FRANCHISE ADVICE
"A business plan is a working roadmap – refer to it often to check that you are progressing towards your goals"
A good plan identifies goals and milestones
so you can be sure you're on track within certain timeframes or otherwise take action early on if targets are not reached. This may mean changing your marketing strategy or focusing on a more profitable product or service. The important point is that you have a reference to go back to and compare progress with forecasts. Honing the plan as your business develops results in more accurate forecasting and so you can be more certain of when you can invest in a new van or take on more staff for example. One way to mitigate future risk is to be
conservative. Everyone says they are conservative with their estimates, however, in our experience most people aren’t! Be realistic and honest with yourself. In addition, build in contingencies to allow for unseasonal or unexpected occurrences. It will never hurt to be above plan, but it will hurt to be below! It’s the same for timeframes. Keep in mind that
it takes time to get a new business off the ground. There will be unforeseen circumstances. You will find some elements more challenging and time consuming than others. Therefore, ensuring you have plenty of time to reach your break-even will mean you will calculate sufficient cashflow to keep the franchise going comfortably until then. If you overstate your financials and don’t have
enough working capital to make it through the downward curve, you will find yourself immediately on the back foot and potentially facing the decision of whether to continue. A business plan is made up of assumptions and
myriad variables, any one of which, if misjudged, could have drastic effects on your business performance. Therefore, proofread, justify costs, know your break-even and pinch points. Get a second opinion as often new franchisees can be too close to see mistakes. The business plan is a working roadmap for
the future, so refer to it often to check you are progressing towards your goals. If you're not, get help before it becomes a real problem. My final point is don’t be afraid to ask for help. Most new franchisees have never written a business plan before and so it makes logical sense to talk to people who have a great degree of experience in planning. It also takes a significant outlay in time/cost to create a good, workable business plan so don’t put your goals in jeopardy by not investing in the professional help needed
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to create a realistic and attainable plan. The success of your franchise could depend on it! At d&t we have worked with many franchisors
and franchisees over the years and have needed to outline flaws in some of their business models which had previously been hidden! We’ve also been able to help many business owners on the road to success through creating a workable plan which takes into account the many variables faced by individuals on their journey. A new or even a more experienced franchisee is unlikely to understand all the implications and optimum configurations for things like vehicle finance, VAT thresholds, asset finance, company structures, tax etc and starting and running a business is never risk-free, particularly in the current climate. However, seeking professional advice from those who have seen the effects that unpredictable events can have on franchises and how they are coping, will offer the best chance for a successful outcome for you and your business in the future. Not all events are predictable but if we can anticipate and prepare through good modelling and planning, we have the best chance of swimming with the next Black Swan not against it.
JAMES THOMAS, QFP is commercial manager at d&t, franchise specialist accountants and funding advisors.
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