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Collaborations between businesses are successful only when they benefit the involved parties. Franchising is also a form of business collaboration. It is successful only when both the franchisor and franchisee stand to gain from it. And when we say gain in business, it is normally in financial terms or profitability. No franchisor or franchisee will ever choose to continue with a loss-making collaboration. But to realise the anticipated profitability, they must first plan and assess whether the expected or desired returns are achievable or not. This is done via a franchise business plan. It is a detailed and comprehensive assessment of business activities and performance in financial terms. And if this assessment has to be accurate, then no detail can be left out. There could be no room for the omission of any important element. Estimations have to be precise and based on realistic data. Having a faulty franchise business plan could be as taxing as not having one.

The significance of developing a robust business plan in a franchising business is elaborated in this blog in four simple and intuitive points. Here, we are not answering how to write a franchise business plan but the why of it.

Avoiding financial stress

The potential to produce the anticipated returns and profitability is the thriving ground of a business idea. Otherwise, there is no point in doing it. Experienced franchise business plan writers know that getting into franchising without sound financial projections and planning is too risky for both the franchisor and franchisee. This demands a good franchise business plan; a plan that is free from any half-based assessments. Inaccurate or incorrect projections become a serious cause of financial stress at later stages. When cows have started returning home, then it becomes challenging for the franchisor and franchisee to find time and space to mend the snowball of financial woes hurling at them. By then, it is usually also late to seek assistance from external franchise business plan consultants. Positive performance beyond the planning does not hurt. But when the numbers are headed south, then it becomes a cause of concern.

Control over finances

When there is a business plan, it becomes easier for both franchisor and franchisee to remain aware of the financial course of action that the business has to maintain. This can include even some of the routine but big financial decisions. A business plan covers financial forecasts and decision-making pertaining to payment of wages and salaries, credit cycle to be followed, inventory purchases, provision for debts, working capital management, creation of funds and provisions, etc. A franchise business financial forecast gives them better control over the inflow and outflow of funds. It makes businesses more disciplined in financial decision making. With planned and disciplined adherence to such plans, franchise businesses can keep their expenditures within the budget and fulfil their financial commitments on time. Of course, many unexpected expenditures emerge from time to time. But with planning, provisions for such expenses could also be made.

If there is no robust franchise business plan in place, it can get difficult to keep a check on expenditures. The same ideology applies to tracking and monitoring the anticipated revenue generation. If the revenues are below the target, then there is a scope to improvise and perform better in the next quarter or financial year. All these ups and downs can be brainstormed in a franchise business plan presentation.

Cushioning the business with funds and provisions

Both certainties and uncertainties are part of the future. While certainties can be planned for, it is not possible to fathom every uncertainty that lies in the future. The pandemic of 2020 and its impact on the business world serves as a good example here. Within a month or two, economies and businesses came to a sudden pause. It highlighted the importance of having funds and provisions in business to meet certain expenditures for some time to keep the business afloat. Funds and provisions are also useful as a part of regular financial management. For example, provisions for bad debts help businesses write off bad debts that have appeared in the books for long and chances of recovery are dim.  We can also look at depreciation funds that help businesses replace old assets that are on the brink of breakdown. Funds and provisions act as a cushion for businesses in mitigating financial aberrations. Such financial preparedness also helps them in keeping their routine operations intact or going for external financial assistance. Accounting for funds and provisions to manage planned and foreseeable expenditures are essential elements of a business plan.

Accounting for inflationary trends and cost escalation

Inflation or the general rise in the price level is a routine feature of any economy. For businesses, it affects the cost of production and delivery of services. This hike is partially or fully passed on to customers. There are many direct and indirect expenses that businesses incur in the form of raw materials, salaries and wages, office supplies and equipment, purchased services, etc. These inputs are subject to inflation. There is nothing businesses can do about preventing inflation except preparing for it. Even a minor change in inflation could mean big at the company level. For example, if a supplier hikes the price of an input material by 5% per unit, the total bill increases by the corresponding figure. If a business decides not to pass on this burden to customers then this hike will have to be absorbed internally. Prudent financial planning demands that franchise businesses must take into account cost escalation and the impact of inflation in their business plan.

Are you a newbie entrepreneur looking to grow your company’s sales faster? How do you get to know more about your market and other competitors? Where can you find more potential customers and yield out ways to attract them to your website or other online streams? Many online businesses face these dilemmas every day to adapt their marketing strategy to complement the way millennial customers research, shop and buy online. The only way to answer all these questions is through profound ongoing Market Research. There are plenty of commonly used tools available to gather information regarding your market, your customers, and your future business prospects located right at our fingertips like – web searches, online questionnaires, customer feedback, forms etc. With the advent of the Internet, there are a wealth of additional resources introduced to conduct cheap or low-cost market research. With a little bit of help online, anyone can create, launch, and analyse market research surveys and enable you to define your ideal customer responses.

DIFFERENT TYPES OF MARKET RESEARCH

E-commerce market research might seem like a daunting task. However, the execution of market research is zeroed in on just two methods:

1.   Primary Research

This research supplies you with first-hand information through direct interaction with the target group. The target group completes interviews and surveys as part of the research using which you can summarise an understanding of the market. Here, you directly conduct the data collection and then analyse the data to bring out actionable business insights.

2.   Secondary Research

This kind of research leverages publicly available data to define your understanding of the target market. The data collection is done through various reports and studies conducted by other businesses, government agencies, media and research organisations or other sources such as keyword listing. These sources have already conducted primary research and make available the quantifiable data obtained. One risk related to secondary research is that since it usually is not conducted against the research parameter or target audience that applies to your business, it may not always carry the applicable data to your business. Many businesses, here forth, choose to direct the responsibility of online market research to specialised marketing firms specialising in the field.

How to Conduct Market Research

1.   Define the Target Group

Your target group or buyer persona is the person who is your potential or prospective customer and who you are targeting your marketing campaigns at. They help in drawing out a fictional, generalised representation of your customer. Some of the generalised information that you may need to have to define your buyer persona are the target group’s age, geography, location, profession, income, challenges, industry etc. This information helps you streamline your communication and design your strategy by visualising your audience’s preferences and personalities. If your business aims to reach out to more than one persona, you will need to optimise your content and strategy to reach out to each/every persona type.

2.   Prepare Research Questions

Once you’ve identified your target group, you will have to prepare questions relevant to the group defined. For example, if your target group consists of buyers from different sectors, then you have made sure you customise the questions accordingly to address each group. Your questions should not be loose ended and should carry appropriate options. A discussion guide can be created to make sure you cover all the top-of-the-mind queries and use your time wisely.

3.   Conduct Keyword Search

This technique helps you understand the demand rate for the product you want to sell online. Please note that high search volumes do not directly imply the product idea is profitable. However, they indeed indicate genuine interest among customers. Keyword search, additionally, allows you to generate organic traffic through Search Engine Optimization (SEO).  A few of the free keyword tools are 1. Google Keyword Planner 2. Keyword Tool 3. Ubersuggest. Your aim should be to find potential keywords that your target group is searching for, create educational content around these keywords, and then soft pitch what your business offers.

4.   Engage the audience

Decide on the channels that you would use to reach out to your relevant target audiences. You may choose from marketing channels like social media campaigns, email campaigns, direct customer outreach, or through online research portals to distribute the survey to relevant target groups for the online business. The objective of the online market research here is to ensure you reach out to the pertinent maximum audiences possible.

5.   Digging into Social Media

Social media holds a treasure trove of customer insights for online business market research. People tend to broadcast their preferences, complaints, wishes and aspirations through social media platforms. If you dive deep enough, you are sure to find some valuable nuggets of information that might accelerate market research for your online business. Some of the action items that might help you gain valuable data are 1, following influencers directly related to your target group 2—monitoring a list of relevant hashtags 3. Analyse competitors’ tactics and sentiments. The insights gained from social media can drive you to personalise your marketing campaigns to align with the voice and aspirations of your target customers.