Regardless of where you ask for money (your local bank or your Aunt Edith and Uncle Fred), anyone providing you with funds will want to know something about your business and how you plan to operate it. In other words, they’ll want to see a business plan. You should want to have a business plan too.
Think of a business plan as a road map. It gives you and your lender the lay of the land, some directions, and an idea of where your business is headed. You are the mapmaker and the tour guide. You’re responsible for helping your lender see the destination and how you plan to get there. Don’t fake any of the information – especially the numbers. Lenders and investors hate surprises.
Keep in mind that a business plan may be a pain to write, but it forces you to focus on setting goals and figuring out how to reach them. Take your time and don’t be afraid to rewrite. You can be optimistic, but only if your optimism is based on reality.
The best business plan is a living document – meaning that you continually update it. It also is creative, reflects your enthusiasm and carries solid information.
Among other details, a business plan defines the reasons you need financing, the way you’re going to spend the money, and the method you’ll use to repay it. It should explain to the reader everything about your location and how you intend to operate it. If you believe that your location will be better than the average location in your franchise system, let the reader know why you think so. Have facts available to support your assumptions.
Your franchisor should be able to assist you with information specific to the business. If you hire an attorney and/or an accountant, ask him or her for input too. Many, but not all, are used to preparing business plans and can offer valuable advice.
After you have a plan, follow it – don’t file it away. Update it as you learn more.