Franchising & Finance: Strategic planning
Used in the right way, a business plan is an essential tool for monitoring performance and for the early identification of weaknesses and under-performance. Richard Holden, Head of Franchising at Lloyds TSB, discusses the 'Business Plan'
Life can be very chaotic when you are setting up a new business, particularly if it is your first venture. It's easy to get bogged down in the many tasks that need your immediate attention, but long term strategic planning is vital too, to ensure your business remains on track and achieves your objectives.
The most effective way to crystallize your business objectives and provide a sense of direction is through a business plan. By preparing a business plan not only are you clarifying your business ideas and aims, but it can also help you secure financial investment for your project.
Used in the right way, a business plan is an essential tool for monitoring performance against benchmarks and for the early identification of weaknesses and under-performance. Crucially, no business plan should be set in stone and should be regularly reviewed as the business develops.
The business plan is too important to be left to someone else to write, but you may need to seek professional advice when you are drafting it. There is plenty of support available from banks, accountants and Business Link to help you. When you open an account, your bank will want to see a plan, whether or not you are asking for substantial financial help. It should include background information about the business, its management, operation, finances and marketing. Give some consideration to the length of the plan - if it is too short you'll miss key information, and if it's too long it will lose its impact. Remember that your business plan is your sales pitch. If you're trying to secure a financial commitment to your business you need to show a lender or investor that there is a good market for your product or service and you have the ability to manage the firm. A lender wants you to demonstrate a sound understanding of your chosen market and the ability to manage the financial commitment you are taking on, as well the potential to make a decent living from the business.
Presentation of the plan should not be neglected, so you should consider how you are going to create the right impact and then practice your delivery before your meeting. Think of those business people on BBC's Dragons' Den. From the outset many don't stand a chance of securing the investment they are seeking because their presentation is poorly conceived or they don't have a good understanding of the key financial information for their own business. Consequently they are unable to establish their own creditability and project confidence in their business.
It is always a good idea to send a copy of the business plan to the lender in advance of the scheduled meeting, as it speeds up the process of assessing the finance. If you are looking to raise a large sum of money from the lender then it would assist if two copies of the business plan were made available, in case sanction needs to be referred to the bank's lending department, who would also wish to review a copy of the business plan.
A well presented, carefully researched business plan will clarify your own thoughts about the business venture and serve as an important tool to monitor the ongoing performance of your business.
Richard heads up the Lloyds TSB franchise team and is a regular contributor to trade publications and national press. He is on the panel of judges for the Franchise Marketing Awards and regularly speaks at franchise seminars and exhibitions. Lloyds TSB are affiliate members of the British Franchise Association.