The business plan your banker wants to see must bring your aspirations to life and show how you will turn them into a winning business proposition, but a ‘smoke and mirrors’ approach will not do the trick. Hard facts and accurate figures, underpinned by a healthy dose of realism, are far more likely to achieve results.
Many people dread the task of preparing a business plan, because they think that it is beyond their capabilities. They seek the services of a professional business plan writer, but this is not the best way to do it. Compiling the business plan yourself will not just save you money, but there are also far more important considerations at stake. Working on your business plan will open your eyes to potential flaws in the concept when it is still easy to implement corrective measures.
There is something else you need to consider. The professional business plan writer may well write a literary masterpiece complete with bells and whistles in the form of charts and graphics. Although this may dazzle the reader at a superficial level, it is not a winning proposition. Here is why:
- The people who will screen your business plan have seen it all before. They are unlikely to be impressed by a few moving pictures.
- Writing skills and graphic wizardry cannot make up for the one ingredient that is needed to bring your business plan to life, namely your DNA.
- Because you didn’t write the plan yourself, it wouldn’t be your plan and you wouldn’t be able to present it with passion. When you come face to face with the banker, you will read it out parrot style and the banker will be less than impressed.
- Contrary to a widely held belief, convincing the banker to grant you a loan isn’t the only reason why you need a business plan. Once your business is up and running, the business plan will become your road map guiding you towards business success. Unless you have drafted it yourself, you won’t feel the necessary commitment to convert figures on paper into cash in the bank.
Remain factual throughout
There is a widely held belief that business plans must be substantial documents, often commencing with a review of the early life of the brand’s founder. This is overkill and may even undermine the plan’s impact. Because salient information is buried under a mountain of irrelevancies, it could easily be overlooked. Let your passion shine through, but don’t waffle.
The franchisor will have a great deal of useful information on customer demographics, site selection criteria and operations. You can use this information, subject to two provisos:
- Make sure that the data you receive is relevant to your situation. The data should originate from a business of similar size that is located in an area with similar demographics and competitor activity.
- Don’t accept information at face value. You will be investing your own money and it will be your responsibility to make a success of the business. It is only reasonable for you to verify everything. No responsible franchisor would want it any other way.
Bankers are busy people and routinely have to look at several business plans a day. What they do want to see is a document of approximately six pages that tells them precisely what they need to know, nothing more and nothing less. Detailed projections and other supporting documents, including your CV and copies of the franchise agreement and other important documentation, can be included as appendices.
Arrange the actual text as follows:
- Title sheet (which should include contact details).
- (1) Executive summary.
- (2) Introduction to the franchise brand and its standing in the marketplace.
- (3) Introduction to the new outlet, its management and proposed staff complement.
- (4) Details of the product and/or service and its target market.
- (5) Details regarding product sourcing, marketing, sales and distribution.
- (6) Financing requirements and proposed deal structure.
- (7) Key financial data and projections.
- (8) Summary.
When you write the summary, don’t be shy to reiterate that, although you cannot guarantee that you will achieve identical results:
- the financial projections you provide are realistic because they are based on the actual performance of similar outlets within the network you are about to join; and
- the combination of your passion for the business and the franchisor’s initial and ongoing support will go a long way towards achieving its success.
Templates for the creation of a business plan and cashflow projections can be downloaded free of charge from the Nedbank website. All financial projections should extend three years into the future.
To find out more about the services Nedbank Franchising offers contact the business manager at the area office nearest to you. For contact details visit www.nedbank.co.za or your nearest Nedbank branch.
Written by Mark Rose of Nedbank and Eric Parker of Franchising Plus.
Copyright rests with the authors.
Develop Digital Marketing Competency In 3 Simple Steps
Conquering the digital revolution needn’t be daunting. Polish up your tech skills and watch your digital marketing prowess increase throughout your franchise.
As a franchisor, digital marketing may be proving to be a challenge due to the unique structuring of the business.
“The very nature of franchises is ‘structured’, however, when it comes to marketing, that structure often lacks,” says Marcela De Vivo, Founder and CEO of Gryffin Media.
Franchisors and franchisees often struggle to reach common ground when looking to achieve different marketing goals. While the franchisor needs to control the brand in its entirety, the franchisee wants to market their business using particular strategies suited to their location.
Research has found that smartphones are the biggest influencers of 82% of users when they make their in-store purchase decisions while. It’s for this reason that the importance of digital marketing for franchises has increased.
Here’s how to harness its power of influence, amplify foot traffic and solidify brand loyalty:
1. Recruit digital natives and early adopters
As much as you’re the leader of your franchise network, there are franchisees in your chain you could learn from. The global increase in millennial franchise owners means it is highly likely that you’ll be able to identify early digital adopters within your franchise network.
“The best people to learn from are those who have been in your shoes before,” says Matt Forman of the Franchise Centre at Griffith University.
“Encourage and support their efforts and use them as case studies to demonstrate to the rest of your franchisees the value of digital marketing, and how to do it right.”
2. Invest in training your team
“Each digital competency level requires more education and resources in order to integrate digital marketing with your physical stores,” says Forman. For this reason, regularly investing in continuous training for your team so as to ensure they keep abreast of any new and emerging trends.
Proactivity and adapting to the constantly evolving digital landscape led KFC to open a LinkedIn account for its founder and mascot Colonel Sanders. KFC’s out of the box tactic is a fresh approach to what has long been considered a B2B platform, under-utilised as a B2C platform.
3. Apply custom targeting techniques
The discovery of new and small businesses is being fuelled by Google searches, social media and online reviews, making these platforms a goldmine of invaluable tools.
Leveraging certain custom targeting techniques like easily searchable keywords and exposure on other reputable and high-traffic websites, gives your franchise’s digital marketing efforts a boost. This results in an effective campaign, favourable reviews and meaningful and lasting interactions with consumers “whether it’s a reply to a Facebook comment or a retweet,” says Entrepreneur’s Emily Conklin.
How To Hire Skilled Workers For Your Franchise
Your staff run your business – you just have to show them how. This is why employing the best people for the job is essential.
According to the Franchise Association of South Africa (FASA) 2017 Franchisor Survey, one of the main challenges facing franchisees is finding the right staff.
“Staffing your franchise can be one of the most challenging parts of running a successful business. Without a great team of employees, you cannot run your business effectively,” says Saxon Marsden-Huggins, founder of WebRover.
These three tips could help you find the best employees for your franchise outlet:
1. Don’t hire in haste
While you may be rearing to go and keen to fill gaps to speed up profitability, research your candidates thoroughly.
As the job applications keep flowing into your inbox, keep in mind that not all of them qualify for the positions available – it may even be a small percent who are actually viable candidates. This is why your hiring process should include:
- Taking the time to thoroughly screen CVs to develop a short list
- Creating a carefully crafted list of interview questions
- Setting aside adequate time for thorough interviews
- Getting to know the candidates through a second round of interviews to confirm your choice.
Giving the hiring process dedication and attention will ensure you get the cream of the crop, contributing to the long-term success of your franchise.
2. Demonstrate support in the workplace
While you can instil the necessary skills into new recruits, it’s difficult to train for culture. This is why choosing the right employees from the beginning will make the rest of your franchise management system will run more smoothly.
“The manner by which you run the franchise will influence employee perceptions of the brand as well,” says Hireology’s Erin Borgerson. “Your staff must become ambassadors of your franchise system to attract the target consumer market.”
The best way to do this is encouraging staff to give you their honest feedback. Your commitment to creating and upholding a positive culture will result in increased loyalty from your current staff and a superior pool of applicants.
3. Offer appealing incentives
When advancement opportunities are clearly communicated, staff is keen to hear how they can get there, as they have career goals of their own. Encouraging this ambition will draw good employees to your franchise.
“Helping employees understand the steps to advancement helps them to view their current job as an important part of a career with an upward path, not just a pay cheque for this week,” say financial reporting technology experts at Qvinci.
Performance bonuses and employee benefits incentivise staff’s efforts, therefore increasing their income alongside the profit of the business. “This serves to make employees a part of the business and not merely people ‘who work there’,” they explain.
3 Ways Communication Helps You Run Your Franchise Better
Managing your business as an independent owner may have been challenging at the beginning, but – as you’ve come to realise – the successful operation of a franchise network requires an extended set of skills.
“When it comes to a multi-location business such as a franchise, effective communication is vital,” says Dani Peleva, Managing Director at online marketing agency Local Fame. “So what happens when you’re struggling to connect with the franchise network you have in place?”
It may be time to upgrade your franchise management skills, because the success of your franchise network has a direct correlation to how you integrate feedback systems into your management processes.
Have a clear comprehension of the challenges your franchise encounters, keep an open chain of communication between yourself, franchisees and managers, and maintain regular interactions between everyone in the network. These are some of the most crucial aspects of successful franchise management:
1. Understand the challenges you face
A thorough understanding of your business requires dedication to regular and consistent groundwork for first-hand experience on how the day-to-day operations of the business are conducted.
“Seeing and talking to the people that make your business will help you understand the challenges that franchisees face and the systems they need to drive higher profitability and growth,” says Rosie Niblock, Marketing and Communications Manager at Proactive Marketing.
“That way you can work more effectively to make improvements to franchise management systems logically and within the financial grasp of all franchisees.”
2. Get personal through regular visits
You never want your franchises to feel neglected. It’ll demoralise them and possibly drop sales, profits and their ability to keep the business running as you intended. Maintaining regular contact and sharing as much information as possible – when you can – fosters strong relations with your franchisees.
Empowerment through information and communication makes a difference in the business and helps franchisees make decisions in favour of the business and to make sure that they all pull in the same direction in terms of customer satisfaction, says Alan van der Westhuizen, executive manager of new business sales at Fournews, a 20-year-old franchise holding company for News Café, Krispy Kreme, Moyo, Brooklyn Brothers, Smooch, Cafe Fino and Go! outlets.
Ensure your response to these concerns is swift. “If not discussed they could fester ad create undesirable rumours,” says Niblock.
3. Create events for network collaboration
One of the most important aspects of managing your franchise is meeting with all your franchisees, at least annually. “Franchise conventions are almost certainly the biggest tool when it comes to building profitable engagement,” says Peleva. “They’re one of the most important things to focus on when you’re considering how to lead your franchise network.” According to her, a successfully attended and executed convention will let you:
- Boost your network-wide productivity
- Hugely increase your profitability
- Drive passion for your brand
Communicating with your franchisees is the best way to identify problems, work towards solving them, and building a pleasant and fruitful relationship with your owners.
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