t standardized, there are must-have sections found in every well-written business plan.
The executive summary provides a brief overview of the company and the history of the franchise. It also outlines the market size and its characteristics, the competition in that market, and how strong it is. Other points included here are your operational approach and the summary of your financial projections. Some of the information you’ll need can be found in the Financial Disclosure Document.
The key management positions and who will fill these roles are what this section is all about. It’s important to highlight that your managers possess the relevant experience your managers have, driving your franchise towards success. You will also want to highlight the staff/ consultants that the franchisor provides to assist franchisees.
This section describes the target market and answers the customers’ questions and how they will be attracted to your business. Outline the competitive advantage your new franchise will enjoy in the market and describe how potential customers perceive the value of your product or service. It will be necessary to briefly outline your marketing and advertising plan and explain how and why they will draw customers to your business.
Pro Forma Financial Projections
Income statements, cash flow statements, and balance sheets that are clear about the anticipated financial performance of the business are found here. All of the material assumptions used to prepare these projections must be carefully and extensively outlined here. When you are working out your numbers, it is crucial to be very conservative. Lenders are realistic, and they understand that unexpected challenges arise no matter how prepared you are.
This section analyzes all of your startup costs, including the working capital required for the marketing plan and the operating expenses until the business gets to its breakeven point. Occasionally entrepreneurs get to this section, and after crunching all the numbers, they discover that the franchise may not be a good venture or the right fit. It’s much better to understand this sooner rather than later. It’s not a failure at all – it’s good business. When you are writing your business plan, don’t be shy about using all the resources a franchisee will make available to you, including initial training and the Financial Disclosure Document. Some franchises are better than others, and the services of a business plan writer are invaluable. Lastly, remember that your business plan is not a static document tucked away in a filing cabinet. It should be reviewed and revised annually.
Get in touch: If you’re considering creating a franchise business plan, want to revise an existing business plan, or need any advice in the business plan writing world then get in touch! I’d love to hear from you.