Whether you’re a franchisor or franchisee, writing a clear and thorough business plan is one of the best ways to ensure a successful franchise experience. A business plan encourages you to consider any potential problems or unrealistic expectations that may occur, working through a plan to face them. Not to mention, a detailed business plan is crucial to encourage investors, as it gives them a realistic assessment of the potential success of your business.
Although the creation of a business plan may seem daunting or complicated, there are steps that any prospective franchisor can follow to make the process run more smoothly. These include:
A Company Summary
A Market Analysis
A Hand-Picked Management Team
A Thorough Marketing Plan
An In Depth Financial Plan
Especially where third party financing is concerned, be sure to keep the plan clean, concise, and direct to encourage investment.
The first part of any business plan should briefly summarize the entire plan. This section is crucial, as it gives potential investors a first impression of the business you are franchising. Produce a complete description of the business, including the products or services sold. Much like Item 1 of any FDD, also provide an overview of the company’s history and growth.
Show third party investors that you’re not simply jumping into business by providing a well-researched market analysis. This analysis should focus closely on the specific area in which the business will be located, emphasizing why there is a good fit. Describe the size of your market and the demographic that makes it up. Is the market of your business undersaturated? While it may seem counterintuitive, provide a brief analysis of any competitors, emphasizing why your business will be better than the others. Finally, it can be wise to speak with an expert. Ask them to provide a professional opinion on the trends and potential growth of your market of choice.
This portion of the plan describes the primary management rules and names the people involved. A new business is only as good as the people running it, so create a brief description of each person in the core team. Describe why they are a good fit for the role and what they plan to contribute to the company’s growth and success. Also point out key aspects of their previous experience or skillset that makes them an asset to the company.
This portion of your business plan is vital to attract and encourage potential investors. In this section, you describe how you plan to draw customers to your new business. Any advertising or promotional plans should be fully described. Also explain any marketing training that the company’s team will work through.
This section of the business plan gives the lender an idea of your company’s overall financial situation. Fully describe all of the costs related to the new business, including the finances you already have to cover marketing and any issues that may arise. Even if you’re not using third party financing, a detailed financing portion of your business plan can keep you on the right track. Outline your budget and specify which funds will be allocated to which parts of the company development.
The more detail you incorporate in your business plan, the more success you are likely to meet. Part of the reason prospective franchisees choose a franchise rather than independent business is the structure and stability of a pre-established company. The business plan plays a key role in developing a stable and profitable company, whether you’re franchising your independent business or purchasing a preexisting franchise.