Do I need a business plan for franchising?
Mar 23 2006
In short, yes. A business plan is a necessity for running any sort of business, so that includes a franchise. Firstly, it is an important tool for you to use to set out the objectives of the business in a formal, thought-through manner. It will enable you to see if your aims are coherent and realistic, as well as helping you set out the weekly, monthly and yearly steps you'll need to take to achieve them.
Established franchisors will nearly always work with their franchisees on an annual business plan. Having a plan in place will identify at an early stage whether the cash flow projections are being achieved and if not you will put in place an action plan to bring it back on track, usually with the assistance of the franchisor.
In addition, if you need outside capital to get your business up and running, the lender you approach will almost certainly want to see a business plan. It's a must when you're borrowing from a bank or building society, but it is also advisable when friends, family or other associates are investing in your business. It will give them an idea of your operational strategy and financial projections, which ensures everyone understands the nature of the business and what are it's aims and objectives. It's only by seeing this plan that anyone lending you money will be able to give you tailored financial advice and make decisions on how to structure your lending package.