To succeed in a franchise, and achieve your dreams, it takes more than a proven system and good intentions. To turn your dream into reality you’ll need to make a plan, then follow that plan.
There are many different approaches to planning, and many different formats for plans. But what they have in common is the “thinking through” of how you’ll achieve a goal.
But we recommend you do more than think it through though, as it always works best to write your plan down. This will provide you with a focus for your actions and a basis for you to compare your results with.
Here are six key areas to consider when you are planning the future of your new franchise business. We’ve found them effective for every type of business.
1. What Does Success Mean To You?
What does success mean to you? This is a very important question to consider, because your business efforts should be directed to help you achieve what you envision. But success means different things to different people. What is it for you?
A good place to start is to reflect on the reasons you want to be in business. These will probably include financial goals as well as personal ones. For instance, is it the freedom to make your own choices in business, or to achieve your own goals? Some people are excited by the opportunity to lead a team, or contribute to the community.
Write your thoughts down. This will help you clarify what you really want. If you have a life partner, discuss this together, even if only one of you will be in the business.
2. Where Do You Shine?
You may not have given this much thought in the past, but it’s important to be clear on what you are good at, and what you like doing. Also identify the areas you’re not so strong in so you can want to make the most of your strengths and be able to compensate for weaknesses.
For example, are you good dealing with people, or do you need to improve your management skills? Are you good at selling, or will you need to get better at this? What new skills will you need to develop to succeed? What strengths can you make the most of, and in what areas will you need support?
This exercise will help you work out which areas to focus on so you can be most effective in your new business.
3. How Much Income Do You Need?
It’s important to know the minimum income you need to meet your personal and family expenses. You need to be aware of this because in the early days, there may be less each month than you were used to.
You should also be clear on how much money you would like to make as this gives you a goal to aim for. Bear in mind that most businesses take time to reach the point where you are meeting your desired income.
4. What Are Your Expenses?
Now for the tantalizing section; the money! Your plan should definitely include setting out financial targets in a budget, and also a cash flow projection.
The budget helps answer two questions: What are the costs for running the business, and what level of sales are needed to pay the expenses and provide you with the income and profit you need?
The information for this will come from different sources. If you are looking at a new franchise, you will need to work it out based on your own research. The Franchise Disclosure Document may include helpful information. Some costs, such as rent, equipment costs and your wages will be specific to your situation.
If you’re buying an existing franchise, look at the figures from the previous owner and make your own assessment from there as to what you might achieve. Also, be sure to ask existing franchisees in relevant markets for their comments about sales and costs.
Your plan should include a cash flow forecast. This will help you identify the seasonal cash flow patterns, and make sure you have the funds to support the day-to-day operation of the business. It will also let you see your upcoming financial commitments.
This part of planning may seem complicated. But it’s really important because you need to understand how the business works financially. We always recommend getting advice from an accountant who is used to working with franchises.
5. How Will You Manage The Business?
Once you’ve worked out your financial goals, the question becomes how will you turn them to reality. This is where an operational plan will help.
Creating this plan involves thinking through how you will achieve your goals. We suggest you consider three areas: Sales and Marketing, Operations, and overall Business Management.
Sales and Marketing
Sales and marketing is about how you find, attract and keep customers. Even though the franchisor will have addressed many aspects of marketing, it’s important for you to be proactive and drive the sales for your own business.
This part of planning is when you consider what you will do to attract and keep customers, through local marketing and selling. It’s a very good idea to prepare a monthly marketing plan as it will help you keep up regular activities to generate business.
Operations are about meeting your customer’s needs. It deals with how you produce the products and services you sell and doing this cost effectively. It includes purchasing from suppliers, creating your product or service and doing so at an affordable price.
Most franchise systems have worked out the operational side of business and will train you in how to follow it. Still, it’s a good idea to consider things like how the business will be staffed and how it will operate day-to-day. This will help you have a clear picture of how you’ll run the business.
Business management is about how you’ll take care of the financial, administration and overall running of the business. It includes practical matters, such as who will do the bookkeeping. You’ll also want to think through how you’ll manage and motivate your team, and the way you’ll work with your franchisor team.
6. Putting Your Plan Into Action!
No matter what your plan looks like on paper, your success will be determined by what you actually do. Once you’ve started the business, you’ll find some aspects go as you expected whereas others do not.
To help achieve your goals, we recommend you summarize your main business goals for the first 12 months, and also for three years down the road, and again for five years. For the first 12 months, break the goals down into monthly and quarterly milestones.
Each month hold a business meeting with your partner, coach or adviser. This is where you’ll review the financial results compared to your goals, and decide what action is necessary to keep moving in the right direction. Then, working with your team implement the actions.
If you review the results each month and take action to improve how you do things, you’ll be much more likely to achieve your goals.
Planning doesn’t need to be a long, complicated process, but it is very important if you want to have the best chance of achieving your goals. By following these six steps you should be well on your way to doing just that!
Kate Groom specializes in the financial side of franchising. In her business, Smart Franchise, she offers advisory services, training and workshops for franchisees and franchisors.
Kate has worked with and run franchise businesses for almost 20 years, focusing on strategy, planning and business improvement.
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