The Optimum Solution: A Blended Approach

At best, planning process should not be at either end of spectrum, but squarely in middle. In my experience, plans that win funding come from a true collaboration between a skilled consultant/facilitator and entrepreneur’s team of employees and advisors.

A business planning consultant can act as a coach, first assessing job to be done, and then recommending who is best to do it. The business plan should be a compilation of work between vision and goals of entrepreneur, technical understanding and expertise of his or her accountant and other professionals, a consensus of employees or others, and research and writing abilities of business planning consultant. The consultant should meet with all parties involved, talk about what is needed for plan, and use all resources available to get work done as quickly and cost effectively as possible. It is consultant’s responsibility in process to take all pieces and make final plan into a readable, accessible document that will stand up to investor/lender scrutiny. My final caveats:

•Don’t pay more than a few thousand dollars for a plan unless you are looking for capital of well over $1 million. I have heard more than a few horror stories by people who have hired university professors assuming they are experts (they aren’t) and paying tens of thousand of dollars for a poorly written or incomplete plan. Ask your banker for business planning consultant recommendations, or better yet, talk with someone who had a good experience having a business plan written for them. It is reasonable for a consultant to expect you to pay half of fee up front and other half at completion of plan. And you can’t hold consultant responsible if you don’t get funding based on plan – too much is based on your own credit and management skills.

•Don’t expect to get a finished plan that is a roadmap of everything you need to do to have a successful business. That isn’t purpose of business planning process. A traditional business plan is intended only to document your strategies for business very briefly – but well enough to get funding. If you are hoping for something that will tell you how to market or how many people you need to hire, you will have to start with a deep strategic planning process, and probably buy lots of consulting time to get you going.

•Don’t expect a great a business plan from a poor business model. If your costs are too high to make your business profitable, business planning process will help you discover that. Then it will be up to you to make hard decisions about changing your costs structure to make business work. The business planning consultant is a skilled professional, not a miracle worker. A good business plan can help you highlight your strengths and minimize your weaknesses, but it cannot make an unworkable business model into a thriving business.

And one final thought: Don’t go on to start a business or make changes in your current business if everything in business planning process tells you it won’t work. Things don’t get better out in real world if they don’t work on paper. Deal with weaknesses – get more training, consider product redevelopment, or have a home-based business to reduce costs until you can sustain rent for an office. Businesses fail finally because they’ve run out of money. If your plan tells you that you can’t make enough money to make business work for long run, pay attention to that reality.

Well known, established franchises typically have a National Advertising campaign in place that provides TV, radio, and printed material advertising. This way, you don’t have to spend a lot of your own money locally advertising your business.

6.(Con) Loss of promotion/advertising freedom.

Great national advertising promotions are typically accompanied by blanket: “You will promote this product or service during this campaign” ruling. Hopefully, their advertising campaigns will make sense, won’t cost you too much money, and bring in more business. Sometimes it works and sometimes it doesn’t.

7.(Pro) Name recognition.

Who has not heard of Baskin Robbins, Subway or GNC? If you haven’t, you’ve been living in a cave. Franchises typically have wonderful name recognition benefits to them. In other words, people will actively seek out a particular franchise wherever they go.

8.(Con) Customer holds other franchise experiences against YOU.

If a customer has had a bad experience at one franchise location, he tends to hold all of other franchise owners responsible for that one bad experience somewhere else. In other words, I’ll never go to another Subway because I didn’t like meatball sub I got at Joe Blow’s location.

9.(Pro) Potential for higher sales.

With national advertising campaigns and name recognition, your franchise business has a better potential for much higher sales than a similar business with a no-name, no experience rating history.

10.(Con) Handing over a percentage of your sales to “Big Daddy”.

Yeah, higher sales! But ouch, you have to hand a large bulk of your sales over to “Big Daddy”. For every dollar you earn, your franchise fee rips away anywhere from .04¢ to .25¢. Pull your wallet out and hand it over to “Big Daddy”.

As with any situation in life, there are resulting pros and cons. Simply study nature of franchises completely and talk to other franchise owners to get a feel of whether you will want to purchase that particular franchise. If it’s a good fit, go for it!

Good luck and good business!