Writing a Business Plan

 

Details of Initial Research

Feedback. Next Steps. Why think of this?

1

Write a sentence that identifies the products or services that you provide. Alternatively write your company’s vision, mission, and goals for the next three to five years. 

You will use this statement all the time so it has to be clear and focused — your future depends on it. Test it with potential customers, friends, lenders, suppliers — if they are confused, then go back to the drawing board.

2

Check out your competition. What type of market are you entering — mature, growing, declining? Define your niche in the marketplace. Are you positioned by quality, service, convenience, innovation? 

This research will help you gauge just how long it is going to take to break into the marketplace, forecast revenues and estimate costs for marketing / advertising start-up costs. Only differentiate on (low) price if you’ve a special edge that provides you with adequate margins while offering low pricing.

3

Research the costs of building your product or service: materials, supplies, equipment, manpower, building specifications. Does it add up to a smart idea? Is your approach competitive?

How long will it take to pay off your initial investment? Can you grow the business, expand your product line, and adjust for market risks beyond your start-up costs? These numbers will be a key factor in your cash flow and break-even analysis.

4

Consider distribution costs and methods. Review the communications discussion and consider the methods used by your competitors. Obtain estimates for the likes of business cards, telephone hookups, yellow pages and online listings, website hosting and design.

Marketing and advertising are considered “soft” costs after the core costs of building your product / service, and yet, without some investment in this area, you may not be able to build your business. Look for ways to slowly increase your spending as revenues increase.

5

Decide where you will conduct your business and choose a location that balances budget, traffic, visibility, and safety parameters. Of course, this area must be zoned appropriately by your municipality.

Is this a business that you can start in your home rather than incurring building / rental space costs? How does that affect your professional business brand? Can you share a commercial space with another small business?

6

Now take a closer look at obtaining raw materials or supplies. Are there preferred customers in the marketplace? Will you be able to get materials in smaller quantities, in a timely manner, and what are the credit terms? Are there a few, or many, suppliers in your marketplace? Explore importing options if the price is worth doing so.

New businesses may or may not be able to obtain credit terms from suppliers. Find out how much time must pass or how many orders you will have to place in order to obtain credit terms. These figures will form an important part of your cash flow planning.

7

Find out how many employees and/or subcontractors you need. What is the market rate for their skills? Are these people in high demand? Are training programs locally available? Does your business culture make you a desired employer?

Refer to the Best Workplaces in Canada 2007 survey — CanadianBusiness.com — for tips on creating credibility, fairness, respect, pride, and camaraderie in your business environment.

8

Recruit an advisory team of professional advisors, partners, and mentors that will work with you while supporting and analyzing your decisions.

Some professional advice will be included in your accountant’s fees or perhaps your industry association membership costs. Include those in your annual expenses and consider joining your local Chamber of Commerce as well.

9

Key risks in your own business, as well those prevalent in your industry need to be identified: key employee illness, injury to clients / staff on work premises, loss of a key supplier, and regulatory changes in the near future are just a few examples.

Probable risks require mitigation planning that should be documented in your risk management strategy. Insurance coverage can be purchased for certain risks. Consult with your local commercial insurance representative.

10

Forecast your finances in a rough draft form. If the initial projections look reasonable, then you can venture into the full forecasting tools provided on this website.

If you have an accountant or banker that you can talk to at this point, ask them for their initial opinion on your ability to qualify for financing. If you do not, your business plan may be designed for attracting partners or investors.

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