How important are business plans for a franchise business?
(Note: This article is appearing here courtesy of Terkel.)
To help you best appreciate the importance of business plans in franchising, we asked CEOs and business leaders this question for their best insights. From helping you evaluate the impact of the owner’s active presence to enabling you to recruit quality employees, there are several reasons offered to stress the importance of business plans to the success of franchise business.
Here are seven insights these leaders shared about the importance of business plans for franchises:
- It Helps You Evaluate the Impact of the Owner’s Active Presence
- Prevent Legal Disputes from Poor Planning
- Provide a Plan for the Unexpected
- Maintain the Company Culture at All Locations According to the Plan
- The Plan Helps You Set Goals and Track Progress
- Get Funding Using Your Business Plan
- Recruit Quality Employees Based on Your Business Plan
Let’s dig into these, one-by-one.
Business Plans Help You Evaluate The Impact of the Owner’s Active Presence
The most important question to many franchisees is whether they should be the manager or hire one. Without a business plan, determining that is impossible. Developing precise financial projections and applying managerial accounting can provide the insights to make a conscious decision. They can answer the questions such as “how much value does my work add to the business” and “how much should we pay someone to manage our business?”.
Michael Sena, SENACEA
Prevent Legal Disputes From Poor Planning
Owning a franchise has the advantages of starting capital, buying power, and brand recognition. However, there are other business strategies and concerns that a franchise owner needs to consider. The contract between the two parties affects how much is under the owner’s control — the location, hours of operation, pricing, layout, interior and exterior design, and product availability may be strict or flexible depending on the franchise’s regulations.
As an attorney with a focus on employment disputes, I feel it is necessary to mention that franchises are more susceptible to legal disputes with court dates than other small businesses. Franchises have a lot more power than individuals starting their own businesses, meaning they have the funds to go to court over issues with their owners. If an owner doesn’t have a plan in place and doesn’t follow a business strategy, they could wind up in costly legal battles with their own company, which will take away from their profits. Hence the importance of business plans in franchising.
David Aylor, David Aylor Law Offices
Work With The Franchise King®
Provide a Plan for the Unexpected
The franchise might have a winning formula, but you can’t utilize that formula properly if you don’t have a proper business plan. If you don’t plan for contingencies and cash-flow issues, for example, your whole business can be taken down when you hit an unexpected snag. Having a successful business plan is all about planning ahead, including planning for what you don’t expect. Your business plan should include a way to get cash at the ready when you need it. If you don’t plan for this, then I wish you good luck—you’re going to need it.
Marcus Hutsen, Patriot Coolers
Maintain the Company Culture At All Locations According To The Plan
One of the main challenges of managing a franchise business is ensuring that employees adhere to the same standards at all your locations. Franchises are often scattered across states – continents even. Having a uniform company culture can either make or break your brand identity and the overall performance of your employees. This is where a business plan comes in: to serve as a guide for setting goals and maintaining company rules, regulations, and other contributing elements that add to your internal culture. Bear in mind that company culture isn’t merely for your staff. They also flow into the quality of service your customers receive.
Finally, your business plan should be shared across all franchised locations so that when a customer in country X talks about your brand, they conjure the same positive feelings that another customer in country Y experiences.
Stephan Baldwin, Assisted Living Center
Business Plan Expert, Tim Berry, On The Ongoing Process
Here’s what my friend, Tim Berry, the co-founder of Palo Alto Software, and co-creator of the top-selling business plan software in the world, says about business planning.
“A business plan ought to be the first step towards a planning process that includes regular review and revision. The goal of business planning is steering the business. If it were navigation, the plan includes the destination as goal and the route as steps toward the goal; but actual navigation includes the GPS positioning and real-time information to fine tune the route along the way, in response to actual traffic, weather, and so forth.”
Note: You’re going to need to put together a formal business plan for your franchise business. Good thing you don’t have to do it alone.
Franchise Business Plan Creation Help
(If you purchase Tim Berry’s LivePlan from the link above, Joel Libava may receive a commission)
Business Plans In Franchising Help You Set Goals and Track Progress
A business plan is essential for any franchise business because it helps to create milestones. Without a plan, it can be difficult to set goals and track progress. A business plan provides a framework for mapping out the steps needed to achieve specific objectives. It also helps to identify potential risks and devise strategies for mitigating them. By setting milestones, a franchise business can measure its progress and make adjustments as needed to ensure that it is on track to meet its long-term goals.
That said, without a business plan, it would be much more difficult to maintain this level of oversight and control.
Lorien Strydom, Financer.com
Get A Small Business Loan With A Franchise Business Plan
Having a business plan for your franchise business is important especially to help you get funding for it and your future endeavors with your business. Investors like to see that you have a well-thought-out business plan in place as it helps them feel more confident that they will see a worthy return on their investment. Your business plan is one of the best tools you can have to get others to partner and work with you or to find investors to help your business get the funding it needs to advance to the next level.
Bill Lyons, Griffin Funding
Recruit Quality Employees Based on Your Business Plan
I think a well-written plan is also a good method to draw in talent. Choosing employees who fit the proposal will help you maintain consistency within your franchise, which is a key component of the most stable and successful franchise business owners. In the future, I believe many employees will want to open their own franchises. It will be tempting to join a company where they may gain experience and acquire the abilities necessary to become a franchisee. So start planning if you want to be one of the most prosperous franchises. You may write your plan with the aid of a huge amount of books, websites, templates, and software.* Don’t be scared to ask questions; your franchisor is the best person to support you. *Affiliate link.
James Crawford, DealDrop
There you have it.
Are you going to put together a top-shelf business plan for your franchise business?