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.
3 Ways To Ensure Your Loyalty Programme is Working Hard For You
Plastic cards are making way for app-based loyalty programmes. Is your franchise keeping up with the digitally savvy consumer?
The average consumer today is a member of at least five of the 100-plus loyalty programmes in South Africa, according to a 2017 study by Nielsen. As the loyalty playing field becomes more cluttered and competitive, what are you doing to ensure each one of your franchisees are catering to customer needs when it comes to loyalty?
Mobility. It’s not the newest buzzword, but it is useful for attracting customers who don’t want to lose loyalty points because their card is lost or not with them. Ailsa Wingfield, Nielsen’s Head of Emerging Markets: Thought Leadership, says that as adoption of non-traditional payment methods increases, loyalty programmes also need to introduce payment type flexibility.
“Mobile payment platforms will increasingly deliver an opportunity for loyalty-programme engagement with consumers, providing a convenient and personalised way for programme members and retailers to engage with one another all along the path to purchase.” – Ailsa Wingfield Nielsen Head of Emerging Markets Thought Leadership.
Have you considered what role tech could play in your current loyalty programme? Here are three ways to apply digital enhancements that appeal to present and potential customers:
1. Offer differentiation through more options
Research has concluded that the loyalty programmes devised by retailers and franchises are not innovative enough to capture the attention of the youth – Millennials and Gen Z. it’s time to diversify your rewards offering. But how?
If your customer base is predominantly younger, being omni-present is key, according to the Truth Loyalty Whitepaper: “An omni-channel approach will not only meet the demands of the younger customer, it will also allow your business to combine intelligence on shopping, search and web behaviour history to assist you in identifying when to offer an in-store promotion, extend a seasonal offer or make a product recommendation through the appropriate channels.”
Implementing a digital loyalty campaign is also a smart way to reduce costs. Coffee shop franchise Mugg & Bean’s Generous Rewards App and partnership with Vitality Active Rewards, means members can earn cash-back rewards to spend on their favourites. Just downloading the app earns you a R25 voucher.
2. Use your tools to engage more
A crucial mistake most franchisors make is not communicating consistently with their loyalty programme members once they’ve signed up and increased numbers. They spend a lot of time recruiting customers to join, but expect them to prompt cashiers for points’ balances and produce their cards independently in their various locations.
“You have gained permission to talk to your customers and created the opportunity to collect enormous amounts of valuable data. Use this to your advantage by creating meaningful and relevant engagement initiatives and communications across your customers’ lifecycle,” advises Truth, a boutique consultancy business specialising in customer centricity and loyalty programme strategy and design.
When enhancing your engagement strategy, Accenture advises that you keep the following in mind:
- 54% of South African consumers are loyal to brands that actively engage them to help design or co-create products or services.
- 57% are loyal to organisations that present them with new experiences, products or services.
- 47% are loyal to brands that engage them in ‘multi-sensory’ experiences, using new technologies such as virtual reality or augmented reality.
3. Keep the experience simple
Review your loyalty programme. Honestly. Then ask yourself if you’ve made your programme too complicated for the layman. If your answer is ‘no’ or even ‘maybe’, how can your target consumer ever reap the full rewards of this programme if they don’t understand the rewards on offer and how to redeem them?
Changing rules too often is the first complication to go. No matter which one of your stores they choose to shop at, the redemption and earning process should be simple enough to keep members interested and engaged in the programme. Make sure you keep your programme simple and transparent.
“Clicks made a simple but fundamental change to its redemption process – paper-vouchers were replaced with virtual points that can be redeemed as cash-back when you swipe your card at the till. While Clicks and Dis-Chem are among only a handful of brands that do this, it’s a sure-fire mechanism for increasing redemption,” said Amanda Cromhout, founder and CEO of Truth.
3 Crucial Considerations For New Multi-unit Franchisees
Your marked success as a single-unit franchisee has led to the choice to multiply your achievement. But do you know what it really takes to move from owner-operator, to multi-outlet operator?
Multi-unit franchise ownership is a brilliant way to grow your business portfolio, once you’re successfully running your single location. Once you get the hang of being franchise business owner, adding one or a few more units could be the next logical step.
“The risk with having one store is higher than if you have more than one store, as the stores support one another. When the one is down the other one is up,” says multi-unit Montagu franchise owner Pierre Lombard.
You’ve probably already realised this lucrative option and are getting acquainted with multi-unit franchising. As this is new territory, you may want to consider these methods to multiply your success.
1. Make more discerning recruitment choices
When you opened shop at your first location, you were probably warned against hiring a manager, because they may not be as invested in the success of your business as you are. Now that you growing, you have no choice, so you need to be selective in your decision of who’s going to run the show when you’re not around.
The best way to ensure consistency in service and quality in each location is to always put culture fit over ability. While a certain level of skill is required to carry out the tasks required of a manager, attitude trumps aptitude when selecting capability running your locations.
“Place one of your outstanding managers or staff from your current store in the new one and have them train up any new staff,” suggests Francesca Nicasio, Retail Expert at Vend.
“That way the practices and attitude that you’ve cultivated in your business will continue into your new store.”
2. You need tech to help you be everywhere
Not only are Cloud technologies enabling franchise owners to scale quickly, easily and more affordably compared to on-site solutions, but these advancements mean you can remotely optimise inventory across all your locations, get a more accurate assessment each store’s performance and better understand your business – all you need is an Internet connection.
With the variety of Cloud-based solutions available today, you’re also able to connect your sales, staff, and customer information to give customers a seamless experience at all locations. You’re also able to receive alerts on low stock levels and automatically have it.
3. Set and stick to a specific standard
As a franchisee, consistency is standard practice. But that’s easy done as a single-unit owner than when running multiple locations. To make your mini network more manageable, ensure all your store understand brand standards beyond the operation manual.
“Naturally, you have your franchise systems’ operations manual and procedures but the way you personally want to stamp your mark on customer experience, for instance, needs to be documented too,” experts at Inside Franchise Business advise.
Doing this reduces the stress of continually keeping tabs on staff, and frees you up to collect and collate the data you need to make smarter decisions faster.
Effective Ways To Bring Customers To Your Door
Here are a few tips from Local Area Marketing Manager of Cash Converters, Juan Botha, to assist you in bringing customers to knock on your door.
Retail, craft, artisan and service businesses can’t rely on only carrying on trade online – you also need people coming through the door and engaging with your product. But how do they find you? Are you the neighbourhood’s “best-kept secret” – and not in a good way?
Your premises, the surrounding area and the audience for your brand are a unique combination. Get to know both inside out so that you can hone your products and your marketing to appeal to potential local customers. With all the pressure to run a website, Facebook page or maintain other online presence, it’s easy to forget the basics and fail to reach your closest customers – those on your doorstep.
Our Local Area Marketing Manager, Juan Botha, previously worked in advertising with local and multinational brands and he taught us how each store needs to make sure its marketing lives up to the pointer, “Act global, think local”.
Here are a few of his tips:
If customers know about you but can’t find you, they’re likely to get frustrated looking for you and give up. If they don’t even know you’re there to find, your chances of using your sales skills with them or getting them to fall in love with your product are zero.
Remember the times you’ve spent searching for a bar or a restaurant hidden in a maze of city streets or a B&B somewhere along a never-ending country road? Those businesses have forgotten that first-time customers can’t be sure where they are. Draw up directions to include on your website or online page. Make sure a friend who doesn’t know the area well test drives them.
People won’t notice you until they need or want what you are offering so keep reminding them of your existence. Being visible is key. Your fascia signage is part of your marketing mission to attract and influence potential customers.
Nobody walking to work or taking their dog out should think, “I wonder what that new place is about?”
As well as giving your business’s name and contact details, your signage must succinctly indicate what your business offers. If you have a display window, use this second important opportunity to sum up your offering – keep it interesting and updated.
Be a customer magnet
If you wait to build a business on passing trade, you could wait forever. Get on the radar with potential customers in the neighbourhood so they all know you exist and where to find you. Each time they’re reminded that you exist and how to find you, they will be prompted to come and seek you out.
You can achieve this – and help new customers trying to find you – by making a modest investment in lamp-post signage. Check local regulations with your municipality and ensure this signage reflects your brand visually. This is a win-win, reinforcing your brand in a potential customer’s mind and helping them recognise your premises as they approach.
Part of marketing is making people interested in and attracted to your business long before their first direct contact with you. Embed yourself in the community by forming alliances.
If security is an issue, bond with the local SAPS, Community Policing Forum and security companies by offering them free coffee. If you have a huge bargain order of toys to shift, offer a few prizes to the local Moms ‘n Tots group. Plug into local business networks and offer to host a speaker or sponsor the audio equipment for a forthcoming meeting.
You’ll be harnessing the incomparable power of word-of-mouth and setting your business growing in a great direction.
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