It's in the bank

The reality is that franchise specialist banks have continued to finance sound business proposals to people looking to invest in well-established franchise opportunities throughout the economic downturn.There are advantages recognised by some banks in operating a franchise over an independent start-up business that helps build your case for financial support. Banks generally consider well-established franchises less risky as the franchisee is investing in a tried, tested and proven business model with initial training and ongoing support from the franchisor.

There are advantages recognised by some banks in operating a franchise over an independent start-up business that helps build your case for financial support. Banks generally consider well-established franchises less risky as the franchisee is investing in a tried, tested and proven business model with initial training and ongoing support from the franchisor.The secret to securing the financial support you need is to present a strong business case to the bank manager. How do you go about giving yourself the best opportunity of winning the backing from a bank?

The secret to securing the financial support you need is to present a strong business case to the bank manager. How do you go about giving yourself the best opportunity of winning the backing from a bank?Most franchisors know the people to contact in the bank's franchise department and can help you with an introduction. Franchising is different from setting up an independent business and you require the support from someone who has a good understanding of the market. It

Most franchisors know the people to contact in the bank's franchise department and can help you with an introduction. Franchising is different from setting up an independent business and you require the support from someone who has a good understanding of the market. It is therefore beneficial to speak with these franchise specialists at the bank rather than approaching your local business manager directly.It is good practice for franchisors to regularly communicate with the bank's franchise unit to keep them up to date with developments in their franchise.

It is good practice for franchisors to regularly communicate with the bank's franchise unit to keep them up to date with developments in their franchise. As a result the franchise team will have a better understanding of the opportunity and are better placed to provide initial guidance with your proposal.The bank can provide advice about investing in a franchise and the financial support that may be available to you at an early stage, even before you have made a commitment to invest.

The bank can provide advice about investing in a franchise and the financial support that may be available to you at an early stage, even before you have made a commitment to invest. However before a bank manager can provide an actual decision on a lending request you need to prepare a business plan.It's reasonable to expect the bank to thoroughly review your business plan and to ask for supporting evidence to back up your financial request before providing a decision. Your plan should be accompanied by an asset and liabilities breakdown, your last six months personal bank statements and evidence showing where your own stake in the business is coming from.

It's reasonable to expect the bank to thoroughly review your business plan and to ask for supporting evidence to back up your financial request before providing a decision. Your plan should be accompanied by an asset and liabilities breakdown, your last six months personal bank statements and evidence showing where your own stake in the business is coming from.By preparing a detailed plan covering the key areas a bank manager will be looking at, you will speed up the decision-making process. Remember a business plan is more than a vehicle to secure the financial commitment you are looking for - it is also a working document to refer back to benchmarking how the business has performed against your original projections.

By preparing a detailed plan covering the key areas a bank manager will be looking at, you will speed up the decision-making process. Remember a business plan is more than a vehicle to secure the financial commitment you are looking for - it is also a working document to refer back to benchmarking how the business has performed against your original projections.You will be expected to commit at least 30 per cent of the total set-up costs from your own savings and the bank may require you to provide security to cover any agreed finance. A business plan needs to be punchy to grab the bank manager's interest. Don't make it too long but it should cover the following areas:

You will be expected to commit at least 30 per cent of the total set-up costs from your own savings and the bank may require you to provide security to cover any agreed finance. A business plan needs to be punchy to grab the bank manager's interest. Don't make it too long but it should cover the following areas:

Executive summary on your requirements
Business and personal objectives: Short, medium and long-term
Market analysis: Research carried out to demonstrate the local demand for product or service, competitor analysis and potential customers identified
Business operations: Premises, equipment, staff, suppliers, IT, Health and safety
Marketing plan: How you are going to achieve your sales
Management details: CV's for key personnel, experience, skills and attributes
Financial requirements: Your own capital stake, finance required and available security
Financial projections: A minimum of two years' cash flow and profit forecasts together with any assumptions used (the bank manager will be reviewing whether the projections are realistic and achievable)
Financial accounts: For existing businesses a copy of the previous financial accounts should be provided
SWOT analysis: Strengths, weaknesses, opportunities and threats to the business

Wherever possible provide the bank manager with a copy of your business plan before your meeting. This will give them the chance to review the plan beforehand and prepare questions.

It is advisable to practise the presentation of the plan beforehand. The bank manager will expect you to understand your plan, including the financial projections and to be able to confidently answer their questions.

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