(FS5) Creating a Financial Plan for Buying a Franchise
A business plan is essential for the success of your franchise. No matter what route you are taking for borrowing money or simply getting through the approval process for your franchise, you will need to have this information.
The First Step to a Franchise Financial Plan
When creating your business plan, make sure you take the time to review it. This is not something you will write once and be done. Rather, you will need to go through it again and again and edit. Think of it as a living document that will carry you to success. Keep in mind that while you may want people to read it over and help you, your franchisor may not be able to review it before the franchise purchase is complete due to legal restrictions. Here are a few of the items that you will need to have in the plan:
- Executive summary– This is where you will describe the franchise that you are planning to buy along with what all is involved in this. If you have a long term goal for numerous franchises then this is where you will want to list them. This is a quick intro of what you want to do and what makes your idea credible.
- Mission statement- This will show the culture of your business and describe your core values and philosophy.
- Overview of the business structure– This will go over the structure of the business as the name implies.
- Industry analysis and background- It is one of the most read sections of the business plan. This is where you will talk about the size of the industry, the competition, the market domination as well as information on the potential customers of the company.
- Market analysis and strategy– This is where you will talk about the trends in the industry and aspects related to the market. it is your way of showcasing what you know about the business.
- Management and organization structure- You should talk about the day to day operations of the business in this area. You will talk about the people you plan to hire, how you will compensate them and any other relevant information here.
- Financing- You should talk about how much it will cost to start up the franchise along with the funds you will need down the road. You should have information on the profit and loss forecasts for the business along with the cash flow analysis over the next several years. You will want to show that you can either break even or have a profit in the first five years.
- Timetable and Implementation- This is the section where you will talk about how you will implement the aspects of business plan in your business. You will also talk about the timetable for getting the business up and running as well as how you will meet ends and define the investment and how it will be used.
- Appendix- Here you will show copies of your tax returns, any information you have on the company and industry such as articles as well as information on the community your business will be serving.
