Description
Entrepreneurs Guide To Writing A Business Plan
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Entrepreneur’s Guide To:
Writing a Business Plan
Business Plan Guide
Why Do I Need a Business Plan? .................................................................................................................. 1
Writing the Plan .......................................................................................................................................... 1
Should I Write the Business Plan Myself? ..................................................................................................... 2
How to Use this Business Plan Guide............................................................................................................ 2
Business Plan Outline .................................................................................................................................. 3
1. Cover – Title Page ................................................................................................................................... 4
2. Table of Contents .................................................................................................................................... 4
3. Executive Summary ................................................................................................................................. 4
4. Company Outline .................................................................................................................................... 5
a/ Company Profile ............................................................................................................................................................................... 5
b/ Goals and Objectives of Business ..................................................................................................................................................... 6
c/ Profile of Key Management .............................................................................................................................................................. 6
d/ Identify Target Market ..................................................................................................................................................................... 7
e/ Identify Geographic Service Area ..................................................................................................................................................... 9
5. Marketing Plan ..................................................................................................................................... 10
a/ Products/Services .......................................................................................................................................................................... 10
b/ SWOT Analysis ................................................................................................................................................................................ 11
c/ Pricing Strategy .............................................................................................................................................................................. 12
d/ Marketing Plan ............................................................................................................................................................................... 12
e/ Location .......................................................................................................................................................................................... 13
6. Industry and Market Analysis ................................................................................................................ 14
a/ Overview ........................................................................................................................................................................................ 14
b/ Industry Size ................................................................................................................................................................................... 14
c/ Industry Trends ............................................................................................................................................................................... 14
The Small Business Centre
provides easy access to information,
resources and complimentary
consultations on all aspects of your
business needs. We work with you
every step of the way including help
with your business concept, preparing
your business plan, research
assistance, registering your business
and learning about other government
requirements and programs.
7. Competition .......................................................................................................................................... 15
a/ Competitive Analysis ...................................................................................................................................................................... 15
b/ Competitive Advantage .................................................................................................................................................................. 16
8. Operating Plan ...................................................................................................................................... 17
a/ Production Processes Described ..................................................................................................................................................... 17
b/ Assets Required are Identified ........................................................................................................................................................ 17
c/ Supply of Product/Service – Suppliers ............................................................................................................................................. 17
d/ Supply of Product/Service – Price and Quality ............................................................................................................................... 18
e/ Cost of Bringing Product/Service to Market Identified ................................................................................................................... 19
f/ Risk Analysis/Assessment................................................................................................................................................................. 19
g/ Contingency Plan ............................................................................................................................................................................ 20
9. Cash Flow Projections ........................................................................................................................... 20
a/ Cash Flow Projections – Two Years ................................................................................................................................................ 20
b/ Assumptions ................................................................................................................................................................................... 21
10. Appendix ............................................................................................................................................ 21
There are many different types of Business Plan Formats. The layout may vary depending on the type of business, the
purpose of the plan and the readership. The following format
guideline can be amended to meet the needs of your
business.
Content adapted with permission from the Canadian Youth Business
Foundation’s Business Resource Centre.
For more information, please visit cybf.ca/resources
Writing a Business Plan P a g e | 1
Why Do I Need a Business Plan?
A business plan is a business development map. Not only does it show your end destination, but it also maps out your
travel path. It sets out realistic goals and a stable path. You can use the plan as a guide to keep you focused and making
progress during the business start up phase.
Every business venture can benefit from the preparation of a carefully written business plan. The purpose of the
business plan is to:
? Help you think through the venture
o ensure that you have considered all options and anticipated any
potential difficulties
o will this business be profitable and meet your personal financial
requirements
o is the idea viable
? Serve as an operating guide as you turn your ideas into a viable business
? Aid in arranging strategic alliances and obtaining contracts
? Convince potential funding programs, lenders and investors that the proposed
venture has merit, that you understand the industry you are entering and that
you have the skills necessary to be successful
Writing the Plan
The hardest part of writing a business plan is getting started. The thought of writing a document of this length may
seem overwhelming to many people. This is why it is recommended that you use the bite-sized approach to writing your
business plan. Consider some of the following tips:
? Create individual documents on your computer for each section of the
plan. This makes it easier to find the section you wish to work on, easier to stay
focused, plus you can see where you require additional information. It’s easy to
cut and paste together your final document when you are ready
? Set aside a specific period of time each day to sit down and write a few
paragraphs or pages
? The sections do not need to be completed in a particular order so work
on the section that interests you the most that day
? If you are not able to fully answer a question, write a few short notes
that immediately occur to you, and think further about what the questions
suggests
? As you continue to write and do more research, you can go back and
add things that you have previously missed
? You may not find it possible to answer every question; however, you
should be aware of these issues as they may affect your venture in the future
Of the primary functions of
management, planning is
the most important. Plan
your work and work your
plan. Old… but it holds.
Grant Hooker,
Beavertails Pastry
Many people do not venture
out on their own because they
become overwhelmed with the
“what if” syndrome. A
comprehensive business plan
will enable you to anticipate
“what if” problems and develop
strategies to overcome thmn
months before you start your
business.
Douglas & Diana Gray,
The Complete Canadian Small
Business Guide
Writing a Business Plan P a g e | 2
A common mistake in writing a business plan is to recognize only the data that supports your concept and to ignore facts
that, when considered objectively, might change the direction of your business.
? Issues must be seriously and objectively considered and you should be somewhat open minded in your
approach
? It is better to recognize needed changes when your business is in the planning stage than when the business is
already underway and your investment is at stake
? Many good business plans go through several revisions and take up to six months to complete
? As changes in the business environment occur (i.e. new competition, new product design), a company's business
plan should be modified to reflect the new environment. A business plan is not a static document – it will
continue to evolve as the business grows and things change in the internal and external environment
Avoid highly technical terms and diagrams that the reader may not be familiar with. You want to write the plan as if the
reader knows nothing about the type of business you are starting.
Think of your business plan as a sales document. After all, it must convince you and other readers that your venture has
the potential to be successful. Your enthusiasm, dedication and confidence in the project should be evident to the
reader, to the point that they will share your view.
Remember not to ignore or omit risk factors that are inherent with your project. Risk is inherent in every business
venture.
Should I Write the Business Plan Myself?
The management team should develop as much of the business plan as possible.
Much of the information, data retrieval and the setting of objectives and targets can only be completed by the
management team. These objectives and targets will be issued to measure the success of the business by investors,
lenders, employees and management.
How to Use this Business Plan Guide
The following pages provide a suggested outline of the material that should typically be included in your business plan.
However, the final product will need to be tailored to fit the circumstances of your business.
Consider having potential partners, investors, or customers sign a
confidentiality/non-disclosure agreement prior to presenting your business
concept or plan to them.
Writing a Business Plan P a g e | 3
Your business plan should
cover all the points of this
outline.
It’s important to keep in mind
that detailed and thorough
research, without being too
technical, will be key aspects
of your business plan.
Your plan should be tailored
in such a way that even a
person unfamiliar with the
industry will be able to
understand and be
convinced by your
arguments, predictions and
analysis.
Business Plan Outline
? Cover – Title Page
? Table of Contents
? Executive Summary
? Company Outline
o Company Profile
o Goals and Objectives of Business
o Profile of Key Management
o Identify Target Market
o Identify Geographic Service Area
? Marketing Plan
o Products/Services
o SWOT Analysis
o Pricing Strategy
o Marketing Plan
o Location
? Industry and Market Analysis
o Overview
o Industry Size
o Industry Trends
? Competition
o Competitive Analysis
o Competitive Advantage
? Operating Plan
o Production Processes
o Assets Required
o Suppliers
o Price and Quality
o Cost of Bringing Product/Service to Market
o Risk Analysis / Assessment
o Contingency Plan
? Cash Flow Projections
o Two Year Cash Flow Projections / Income Statement
o Assumptions
? Appendix
o Supporting Documents
Writing a Business Plan P a g e | 4
Finish this section
of your plan last
1. Cover – Title Page
State the business' name, address, phone number, fax number, email address and the names of the principal owners.
Indicate the date of issue of the plan and the copy number.
2. Table of Contents
Your table of contents should be a single page that lists section headings with corresponding page numbers.
It can be automatically generated (saving time and frustration) by right clicking the mouse and selecting ‘update entire
table of contents’. Changes to titles and page number are done in one click.
3. Executive Summary
The executive summary should be written after the business plan is complete.
It is a brief (one to two pages) summary of the highlights of your business plan.
This section may be the most important part of your plan. Investors will read the summary to decide whether to read
the entire plan. For this reason, your summary should be convincing, attract the reader's interest and at the same time,
be brief.
Your executive summary should cover the key points of following items:
? Introduction to the business opportunity
? Type of business structure (sole proprietorship, partnership, or corporation)
? Management/key employee background
? Product(s) or service(s) you are offering and how they are unique
? Target market and its size
? Competitive analysis
? Marketing strategy – how does it differ from the competition
? Equity investment of owners
? Financing required and how it will be used
Writing a Business Plan P a g e | 5
4. Company Outline
This section clearly identifies the long-term and short-term objectives that will contribute to the overall mission. These
objectives will give the operation direction for future activity and serve as a measuring stick for the success of the
operation.
a/ Company Profile
The Company Profile is a quick snapshot of your business.
Company Profile – Sample
Form of Business Ownership: Sole Proprietor
Registered on (insert date or ‘to be registered’)
Owners: Your name and any partners’ or shareholders’ names
Name of Business: Business name you plan to use
Business Start Date: Actual start date or target start date
Business Operation: Full time or part time venture?
Days of operation
Hours of operation
Brief Business Description: One or two sentence description of your business
Location: Where you will operate your business from, either your home address or your
store front location address
Advisors: Name any professional services you have enlisted such as an accountant or
lawyer
Writing a Business Plan P a g e | 6
b/ Goals and Objectives of Business
What short-term and long-term goals have been set?
List both the long-term and more specific short-term goals of the company. List these goals in order of importance.
Short-term goals (less than one year) should be very specific. Long-term goals may
be more general.
Some common goal areas include:
? Growth targets (i.e. sales, production, capacity to produce, market share)
? Product quality and service
? Research, development and adoption of the production and marketing
methods
? Comparative profitability (i.e. return to owners or investors,
profit/investment)
? Maintaining control over your company's resources
c/ Profile of Key Management
A strong management team is the key to a successful business. Investors will look for a committed management team
with a balance of marketing, technical, operational and financial skills and experience. Show that your management
team has these necessary skills or is making efforts to attain them. In a small business the management team may
consist of just the owner. If you do have an accountant, lawyer or bookkeeper on a fee-for-service basis, you would
include them in this section as part of the team also.
What are the business and management skills of the key management participants?
List management personnel and the position they will fill in this business venture. Emphasize the skills and abilities each
person brings to the operation.
Does your management team have direct operational or managerial experience in your business field?
If the management team has direct experience in this proposed business area, it should be stated. Support this
experience by listing accomplishments related to other successful ventures.
Describe your organizational structure and include a brief description of each person's responsibilities.
Include an organizational chart if your group is very large. It is necessary for the company to determine the relationship
between the key management roles. In addition, show who has authority and responsibility for the successful
completion of each business function. An organizational chart may make this area easier for you to explain and easier
for the reader to understand.
Your goals should be SMART:
Specific
Measurable
Attainable
Relevant
Time measured
Susan Kennedy-Loewen,
The Canadian Small Business
Handbook
Writing a Business Plan P a g e | 7
Remember you’re not
only selling a business
idea, you’re also selling
yourself as the ideal
candidate to lead,
manage and pursue the
business venture.
What plans have been made to increase the level of expertise in management?
Address the areas where your management resources are not as strong as they should be and show how you plan to fill
these gaps. Consider using other management resources such as consultants.
Identify any current or future requirement for hiring of employees.
Identify the number of employees that will be required as well as whether they will be full time or part time. How will
they be paid: wage, salary, commission? What will their rate of pay be as well as other associated costs like benefits,
source deduction costs, etc.?
Include supporting documentation.
Attach resumes of key management as appendixes at the end of the document. (Example: “See Appendix __”)
d/ Identify Target Market
What consumer need(s) is/are not currently being met?
What do consumers want that no one is currently providing? Consumer needs may relate to things such as special
features, quality levels, service, price, availability, or greater selection.
Needs are areas that you should focus on when developing your product.
Further on in the business plan you will want to show how your product meets these needs.
Who are your target market(s)?
A target market is a group of similarly described customers. Many businesses will have anywhere from one to five target
markets, or groups of customers. List your target markets and describe each in detail. Include possible future target
markets.
Include each target market’s common characteristics including:
? Age
? Group
? Sex
? Income level
? Lifestyle
? Other factors which may influence their buying
decisions
Writing a Business Plan P a g e | 8
You may also consider:
? Level of education
? Marital status
? Career
? Personality
? Ethnic and religious background
Identifying your target market involves segmenting the entire market based on these common characteristics and other
factors. By segmenting the market, you can focus your marketing efforts on the segment(s), which are the most likely to
purchase your product. From the identified segments, select your primary market (who is most likely to be your
customer) and the other segments become your secondary markets.
Possible sources of information to define target market:
? Windsor Essex Small Business Centre www.windsoressexsmallbusiness.com
? Canada Business Service Centres (click on your province): www.cbsc.org
? Statistics Canada - Census Division and Subdivision Profiles: www.statcan.ca
? Canada Post - Demographic and Income Statistics for Postal Statistics
? City Planning Departments - Neighborhood Profiles
? Provincial Health and various market research reports and trade journals
If your business is selling to other businesses (B2B) then you would use the same process but you would look at the
business demographic identifiers like:
? Number of businesses
? Location of businesses
? Size of business (# employees/yearly revenue)
? Frequency of purchase
? Who makes purchasing decision
What factors affect their decision to buy?
Consider the following factors:
? How, when and where they purchase
? The quality demanded
? Packaging requirements
? Supply requirements
? Service level demanded
? The price they are willing to pay
? Other related issues
Is the market primarily domestic or foreign?
Will the greatest amount of sales occur in Canada or a foreign country? It’s important to take into consideration all
proper exporting procedures which may be required by both the Canadian Government and the foreign country where
you intend to sell your product.
Writing a Business Plan P a g e | 9
For more information on
international trade, contact
Export Development Canada
www.edc.ca.
Or
Industry Canada
www.ic.gc.ca
Will the foreign market be affected by tariffs, political instability, lack of patent protection or currency fluctuation?
If the greatest percentage of your sales will occur in a foreign country, be aware of the country's importing history, as
well as future trends. Countries that have trade policies that support importation of products provide a good
opportunity for the Canadian exporter. Protectionist nations may not be so receptive and added tariffs may make your
products uncompetitive in that country. For more information on international trade, contact Export Development
Canada www.edc.ca.
e/ Identify Geographic Service Area
Clearly identify the service area where the company will operate. Depending on the nature of your business, your
service area could be regional (i.e. Windsor and Essex County), provincial, international or global.
Writing a Business Plan P a g e | 10
? Product/Service
? Place
? Price
? Promotion
What sets your
business/product apart
from the competition is
its competitive
advantage.
See Section 7.b
5. Marketing Plan
A marketing plan is an overall company program for selecting a particular market segment and then satisfying that
segment through the best marketing mix. A marketing plan requires that all aspects of the marketing mix be considered
including the product planning, pricing, distribution and promotion.
a/ Products/Services
Describe in detail the products and/or services you will be providing. What are the features and benefits of these
products/services. The features and benefits should fill some of the needs or gaps identified in the industry analysis.
? What are your products/services unique features?
? What are the value added features?
? What are the benefits of these features?
? How is your product positioned against the competition? What are you doing differently?
Writing a Business Plan P a g e | 11
b/ SWOT Analysis
A scan of the internal and external environment is an important part of the strategic planning process.
Environmental factors internal to the firm can usually be classified as strengths (S) or weaknesses (W), and those
external to the firm can be classified as opportunities (O) or threats (T). Such an analysis of the strategic environment is
referred to as a SWOT analysis.
Strengths
A firm’s strengths are its resources and capabilities that can be used as a basis for developing a competitive advantage.
Examples of such strengths include:
? Patents ? Strong brand names
? Good reputation among customers ? Cost advantages from proprietary know-how
? Exclusive access to high grade natural
resources
? Favorable access to distribution networks
Weaknesses
The absence of certain strengths may be viewed as a weaknesses. For example, each of the following may be considered
weaknesses:
? Lack of patent protection ? A weak brand name
? Poor reputation among customers ? High cost structure
? Lack of access to the best natural resources ? Lack of access to key distribution channels
In some cases, a weakness may be the flip side of strength. Take the case in which a firm has a large amount of
manufacturing capacity. While this capacity may be considered a strength that competitors do not share, it also may be
considered a weakness if the large investment in manufacturing capacity prevents the firm from reacting quickly to
changes in the strategic environment.
Opportunities
The external environmental analysis may reveal certain new opportunities for profit and growth. Some examples of such
opportunities include:
? An unfulfilled customer need ? Arrival of new technologies
? Loosening of regulations ? Removal of international trade barriers
Threats
Changes in the external environment may also present threats to the firm. Some examples of such threats include:
? New regulations ? Emergence of substitute products
? Shifts in consumer tastes away from the firm’s
products
? Increased trade barriers
Writing a Business Plan P a g e | 12
c/ Pricing Strategy
Pricing strategy is how you will position yourself in the marketplace against your competition. Price is a function of your
costs, competition and customers. Your customers must have a desire, willingness and ability to pay for your product or
service. Your pricing strategy should be consistent with the overall positioning of the product/service.
Refer back to section 5b to ensure that no issues arising from your SWOT Analysis have been overlooked.
d/ Marketing Plan
Your promotional strategy consists of the methods you choose to communicate to your target market. The timing of
promotional methods will have a direct impact on cash flow; cash receipts and disbursements. You will need a well
defined plan of action that includes the timing, costs and expected return of the chosen promotional methods.
Promotions may include:
Writing a Business Plan P a g e | 13
e/ Location
Provide a comprehensive description of how and where you plan to sell your product.
If you will be operating a home based business, check on the Home Occupation By-Law for your municipality and
indicate in your plan that you are aware of and are complying with it. Also indicate the advantages and disadvantages of
operating from home. While a home based business does offer low overhead, it does present unique challenges when it
comes to client meetings and customer convenience.
If you will be operating from a store front location, indicate where that will be. If you have not secured a location,
indicate the geographical area that you have identified as ideal and whether it will be in a commercial or residential
location. Indicate all of the costs associated with the location, whether or not there is room for growth, and the
marketing importance of the location.
You may want to include a floor plan as an appendix or any other documentation regarding the location (lease, interior
photos, exterior photos, map etc.).
What are the defining factors of
your location:
? Parking requirements
? On a bus route
? Room for expansion
? Warehouse space
? Storefront windows
? Office space
? In a plaza or mall
? Free-standing location
? Accessibility
Writing a Business Plan P a g e | 14
6. Industry and Market Analysis
This section of the business plan will analyze the environment in which your business will compete.
Many people find the market analysis section the most difficult to complete. However, it is absolutely essential that you
understand the market in which you will sell your product.
Market analysis should be done before business start up, and should be ongoing throughout the life of the operation.
The market analysis will demonstrate that there is a market for your product and that this market is large enough for
your business to earn a reasonable profit (now and in the future). Financial investors will want assurance that you have
realistically considered all the potential opportunities and threats relating to your business.
a/ Overview
Consider how long the industry has been in existence, major changes that have taken place, and situations that have
affected this industry.
b/ Industry Size
What is the size of the entire "target market” - number of consumers, geographic area?
Defining the size of your target market will assist you in calculating the required level of production, distribution
channels, promotion strategy and other marketing decisions. Information can be gathered from a number of different
sources including industry/trade associations and journals, Statistics Canada publications, producers and suppliers,
university libraries, business resource centres and Government business advisory services.
What percent of the market do you expect to capture (initially and in the long term)?
Consider how your company plans to grow. Do you plan to develop new customers or win customers away from your
competitors? Be realistic in terms of how many competitors’ customers can be convinced to purchase your product in
the short term, as customers may be loyal to existing brands.
c/ Industry Trends
Are any future short and long term trends evident?
Based on history and recent developments, consider what the outlook is for the industry. Trends may include changes
in:
? Consumer preferences
? Social changes
? Product supply and demand
? Production practices and technology
A very important trend is the market growth potential. You will want to be entering a market that is growing. You can
identify these trends by reading industry journals or asking suppliers or customers what changes they foresee. Once
these trends have been identified, you should decide how your business will accommodate them.
? Traditional payment arrangements
? Regulations
? Economy
Writing a Business Plan P a g e | 15
Take time to research, gather
information and analyze
information on your
competition.
Take note of what the
competition is doing right and
where there is room for
improvement which you can
apply to your business.
7. Competition
Entrepreneurs tend to be quick to minimize the significance of competitors. They often believe that competitors offer
inferior products or services. It is important to understand why customers buy from other producers and to learn from
this.
You must be sure to evaluate each competitor objectively in order for your plan to have credibility in the eyes of
investors.
a/ Competitive Analysis
To easily show the competitors and the associated strengths and weaknesses of each, display in a competitor analysis
table.
How many competitors are there and who are they?
Establish which competitors are the largest and/or the fastest growing in order to understand where the strongest
competition may come from. Small, recent entries are of importance since they may have an advantage, which will help
them quickly become market leaders. State the percentage of market share each competitor controls in terms of
revenues and volume sold.
What are the competitors' strengths and weaknesses?
Why do people currently buy from your competitors? What are they not doing well that will cause their customers to
buy from you? Strengths and weaknesses may involve areas such as:
? Consumer and supplier loyalty
? Price
? Payment arrangements
? Reputation
? Technology
? Customer service
? Warranty / return policy
? Experience
? Location
? Financial stability
? Quality
? Other related areas
How will the competition react to your entry?
Will competitors:
? Decrease their prices?
? Increase promotional efforts?
? Develop new technology?
? Adapt the quality of their products?
Competitor reaction is of critical importance - especially if the competitors are financially stable and are therefore able
to decrease prices and/or increase promotion. By anticipating their reaction, you can develop an action plan of your
own.
Writing a Business Plan P a g e | 16
Be realistic and try
to back up your
claims where
possible
Are there any barriers, which may discourage additional competitors from entering the market?
Examples of barriers may be
? High start-up costs
? Technology
? Skilled labour
? Brand loyalty
? Established contracts with suppliers or middlemen
Discuss if and how your company will overcome these barriers.
Is there any indirect competition in the form of a substitute for this product?
Substitute products refer to those that are different from your product, but have
potential to serve as a partial replacement (i.e. popcorn or another snack food may
serve as a substitute for potato chips).
Even if you are introducing a completely new business idea to the region, you will still
need to identify your competitors. To do this, consider which part of your customers’
budgets they will be taking money from to purchase your product or service. Since
their income will not increase to allow for this purchase, they will need to decrease
spending somewhere to be able to afford to purchase from you. Where will they cut
back? This will give you a clue to who you are truly competing against.
b/ Competitive Advantage
What is your "Competitive Advantage" with respect to the competition?
Your business must have a competitive advantage in order to be successful. Consider areas where your product and/or
services differ from the competition. Also, examine competitor weaknesses and your company's strengths. It may not be
enough to just say that your product and/or service is different, or even better. You must show that the customer
actually wants or needs this different or improved product.
Is this advantage sustainable in the long term?
You will want to demonstrate that your product is not only different from the competitors', but that it will not be quickly
duplicated. Consider the barriers to entry. The greater the barriers, the easier it will be to sustain your advantage. A
competitive advantage can also be sustained with continuous product developments through research and
development.
What is your product offering?
Are there product segments within your product offering? For instance you may sell men’s clothes. The segments may
include shirts, pants, shoes, and accessories. The product offering directly ties back to the target market.
Writing a Business Plan P a g e | 17
The Small
Business Centre
can assist you in
finding
suppliers.
What is the nature of your product and how is it unique?
Describe the features, functions, warranties and any other benefits to the consumer of your product. Demonstrate how
your product meets the needs of the customer (discussed earlier in the Industry and Market Analysis section).
What steps in the product/technology development process have been completed?
In this process, each step of product/technology development is linked with a marketing step and is then evaluated to
decide if the process should be continued, stopped, or modified. Comment on test marketing results,
product/technology modifications and the projected launch date of the product/technology.
8. Operating Plan
a/ Production Processes Described
Carefully detail all the steps that are required to deliver your product/service to the identified target market.
b/ Assets Required are Identified
Ensure that all the assets required to operate the business have been clearly identified in your Business Plan. Identify
the assets which you currently possess as well as the assets which will need to be
purchased.
c/ Supply of Product/Service – Suppliers
Who are the raw material suppliers and where are they located?
List the major suppliers and identify those you are considering. Location is important
because of shipping costs and delivery time. If you require a website, identify who will
supply this site as well as the hosting, maintenance, etc.
Do the suppliers have a history of being efficient and reliable?
Consider how long they have been in business, their turnaround time from when the order is received to when the order
is shipped and their return policy for damaged items. You may wish to get information on major suppliers from the
Better Business Bureau if the supplier will have a major impact on your business success.
This is one of the most
important questions you
will have to answer.
Your business success
depends on developing a
competitive advantage and
maximizing its potential.
Writing a Business Plan P a g e | 18
Do you have any letters of intent from prospective suppliers?
Letters of intent show commitment on the part of suppliers to provide your business with the needed raw materials.
These letters should be mentioned and included in the Supporting Documents section at the end of the business plan .
(Example: “See Appendix __”)
If your business success will rely on one or two major suppliers, what plans have you made to diversify?
When evaluating suppliers, you should consider an alternate supplier in the event that problems arise.
d/ Supply of Product/Service – Price and Quality
What price(s) will you charge for your product(s)?
What is the cost of producing your product – your direct costs with providing your product or service?
What is the price based on – what’s the pricing strategy?
Understanding your cost of production is perhaps the most important thing to know about your business. When
deciding upon the price you will charge, you should take into account a number of different factors such as your costs,
product demand, desired profit levels, competitor prices and the price the market will bear. Because costs tend to be
underestimated, you must calculate them very carefully, including not only raw material and distribution costs, but costs
related to the day-to-day running of the business.
These may include (among others):
? Utilities
? Labour
? Marketing
? Bad debts
? Quality control expenses
? Equipment leases
? Taxes
? Loan payments
? Website maintenance, hosting, etc.
? Employee benefits
Proper cost calculation is of particular importance as it is much more difficult to raise prices (if costs are greater than
expected) than it is to decrease them.
What prices do your competitors charge?
How will you use discounts, rebates, etc. in your pricing strategy?
State what type of discounts or rebates (if any) you will use, how often, and when you plan to use them. Some examples
are volume discounts, coupons, and mail-in rebates. Discounts and rebates can be especially effective when introducing
a new product to the market, or when trying to convince competitor's current customers to try your product. However,
overuse of these strategies may make some customers reluctant to purchase your product at its regular price.
Will customers pay immediately for the product / service – cash based business?
Will you offer your customers payment terms (i.e. 30, 60, or 90 days to pay) – credit based business?
Writing a Business Plan P a g e | 19
Will it be a mixture of both?
Describe your credit policy. What credit policy is most commonly used in your industry? Customer payment terms are
especially important for start-up businesses as cash outflow can be very high in the first few years.
Cash received must at least equal cash outflow in order for the business to operate. For this reason, your business will
want to develop a payment policy that ensures cash is continually coming in.
Keep in mind that many businesses that offer credit (30 day or 45 day) have a certain amount that are never paid –
called bad debt. Credit increases the amount of risk involved for the business.
e/ Cost of Bringing Product/Service to Market Identified
How will you get your product(s) to the consumer?
Once you have identified the target market, you must then determine the most effective and efficient way to get your
product to the consumer. The way in which you move your product to your target market makes up your distribution
channel and may include one or more of the following:
? Retail outlets
? Direct sales
? Brokers - local and export
? Catalogue marketing
? Transport companies
? Custom brokers
? Manufacturing agent
? A combination
Where will your business be located and why was that location chosen?
Describe the location of the business and discuss any advantages and/or disadvantages of this site. These may include
things such as labour availability, proximity to customers or suppliers, utilities, zoning, etc. Also, mention whether the
land will be leased or owned. If leased, what are the terms of the lease contract?
Are you near available distribution channels?
Consider the distance between your business and the distribution channel(s) you propose to use. Compared to the
competition, are you close to, or far from, these channels? This may be viewed as a competitive advantage or a
disadvantage to your business due to associated shipping costs.
Who will be responsible for shipping costs?
You should first determine what the standard practice is in your industry. Shipping costs will affect the price you are able
to charge for your product (i.e. if you pay for shipping, your price should reflect this added expense).
f/ Risk Analysis/Assessment
In this section you will want to recognize potential problems relating to your venture and take steps to decrease the
likelihood and impact of their occurrence. Be realistic and honest when identifying potential risks. Nothing is more
damaging to a venture than having an investor discover negative factors the entrepreneur did not know about, does not
want to discuss or has casually dismissed. Identifying and analyzing potential problems before they happen will make
the venture look more attractive. It will also enable your operation to deal effectively with them if they occur.
Writing a Business Plan P a g e | 20
What potential internal and external risks exist for this business and how are these risks going to be minimized or
overcome?
Internal risks are weaknesses within your company over which you have control (such as not being able to secure a
qualified manager).
External risks are those potential situations over which your business has little or no control (such as increased shipping
costs).
? How will your business minimize the potential impact of these risks?
? What plans have you made in the event that these risks materialize into problems?
For example, if a qualified manager could not be secured, you could consider training a less-qualified manager. If
shipping costs increased, you could consider other distribution methods or channels.
What type of insurance does the business have?
This section provides information regarding the type of insurance the business requires.
g/ Contingency Plan
In the event that the business fails, what type of exit strategy has been considered?
No new business owner likes to consider this possibility, however, if factors beyond your control force you to
discontinue your business, you should consider what can be done to lessen the problems this situation presents. This is
particularly important if you are a sole proprietor or if your business relies heavily on you for its success. What happens
if you are not available due to health issues, illness, or an accident? A lender will want to know what plans you have in
place to ensure the business will continue to function in this situation.
9. Cash Flow Projections
a/ Cash Flow Projections – Two Years
Show monthly and year-end totals for two years for all the cash inflow (investment, loans and sales) and cash outflows
(direct costs, expenses and other disbursements).
For a new business, the cash flow forecast can be more
important than forecasts of profits. Cash flow statements
detail when the company expects to receive cash from sales
and when the company expects to pay its bills. Obviously,
businesses must bring in at least as much cash as they pay
out.
The cash flow projections will assist you to determine how
much credit will be needed and when.
When doing projections it can be helpful to do:
? Best-case scenario (Optimistic)
? Worst-case scenario (Pessimistic)
Then do a final projection somewhere in between
which is likely to be realistic.
Writing a Business Plan P a g e | 21
Income Statement
Show year-end amounts for two years.
The income statement presents the reader with the forecasted results of earnings activity over a period of time. Include
written comments on increases in net income over the two-year period, reasons for any losses and reassurance that
projections are as accurate as possible.
b/ Assumptions
All assumptions, which were outlined in the Business Plan under the sections Company Outline, Operating Plan, and
Marketing Plan, are clearly identified. Also include an explanation on all of the assumptions made when preparing your
projections.
10. Appendix
Include all items referenced in the Business Plan as an appendix. They can be labeled with numbers or letters, just be
consistent. These may include:
? Floor plan
? Sample menu
? Resume
? Competitor’s brochure
? Supplier price sheet
? Photographs
Supporting Documents
Supporting documents back up claims made previously in the business plan. Include the following documents and any
other information, which you feel, would strengthen your business plan.
? Copies of all leases, contracts, agreements, deeds or other legal documents.
o Business incorporation
o Lease agreement
o Insurance policy / quote
? Industry analysis market research
? Promotional materials / research
? Management resumes
? Letter of intent / contract – suppliers
? Letter of intent / contract – customers
? Detailed drawings, descriptions and photos of the operation and products
? Copies of technology rights
doc_568771211.pdf
Entrepreneurs Guide To Writing A Business Plan
Main Office
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Windsor, Ontario N9B 2Z2
T. 519-253-6900
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www.windsoressexsmallbusiness.com
Entrepreneur’s Guide To:
Writing a Business Plan
Business Plan Guide
Why Do I Need a Business Plan? .................................................................................................................. 1
Writing the Plan .......................................................................................................................................... 1
Should I Write the Business Plan Myself? ..................................................................................................... 2
How to Use this Business Plan Guide............................................................................................................ 2
Business Plan Outline .................................................................................................................................. 3
1. Cover – Title Page ................................................................................................................................... 4
2. Table of Contents .................................................................................................................................... 4
3. Executive Summary ................................................................................................................................. 4
4. Company Outline .................................................................................................................................... 5
a/ Company Profile ............................................................................................................................................................................... 5
b/ Goals and Objectives of Business ..................................................................................................................................................... 6
c/ Profile of Key Management .............................................................................................................................................................. 6
d/ Identify Target Market ..................................................................................................................................................................... 7
e/ Identify Geographic Service Area ..................................................................................................................................................... 9
5. Marketing Plan ..................................................................................................................................... 10
a/ Products/Services .......................................................................................................................................................................... 10
b/ SWOT Analysis ................................................................................................................................................................................ 11
c/ Pricing Strategy .............................................................................................................................................................................. 12
d/ Marketing Plan ............................................................................................................................................................................... 12
e/ Location .......................................................................................................................................................................................... 13
6. Industry and Market Analysis ................................................................................................................ 14
a/ Overview ........................................................................................................................................................................................ 14
b/ Industry Size ................................................................................................................................................................................... 14
c/ Industry Trends ............................................................................................................................................................................... 14
The Small Business Centre
provides easy access to information,
resources and complimentary
consultations on all aspects of your
business needs. We work with you
every step of the way including help
with your business concept, preparing
your business plan, research
assistance, registering your business
and learning about other government
requirements and programs.
7. Competition .......................................................................................................................................... 15
a/ Competitive Analysis ...................................................................................................................................................................... 15
b/ Competitive Advantage .................................................................................................................................................................. 16
8. Operating Plan ...................................................................................................................................... 17
a/ Production Processes Described ..................................................................................................................................................... 17
b/ Assets Required are Identified ........................................................................................................................................................ 17
c/ Supply of Product/Service – Suppliers ............................................................................................................................................. 17
d/ Supply of Product/Service – Price and Quality ............................................................................................................................... 18
e/ Cost of Bringing Product/Service to Market Identified ................................................................................................................... 19
f/ Risk Analysis/Assessment................................................................................................................................................................. 19
g/ Contingency Plan ............................................................................................................................................................................ 20
9. Cash Flow Projections ........................................................................................................................... 20
a/ Cash Flow Projections – Two Years ................................................................................................................................................ 20
b/ Assumptions ................................................................................................................................................................................... 21
10. Appendix ............................................................................................................................................ 21
There are many different types of Business Plan Formats. The layout may vary depending on the type of business, the
purpose of the plan and the readership. The following format
guideline can be amended to meet the needs of your
business.
Content adapted with permission from the Canadian Youth Business
Foundation’s Business Resource Centre.
For more information, please visit cybf.ca/resources
Writing a Business Plan P a g e | 1
Why Do I Need a Business Plan?
A business plan is a business development map. Not only does it show your end destination, but it also maps out your
travel path. It sets out realistic goals and a stable path. You can use the plan as a guide to keep you focused and making
progress during the business start up phase.
Every business venture can benefit from the preparation of a carefully written business plan. The purpose of the
business plan is to:
? Help you think through the venture
o ensure that you have considered all options and anticipated any
potential difficulties
o will this business be profitable and meet your personal financial
requirements
o is the idea viable
? Serve as an operating guide as you turn your ideas into a viable business
? Aid in arranging strategic alliances and obtaining contracts
? Convince potential funding programs, lenders and investors that the proposed
venture has merit, that you understand the industry you are entering and that
you have the skills necessary to be successful
Writing the Plan
The hardest part of writing a business plan is getting started. The thought of writing a document of this length may
seem overwhelming to many people. This is why it is recommended that you use the bite-sized approach to writing your
business plan. Consider some of the following tips:
? Create individual documents on your computer for each section of the
plan. This makes it easier to find the section you wish to work on, easier to stay
focused, plus you can see where you require additional information. It’s easy to
cut and paste together your final document when you are ready
? Set aside a specific period of time each day to sit down and write a few
paragraphs or pages
? The sections do not need to be completed in a particular order so work
on the section that interests you the most that day
? If you are not able to fully answer a question, write a few short notes
that immediately occur to you, and think further about what the questions
suggests
? As you continue to write and do more research, you can go back and
add things that you have previously missed
? You may not find it possible to answer every question; however, you
should be aware of these issues as they may affect your venture in the future
Of the primary functions of
management, planning is
the most important. Plan
your work and work your
plan. Old… but it holds.
Grant Hooker,
Beavertails Pastry
Many people do not venture
out on their own because they
become overwhelmed with the
“what if” syndrome. A
comprehensive business plan
will enable you to anticipate
“what if” problems and develop
strategies to overcome thmn
months before you start your
business.
Douglas & Diana Gray,
The Complete Canadian Small
Business Guide
Writing a Business Plan P a g e | 2
A common mistake in writing a business plan is to recognize only the data that supports your concept and to ignore facts
that, when considered objectively, might change the direction of your business.
? Issues must be seriously and objectively considered and you should be somewhat open minded in your
approach
? It is better to recognize needed changes when your business is in the planning stage than when the business is
already underway and your investment is at stake
? Many good business plans go through several revisions and take up to six months to complete
? As changes in the business environment occur (i.e. new competition, new product design), a company's business
plan should be modified to reflect the new environment. A business plan is not a static document – it will
continue to evolve as the business grows and things change in the internal and external environment
Avoid highly technical terms and diagrams that the reader may not be familiar with. You want to write the plan as if the
reader knows nothing about the type of business you are starting.
Think of your business plan as a sales document. After all, it must convince you and other readers that your venture has
the potential to be successful. Your enthusiasm, dedication and confidence in the project should be evident to the
reader, to the point that they will share your view.
Remember not to ignore or omit risk factors that are inherent with your project. Risk is inherent in every business
venture.
Should I Write the Business Plan Myself?
The management team should develop as much of the business plan as possible.
Much of the information, data retrieval and the setting of objectives and targets can only be completed by the
management team. These objectives and targets will be issued to measure the success of the business by investors,
lenders, employees and management.
How to Use this Business Plan Guide
The following pages provide a suggested outline of the material that should typically be included in your business plan.
However, the final product will need to be tailored to fit the circumstances of your business.
Consider having potential partners, investors, or customers sign a
confidentiality/non-disclosure agreement prior to presenting your business
concept or plan to them.
Writing a Business Plan P a g e | 3
Your business plan should
cover all the points of this
outline.
It’s important to keep in mind
that detailed and thorough
research, without being too
technical, will be key aspects
of your business plan.
Your plan should be tailored
in such a way that even a
person unfamiliar with the
industry will be able to
understand and be
convinced by your
arguments, predictions and
analysis.
Business Plan Outline
? Cover – Title Page
? Table of Contents
? Executive Summary
? Company Outline
o Company Profile
o Goals and Objectives of Business
o Profile of Key Management
o Identify Target Market
o Identify Geographic Service Area
? Marketing Plan
o Products/Services
o SWOT Analysis
o Pricing Strategy
o Marketing Plan
o Location
? Industry and Market Analysis
o Overview
o Industry Size
o Industry Trends
? Competition
o Competitive Analysis
o Competitive Advantage
? Operating Plan
o Production Processes
o Assets Required
o Suppliers
o Price and Quality
o Cost of Bringing Product/Service to Market
o Risk Analysis / Assessment
o Contingency Plan
? Cash Flow Projections
o Two Year Cash Flow Projections / Income Statement
o Assumptions
? Appendix
o Supporting Documents
Writing a Business Plan P a g e | 4
Finish this section
of your plan last
1. Cover – Title Page
State the business' name, address, phone number, fax number, email address and the names of the principal owners.
Indicate the date of issue of the plan and the copy number.
2. Table of Contents
Your table of contents should be a single page that lists section headings with corresponding page numbers.
It can be automatically generated (saving time and frustration) by right clicking the mouse and selecting ‘update entire
table of contents’. Changes to titles and page number are done in one click.
3. Executive Summary
The executive summary should be written after the business plan is complete.
It is a brief (one to two pages) summary of the highlights of your business plan.
This section may be the most important part of your plan. Investors will read the summary to decide whether to read
the entire plan. For this reason, your summary should be convincing, attract the reader's interest and at the same time,
be brief.
Your executive summary should cover the key points of following items:
? Introduction to the business opportunity
? Type of business structure (sole proprietorship, partnership, or corporation)
? Management/key employee background
? Product(s) or service(s) you are offering and how they are unique
? Target market and its size
? Competitive analysis
? Marketing strategy – how does it differ from the competition
? Equity investment of owners
? Financing required and how it will be used
Writing a Business Plan P a g e | 5
4. Company Outline
This section clearly identifies the long-term and short-term objectives that will contribute to the overall mission. These
objectives will give the operation direction for future activity and serve as a measuring stick for the success of the
operation.
a/ Company Profile
The Company Profile is a quick snapshot of your business.
Company Profile – Sample
Form of Business Ownership: Sole Proprietor
Registered on (insert date or ‘to be registered’)
Owners: Your name and any partners’ or shareholders’ names
Name of Business: Business name you plan to use
Business Start Date: Actual start date or target start date
Business Operation: Full time or part time venture?
Days of operation
Hours of operation
Brief Business Description: One or two sentence description of your business
Location: Where you will operate your business from, either your home address or your
store front location address
Advisors: Name any professional services you have enlisted such as an accountant or
lawyer
Writing a Business Plan P a g e | 6
b/ Goals and Objectives of Business
What short-term and long-term goals have been set?
List both the long-term and more specific short-term goals of the company. List these goals in order of importance.
Short-term goals (less than one year) should be very specific. Long-term goals may
be more general.
Some common goal areas include:
? Growth targets (i.e. sales, production, capacity to produce, market share)
? Product quality and service
? Research, development and adoption of the production and marketing
methods
? Comparative profitability (i.e. return to owners or investors,
profit/investment)
? Maintaining control over your company's resources
c/ Profile of Key Management
A strong management team is the key to a successful business. Investors will look for a committed management team
with a balance of marketing, technical, operational and financial skills and experience. Show that your management
team has these necessary skills or is making efforts to attain them. In a small business the management team may
consist of just the owner. If you do have an accountant, lawyer or bookkeeper on a fee-for-service basis, you would
include them in this section as part of the team also.
What are the business and management skills of the key management participants?
List management personnel and the position they will fill in this business venture. Emphasize the skills and abilities each
person brings to the operation.
Does your management team have direct operational or managerial experience in your business field?
If the management team has direct experience in this proposed business area, it should be stated. Support this
experience by listing accomplishments related to other successful ventures.
Describe your organizational structure and include a brief description of each person's responsibilities.
Include an organizational chart if your group is very large. It is necessary for the company to determine the relationship
between the key management roles. In addition, show who has authority and responsibility for the successful
completion of each business function. An organizational chart may make this area easier for you to explain and easier
for the reader to understand.
Your goals should be SMART:
Specific
Measurable
Attainable
Relevant
Time measured
Susan Kennedy-Loewen,
The Canadian Small Business
Handbook
Writing a Business Plan P a g e | 7
Remember you’re not
only selling a business
idea, you’re also selling
yourself as the ideal
candidate to lead,
manage and pursue the
business venture.
What plans have been made to increase the level of expertise in management?
Address the areas where your management resources are not as strong as they should be and show how you plan to fill
these gaps. Consider using other management resources such as consultants.
Identify any current or future requirement for hiring of employees.
Identify the number of employees that will be required as well as whether they will be full time or part time. How will
they be paid: wage, salary, commission? What will their rate of pay be as well as other associated costs like benefits,
source deduction costs, etc.?
Include supporting documentation.
Attach resumes of key management as appendixes at the end of the document. (Example: “See Appendix __”)
d/ Identify Target Market
What consumer need(s) is/are not currently being met?
What do consumers want that no one is currently providing? Consumer needs may relate to things such as special
features, quality levels, service, price, availability, or greater selection.
Needs are areas that you should focus on when developing your product.
Further on in the business plan you will want to show how your product meets these needs.
Who are your target market(s)?
A target market is a group of similarly described customers. Many businesses will have anywhere from one to five target
markets, or groups of customers. List your target markets and describe each in detail. Include possible future target
markets.
Include each target market’s common characteristics including:
? Age
? Group
? Sex
? Income level
? Lifestyle
? Other factors which may influence their buying
decisions
Writing a Business Plan P a g e | 8
You may also consider:
? Level of education
? Marital status
? Career
? Personality
? Ethnic and religious background
Identifying your target market involves segmenting the entire market based on these common characteristics and other
factors. By segmenting the market, you can focus your marketing efforts on the segment(s), which are the most likely to
purchase your product. From the identified segments, select your primary market (who is most likely to be your
customer) and the other segments become your secondary markets.
Possible sources of information to define target market:
? Windsor Essex Small Business Centre www.windsoressexsmallbusiness.com
? Canada Business Service Centres (click on your province): www.cbsc.org
? Statistics Canada - Census Division and Subdivision Profiles: www.statcan.ca
? Canada Post - Demographic and Income Statistics for Postal Statistics
? City Planning Departments - Neighborhood Profiles
? Provincial Health and various market research reports and trade journals
If your business is selling to other businesses (B2B) then you would use the same process but you would look at the
business demographic identifiers like:
? Number of businesses
? Location of businesses
? Size of business (# employees/yearly revenue)
? Frequency of purchase
? Who makes purchasing decision
What factors affect their decision to buy?
Consider the following factors:
? How, when and where they purchase
? The quality demanded
? Packaging requirements
? Supply requirements
? Service level demanded
? The price they are willing to pay
? Other related issues
Is the market primarily domestic or foreign?
Will the greatest amount of sales occur in Canada or a foreign country? It’s important to take into consideration all
proper exporting procedures which may be required by both the Canadian Government and the foreign country where
you intend to sell your product.
Writing a Business Plan P a g e | 9
For more information on
international trade, contact
Export Development Canada
www.edc.ca.
Or
Industry Canada
www.ic.gc.ca
Will the foreign market be affected by tariffs, political instability, lack of patent protection or currency fluctuation?
If the greatest percentage of your sales will occur in a foreign country, be aware of the country's importing history, as
well as future trends. Countries that have trade policies that support importation of products provide a good
opportunity for the Canadian exporter. Protectionist nations may not be so receptive and added tariffs may make your
products uncompetitive in that country. For more information on international trade, contact Export Development
Canada www.edc.ca.
e/ Identify Geographic Service Area
Clearly identify the service area where the company will operate. Depending on the nature of your business, your
service area could be regional (i.e. Windsor and Essex County), provincial, international or global.
Writing a Business Plan P a g e | 10
? Product/Service
? Place
? Price
? Promotion
What sets your
business/product apart
from the competition is
its competitive
advantage.
See Section 7.b
5. Marketing Plan
A marketing plan is an overall company program for selecting a particular market segment and then satisfying that
segment through the best marketing mix. A marketing plan requires that all aspects of the marketing mix be considered
including the product planning, pricing, distribution and promotion.
a/ Products/Services
Describe in detail the products and/or services you will be providing. What are the features and benefits of these
products/services. The features and benefits should fill some of the needs or gaps identified in the industry analysis.
? What are your products/services unique features?
? What are the value added features?
? What are the benefits of these features?
? How is your product positioned against the competition? What are you doing differently?
Writing a Business Plan P a g e | 11
b/ SWOT Analysis
A scan of the internal and external environment is an important part of the strategic planning process.
Environmental factors internal to the firm can usually be classified as strengths (S) or weaknesses (W), and those
external to the firm can be classified as opportunities (O) or threats (T). Such an analysis of the strategic environment is
referred to as a SWOT analysis.
Strengths
A firm’s strengths are its resources and capabilities that can be used as a basis for developing a competitive advantage.
Examples of such strengths include:
? Patents ? Strong brand names
? Good reputation among customers ? Cost advantages from proprietary know-how
? Exclusive access to high grade natural
resources
? Favorable access to distribution networks
Weaknesses
The absence of certain strengths may be viewed as a weaknesses. For example, each of the following may be considered
weaknesses:
? Lack of patent protection ? A weak brand name
? Poor reputation among customers ? High cost structure
? Lack of access to the best natural resources ? Lack of access to key distribution channels
In some cases, a weakness may be the flip side of strength. Take the case in which a firm has a large amount of
manufacturing capacity. While this capacity may be considered a strength that competitors do not share, it also may be
considered a weakness if the large investment in manufacturing capacity prevents the firm from reacting quickly to
changes in the strategic environment.
Opportunities
The external environmental analysis may reveal certain new opportunities for profit and growth. Some examples of such
opportunities include:
? An unfulfilled customer need ? Arrival of new technologies
? Loosening of regulations ? Removal of international trade barriers
Threats
Changes in the external environment may also present threats to the firm. Some examples of such threats include:
? New regulations ? Emergence of substitute products
? Shifts in consumer tastes away from the firm’s
products
? Increased trade barriers
Writing a Business Plan P a g e | 12
c/ Pricing Strategy
Pricing strategy is how you will position yourself in the marketplace against your competition. Price is a function of your
costs, competition and customers. Your customers must have a desire, willingness and ability to pay for your product or
service. Your pricing strategy should be consistent with the overall positioning of the product/service.
Refer back to section 5b to ensure that no issues arising from your SWOT Analysis have been overlooked.
d/ Marketing Plan
Your promotional strategy consists of the methods you choose to communicate to your target market. The timing of
promotional methods will have a direct impact on cash flow; cash receipts and disbursements. You will need a well
defined plan of action that includes the timing, costs and expected return of the chosen promotional methods.
Promotions may include:
Writing a Business Plan P a g e | 13
e/ Location
Provide a comprehensive description of how and where you plan to sell your product.
If you will be operating a home based business, check on the Home Occupation By-Law for your municipality and
indicate in your plan that you are aware of and are complying with it. Also indicate the advantages and disadvantages of
operating from home. While a home based business does offer low overhead, it does present unique challenges when it
comes to client meetings and customer convenience.
If you will be operating from a store front location, indicate where that will be. If you have not secured a location,
indicate the geographical area that you have identified as ideal and whether it will be in a commercial or residential
location. Indicate all of the costs associated with the location, whether or not there is room for growth, and the
marketing importance of the location.
You may want to include a floor plan as an appendix or any other documentation regarding the location (lease, interior
photos, exterior photos, map etc.).
What are the defining factors of
your location:
? Parking requirements
? On a bus route
? Room for expansion
? Warehouse space
? Storefront windows
? Office space
? In a plaza or mall
? Free-standing location
? Accessibility
Writing a Business Plan P a g e | 14
6. Industry and Market Analysis
This section of the business plan will analyze the environment in which your business will compete.
Many people find the market analysis section the most difficult to complete. However, it is absolutely essential that you
understand the market in which you will sell your product.
Market analysis should be done before business start up, and should be ongoing throughout the life of the operation.
The market analysis will demonstrate that there is a market for your product and that this market is large enough for
your business to earn a reasonable profit (now and in the future). Financial investors will want assurance that you have
realistically considered all the potential opportunities and threats relating to your business.
a/ Overview
Consider how long the industry has been in existence, major changes that have taken place, and situations that have
affected this industry.
b/ Industry Size
What is the size of the entire "target market” - number of consumers, geographic area?
Defining the size of your target market will assist you in calculating the required level of production, distribution
channels, promotion strategy and other marketing decisions. Information can be gathered from a number of different
sources including industry/trade associations and journals, Statistics Canada publications, producers and suppliers,
university libraries, business resource centres and Government business advisory services.
What percent of the market do you expect to capture (initially and in the long term)?
Consider how your company plans to grow. Do you plan to develop new customers or win customers away from your
competitors? Be realistic in terms of how many competitors’ customers can be convinced to purchase your product in
the short term, as customers may be loyal to existing brands.
c/ Industry Trends
Are any future short and long term trends evident?
Based on history and recent developments, consider what the outlook is for the industry. Trends may include changes
in:
? Consumer preferences
? Social changes
? Product supply and demand
? Production practices and technology
A very important trend is the market growth potential. You will want to be entering a market that is growing. You can
identify these trends by reading industry journals or asking suppliers or customers what changes they foresee. Once
these trends have been identified, you should decide how your business will accommodate them.
? Traditional payment arrangements
? Regulations
? Economy
Writing a Business Plan P a g e | 15
Take time to research, gather
information and analyze
information on your
competition.
Take note of what the
competition is doing right and
where there is room for
improvement which you can
apply to your business.
7. Competition
Entrepreneurs tend to be quick to minimize the significance of competitors. They often believe that competitors offer
inferior products or services. It is important to understand why customers buy from other producers and to learn from
this.
You must be sure to evaluate each competitor objectively in order for your plan to have credibility in the eyes of
investors.
a/ Competitive Analysis
To easily show the competitors and the associated strengths and weaknesses of each, display in a competitor analysis
table.
How many competitors are there and who are they?
Establish which competitors are the largest and/or the fastest growing in order to understand where the strongest
competition may come from. Small, recent entries are of importance since they may have an advantage, which will help
them quickly become market leaders. State the percentage of market share each competitor controls in terms of
revenues and volume sold.
What are the competitors' strengths and weaknesses?
Why do people currently buy from your competitors? What are they not doing well that will cause their customers to
buy from you? Strengths and weaknesses may involve areas such as:
? Consumer and supplier loyalty
? Price
? Payment arrangements
? Reputation
? Technology
? Customer service
? Warranty / return policy
? Experience
? Location
? Financial stability
? Quality
? Other related areas
How will the competition react to your entry?
Will competitors:
? Decrease their prices?
? Increase promotional efforts?
? Develop new technology?
? Adapt the quality of their products?
Competitor reaction is of critical importance - especially if the competitors are financially stable and are therefore able
to decrease prices and/or increase promotion. By anticipating their reaction, you can develop an action plan of your
own.
Writing a Business Plan P a g e | 16
Be realistic and try
to back up your
claims where
possible
Are there any barriers, which may discourage additional competitors from entering the market?
Examples of barriers may be
? High start-up costs
? Technology
? Skilled labour
? Brand loyalty
? Established contracts with suppliers or middlemen
Discuss if and how your company will overcome these barriers.
Is there any indirect competition in the form of a substitute for this product?
Substitute products refer to those that are different from your product, but have
potential to serve as a partial replacement (i.e. popcorn or another snack food may
serve as a substitute for potato chips).
Even if you are introducing a completely new business idea to the region, you will still
need to identify your competitors. To do this, consider which part of your customers’
budgets they will be taking money from to purchase your product or service. Since
their income will not increase to allow for this purchase, they will need to decrease
spending somewhere to be able to afford to purchase from you. Where will they cut
back? This will give you a clue to who you are truly competing against.
b/ Competitive Advantage
What is your "Competitive Advantage" with respect to the competition?
Your business must have a competitive advantage in order to be successful. Consider areas where your product and/or
services differ from the competition. Also, examine competitor weaknesses and your company's strengths. It may not be
enough to just say that your product and/or service is different, or even better. You must show that the customer
actually wants or needs this different or improved product.
Is this advantage sustainable in the long term?
You will want to demonstrate that your product is not only different from the competitors', but that it will not be quickly
duplicated. Consider the barriers to entry. The greater the barriers, the easier it will be to sustain your advantage. A
competitive advantage can also be sustained with continuous product developments through research and
development.
What is your product offering?
Are there product segments within your product offering? For instance you may sell men’s clothes. The segments may
include shirts, pants, shoes, and accessories. The product offering directly ties back to the target market.
Writing a Business Plan P a g e | 17
The Small
Business Centre
can assist you in
finding
suppliers.
What is the nature of your product and how is it unique?
Describe the features, functions, warranties and any other benefits to the consumer of your product. Demonstrate how
your product meets the needs of the customer (discussed earlier in the Industry and Market Analysis section).
What steps in the product/technology development process have been completed?
In this process, each step of product/technology development is linked with a marketing step and is then evaluated to
decide if the process should be continued, stopped, or modified. Comment on test marketing results,
product/technology modifications and the projected launch date of the product/technology.
8. Operating Plan
a/ Production Processes Described
Carefully detail all the steps that are required to deliver your product/service to the identified target market.
b/ Assets Required are Identified
Ensure that all the assets required to operate the business have been clearly identified in your Business Plan. Identify
the assets which you currently possess as well as the assets which will need to be
purchased.
c/ Supply of Product/Service – Suppliers
Who are the raw material suppliers and where are they located?
List the major suppliers and identify those you are considering. Location is important
because of shipping costs and delivery time. If you require a website, identify who will
supply this site as well as the hosting, maintenance, etc.
Do the suppliers have a history of being efficient and reliable?
Consider how long they have been in business, their turnaround time from when the order is received to when the order
is shipped and their return policy for damaged items. You may wish to get information on major suppliers from the
Better Business Bureau if the supplier will have a major impact on your business success.
This is one of the most
important questions you
will have to answer.
Your business success
depends on developing a
competitive advantage and
maximizing its potential.
Writing a Business Plan P a g e | 18
Do you have any letters of intent from prospective suppliers?
Letters of intent show commitment on the part of suppliers to provide your business with the needed raw materials.
These letters should be mentioned and included in the Supporting Documents section at the end of the business plan .
(Example: “See Appendix __”)
If your business success will rely on one or two major suppliers, what plans have you made to diversify?
When evaluating suppliers, you should consider an alternate supplier in the event that problems arise.
d/ Supply of Product/Service – Price and Quality
What price(s) will you charge for your product(s)?
What is the cost of producing your product – your direct costs with providing your product or service?
What is the price based on – what’s the pricing strategy?
Understanding your cost of production is perhaps the most important thing to know about your business. When
deciding upon the price you will charge, you should take into account a number of different factors such as your costs,
product demand, desired profit levels, competitor prices and the price the market will bear. Because costs tend to be
underestimated, you must calculate them very carefully, including not only raw material and distribution costs, but costs
related to the day-to-day running of the business.
These may include (among others):
? Utilities
? Labour
? Marketing
? Bad debts
? Quality control expenses
? Equipment leases
? Taxes
? Loan payments
? Website maintenance, hosting, etc.
? Employee benefits
Proper cost calculation is of particular importance as it is much more difficult to raise prices (if costs are greater than
expected) than it is to decrease them.
What prices do your competitors charge?
How will you use discounts, rebates, etc. in your pricing strategy?
State what type of discounts or rebates (if any) you will use, how often, and when you plan to use them. Some examples
are volume discounts, coupons, and mail-in rebates. Discounts and rebates can be especially effective when introducing
a new product to the market, or when trying to convince competitor's current customers to try your product. However,
overuse of these strategies may make some customers reluctant to purchase your product at its regular price.
Will customers pay immediately for the product / service – cash based business?
Will you offer your customers payment terms (i.e. 30, 60, or 90 days to pay) – credit based business?
Writing a Business Plan P a g e | 19
Will it be a mixture of both?
Describe your credit policy. What credit policy is most commonly used in your industry? Customer payment terms are
especially important for start-up businesses as cash outflow can be very high in the first few years.
Cash received must at least equal cash outflow in order for the business to operate. For this reason, your business will
want to develop a payment policy that ensures cash is continually coming in.
Keep in mind that many businesses that offer credit (30 day or 45 day) have a certain amount that are never paid –
called bad debt. Credit increases the amount of risk involved for the business.
e/ Cost of Bringing Product/Service to Market Identified
How will you get your product(s) to the consumer?
Once you have identified the target market, you must then determine the most effective and efficient way to get your
product to the consumer. The way in which you move your product to your target market makes up your distribution
channel and may include one or more of the following:
? Retail outlets
? Direct sales
? Brokers - local and export
? Catalogue marketing
? Transport companies
? Custom brokers
? Manufacturing agent
? A combination
Where will your business be located and why was that location chosen?
Describe the location of the business and discuss any advantages and/or disadvantages of this site. These may include
things such as labour availability, proximity to customers or suppliers, utilities, zoning, etc. Also, mention whether the
land will be leased or owned. If leased, what are the terms of the lease contract?
Are you near available distribution channels?
Consider the distance between your business and the distribution channel(s) you propose to use. Compared to the
competition, are you close to, or far from, these channels? This may be viewed as a competitive advantage or a
disadvantage to your business due to associated shipping costs.
Who will be responsible for shipping costs?
You should first determine what the standard practice is in your industry. Shipping costs will affect the price you are able
to charge for your product (i.e. if you pay for shipping, your price should reflect this added expense).
f/ Risk Analysis/Assessment
In this section you will want to recognize potential problems relating to your venture and take steps to decrease the
likelihood and impact of their occurrence. Be realistic and honest when identifying potential risks. Nothing is more
damaging to a venture than having an investor discover negative factors the entrepreneur did not know about, does not
want to discuss or has casually dismissed. Identifying and analyzing potential problems before they happen will make
the venture look more attractive. It will also enable your operation to deal effectively with them if they occur.
Writing a Business Plan P a g e | 20
What potential internal and external risks exist for this business and how are these risks going to be minimized or
overcome?
Internal risks are weaknesses within your company over which you have control (such as not being able to secure a
qualified manager).
External risks are those potential situations over which your business has little or no control (such as increased shipping
costs).
? How will your business minimize the potential impact of these risks?
? What plans have you made in the event that these risks materialize into problems?
For example, if a qualified manager could not be secured, you could consider training a less-qualified manager. If
shipping costs increased, you could consider other distribution methods or channels.
What type of insurance does the business have?
This section provides information regarding the type of insurance the business requires.
g/ Contingency Plan
In the event that the business fails, what type of exit strategy has been considered?
No new business owner likes to consider this possibility, however, if factors beyond your control force you to
discontinue your business, you should consider what can be done to lessen the problems this situation presents. This is
particularly important if you are a sole proprietor or if your business relies heavily on you for its success. What happens
if you are not available due to health issues, illness, or an accident? A lender will want to know what plans you have in
place to ensure the business will continue to function in this situation.
9. Cash Flow Projections
a/ Cash Flow Projections – Two Years
Show monthly and year-end totals for two years for all the cash inflow (investment, loans and sales) and cash outflows
(direct costs, expenses and other disbursements).
For a new business, the cash flow forecast can be more
important than forecasts of profits. Cash flow statements
detail when the company expects to receive cash from sales
and when the company expects to pay its bills. Obviously,
businesses must bring in at least as much cash as they pay
out.
The cash flow projections will assist you to determine how
much credit will be needed and when.
When doing projections it can be helpful to do:
? Best-case scenario (Optimistic)
? Worst-case scenario (Pessimistic)
Then do a final projection somewhere in between
which is likely to be realistic.
Writing a Business Plan P a g e | 21
Income Statement
Show year-end amounts for two years.
The income statement presents the reader with the forecasted results of earnings activity over a period of time. Include
written comments on increases in net income over the two-year period, reasons for any losses and reassurance that
projections are as accurate as possible.
b/ Assumptions
All assumptions, which were outlined in the Business Plan under the sections Company Outline, Operating Plan, and
Marketing Plan, are clearly identified. Also include an explanation on all of the assumptions made when preparing your
projections.
10. Appendix
Include all items referenced in the Business Plan as an appendix. They can be labeled with numbers or letters, just be
consistent. These may include:
? Floor plan
? Sample menu
? Resume
? Competitor’s brochure
? Supplier price sheet
? Photographs
Supporting Documents
Supporting documents back up claims made previously in the business plan. Include the following documents and any
other information, which you feel, would strengthen your business plan.
? Copies of all leases, contracts, agreements, deeds or other legal documents.
o Business incorporation
o Lease agreement
o Insurance policy / quote
? Industry analysis market research
? Promotional materials / research
? Management resumes
? Letter of intent / contract – suppliers
? Letter of intent / contract – customers
? Detailed drawings, descriptions and photos of the operation and products
? Copies of technology rights
doc_568771211.pdf