You’re set on becoming a franchisee. You may think it’s time to call a franchisor, tell them you’re interested, and get funding from your local bank, right? Wrong.
If you’re considering buying a franchise, you’ll need to write a thorough business plan before moving forward.
A business plan is a detailed document that describes how your business will achieve its goals. Consider it an essential tool for any business owner — including franchisees!
Sound daunting? It can be. But it’s a crucial and necessary step in starting your own business. Plus, becoming a franchisee means that the franchisor will provide some of the strategies, plans and overall business information, with some minor tweaks for your specific market.
Here’s how to get started.
Related: Considering franchise ownership? Get started now and take this quiz to find your personalized list of franchises that match your lifestyle, interests and budget.
Start with comprehensive research
Before you can begin writing your franchise business plan, you need to gather information about your franchise business. Research the industry, market trends and competitors in the area. You should utilize a SWOT (strengths, weaknesses, opportunities, and threats) analysis of the business, as well.
Next, research the franchisor’s history, vision, mission and values. This will help you understand the franchisor’s expectations and see if your goals align with the brand. You may have already done a lot of this research when narrowing down your franchise choices.
Related: The 4 Biggest Myths About Franchising
Define your business concept and target market
Your business concept should include details about your product or service, pricing strategy, location, unique selling proposition and market advantages.
Much of this information will be supplied by your franchisor. However, make sure to tweak it correctly for your specific location and audience.
Develop a financial plan
A financial outline is a critical component of your franchise business plan. It should include details about your startup costs, ongoing expenses, revenue projections and profitability.
You should also share cash flow, balance sheets and income statements here. With these documents, you can readily identify any gaps in your business and develop strategies to address them.
Related: 10 Tips to Go From Employee to Boss, From Franchisees Who Did It
Outline your marketing and sales strategy
You may get a headstart from your franchisor on the marketing and sales strategy. This is where you’ll want to include more information about your target audience, marketing channels and tactics to promote your business.
From a sales strategy perspective, include your pricing strategy, sales team structure and sales targets that are tailored to your area.
Develop an operations plan
Your operations plan should include details about your day-to-day work, staffing requirements and supplier relationships. You should also outline any technology and equipment needs, inventory management and quality control procedures, some of which your franchisor may dictate.
Create a management team and personnel plan
Your management team and personnel plan should detail the leadership structure of your business, each team member’s role and responsibility and the qualifications and experience needed for each position.
You should also outline a staffing plan, which will include your recruitment strategy, employee benefits and training and development programs.
Related: The 4 Biggest Myths About Franchising
Create an executive summary
An executive summary is literally a summary of your business plan that will provide all the necessary information to someone who only has a few moments to review your business plan. It should summarize the key points of your franchise business plan and research.
Get started by outlining your business plan
A franchise business plan, at the minimum, should include the following sections:
- Executive Summary: This section provides a brief overview of your business, your mission statement, goals and target market.
- Company Description: This section includes more information about your business, such as what you do or sell, your company history and your management team.
- Market Analysis: This section analyzes the market for your products or services, including your target market, competition and competitive advantage.
- Operations Plan: This section describes how your business will operate, including your location, your marketing and sales strategies and management and staffing plan.
- Financial Plan: This section projects your business’s financial performance, meaning your revenue, expenses and profit.
- Appendix: This section includes supporting documents, such as financial statements, marketing materials and legal documents.
Related: 10 Tips to Go From Employee to Boss, From Franchisees Who Did It
A business plan will help you succeed
Writing a franchise business plan is a critical step in becoming a successful franchisee. It requires comprehensive research, a well-defined business concept, a solid financial plan, a strong marketing and sales strategy, a detailed operations plan and a competent management team.
Remember: It’s a living document, so be sure to update it regularly as your business grows and changes. This will ensure that your plan always reflects the current state of your business.
Tackle a business plan logically and seek help from an expert or your franchisor, as necessary. Then you’re off to get your loan, finish your applications and open your doors!
Related: Is Franchising Right For You? Ask Yourself These 9 Questions to Find Out.
This story originally appeared on Entrepreneur
