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The Importance Of A Plan

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The Importance Of A Plan

By FranchiseKing, Guest Blogger
Published: July 31, 2012

In my role as a franchise advisor, I’ve been able to work with a lot of really smart people over the years. I’m talking MBA’s, PhD’s-even a rocket scientist from NASA. I would guess that some of them were qualified to be members of MENSA.*

But, even smart people make mistakes, and I’ve seen some real whoppers take place at various stages of the franchise buying cycle. Some of them include:

·        Not calling 10-15 current and former franchisees to ask about their experiences as owners

·        Not visiting current franchisees in-person as part of the franchise research process

·        Not having enough money set aside for the start-up phase

·        Not using a lawyer who specializes in franchising

There’s one other thing that’s always baffled me about potential franchise owners, and it’s this:

How do some franchise buyers (after doing a lot of right things during the investigative process), manage to just about ruin their chances of ever becoming their own bosses towards the end of it?

I’m going to use a specific example that I’ve seen take place on more than one occasion, and my hope is by sharing it here, you won’t do the same.

 

The Business Plan

Some potential franchise owners don’t put enough time and energy into writing a powerful and convincing business plan for their new business.

Admittedly, it gets me a little aggravated when I learn that one of my clients isn’t taking their business plan very seriously. I won’t admit to losing sleep over it, but I know in my heart that my client’s chances of securing a small business loan diminish greatly if the business plan they submit to their bank is weak.

One person that may lose sleep over something like this is Tim Berry. He lives and breathes business plans. *

Here’s what Tim says about business plans:

When a bank asks for a business plan, the bank wants a document that’s a convenient summary of the key points of the business. That includes highlights like what you sell, into what markets, through what channels, with what sales and marketing strategies. Also who’s in charge of this business, and what experience the people in the team have. “

But, banks want a lot more, especially today. So, you just have to give them more.

Tim goes on:

Most of all, with a business plan that’s being submitted to a bank, they are looking for stability, reliability, and responsibility. They want to see a good credit history, both business and personal, and assets to cover loans and reduce risks.”

You’ll also need to tell your story by adding a human dimension to your business plan.

If you’ve never written a business plan, don’t sweat it; there’s plenty of help available:

1.      Business Plan Software

You can purchase software that provides step by step instructions and includes templates with blank fields that just need your numbers added to them.

2.      Small Business Development Centers

Administered by The US Small Business Association, SBDC’s provide no-cost services for future and up and running small businesses. Programs vary by location, but here’s an example of one that’s focused on helping entrepreneurs create solid business plans.* 

3.      SBA.Gov Online Tutorials

Watch a collection of useful how-to videos on business planning, including an introduction to the planning process, strategies, sales forecasting, and more. You can view them at your leisure, 24/7. 

 

You don’t have to be a rocket scientist to know that in today’s lending environment, you shouldn’t even think of going into a bank to apply for a small business loan without a strong, formal business plan in your hands. The lender is going to want to see your projections and read your story. Use one or all of the resources I shared with you to make your plan shine.

It’s a smart thing to do.

Have you ever written a business plan? Do you feel that’s it’s crucial to have one?  

* Non US Government links

About the Author:

Joel Libava

Guest Blogger

The Franchise King®, Joel Libava, is the author of Become a Franchise Owner! and is a franchise ownership advisor. He shows people how to carefully choose and properly research franchises.   

Comments:

yes, plan is very important..if you fail to plan, you plan to fail
Planning is undoubtedly an important part of business. So it is a necessity to carefully examine every step and action a business takes. Though a lot of people has neglected to do this part. I hope people and businessmen will learn how to improve and take time to deal with the planning phase. Thanks !
I think a lot of business fail or at least fail to go further because they don't have a business plan. They don't know where they are going, how much money they are making or want to make or even simple goals. It is vital for any business to have a business plan.
Planning refers to the process of setting goals, developing strategies and outlining tasks and schedules to accomplish the goals and also help in deciding objectives both in quantitative and qualitative terms.Having a business plan is extremely important to our business
A good start is half the Success .Your blog provided us with valuable information. This is very useful for me. just planning
I believe this is one of the most important info for me. And i'm satisfied studying your article. Just right process, cheers!
Having a business plan is extremely vital to your business. Think about the organization, the structure and the work culture. Without it, you are on a sinking ship. Trust me, i have experienced this before.
I think a lot of business fail or at least fail to go further because they don't have a business plan. They don't know where they are going, how much money they are making or want to make or even simple goals. It is vital for any business to have a business plan. Large corporations are spending hundreds of thousands for it, so why do small business ignore it?!
Planning is undoubtedly an important part of business. So it is a necessity to carefully examine every step and action a business takes. Though a lot of people has neglected to do this part. I hope people and businessmen will learn how to improve and take time to deal with the planning phase.
I'm surprised that many small businessman don't use a good lawyer when putting a deal together....a good lawyer essential these days.........

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