- Have you dreamed of going into entrepreneurship?
- Have you become a franchisee?
- Have you been seduced by a brand?
You start to understand it well and your project becomes clearer!
The next step is to find out if your project is profitable and viable. This will be a condition for obtaining a loan from a bank.
When drawing up the business plan, you will consider the following points:
- The real opportunity represented by the brand you have chosen
- The reality and consistency of your project
- Assessing your management, managerial and sales skills, etc.
- Market Qualification
- The risks and benefits of the activity
- The chance of success
- The financial dimension of the project and its feasibility
- The projection into the future of your company…
The business plan will become a necessary tool for your banker and your future partners, which will revolve around:
- 1. Description of the project
- 2. His market research
The preliminary phase which consists of validating the economic model and the idea is limited because you have chosen a brand that has proven itself, however you have to make sure that you are in phase with the standards of the brand.
Investments to be financed
The franchisor has already tested at least one pilot unit. It contains specific information on the costing of the investments required to set up a point of sale.
These investments consist of the following elements:
- The property: concerns the payment of a right to the lease, a deposit and brokerage costs for real estate.
- The layout of the premises and furniture, IT equipment, vehicle, etc.
- Inventory is an essential and important element to finance: you must accurately estimate the amount, as well as the possible seasonal influences.
- The registration fee to be paid to the franchisor (average 13 K€).
These investments are financed in 2 ways:
- By your own contribution which will usually represent 30% of the total amount of the investment
- By taking out a loan with your bank for the balance
The expected income statement
You need to estimate your income, your expenses and your profit over 3 years
This exercise will allow you to detail your vision of the evolution of your activity.
Central to this is the determination of turnover. You should get the most accurate idea of the salable volumes or billable services, depending on your service area and the experience of the installed franchisees.
It is especially crucial to identify the level of revenue that you can start making money from.
To be efficient and reliable, you can rely on the results of other brand franchisees and be assisted by an accountant. You can then compare your performance against the forecast elements and understand the discrepancies.
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You can review your projected monthly receipts and expenses during the 1st year of activity and see the money that should remain in cash at the end of each month.
Cash is money that is available in cash or at the bank.
The business plan allows you to assess the amount of your cash to validate each month that it is positive. Otherwise, it is advisable to apply for an additional loan from your bank.
The 3-year financing plan
After assessing the financing requirement for the start of your activity, the expected profitability and the monthly cash balance, you must ensure that after 3 years the available resources can meet your needs: inventories, new investments, etc.
If not, you may want to consider applying for a new credit.
Fall to avoid
- Don’t put your thoughts in writing
- Not having contacted network franchisees beforehand
- Don’t make a business plan
- Not estimating your catchment area accurately enough
- Not identifying your strengths and weaknesses
- Failure to identify the risks of the activity
- Not knowing the competition
- Not getting help from an expert
Read more about the business plan:
Business plan: step 1
Business plan: step 2
Business plan: step 3
Business plan: step 4