101
HOTtopic
Richard holden
Richard Holden is Head of
Franchising for Lloyds TSB
Commercial. For further information
contact the team on 0800 587 2379
or email
franchising@lloydstsb.co.uk
It's in the bank!
The media has been debating bank lending for months. Here Lloyd’s TSB’s
FRANCHISE ADVICE
Richard Holden reveals the truth about securing funding for your franchise
T
HE REALITY is that franchise specialist
"You will be expected to commit
By preparing a detailed plan covering the
banks have continued to fi nance sound
at least 30 per cent of the total
key areas a bank manager will be looking at,
business proposals to people looking to you will speed up the decision-making process.
invest in well-established franchise opportunities
set-up costs from your own
Remember a business plan is more than a
throughout the economic downturn.
savings…"
vehicle to secure the fi nancial commitment you
There are advantages recognised by are looking for – it is also a working document
some banks in operating a franchise over an to refer back to benchmarking how the business
independent start-up business that helps build your case for fi nancial has performed against your original projections.
support. Banks generally consider well-established franchises less risky as You will be expected to commit at least 30 per cent of the total set-up
the franchisee is investing in a tried, tested and proven business model with costs from your own savings and the bank may require you to provide
initial training and ongoing support from the franchisor. security to cover any agreed fi nance. A business plan needs to be punchy
The secret to securing the fi nancial support you need is to present a to grab the bank manager’s interest. Don’t make it too long but it should
strong business case to the bank manager. How do you go about giving cover the following areas:
yourself the best opportunity of winning the backing from a bank?
Most franchisors know the people to contact in the bank’s franchise Executive summary on your requirements
department and can help you with an introduction. Franchising is different Business and personal objectives: Short, medium and long-term
from setting up an independent business and you require the support Market analysis: Research carried out to demonstrate the local demand for
from someone who has a good understanding of the market. It is product or service, competitor analysis and potential customers identifi ed
therefore benefi cial to speak with these franchise specialists at the bank Business operations: Premises, equipment, staff, suppliers, IT, Health and safety
rather than approaching your local business manager directly. Marketing plan: How you are going to achieve your sales
It is good practice for franchisors to Management details: CV’s for key personnel,
regularly communicate with experience, skills and attributes
the bank’s franchise unit Financial requirements: Your own capital
to keep them up to date stake, fi nance required and available security
with developments in their Financial projections: A minimum of two
franchise. As a result the years’ cash fl ow and profi t forecasts together
franchise team will have a with any assumptions used (the bank
better understanding of the manager will be reviewing whether
opportunity and are better the projections are realistic and
placed to provide initial guidance with achievable)
your proposal. Financial accounts: For existing
The bank can provide advice about businesses a copy of the previous
investing in a franchise and the fi nancial fi nancial accounts should be
support that may be available to you at provided
an early stage, even before you have made a SWOT analysis: Strengths,
commitment to invest. However before a bank weaknesses, opportunities and
manager can provide an actual decision on threats to the business
a lending request you need to prepare a
business plan. Wherever possible
It's reasonable to expect the bank to provide the bank manager with
thoroughly review your business plan and a copy of your business plan
to ask for supporting evidence to back before your meeting. This will
up your fi nancial request before give them the chance to review
providing a decision. Your plan the plan beforehand and prepare
should be accompanied by an asset questions.
and liabilities breakdown, It is advisable to practise the
your last six months presentation of the plan beforehand.
personal bank statements The bank manager will expect you to
and evidence showing understand your plan, including the financial
where your own stake in projections and to be able to confidently
the business is coming from. answer their questions. ■
www.businessfranchise.com November 2009
BF101_HotTopic-Holden-Nov09.indd 1 14/10/2009 16:53
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100 |
Page 101 |
Page 102 |
Page 103 |
Page 104 |
Page 105 |
Page 106 |
Page 107 |
Page 108 |
Page 109 |
Page 110 |
Page 111 |
Page 112 |
Page 113 |
Page 114 |
Page 115 |
Page 116 |
Page 117 |
Page 118 |
Page 119 |
Page 120 |
Page 121 |
Page 122 |
Page 123 |
Page 124 |
Page 125 |
Page 126 |
Page 127 |
Page 128 |
Page 129 |
Page 130 |
Page 131 |
Page 132