The old adage “If you fail to plan, you plan to fail” is especially important for first time franchisees. Those who understand the benefits of business planning are more likely to be successful and pro-active to management decisions, than are those who react to day-to-day operational issues. Franchisees who fail to plan strategically end up confronting problems head on and may be unable to manage the business effectively on a daily basis.
This type of business management can have a negative impact on the franchise, staff and other individuals involved in the operation. It can also leave very little time for any other business management concerns. Therefore it is necessary for franchisees to construct an effective business plan for their franchise system.
Your business plan will be the “sales document” for you and your business and its preparation should project the image of what you want for your business.
The following is a useful guideline on how best to approach drawing up a business plan and the key terms it should contain.
1. Introduction
• Purpose of the business and business concept;
• Overall business objectives;
• Legal status of the business stated; benefits and shortcomings of this business system.
2. The Product and Service
• Product or service your business will offer; include relevant history of the franchise product
or service;
• List the Unique Selling Point (USP) of your business product or service; the key feature
that makes your product stand out from the rest in the market place;
• How the product or service can be developed with the help of the franchisor.
3. The Personnel
• Include details of anyone who will be involved in making your business a success. These
people are a very important asset to your business success. Include in this section:
• Brief summary of each person’s skills and knowledge of the particular sector, including
their personal assessment of attributes, strengths, weaknesses as well as your own
assessment of each person;
• Relevant experience, commitment and reasons for involvement;
• Don’t forget to include yourself in this assessment of key personnel- you are the driving
force behind the business operation.
• Include a detailed CV for each person in the “Appendix” at the end of your plan.
4. The Market
• This is probably the most important section of the business plan. Without a clearly defined
market, your business will not succeed. If you can show that you have “done your
homework”, you will gain credibility for the whole business plan. Your franchisor will also
have research in this area you can avail of.
• Describe the current conditions in the market place for your product or service;
• Detail any relevant facts and figures relating to the market sector(s) that you will be
targeting, and the type(s) of potential customers for your product or service.
• Details of competitors should be included with reasons why potential customers will
choose your product/service over your competitors.
5. The Marketing Plan
• Include your marketing objectives; i.e. number of sales.
• Where your product or service will be positioned within the market place in terms of
image, price and quality. You can avail of franchisor assistance in determining the
marketing strategy.
• Planned marketing, PR campaigns and advertising;
• Customer service policy is planned and how it will work.
6. The Operation
• Include sources of supply, labor and materials;
• Detail resources required to operate your business; what you already have and what you
will need to acquire;
• Identify any crucial procedures or sensitive issues and outline possible solutions;
• State where you intend to operate from- your current premises and future requirements;
• Outline your projected Health and Safety policies.
7. The Premises
• Location;
• Future business growth;
• Running costs and Uniform Business Rates, rent, etc.
• Insurance
• Planning Consent, planning issues.
8. Financial Information
(a) Introduction: Start with the key facts; the forecast profit (or loss) for the year;
• Whether additional financing will be required and what for;
• Break even sales for the business should be calculated and shown as a % of your
anticipated sales;
• Details of the money you need to take out of the business to live on – required income.
(b) Profit and Loss Forecast
Your forecast profit (or loss) should be based on your anticipated sales, minus your direct costs and overheads. The assumptions made should include:
• Justify anticipated sales as best you can;
• Any direct costs (materials, etc) should be detailed;
• Don’t’ forget overheads;
(c) Cash Flow Forecast
To anticipate how much cash your business will require, you should convert your profit and loss forecast. List the following assumptions:
• When will you get the money from sales;
• When you will have to pay suppliers;
• The timing of specific overheads;
• How much capital equipment that you require for the business. Differentiate between
existing equipment and expenditure still to be made- how much and when.
9. The Appendix
This is the final section of the BP. It should include the detailed information mentioned earlier and the following:
• Details of premises;
• Insurance Details;
• Product brochure, photographs, letterhead.
• Anything else that you believe will enhance the credibility of you or enhance the credibility
of your business.
If you use these guidelines as your point of reference to guide you through creating your own business plan, you should have no problem in writing a successful Business Plan for your own personal use, or for approaching investors for your business, financial institutions and a franchisor.
Aine Meade is a Website Editor for Franchise Direct, a leading Internet franchise advertising portal. Aine creates high quality franchise information for its international websites in the U.S., and Europe. Aine has a BA (First) in English and History; MA in Literature & Publishing; Diploma in Media Journalism and a Diploma in Marketing.