To help you succeed in your new business, it’s really important to have a business plan. A business plan will help you set the direction for your business, provide focus for your actions and give you something to measure your results against.
Essentially your plan sets out the goals for the business how you will achieve them. It takes a structured approach to each aspect of the business, including:
- Sales and Marketing. How you will attract and keep customers?
- Operations. How the business will produce the goods, or services that you will sell.
- Business management. The general management and accounting aspects of business.
- Financial information. This should include the main financial targets, such as sales, profit and what you will pay yourself. It should also cover start-up costs, how the business will be financed and also include a budget and cash flow forecast.
We recommend you prepare your plan progressively as you investigate the franchise. You will find this provides a structured way to understand the business, clarify what will make it successful and assess the franchise opportunity.
This article provides some suggestions for approaching the first three areas above. In our next article we’ll look at the fourth area, the financial aspects and working with your accountant and bank.
Sales and marketing
Sales and marketing is all about how you find, attract and keep customers. It’s a good place to start your thinking about the business, because if you don’t have customers you don’t have a business!
The franchisor is likely to have addressed many aspects of sales and marketing, but we think it’s important to take time to understand this yourself. It will help you get a good sense of how this part of the business will work.
Here are the Top 10 questions to answer about sales and marketing:
- Who is your target customer, and what products and services will they buy?
- Will you charge a premium price, or is yours a ‘bargain offering’?
- Who are your competitors, and why will customers buy from you rather than them?
- Where will the business be located and why is that location suitable?
- How will the physical appearance of your business help you sell?
- What marketing and sales programs does the franchisor provide?
- What local marketing activities will you do each month?
- How will you attract customers and what is the process to encourage them buy from you?
- How will you keep customers once you have them?
- How many customers will you need and how much will they spend?
Operations is all about meeting your customer’s needs. It deals with how you produce the products and services you sell and doing this cost effectively. It includes purchasing from suppliers, creating your product or service and doing so at an acceptable price.
Most franchise systems have worked out the operations side of business. This is documented in the operations manual, so with your plan there’s no need for lots of detail. You’re simply capturing the main aspects of how the business will run.
Here are the Top 10 questions to answer about operations:
- What is the process to fulfill a customer’s order?
- How will you ensure quality control?
- Are there any regulations that affect the business, and what is needed to comply?
- What staff levels are required, what are their roles and what skills do they need?
- What role will you play in the business? Are your current skills sufficient?
- Who are the main suppliers, and how will you keep good relationships with them?
- What equipment is required? When will upgrades and maintenance be required?
- How does the franchise continue to innovate?
- What software is used for business and customer management?
- What training is provided by the franchisor at startup and ongoing?
Business management involves the overall management of the business and keeping your eye on the ‘big picture’. It’s really important to think about how you’ll keep the business on track to achieve your goals.
Here are the Top 5 questions to answer:
- How will you manage your team? This includes setting goals, monitoring results, coaching and training.
- How will you monitor progress against your plan? We recommend a monthly business meeting for this purpose.
- What ongoing support does the franchisor provide, including training and regional meetings or conferences? How will you participate and make the most of them?
- How will you care for the bookkeeping, accounting and compliance needs of your business?
- What risks and threats might undermine your success, and how will you mitigate them? This can include business risks, such as losing a customer, or supplier and also personal factors such as your health.
Apart from these questions, we recommend that you summarise your main business goals for the first 12 months, and also 3 years and 5 years. It will help you keep your eye on the ‘big picture’. For the first 12 months, break the goals down into monthly and quarterly milestones.
Implementing your business plan
Having a plan is one thing. But it’s nothing until you bring it to life and implement it. In the end, your success will be determined by what you actually do. This means using your plan as a working document!
The Top 4 Steps to implement your plan are:
- Set the goal
- Take the action
- Review the results
- Make adjustments as needed
As you can see, the key to your success is a regular review your performance. That’s why we recommend a monthly business meeting, at a regular time, with a set agenda. You can have a meeting like this with your partner, or your business coach. You might also like to meet with your franchise support manager, if that is part of the franchise process.
The research to prepare a business plan will help you understand the franchise you’re buying and have realistic expectations of what it takes to succeed.
Your business plan will also help you put together your budget and cashflow forecast. This will help you work with your accountant on the financial side of things, and will be the focus of our next article in this series.
This is a guest post by Peter Knight, FCPA and Kate Groom. Through their business, Smart Franchise, they help franchise owners understand the financial side of business.
Peter is an accountant with over 25 years in professional practice advising business owners. Kate has worked with franchises for almost 20 years, focusing on business improvement. She was formerly Business Performance Manager with Kwik Kopy Australia.
Find out more at www.smartfranchise.com.au