Franchise Q&A
then ask what these fi gures would be if they did it all again today, now that they have learned the hard lessons. The answer is invariably the same: they would spend less and turn over more. Additionally, in most cases, the business operating systems have been updated and improved over time, which ultimately increases profi t margins.
It is a fact that two out of three small businesses fail within their fi rst three years. In franchising, however, over 90 per cent of franchisees report a profi t, and continue to trade successfully through the term of their franchise. So if you want to reduce the risk
of failure, work in a tried-and-tested system, and have an experienced team to help and guide you in your business, then consider franchising instead of setting up on your own.
[Q] Am I a good fi t for franchising?
[BIO] NIGEL TOPLIS
Nigel Toplis is the managing director of The Bardon Group (Recognition Express,
ComputerXplorers, The ZipYard and Kall Kwik).
[A] Nobody wakes up in the middle of the night and exclaims: “Eureka! I
must become a franchisee!” It simply does not happen. Franchising is not always the easiest thing to get into. There are questions to ask yourself fi rst: Where do you start? Who can give advice? What business do you open? Who’s done it before, and what were the results? And fi nally, do I have the right characteristics to run my own business?
Franchising is more a concept than an industry or business. It is a concept that delivers products and services to market, and a mixture of conformity and individuality combining the best elements of big business and small operations. As a result, a franchisee must comply with the franchise system to be successful. Some businesses may require some specifi c skills or background experience, but apart from that, a franchisee must show certain characteristics.
In the four franchises that I run, we look for a willingness to work with, not against, the business system, plus a sense of structure, focus and good organisational skills. We also look for strong communication skills, a dedicated work ethic, and an understanding that owning a franchise is not like having a job.
Franchisees who perform below expectations are generally found to be working against the system, have personal issues or are simply treating the business like a nine to fi ve. A good franchisee – one that shows growth and is keen on developing their business – will work with the franchisor and will use the franchisor’s knowledge and experience to help them move to the next stage.
Running a small business is hard work, so you must be prepared for this. To stand a chance, however, at being successful you also need to be able to build relationships with people and relate to customers. So, if you are well-organised ‘people person’ who is prepared to work hard to implement the franchisor’s business system, franchising could be for you.
[Q] How do I write a business plan persuasive enough to secure bank funding?
[BIO]
CATHRYN HAYES
Cathryn Hayes is head of franchising at HSBC.
A good business plan will contain the following: • Summarised business description – details of the franchise being purchased and the fi nancial needs.
“The more solid information you gather, the better the business plan will be and the more it will show the bank that you are committed and understand the business”
• Market analysis and product / service – research and identify local competition and assess what the likely demand of the product/service will be in the specifi c territory. • Market Strategy – outline intentions for marketing the product/ service and how the sales fi gures shown in the projections will be generated. • Management plan – include details of the type of business (eg sole trader, limited company) and CVs of key personnel • Operations – analyse the capacity and effi ciency of the current operations and any planned improvements. • Financial data – two years’ projected fi gures are required, including a balance sheet, cashfl ow and profi t & loss statement. • SWOT analysis – a one-page analysis of Strengths, Weaknesses, Opportunities and Threats.
[A] A business plan will need to clarify the main business idea of
your chosen franchise and defi ne the long-term objectives.
A good franchisor will help with putting your case for funding together, but you should understand the fi gures and ultimately own the business plan. This plan provides a blueprint for running the business and a series of benchmarks for you and the franchisor to check progress against during at least the fi rst few years of trading.
The more solid information you
gather, the better the business plan will be. A well-researched and written plan will show the bank that you are committed and understand the business, so a request for fi nance is likely to be looked at more favourably than those who are unprepared. n
Contact details
Email your questions to:
editor@businessfranchise.com
September 2013 |
Businessfranchise.com | 23
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