What must the business plan include to get a quick decision from the bank?

by Cathryn Hayes, Head of Franchising, HSBC

The length of time taken to obtain a loan varies according to the complexity of the deal and the type of franchise being purchased. For example, if a property lease is required or the bank requires security, such as a charge on a property, this can take longer than for a franchisee starting a low cost business from home.

Typically the bank can provide an agreement in principle within 48 hours of meeting you, providing we have all of the information required. You can help speed up the process by ensuring you have fully completed your business plan before approaching the bank.

The business plan will clarify the main business idea of the chosen franchise and define the long-term objectives. It provides a blueprint for running the business and a series of benchmarks for you and your franchisor to check progress against.

A good business plan will contain the following:

Summary business description - details of the franchise being purchased and the financial needs.

Market analysis & product / service - research and identify local competition and assess what the likely demand of the product / service will be in the specific territory.

Market Strategy - outline intentions for marketing the product / service and how the sales figures shown in the projections will be generated.

Management plan - include details of the type of business (e.g., sole trader, limited company) and CVs of key personnel. Set out the structure and key skills of the management team and staff.

Financial data - at least two years projected figures are required, including a balance sheet, cash flow and profit & loss statement, ensuring that projections correspond with the information outlined above and they’re realistic. If it is a resale franchise, include details of the existing business being sold. Has the business been growing? Is it profitable? A copy of previous years’ accounts should also be included.

SWOT analysis - a one-page analysis of strengths, weaknesses, opportunities and threats.

To summarise, here are our fundamental rules for writing a plan:

Do:

• clarify the purpose of your plan before you write it
• focus on the key information the reader will want
• highlight future plans as well as describing the current situation
• be realistic

Don't:

• waffle or include unnecessary detail
• base your plan on over-optimistic assumptions
• ignore competitive threats and weaknesses

Additional help and assistance on writing a business plan can be found at HSBC’s Knowledge Centre.