Once an agreement is made to progress a potential franchisee’s application, all franchisors will ask for a detailed business plan and cashflow forecast. Winkworth asks for a three-year business plan and financial forecast and the new franchising team can assist where possible with templates and guidance on how to complete these.
A business plan is about more than just funding. It provides concise ideas and objectives as well as giving the potential franchisee the opportunity to show their business acumen off to the franchisor during the explanation meetings.
Writing a business plan can be slightly daunting – they need to be detailed but concise, to the point, and divided into logical sections. Below is some guidance on what to include.
The executive summary is the introduction to the business plan. This should include a Company Overview detailing how the service company will be structured and under which trading name. It should also include an External Review – identifying property demographics, prices and postcodes that the potential franchisee wishes to operate in, and finally a Services Offered section explaining whether the office will provide more than just sales and lettings, for example mortgage services or property management.
Fees and Charges
Fees and charges will be a very important component of the business and carrying out some mystery shopping can help here. Once the potential franchisee knows what sales and lettings fees competitors are charging in the area, they can use this knowledge to guide and base their fees upon.
Often potential franchisees have staff that they have already touted to come and work with them. This section can be used to explain the staffing structure that will be in place from day one, followed by how it’s likely to grow in the future and at which trigger points. It’s important to include CV’s of staff in this section.
This is a vital part of any business plan and should be the most comprehensive aside from the financial forecasts. It’s important to research the area thoroughly and include sub sections such as target customers, market dynamics and a competitor summary on all the agents working in the area. This section will ultimately determine to the franchisor that the area is not too saturated and there is enough business to support the office.
Strengths, Weaknesses, Opportunities, Threats (SWOT)
Strengths and weaknesses should be shown relative to competitors. Strengths are shown if they are better than the competitors, whereas weaknesses show where they may be lacking. For example, a strength could be the recognised Winkworth brand name and good reputation coupled with local knowledge and expertise. A weakness could be little available housing stock in the area.
Objectives should be clear and realistic goals that the potential franchisee’s set themselves right from the beginning. It’s important to try and stick to these objectives so as not to delay opening and thus a potential loss of earnings:
- Objective 1: To develop estate agency premises ready for business
- Objective 2: Recruit and train staff
- Objective 3: Launch
- Objective 4: Marketing plan
This section is where to include a comprehensive three-year cashflow forecast, including all profits and losses (Winkworth again have templates for these to aid the process). Alongside this document any financing options that the potential franchisee might have in place should be included, whether these be via bank loans, overdrafts or personal funding.
This document is by no means exhaustive and is simply a brief guide to business planning. For further information and direction on how to produce a comprehensive business plan, get in touch with the new franchising department today.