If you can, you will also remember that most long journeys to a new destination were in fact a two-man (or woman) job. The driver’s responsibilities were simple; drive the car, don’t crash and stay awake. In most circumstances you were also afforded music choice privileges, and the right to choose when toilet breaks occurred.
The passenger was equally as important to the road trip, being relied on as navigator, map reader, and snack facilitator. The core of their obligations was to make sure the driver did not miss a turn, was on the correct road, and to ensure and road works or diversions we navigated safely.
Suffice to say, we got lost. All the damn time. Especially if this unfortunate pairing happened to be a husband-and-wife team; arguments were heated and plentiful.
Then sat nav arrived and everything changed. Suddenly your co-pilot wasn’t a belligerent friend or relative withholding sufficient wine gums, it was an magic box that new exactly where you were, and where you were going. Even more amazingly, if you took a wrong turn it knew! And could redirect you in moments! Best of all if you were the passenger, you could now shirk all duties and fall asleep, waking only on arrival (or at least that’s what my wife does).
Hard to imagine life without it now, but what has this got to do with the wonderful world of franchising?
Well, the good news is that your new business will have its very own ‘sat nav’ from day one. It will know where you are going, how you are going to get there, and what its going to cost you. The bad news is that you have to write it.
I’m talking of course about your business plan. Now there is no pretending that business plans are the most exciting part of becoming a business owner, but they are one of the most important.
The Business Plan is the foundation of the strategy you intend to follow. It is the anchor document that outlines your direction from the start, highlighting your strengths and weaknesses, tracking your milestones, and manages your cashflow.
It is also the document that will often be the bellwether for securing the funding you require from your chosen finance provider.
In short this is your Business Sat Nav – helping you understand where you are starting from, where you going, how long it’s going to take you to get there, and some forward planning on potential diversions along the way.
The topic of a ‘Good’ business plan is one deserving of a whole book all to itself (not least because its quite subjective), but I thought it might be useful to offer just some of my experiences having read quite a few of them, and seeing people drive round and round in circles trying to get them right.
Nail the numbers
Check your numbers and check them again. I’ve lost count of the amount of cashflows I’ve seen where the totals don’t add up, or fundamental costs to the business are missing. If your numbers don’t make sense, your entire business plan won’t make sense. Make sure you are a freak in the sheets and get those Excel docs right.
Keep it brief
The longer the plan, the more likely it is to be filled with waffle. Build with the most important points covered first – business description, management structure, marketing plan, operational plan, risks, competitive advantage, cashflow forecasts.
Review it regularly
Try not to see the business plan as a ‘one and done’ exercise; throughout your due diligence process with your chosen franchisor, you should be revisiting the plan regularly and rewriting as more information is available. Take advice from your franchisor, asking them to review your plans and offer constructive feedback.
Cash is king
The biggest killer of any business is undercapitalisation i.e. not having enough cash in the bank for the early stages. Make sure that not only have you allowed for enough working capital, but that you have allowed for extra costs or eventualities – 50% more than your calculations is sensible. Make sure the capital is clearly demonstrated in your forecasts, and its origins can be proven.
Set clear goals
Make sure your goals are clear, achievable and evidential. Put a timeframe on each one, allowing for a ‘spread’ of success – what happens if you achieve 10% less sales than planned in year one? Or 25% more? Both outcomes will impact the business plan in a variety of ways.
Make sure it works
If you write your business plan but the numbers simply won’t add up, perhaps this franchise model isn’t right for you in your current position. Don’t try to make the model fit your finances; a round peg won’t work in a square hole no matter how many times you redo the spreadsheet or increase the sales expectation. Be honest with yourself, there is no benefit with unrealistic expectations.
Finally, I suggest you remember the five Ps – proper planning prevents poor performance (it should be 6 Ps but let’s keep it clean). An honest and conservative business plan will pay dividends (literally) in the long run, and your Sat Nav will guide you safely and swiftly to franchise success.
Beware though, if you punch in the wrong info, you might just find yourself driving into a river you thought was a road, wishing you’d paid a bit more attention at the planning stage.
Good luck and safe travels.
