|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 go back to the drawing board.|
|2||Check out your competition. What type of market are you entering – mature, growing, specialized/high-tech, declining? Define your niche in the marketplace. Are you positioned by price, 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.
|3||Research the costs of building your product or service: materials, supplies, equipment, manpower, building specifications. Does it add up to a smart idea? Are you competitive?
|How long will it take to pay off your initial investment? Can you grow the business, expand your product line, 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 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 trade services in the areas that you require or 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, safety parameters. Of course, this area will be zoned appropriately by your municipality.
|Is this a business that you can start in your home before incurring building/rental space costs? How does that affect your professional business appearance? Can you share the 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, with/without credit terms? Are there a few, or many, suppliers in your marketplace?||New businesses may or may not be able to obtain credit terms from suppliers. Find out how much time/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?||People are the new “green” for companies. Refer to the Best Workplaces in Canada 2007 survey – CanadianBusiness.com – for tips on creating credibility, fairness, respect, pride and camaraderie in your business.
|8||Recruit your advisory team of professional advisors, partners and mentors that will work with you and support and analyze your decisions.
|Some professional advisement 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 employees 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 you 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 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.|
The executive summary is the most important part of your business plan, and is typically pulled together after you have completed writing your plan. Don’t assume people will read your plan cover-to-cover. Succinctly state what your business is about and why it was successful.
|Registered Business Name|
|Business Operating Name|
|Current Ownership Since|
|Form of Business:||__________ Corporation _________ Society
__________ Partnership ______ Co-operative
_______ Sole Proprietorship _____ Inc. Assoc.
____ Other: ___________________________
|Current Financial Institutions:|
|Company Owner(s) – Supply Same Information for Each Owner|
|Business Involvement:||__________ Part-time _________Full-time|
|Fiscal Year End|
|Date of most recent formal accountant prepared financial statements or corporate income tax return|
|Latest interim statements (if applicable)|
This section of the plan describes the nature of your product of service, its key features, benefits and its competitive advantage.
Complete the sales forecast for your product or service below:
Sales Assumptions must be supported by research in order to be credible. Past history of the business is one way to arrive at the numbers, as are trends in the industry and consumer spending habits, and competitor figures.
Make a list of sales assumptions and research to support sales assumptions in the table below. Add more rows if you require them.
|Sales Assumptions||Research to Support
|Critical Risk/ Weakness of this Assumption|
Calculating Sales and Cash Flow Projections from Sales (example):
|Month||Units Sold||Price Per
|% Cash Collected This Month*||% Cash Collected from Previous Month*||% Cash Collected from 60 days prior*||Total Cash Monthly
|January||15||€ 200||€ 3000||€ 1500||€ 0||€ 0||€ 1500|
|February||12||€ 200||€ 2400||€ 1200||€ 750||€ 0||€ 1950|
|March||11||€ 200||€ 2200||€ 1100||€ 600||€ 750||€ 2450|
|April||9||€ 200||€ 1800||€ 900||€ 550||€ 600||€ 2050|
|May||7||€ 200||€ 1400||€ 700||€ 450||€ 550||€ 1650|
|June||3||€ 200||€ 600||€ 300||€ 350||€ 450||€ 1100|
|August||3||€ 200||€ 600||€ 300||€ 150||€ 350||€ 800|
|September||4||€ 200||€ 800||€ 400||€ 150||€ 150||€ 700|
|October||6||€ 200||€ 1200||€ 600||€ 200||€ 150||€ 950|
|November||8||€ 200||€ 1600||€ 800||€ 300||€ 200||€ 1300|
|December||10||€ 200||€ 2000||€ 1000||€ 400||€ 300||€ 1700|
|Totals||95||0||€ 17,600||€ 16,150|
* In this exercise 50% collected in current month of sales and 25% collected in each of the following two months after the sales are generated. If you provide credit terms to your customers or take deposits/balance of payment on a different time scale you will need to adjust your sales and cash flow projections.
Cash flow is the life blood of a business. It is important to reflect on how customer terms, late payments on invoices and possible non-payment will impact your business management, commitments to financers and payroll. You can see from this example that your cash collection could potentially be almost 10% behind your sales figures on a monthly basis.
This sales/cash flow information will be used in creating the financial information for your new business.
market / Business environment research
This section helps you address the research required to assess the business environment using the most common business analysis tools. In fact, environmental analysis should be continuous and feed all aspects of planning and forecasting. Every firm exists in multiple environments. It is both affected by, and shapes, those environments.
The summary of these tools is briefly described below and links to additional resources can be found on this page. While you may not report all the elements of this analysis in your business plan, you will need to summarize the high points of your strengths/ opportunities and weaknesses/ threats. Lenders, potential partners and investors will want to know the downside (worst case scenario) of your new venture.
Porter’s Five (or Six) Forces Analysis
Porter’s Five Forces is a framework for industry analysis and business strategy development (Michael Porter, Harvard Business School, 1979). It works effectively for big or small businesses, and by design are generally used to analysis the micro-environment of your business. Each of the forces can be given a value of low, medium, strong or very strong rating and together provide a strategic ‘picture’ of our business.
Internal Environment Analysis
People, with their knowledge, know-how and managerial skills, are seen to be the new competitive advantage. Is your business structured in a manner that harnesses employee power, or drives it away?
It is important to note that opportunities and threats are often beyond the control of a business, and therefore should prompt the business to adapt, evolve and innovate to either take advantage of the opportunity, or to mitigate the damage of the threat. Here is a chart that you can use to formulate your analysis:
(to business achieving
(to business achieving its objective)
(attributes of organization)
(attributes of the environment)
|Examples of SWOTs|
Strengths or Weaknesses
Opportunities or Threats
One of the main difficulties faced by any entrepreneur is that advertising has changed and evolved over the last few years. It now includes audio, visual and electronic media. Website programming of all sorts allows you to interact with your customers. And that is just the tip of the iceberg!
The Internet has made unbelievable amounts of information accessible, but it has also contributed to information overload. An effective advertising/marketing campaign is not about being everything to everyone, but is about having a conversation with your ideal customer and measuring those results through sales and/or feedback.
Advertising: Advertising is an attempt to influence the buying behavior of your customers or clients by providing a persuasive selling message about your products and/or services. Technically, advertising in only one way of promoting your business, and you will want to be sure that whatever form of advertising you choose fits in with your marketing plan, strategy and budget.
Forms of advertising:
Marketing: Marketing is a process of interesting potential customers and clients in your products and/or services. The key word in this marketing definition is “process”; marketing involves researching, promoting, selling and distributing your products or services. Marketing involves everything you do to get your potential customers and your product or service together.
Forms of marketing:
Here are some of the major areas and questions, by category, that you can ask in order to develop your marketing plan:
Write your marketing plan in five subsections:
(1) Target Market/Competitive Analysis
You will need to understand the size of the target market for your product or service, and the number of competitors that already satisfy (or don’t) the market you are attempting to break into with your new business idea. The target market section should cover:
Your marketing strategy should communicate what makes your product or service unique.
(3) Pricing Strategy
An important part of marketing is determining the price of your product or service. If your prices are too high for your customers, some will pass you by. If you do not charge enough, some may question the value of your service/product. Some markets and products will be price sensitive – consider what pricing says about your company and your products.
(4) Sales/Distribution Plan
Your sales/distribution plan should detail how the transaction between you and your customer will take place. You need to explain in detail what type of distribution channels are available to you – account representatives, sales people, internet referrals, delivery services, wholesalers and retailers. Analyze the various stops and routes in your distribution plan for possible efficiencies or duplications, cost-savings and excessive costs.
(5) Advertising and Promotions Plan
Your advertising and promotions plan must detail how you are going to communicate to your customers and prospects. If possible, provide an example of a mock-up of your brochure, website pages, advertisements, etc.
Advertising / Marketing worksheet
Advertising/Marketing Techniques for Your Business
|Activity||Appropriate||Maybe||Not Appropriate||Top Priority?|
|Advertising (print, broadcast, Internet)|
|Annual reports & reviews|
|Book and publication writing|
|Brochures & collateral materials|
|Customer advisory boards|
|“Customer experience” enhancements|
|Event sponsorships & trade shows|
|Press relations campaign|
|Referral sources campaign|
|Seminars & public speaking|
|Signage (vehicle, office, roadside)|
|Yellow Pages TM|
|Website – unique domain/development|
“Marketing Mix” of Tools and Techniques
|Top Priority Marketing Techniques
(from above list)
|Steps needed to implement||Estimated Costs||Timing / Deadlines||Person Responsible|
Your plan needs to address the day-to-day running of your business. The operations section should address the stage of development and production process.
The development section should cover the following:
The production process section should cover the following:
If you are a manufacturer, then your proposal should also briefly cover the:
The financial information section of your business plan is like the skeleton upon which all the other parts hang. It will act as your progress report and benchmark for success. There are several worksheets that are included in this section that can be downloaded and printed off, or enter the lists into a spreadsheet for first-time and on-going planning.
Each link below takes you to a new webpage and a link to download the PDF file version of each financial planning tool.
Enter the Financial Planning Tools Section HERE!
There are three essential steps in creating your basic financial plan:
If you are creating a business plan for an ongoing business include financial statements from previous years:
Other tools that are useful for different types of businesses are:
START-UP EXPENSES WORKSHEET
A new business will have two types of expenses: one-time expenses and operating expenses. Estimate these costs and add them to the cash flow statement. Lenders will require actual quotes from approved/certified vendors (for building contractors, franchises, etc).
Your one-time expenses section may include, but are not limited to:
Your operating expenses section of your business plan may include, but are not limited to:
cash flow Statement
By completing this monthly cash flow projection for one year (or more) you will have an idea of cash inflows and outflows. Your calculations may help you plan material purchases in smaller/larger amounts, take time to negotiate terms with suppliers, watch your cash during slowdowns, ramp up for busy periods, and more. Once you have your cash flow projections you can speak to your accountant or lender about your cash needs.
You will need your start-up estimates/costs/quotes from the previous worksheet. Input them in the first column.
|Cash Flow Statement for a Small Business|
|12 Month and Start-Up Cash Flow||Start-Up Costs||Month 1||Month 2||Month 3||Month 4|
|Cash Receipts (Cash In)|
|Collections from accounts receivable|
|Other cash received (specify)|
|Total Cash In|
|Cash Disbursements (Cash Out)|
|Advertising & promotion expense|
|Bank charges & interest|
|Business licenses & permits|
|Capital / Assets Purchases|
|Government Remittances (taxes, VAT, etc)|
|Loan/line of credit payments|
|Management salaries (owners draw)|
|Office supplies & expenses|
|Payroll remittances (pensions, payroll taxes, other taxes, etc)|
|Professional fees (accounting, legal)|
|Rent or mortgage payment|
|Repairs & Maintenance|
|Wages & salaries (staff)|
|Total Cash Out|
|Cash Flow Summary|
|Add: Cash In|
|Subtract: Cash Out|
|Closing cash balance – surplus or (deficit)|
An income statement shows your profit or loss for a particular period of time, detailing all revenues and expenses. It should be prepared on a monthly or quarterly basis to allow for proactive management to make any necessary changes. The income statement is primarily an accounting tool to measure a business’ performance.
Another useful tool that will help you to measure your business performance at the outset is the break-even analysis. You can measure your breakeven point in level of sales in either dollars or units where revenue equals total cost.
Use this worksheet to prepare your Income Statement if you are already in business, and as a format for pro forma (projected) income statements.
|Income Statement for a Small Business|
|Time Period – Projected or Actual||1st Quarter||2nd Quarter||3rd Quarter||4th Quarter||Full
|> >Opening inventory||€|
|> > + Purchases (direct materials)||€|
|> > + Production wages*||€|
|. > . – Closing inventory||€|
|(Less) Cost of goods sold (COGS)||€|
|Gross profit (or income)||€|
|Advertising & marketing|
|Rent or mortgage interest|
|Salary – owner|
|Earning (or loss) before taxes|
|. . Less Income Taxes|
|Net Earnings (or loss)|
* Wages are only included in manufacturing businesses; in retail businesses wages are operation’s expense.
BALANCE SHEET FOR A SMALL BUSINESS
Use this worksheet to prepare a balance sheet you will include in your business plan for an ongoing business. If you are starting a new business proforma (projected) balance sheets can be prepared, particularly if your business requires significant capital (asset) investment or financing.
|Current Assets||Current Liabilities|
|Cash in bank||_____________________||Accounts payable||__________________|
|Accounts receivable||_____________________||Short-term loans||__________________|
|Inventory||_____________________||Other payments due in 12 months||__________________|
|Cash in (item 1)||_____________________||VAT(BTW)owing|
|Cash in (item 2)||_____________________||VAT(BTW) collected on sales||__________________|
|Total current assets||_____________________||Less ITC (deductables)||(_________________)|
|Net amount payable or (refundable)||__________________|
|Total current liabilities||__________________|
|Fixed Assets||Long-term Liabilities|
|Land||_____________________||Long-term loans (due after 1 yr)||__________________|
|Less amortization||(____________________)||Total long-term liabilities||__________________|
|Net land & buildings||_____________________|
|Total Liabilities (L)||__________________|
|Less amortization||(____________________)||Owners’ Equity|
|Less amortization||(____________________)||Total owners’ equity (E)||__________________|
|Total Assets (A)||_____________________||Total liabilities and equity (L+E)||__________________|
ITC – Input tax credits
Another useful tool that will help you to measure your business performance at the outset is the break-even analysis. You can measure your break-even point in level of sales in either dollars or units where revenue equals total cost.
The break-even analysis is especially useful when you’re developing a pricing strategy, either as part of a marketing plan or a business plan.
Break-even analysis depends on the following variables:
Each of these variables is interdependent on the break-even point analysis. If any of the variables changes, the results may change.
Total Cost: The sum of the fixed cost and total variable cost for any given level of production, i.e., fixed cost plus total variable cost.
Total Revenue: The product of forecasted unit sales and unit price, i.e., forecasted unit sales times unit price.
Break-Even Point: Number of units that must be sold in order to produce a profit of zero (but will recover all associated costs). In other words, the break-even point is the point at which your product stops costing you money to produce and sell, and starts to generate a profit for your company.
As a business owner you can play with the variables to make managerial decisions like:
Q = FC / (UP – VC)
Q = Break-even Point, i.e., Units of production (Q),
FC = Fixed Costs
VC = Variable Costs per Unit
UP = Unit Price
Break-Even Point Q = Fixed Cost / (Unit Price – Variable Unit Cost)
Every business has some degree of risk. Acknowledging the worst case scenarios and how you will minimize or mitigate the risks inherent in your business, is the first step in avoiding the problems.
Often risk awareness and mitigation will warrant an operational or administration expense category, i.e. a particular type of insurance, an employee with certain credentials/salary scale, training program for staff, etc.
Consider the following:
Risk Conclusions: Clearly restate your goals and objectives for your business. Address the risks and liabilities in light of a positive way forward and the resources available to you, for example: equipment, superior technology, a talented workforce, deep and wide networks.
IMPLEMENTATION PLAN & TIMELINE
If your business plan is complicated, requiring many steps or construction of a facility, a project plan with a timeline will be required at this step of the business plan.
Lenders may time payment advances with the various steps in the projects. At each step of the project, actual costs will be compared with estimated costs of the business plan. There will be decision points with regards to cost overruns or cost savings and the reallocation of monies from other parts of your business plan.
It provides a way of planning your time and resources so that all the necessary tasks are carried out within a given timescale. It will provide whoever sees your business plan with a ‘snapshot’ of how you intend to go about setting up your business. It should be broken down into the following sections:
The plan does not need to be complex. It is a simple, disciplined means of getting your project completed in a reasonable time and with minimum confusion as to each person’s responsibilities.
|Timescale For Workshop Project – SAMPLE|
|Month of Action for Task Assigned|
|Finalize planning permission||Joe||X|
|Apply for loan||Jane||X|
|Liase with local building inspector||Henry||X|
|Plan shop and interior design||Jane /Susan||X|
|Marketing materials created and distributed||Henry||X|
Legend: “x” becomes “V” when completed