Your business plan will serve two purposes: to present to your bank or lender the components of the franchise venture your are pursuing to get the funding you need and later, to provide a self-guided progress report for the maintenance, improvement, and expansion of your business.
Your lender will require a business plan as part of the application process. No two business plans are alike, although there are a number of section that must be included. Without them, the plan will be incomplete and lessen your chances of getting funded. Before you start writing, there is some research to be done that can help piece together the components of the plan before you present it.
Before You Start Writing, Do Some Research
The following three questions should be asked prior to you writing the business plan:
1. Ask your lending officer the kind of business plan they are looking for when reviewing your application.
Many lenders dealing in small business have read hundreds of business plans – good ones and bad ones. Long ones and short ones. Chances are, they’d heard and seen it all. You do not want to write a 30-page business plan with so much detail that may weaken your presentation. On the other hand, a 5-page document won’t do, either. You should determine the specific area of interest that the lender wants to see.
2. Determine if the lending institution uses a specific business plan template or format.
If you search on your lender’s website, you should find information about how to prepare a business plan using a specific set of guidelines. Your lending officer may urge you to follow this format, or provide you with a electronic version of a business plan template used by that institution. In this case, all you do is fill in the blanks right from your computer. There are also a good number of computer applications that guide you step-by-step through the business plan as you fill in each required section and sub-section.
3. Ask if the franchisor has already produced a generic business plan which can be modified to your personal requirements.
Some franchisors already have a customizable document written specifically to acquire financing. In many cases, this is what the lender wants to see. Keep in mind that if you are investing in a franchise opportunity with brand recognition and a known profit-making track record, you will already have a foot in the door to getting lender approval.
Are you Writing for the Right Audience?
As you gather the information above, there is one more question you have to ask: for whom are you writing your business plan? Most franchise start-ups that require financing will go to their local bank so the information and advice you will be reading about this subject will cater to this audience.
But, if the kind of funding you seek is meant for private investors such as angels or venture capitalists, the same business plan won’t work. These individuals or organizations will require a business plan weighted on financial forecasts and how the business intends on breaking even as quickly as possible.
Therefore, the language or voice of the business plan has to sound like yours. If you are a gifted entrepreneur with a stellar grasp of business concepts and catchy business clichés, your lender will judge your plan as a reflection of who you are; if your writing is less sophisticated, do not try to write like someone you are not. If you write from the heart or as if you would be talking to a friend, your vision will catch on and convince your lender that your goals and objectives have success potential.
Your Goals and Objectives
One final consideration you should give before you roll up your sleeves and begin writing is to outline your overall goals and objectives surrounding the franchise venture. These points are about you and not the business, but will have a 100% impact on your franchise if your goals and objectives do not coincide with the unanticipated ups and downs of running a business. These goals and objectives should also respond to a “plan of action” if they are not met to your satisfaction. Your goals and objectives should act as a backdrop when writing your business plan.
Only you can determine what your goals and objectives are but here are some basic ideas to get your started:
- How will this venture impact your lifestyle?
- How much money do you want to make in your first year? Third? Fifth?
- How will you revamp your daily routines to accommodate the business’ needs?
- What sacrifices do you have to make to get the venture off the ground?
- What can you do to enhance your leadership and business management skills?
