Business plans work as a sat nav for your franchise. Essentially, having one helps you get to where you want to be
Benjamin Franklin once famously said: “By failing to prepare, you are preparing to fail.” This statement certainly holds true for franchisees and whether you’re a new franchisee, growing, expanding or even looking to sell your franchise, a business plan can help you prepare for your journey or at least the next part of it.
Although many business plans are written with the objective of raising finance, you shouldn’t underestimate the many additional benefits of well-considered plans. By monitoring business performance against the specific goals and objectives within your plan, the chances of achieving the desired results will greatly improve. It’s an old cliché but it’s also very true: “What gets measured, gets done.”
At Hitachi Capital Franchise Finance, we often refer to business plans as business sat navs as they help guide you from where you currently are today to where you want to get to in the future.
Why do I need a business plan if I don’t need finance?
The business plan shouldn’t be considered as simply an application for finance but instead as an important tool which can be used to identify the actions required as in what your strategy should be like to help you achieve your goals and objectives.
The financial projections will help you identify how profitable your actions are likely to be and therefore whether they’re worthwhile. Your cashflow forecast will help you understand whether you’ll have enough money to do everything required i.e. whether you can actually afford to do it.
If you’re planning to invest your own funds or utilise surplus cashflow, it’s worth considering the implications of doing this. It’s often more prudent to borrow at least some of the money rather than leaving little or no contingency because you don’t want to pay interest on a loan. Retaining some of your own funds will help improve your ability to deal with any unforseen emergencies or changing economic conditions and to invest in the business to aid further growth or take advantage of any opportunities that suddenly appear.
The business plan is also an opportunity for you to sanity check your proposed strategy and to check the viability of your proposal. It gives you the ability to consider the risks, understand the competion and the proposed marketing, in addition to reviewing the potential return on your investment.
A comprehensive plan will therefore help you to stay safe and navigate the way to achieving what you want to do. It will also make it much easier for a lender or investor to assist you.
Can I prepare my business plan?
The answer will depend upon your own skills and ability. Some people will certainly be able to write a comprehensive plan and prepare detailed financial forecasts. However, some will simply not have the necessary experience and will need help. When running a business it’s important to understand your own strengths and weaknesses and to surround yourself with professional people and advisors who can do or teach you to do the things that you cannot or are struggling with. Business planning is no exception and is the key to your success.