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Thinking of starting a business? It pays to have a plan
Are you thinking of setting up your own business? If so, you will need a business plan. Cathryn Hayes, Head of HSBC’s Franchise Unit, talks you through all the important information to include.
Many potential start-up businesses are daunted by the prospect of compiling a business plan. But it is not an intimidating process – and a good business plan focuses the mind as well as helping to secure finance and support. Your chosen franchisor will often help you with the process, providing useful advice and guidance.
The business plan will clarify the main business idea of your chosen franchise and define your long-term objectives. It provides a blueprint for running the business and a series of benchmarks to check your progress against. It is also vital for convincing your bank – and possibly key customers and suppliers – to support you.
A good business plan will contain:
Summary business description – details of the franchise being purchased and your financial needs. It is also helpful that when you present your business plan you explain exactly what help the franchisor will be providing and their track record.
Market analysis & product / service – research and identify local competition and assess what the likely demand of the product / service will be in the specific territory.
Market Strategy – outline intentions for marketing the product / service and how the sales figures shown in the projections will be generated.
Management plan – include details of the type of business (e.g., sole trader, limited company) and CVs of key personnel.
Financial data – at least 2 years projected figures are required, including a balance sheet, cash flow and profit & loss statement, ensuring that projections correspond with the information outlined above and they’re realistic. If it is a resale franchise, include details of the existing business being sold and a copy of previous years’ accounts.
SWOT analysis – a one-page analysis of strengths, weaknesses, opportunities and threats.
To summarise, here are our fundamental rules for writing a plan:
Do:
– clarify the purpose of your plan before you write it
– focus on the key information the reader will want and make it easy to find – sometimes it can be hard to clarify how much the applicant wants to borrow!
– highlight future plans as well as describing the current situation
– be realistic – make sure that the business can afford the proposed repayments
If the lending is for the purchase of a poorly performing resale, give some commentary about why turnover and profits are set to rise, and details of the assumptions made.
Don’t:
– waffle or include unnecessary detail
– base your plan on over-optimistic assumptions
– ignore competitive threats and weaknesses.
The more solid the information that you can gather, the better the business plan will be. When requesting finance the bank will look to assess the proposal using all of the areas covered above. A well researched and written plan will show the bank that you are committed and understand your, meaning that a request for finance is likely to be looked at more favourably than those who are unprepared.
Additional help and assistance on writing a business plan can be found at HSBC’s Knowledge Centre, an online resource to help you start and develop your business.
This article is written by Cathryn Hayes, Head of HSBC’s dedicated Franchise Unit. The unit has been going for over 25 years and continues to work closely with the British Franchise Association (bfa) and its members in the development of ethical franchising.
HSBC’s Starting a Franchise guide has more information on the planning and research required to start a franchise. Free copies are available to download from www.hsbc.co.uk/franchise or contact HSBC’s franchise team at [email protected]
To find out about franchising opportunities, visit workingmums,co.uk’s FranchiseZone.
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