Description
The planning outline provided in this guide leads you through a series of questions and issues that you should consider when thinking about your business. Remember that you are an investor in your own business. You are the first person who must have confidence in the validity of your business concept.
Business Planning and
Financial Forecasting
A Start-up Guide
Ministry of Small
Business and
Economic
Development
Ministry of Small
Business and
Economic
Development
Business Planning and
Financial Forecasting
A Start-up Guide
Western Economic Diversification Canada and the
Ministry of Small Business and Economic Development are pleased to publish
Business Planning and Financial Forecasting: A Guide for Business Start-Up.
his !eb-based "uide is available on Small Business BC#s !ebsite by clic$in" on
Small Business Guides at !!!.smallbusinessbc.ca.
%or all your other business information needs "o to British Columbia#s a!ard-
!innin" resource centre for business information and plannin" tools.
Small Business BC
Suite &'( )*+ West Cordova( ,ancouver( BC ,)B +G+
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0n Greater ,ancouver )*1 //2-22'2
%a3. )*1 //2-22'*
e-mail. visit !!!.smallbusinessbc.ca4email
!ebsite. !!!.smallbusinessbc.ca
he
Business -lan
0ntroduction
5ou !ant to start a business - or e3pand your e3istin" business. 5ou have a "reat
idea( super attitude and the entrepreneurial spirit. So you head do!n to your local
ban$ or financial institution6 you sit do!n in front of the credit mana"er and start to
e3plain this brilliant idea !hen she interrupts you. "That sounds great, but where
is our business plan!"
his scenario is played out every day in Canada - people !ith ideas !ho !ant to
plun"e into business !ithout havin" done a business plan. he purpose of this "uide
is to e3plain in simple terms the business plan concept and to sho! you ho! to put your
o!n plan to"ether.
A Start-7p Guide leads entrepreneurs throu"h the business plannin" process. By
describin" everythin" from ,ision and Mission to 8perational Strate"ies( the Guide
provides an easy to read description of your ne! business concept. he afliated
9%inancial -lannin" emplate9 helps entrepreneurs assemble their Startin" Balance Sheet(
-ro-%orma 0ncome Statement and first year Cash %lo! %orecast. his MS E3cel template
is available at http.44!!!.cse."ov.bc.ca4:eports-ublications4 %inancialemplate.;<.
There is plenty of help available to you including courses from your local colle"e or
school board and of course the services and information resources of Small Business
BC( includin" the "nteracti#e Business Planner located at !!!.smallbusinessbc.ca4ibp.
Why do a Business -lan=
Your own thinking process is solidified through the planning
process.
he plannin" outline provided in this "uide leads you throu"h a series of >uestions
and issues that you should consider !hen thin$in" about your business. $e%e%ber that
ou are an in#estor in our own business& 5ou are the first person !ho must have
confidence in the validity of your business concept.
Your bank or financial institution will need to be convinced of the
viability of your business, or your business epansion.
he business plan is a co%%unications tool to inform and in?uence the reader to!ards
some action - providin" a loan( e3tendin" credit or investin" in your business.
Your business plan provides some guideposts in running your
business.
5ou !ill set "oals and then( once you are in business( you can measure those "oals
a"ainst the actual performance. Goals should be specific( measurable( achievable(
realistic and time limited - S'A$T.
A Start-up Guide ( !
What is in a business plan
here seem to be as many $inds of business plans as there are business
plannin" "uides. here are t!o !ays to loo$ at the business plan. by sta"e of
development( and by tar"et reader. 7nder the sta"e of development( there
are "enerally t!o !ays to divide the plannin" style. start-up plans and plans for
on"oin" businesses. 7nder the tar"et reader there are also t!o !ays to loo$ at
the plan. an inside reader and an outside reader.
Graphically( !e can loo$ at it this !ay.
E3istin" Business )oan or "n#est%ent Strategic Plan
Stage of
"evelopment
Start-up )oan Proposal *perational Start-up
E3ternal 0nternal
#arget $eader
here are of course many variations on the "eneral cate"ories. ?%or e3ample( a
rapidly "ro!in" business re>uires a sli"htly diferent emphasis for both its strate"ic
and loan 4 investment plan.@ Althou"h there are diferent plans and diferent readers(
there are similarities in each of the four plans - includin" the financial forecast( !hich is
common to all business plans.
A business plan "eared to an e+ternal reader is !ritten !ith a specific obAective in
mind - usually a loan or an investment. Before !ritin" the e3ternal plan( you as the
business o!ner must believe in your business. After all( ho! can you convince a
ban$ or financial institution to lend( or an investor to invest( unless you are personally
convinced of the validity of the business=
A business plan "eared to the internal reader serves t!o purposes. 0t is a road
map for ta$in" the business in a particular direction. 0t is also a litmus test for the
business. Settin" "oals and obAectives is one thin"( but determinin" the steps
needed to accomplish these "oals is >uite another. he plannin" process allo!s
the entrepreneur to determine !hat mi"ht or mi"ht not !or$. %or e3ample( a
business o!ner may research the idea of openin" a chain of stores only to discover
that franchisin" is a more efective !ay to e3pand the business. <i$e!ise( in a
start-up situation( an entrepreneur may discover durin" her mar$et research that
her hometo!n is not lar"e enou"h to provide a sustainable mar$et for her chosen
endeavor. She can then consider a diferent type of business( or start her business in
a diferent location.
% ( Business Planning and Financial Forecasting
his Guide
This guide to Business Planning
and Financial Forecasting is written for the Start-up
Business to co%%unicate with an e+ternal reader, with special e%phasis on ban,s or
financial institutions&
Be clear and inform
5ou cannot assume that the reader of your plan $no!s anythin" beyond !hat
you have stated in the plan. 5ou may $no! !hat you mean( but have you clearly
e3plained it to the reader= As you "o throu"h this outline( constantly as$ yourself
if you are ma$in" yourself clear to a reader !ho is not familiar !ith your industry or
your business. -our business plan %a be our onl representation to an outside part
such as a ban, or financial institution. 0n most business start-up situations( the lender is
basin" their decision on the viability of the business and the character of the
entrepreneur. 5our business plan not only represents your business ? it represents
you.
Bere are a fe! tips on the actual !ritin" of the plan.
"o&s
? ry to $eep it fe!er than t!enty pa"es( e3clusive of the appendi3.
? 7se bullet points and numbered lists !herever possible.
? 7se( but do not overuse( "raphs( dia"rams and photo"raphs.
? Bave a neutral third party read the plan - especially someone unfamiliar !ith
your industry.
? 0nclude a table of contents and pa"e numbers in your plan.
"on&ts
? Avoid bi" !ords and lon" sentences. hey only serve to confuse the reader.
? Don#t use technical !ords and unnecessary Aar"on. 0f you need to introduce a
technical term( then you should define it.
? Avoid usin" acronyms and initials to e3press !ords is another common error.
5ou may be very familiar !ith the acronym but your reader mi"ht not. 0f an
acronym has become as common as a !ord( such as SC7BA or <ASE
then use
them. 0f they are still technical( such as 7:< then you may need to define the
acronym and its meanin".
8utlinin" your business plan
here are many diferent outlines you can use for your business plan. he follo!in"
outline is desi"ned specifically for the reader. A "ood plan for an outside reader
anticipates and ans!ers the readers concerns and important issues. o see a sample
plan( "o to. !!!.smallbusinessbc.ca.
-lannin" 8utline
'ntroduction
? Business Concept
? -lan Goals and 8bAectives
? Mana"ement 4 8!nership
Products ( Services
? -roduct 4 Service Mi3
? -roduct 4 Service :is$s
)arket $esearch
? 0ndustry :esearch
? Customer :esearch
)arketing Strategies
? -ricin"
? -hysical Distribution
? -romotion
*perations
? -rocess
? -rocurement
? -ersonnel ?Buman :esources@
? <e"al and Administrative
Finance
? Brea$even
? Startin" Balance Sheet
? -ro-forma 0ncome Statement
? Cash %lo! %orecast
? -ro"ram and %inance
A Start-up Guide ( +
Eurpose. The purpose of aecuti#e su%%ar is to get the readers attention
b
P
lements of the e+ Business -lan
su%%ari/ing the ,e ele%ents of the business plan& "t %ust be short, to the point and
#er well written&
his is ar"uably the most important part of the business plan. he "ntroduction must
ma$e your reader !ant to $eep readin". 0t is a "ood idea to !rite as much of the
"ntroduction as you can at the outset of the plannin" process. his initial !ritin" !ill
help you to focus your attention on the "oals of the plan. 5ou should then rewrite
the "ntroduction after you have completed the rest of the business plan. his !ay
the specifics of the plan( and the chan"es made durin" the plannin" process are
accounted for. 5ou are addressin" the issues of !hat you do( !here you are "oin" in
the short term and !hat you !ant from the reader of the plan. This section of the
plan should be two to three pages long&
Business Concept
? Describe !hat your business does in "eneral terms.
? 0nclude your mission or vision statement.
? Describe !hat differentiates your business from others. his is important to
the reader( as they !ant to $no! ho! your business !ill be able to create ne!
customers. What do you offer that !ill ta$e customers a!ay from competitors=
? Briefly describe your business history if applicable.
? -rovide any other information that !ill e3cite the reader about your business.
Goals C 8bAectives
? ell the reader !hat you !ant ?e.". a business loan for a specific amount to
purchase e>uipment@.
? State your sales( production and profit "oals. Be specific in amount and time
line.
? 0f this is for a ban$ loan( comment on "oals such as anticipated time to achieve
a positive cash flo! and the ability to service debt. ?Dote you cannot complete
this section until the rest of the plan is complete.@
Mana"ement 8!nership
? Briefly describe the technical >ualifications of each principal in this enterprise.
? Briefly describe the business >ualifications of each principal in this enterprise.
? ell the reader your business structure ?i.e. proprietorship( partnership( and
incorporation@.
? -rovide a fact sheet !ith contact information such as name( address( telephone(
e-mail( etc.
, ( Business Planning and Financial Forecasting
-roducts and Services
Purpose- The purpose of the product0ser#ice section is to detail e+actl what our
business does for the custo%er and what %a,es these oferings desirable&
Product *riented Businesses
? Describe each product you sell. he combination of products is your
product mi3.
? 0f you cannot list each product( brea$ the business do!n into lo"ical
cate"ories.
? Describe the $ey product features( and ho! your products are different from
those of your competition. ?%unctionality( durability( ease of use( etc@.
? Describe product protection such as patents( copyri"hts and trademar$s.
Service Businesses
? Describe each type of service you offer ?be specific@.
? Describe the service features in terms important to the customer. ?
Describe any service protection such as copyri"hts or trademar$s.
Product $isks
0f there are any ris$s associated !ith your product or service such as product liability(
professional liability( or ease of duplication by competition( state them and describe ho!
you !ill miti"ate these ris$s.
Mar$et :esearch
Purpose- The purpose of the "ndustr and 'ar,et $esearch section is to pro#e that
the %ar,et is large enough in our area to support the sur#i#al and growth of our
business&
'ndustry $esearch
Describe your industry. 0f you are in a ne! industry( or an industry not !ell $no!n
to a reader( this !ill be a fairly comprehensive section. A better $no!n industry
re>uires less e3planation.
? Describe the state of the industry. 0s it a ne! industry( "ro!th industry(
competitive industry( or a stable mature industry=
? Document industry trends on a local( national or !orld scale. Sales( number
of customers( number of units sold( trends in related industries are all "ood
industry indicators.
? Describe the $ey customers for your specific industry.
? -rovide other national4international economic indicators that encoura"e the
health of your industry.
? E3amine ris$s to the industry caused by le"islation( technolo"ical chan"e or
any threat to the industry as a !hole.
A Start-up Guide ( .
#arget )arket / Customer $esearch
he ar"et Mar$et is the "roupin"s of consumers or businesses most li$ely to
purchase your products or services. he first "roup you plan to tar"et is your
Pri%ar Target 'ar,et6 the second is your Secondar Target 'ar,et. 0t is very
important that you understand your tar"et mar$ets ? after all( these are the
customers you need to $eep happyE
Who is the customer? (Provide
both the description and the
information in this section.)
Where is the customer?
Consumer Markets
• Age
• Gender
• Income
• Family Status
Be sure to include ho many
customers there are in each
grouping.
!arget the geographic radius of
Business Markets
• Industry !ype
• Si"e of #ustomer
• Annual Sales
$stimate the number of companies
using directories or %ello Pages.
!he geography of business to
your customer base by city& region business mar'ets tends to be larger
province or country. than consumer mar'ets.
When do they buy? Is there a particularly busy season If you are selling to seasonal
What do they buy?
Why do they buy?
How much do they buy?
for your product or service(
• )ecessity
• *u+ury Item
• ,igh involvement-Big tic'et
• *o involvement-consumable
,o does your product or service
help the consumer(
.etermine ho much is spent on
your product by your customers.
businesses& the timing can be
everything. (e.g. holesaling)
• Inventory Item
(e.g. item that is resold)
• #apital Item
• #onsumable Item
,o does your product enhance
the performance of the customers/
business(
$stimate the commercial
e+penditure by the industries in
your target area.
0ote- "f ou are using indirect distribution, it %a be necessar to describe both our
custo%ers as a target %ar,et, and the end user as a target %ar,et&
0t is a "ood idea to state your sources. his "ives the reader more confidence in
the information and in the case you are ma$in" for your business.
1 ( Business Planning and Financial Forecasting
Competitive 2nalysis
? -rovide the results of any customer survey !or$ you have done and the sources
of information.
? <ist the direct competitors in your local mar$et. hese are firms !ho offer
e3actly !hat you offer. <ist the current number and the number in e3istence for
the past three-year period.
? <ist the indirect competitors in your local mar$et. hese are firms !ho offer
substitute products.
? AnalyFe any competitors !ho have "one out of business in the past and if
possible describe !hy their business failed.
? E3plain ho! your firm !ill compete !ith these competitors to prove ho! you
can survive in their mar$ets.
? E3amine ris$s that could occur !hen you enter the mar$et. %or e3ample( !hat
if your $ey competitor cuts their price !hen you open your business=
? -osition your product. Sho! ho! your products4services or company is
different from your competition.
Mar$et Strate"ies
Purpose- The purpose of the 'ar,eting section is to de%onstrate how ou plan to tap
our %ar,et& This includes pricing, distribution, sales and pro%otional strategies&
Mar$etin" is one of the most misunderstood aspects of business.o many( mar$etin"
is sales and promotion. Sales and promotion are important elements of mar$etin"( but
mar$etin" is a broader concept. 0t envelops the desi"n and pac$a"in" of a product
- the price and discountin" strate"ies for the business - and the intimate $no!led"e of
the current and future needs and !ants of the tar"et mar$et. o create a balanced
approach you should research all elements of mar$etin"? not Aust advertisin"( sales and
promotion. Bere are some of the $ey elements of mar$etin" you !ant to address in
your business plan.
Price Strategy
? What are your prices for different products and services=
? Bo! did you arrive at those prices= ?i.e.( Char"e "oin" rate( industry standard
mar$-up( etc.@
? Do you have any price pac$a"es=
? What is your price ima"e= ?i.e.( bar"ain( middle of the road( hi"h end@ 0s this
consistent !ith your tar"et mar$et=
? Bo! do your prices compare !ith your competition=
? Bave you accounted for mar$do!ns and off price promotions=
A Start-up Guide ( 3
Physical "istribution
Describe !hich of the follo!in" distribution systems you plan to use in your
business.
? Direct Distribution - sellin" directly from producer4provider to the customer. ?
Wholesale Distribution - sellin" to a retailer !ho sells to the customer.
? Bro$ers or A"ents - usin" a third party to sell the product - usually on a
commission basis. his can be done for "oods ?Manufacturers# A"ents@ or for
services ?Spea$er#s Bureau@.
? Bybrid Distribution - 7sin" more than one of the above. ?
0nternet Sales - See 0nternet Strate"ies Section.
4ocation
? Dei"hbourhood <ocation ?use a [email protected] counts and supportin" information
such as population radius is helpful. $e%e%ber to include direct and indirect
co%petitors on our %ap&
? Site <ocation - place in a mall( shoppin" centre( or city bloc$. Sho! the other
tenants and access4e"ress for par$in" if applicable.
? %acility <ocation - includin" a dia"ram of the business layout. ?
Si"na"e - both inside and outside the business.
? <ocation ris$s. %or e3ample( a median placed in the middle of your road !ill cut
off access to your business. Chec$ !ith your city-plannin" department before
si"nin" a lease.
Advertisin" C -romotion
5our promotional strate"y is made up of three main areas. Dot all businesses use
all three( so only include the parts relevant to your situation. Small Business BC has
resource people dedicated to help clients !ith this aspect of your business.
2dvertising Plan 5Paid 2dvertising6
? -rovide a list of the media you plan to use. 5ou may include ne!spapers(
ma"aFines( radio( television( direct mail or 0nternet advertisin".
? Develop a monthly advertisin" schedule !ith planned bud"et amounts.
? 0f you have !ritten any ads or brochures( include them as appendices to the
business plan.
Public $elations Plan
? 0nclude media sources you plan to use to promote your business.
? 0nclude press releases in the appendices to the business plan.
? 0f you are usin" a -ublic :elations firm indicate the name of the firm in this
section.
Personal Selling Plan
? Describe ho! you !ill prospect and find ne! customers.
7 ( Business Planning and Financial Forecasting
? Describe ho! you !ill provide ne! customers !ith information.
? 0f you have letters of a"reement( contracts or other sales tools( it is sometimes
advisable to include them as appendices to the business plan.
'nternet
Canada uses a consumer benefit model $no!n as 0CE. 5ou should describe your
0nternet strate"y in the same !ay !ith the follo!in".
? 0nformation Gatherin" -his includes the information provided to the consumer
about your business( products and services.
? Communication - his includes more specific forms of t!o-!ay communication
such as customer service and feedbac$ mechanisms.
? Entertainment - his is the multimedia aspect approach to your site. his
includes animation( sound clips and video clips.
? ransactions - his is the ability to actually order and pay for products over the
0nternet.
8perations
Purpose- The purpose of the *perations section is to indicate how ou plan to operate
the business& This %eans how ou will produce the ser#ices or pro#ide the products&
Production Plan 5)anufacturing Businesses6
he production plan demonstrates your ability to produce products. his section
may not apply to service businesses.
Production Flow Chart 5)anufacturing businesses6
? -rovide a flo! chart4process dia"ram sho!in" the entire production process
from start to finish.
? <ist and bud"et production e>uipment re>uired for the business.
Procurement 5Businesses that manufacture or sell products6
? Sources of supply and order lead time.
? erms and conditions of sale.
? Alternate sources of supply ?this addresses procurement ris$@.
? 0nventory control systems.
? -hysical space re>uirements ?unless covered in location sections@.
Sub Contractors 5both goods and services6
? -rovide a list of sub-contractors.
? Sho! e3actly !hat these sub-contractors do and !here they fit into the
production of the business.
? Sho! alternative sub-contractors ?this addresses sub-contract ris$@.
A Start-up Guide ( 8
Buman :esources
Purpose- The 1u%an $esources section de%onstrates how ou will deter%ine our 1$
needs, fill the%, %anage our staf and pa the%&
Stafng
? 8r"aniFational chart ?sho! reportin" structure@.
? Gob descriptions ?sho! !hat people do@.
? Gob specifications ?sho! the s$ills and $no!led"e re>uired to do each Aob@.
? :ecruitin" - Where !ill you find "ood people=
? Mana"ement - Bo! !ill you treat those "ood people=
? Compensation - Bo! much !ill you pay your people= his includes base !a"es(
commissions( bonuses and other incentives. ?Don#t for"et your statutory benefits
of E0( C--( WCB C Boliday pay( in addition to any benefits you plan to add.@
? Buman resources ris$s. <oo$ at contin"ent plans for loss of $ey personnel(
labour shorta"es or stri$es.
Professionals ( )entors
? Accountant
? <a!yer
? Ban$ Services
? Business Advisors and Mentors ?it can be helpful to provide sin"le-para"raph
bio"raphies on $ey business advisors.@
4egal ( 2dministrative
? <e"al %orm ?proprietorship( partnership( corporation( cooperative@.
? Share Distribution ?Corporation 8nly@
? Directors C 8fficers ?Corporation 8nly@
? Buy Sell A"reement ?Corporation and -artnerships 8nly@
? <ist of $ey le"al a"reements such as contracts( leases( a"reements( franchise
a"reements( personal loan "uarantees etc. he actual documentation is often
put into the appendi3 of the business plan.
? 0nsurance4:is$ mana"ement
%inancial -lan
Purpose- To show the financial re2uire%ents to start the business, and to ,eep the
business profitable and li2uid&
? Startin" Balance Sheet
? -ro-%orma ?%orecast@ 0ncome Statement
? Cash %lo! %orecast
? Dotes to the %inancial -lan
? Statement of -ersonal Det Worth ?for lendin" purposes@
!9 ( Business Planning and Financial Forecasting
Appendices
Purpose- The purpose of the appendices is to pro#ide supporting docu%ents for clai%s
%ade in the business plan& The %a not necessaril be read, but are there for reference
purposes&
? :esumH?s@ of principals
? <etters of a"reement 4 intent ?potential orders( customer commitments( letters
of support@. his adds a "reat deal of credibility to the outside reader( includin" the
ban$ or financial institution.
? Sample ads and brochures ?
Collation of mar$et surveys
? 8ther
? -rice lists
? -ersonal net !orth statement ?includin" personal property values( investments(
cash( ban$ loans( char"e accounts( mort"a"es( other liabilities. his !ill
substantiate the value of your personal "uarantee if re>uired for security.
? <ist of inventory ?includin" type( a"e( value@
? <ist of leasehold improvements ?includin" description( !hen made@
? <ist of fi3ed assets ?includin" description( a"e( current mar$et value of any
e>uipment6 le"al description of any lands6 description of any encumbrances on
assets to be pled"ed for business purposes@
? Description of insurance covera"e ?e.". insurance policies( amount of
covera"e@
? A"ed accounts receivable summary
? A"ed accounts payable summary
? Copies of le"al a"reements ?e.". contracts( lease( franchise a"reement( mort"a"e(
debentures@
? Appraisals ?include recent appraisals of assets such as buildin"s( property( and
e>uipment or provide a mar$et evaluation of the business and an asset list
outlinin" the asset( the year purchased and amount paid@
? %inancial statements for associated companies ?!here appropriate@
? Dame of present lendin" institution ?includin" branch( type of accounts@
? <a!yer#s name ?include address and phone4fa3 number@
? Accountant#s name ?include address and phone4fa3 number@
Some final thou"hts on plannin"
A famous "eneral once said. ""n preparing for battle, " ha#e found that plans are useless,
but planning is indispensable&" Startin" a business is a "reat underta$in". 5ou !ant to
be prepared. So here are some tips to $eep in mind !hile in the plannin" process.
? Ieep an open mind. Don#t try to ma$e somethin" !or$ that cannot !or$( Aust
because you li$e the idea.
A Start-up Guide ( !!
? :emember the :ule of ' and J. 0t ta$es t!ice as much money and three times
as lon" as !e anticipate. So plan accordin"ly.
? Be fle3ible - !hile developin" the business plan other ideas( mar$ets( products
or services may come to mind. E3plore them.
? Ma$e your mista$es on paper - it is far cheaper than ma$in" them in real life.
? Ieep plannin"E 0t can be difficult to plan !hen you are runnin" your business(
but it is very useful to re-e3amine your "oals and obAectives on a re"ular basis.
Don#t ever let the business s>uee"ee out the creative entrepreneur.
:se all available resources to help you develop your plan.
his can include formal and informal mentors( other entrepreneurs or friends
!ho !ill act as the 9devil#s advocate.9 Small Business BC provides a business plan
revie! service( and an "nteracti#e Business Planner at !!!.smallbusinessbc.ca4ibp.
Community %utures Development Corporations ?C%DCs@( throu"hout rural British
Columbia( are another e3cellent source of business advice. o locate your nearest
C%DC "o to !!!.communityfutures.ca4provincial4bc and clic$ on )ocations.
2re you ready for the lifestyle;
Self-employment is not for everybodyE ry one of the many self-assessment "uides.
Western Economic Diversification Canada ofers such a test at http.44!!!.!d."c.
ca4tools43inde3Ke.asp. It will at least make you more aware of the entrepreneurial
lifestyle and the challen"es.
)ost of all / be persistent.
Sometimes you !ill try many variations on a theme. 5ou may have to increase
or decrease a product mi3 - chan"e the !ay you distribute your product or even
chan"e the business.
!% ( Business Planning and Financial Forecasting
' he %inancial -lan
0ntroduction
he financial plan is critical to the success of your business plan - especially if it is
for the purpose of "ettin" a ban$ loan. he Cash %lo! %orecast is ar"uably the most
important part of the plan( but each of the other documents is important from a
plannin" perspective. here are three sections in a financial plan.
• he Startin" Balance Sheet
• he -ro-%orma ?or %orecast@ 0ncome Statement
• he Cash %lo! %orecast ?each of these sections should have notes of e3planation
for the reader@.
he %inancial -lannin" emplate
o assist you in this process( !e have created a template !ritten for MS4E3cel. Clic$
here to access the template. his !ill ta$e you throu"h seven !or$sheets( each
as$in" for financial information. his information is then assembled into the three
statements described above. 0nformation can be chan"ed( and the results of the
chan"e are immediately calculated. his !ill ta$e you to a reasonable first draft
of your financials ? but you !ill have to ma$e some final adAustments for your particular
situation.
0f you are usin" a printout of this "uide you can find the E3cel template under
http.44!!!.cse."ov.bc.ca4:eports-ublications4%inancialemplate.;<.
Before 5ou Get Started
#he Beauty of <=hat 'f;<
0t is almost impossible to "et thin"s ri"ht the first time. 0n all business plannin"( but
especially in the financial section( it is important to try diferent scenarios. What if
0 purchase used e>uipment instead of ne! e>uipment= What if 0 raise or lo!er
prices= What if 0 reduce my personal dra!= By tryin" diferent scenarios( you !ill
soon determine !hat it !ill ta$e to ma$e your business financially viable.
With business plannin"( you must $eep tryin" until you have a result that is
reasonable and that you are convinced is achievable.
Five #ips on your Financial Plan
!. Be persistent> Most people do not have e3pertise in finance so preparin" a
financial plan is a Aourney into the un$no!n. Be patient.
%. $ead the entire planning guide before startin" on the plan. 5ou !ill learn
!hat information you re>uire to assemble the financial part of the plan.
+. ?et help in assembly, but not in research. hese should be your numbers
and assumptions. 5ou !ill be responsible for achievin" these obAectives so you
should believe in the numbers.
%inancial -lan
8utline
Starting Costs
? Estimate Current Assets
? Estimate Capital Assets
? Estimate Start-up E3penses
Starting Balance Sheet
? otal Assets ?from above@
? -lanned 0nvestment ?E>uity@
? -lanned <oans ?<iabilities@
? Balance Sheet %ormula
? Assets L <iabilities M E>uity
'ncome Statement
? Start-up E3penses ?from
above@
? %orecast :evenue
? %orecast Cost of Goods
? %orecast 8verhead E3penses
? :evenue - E3penses
L Det -rofit
Cash Flow
? Estimate Monthly Sales
? AdAust Monthly Sales for A:
? Account for loans C
investments
? Calculate otal :eceipts
? Estimate Monthly -urchase
? AdAust for A-
? Estimate Monthly 8verheads
? Estimate <oan :epayment
? %or!ard Start-up Costs
? Calculate Disbursements
? Startin" Balance
M :eceipts
- Disbursement
L Endin" Balance
A Start-up Guide ( !+
,. Be consistent. Ma$e sure that your financial plan is consistent !ith the rest
of the business plan. %or e3ample( if your pricin" section mentions a mar"in of
1*N( this should be reflected in your 0ncome Statement.
.. :se the simple template provided. ?0t is an 3+cel do!nload.@ Althou"h it !ill
not provide a final plan( it !ill "et you !ell on your !ay in the Aourney. Go to
http.44!!!.cse."ov.bc.ca4:eports-ublications4%inancialemplate.;<.
Calculating #he Break/even
he brea$-even point in your business is the point at !hich your sales revenue
e>uals your total e3penses. At that point you neither ma$e money( nor do you lose
any. he brea$-even lets you $no! !hat it is "oin" to ta$e in sales Aust to survive. 0t
provides a "ood indication of the viability of a business proAect.
he brea$-even can also be used to evaluate a business e3pansion or any other
business e3penditure. 5ou are simply as$in" ho! much additional revenue !ill be
re>uired to cover the additional cost. here are some $ey definitions necessary to
determine the brea$-even for the business. hey are.
Fied Costs 5*verhead6 are costs that do not vary directly !ith sales. 7tilities(
salaries( advertisin"( office supplies and telephone are Aust a fe! e3amples. hey
do not have to be the same every month. What is important is that you pay
them re"ardless of sales made.
@ariable Costs 5Cost of ?oods6 are the actual costs of ma$in" the product
or providin" the service. hey can include materials( shippin" and contract
labour.
Capacity governs your output. 0t can be measured in units of production(
billable hours( or sales volume. o calculate the brea$-even in units !e use the
follo!in" formula.
Fied Costs
A Break/even in :nits
5:nit Price / :nit Cost6
his method is $no!n as Total Absorption 4osting( because dividin" the total cost by
the units sold absorbs the fi3ed costs. Every business plan - be it for "ro!th or for
start-up - needs to establish proAect and business costs before proceedin".
0ote- For planning purposes treat the entire ter% loan pa%ent, both principal and
interest, as a fi+ed cost to the business&
!, ( Business Planning and Financial Forecasting
Bample
5an is a ho%e-based potter who %a,es custo% %ugs b the case& 1er capacit
is no %ore than 67 cases of %ugs per wee,& She has calculated the #ariable cost for
each case, including cla, gla/e and pac,aging to be 879 per case& "t costs 5an 8:,999
per wee, to run her business, including her wage& The cost per case, when we include
the 8:,999 per wee, in fi+ed costs, changes depending on the nu%ber of cases
produced each wee,& This is calculated in the table following&
Units
Produced
0
1
2
8
3
45
44
46
47
48
40
Fixed
Costs
9 7&555
9 7&555
9 7&555
$
3!!!
9 7&555
9 7&555
9 7&555
9 7&555
9 7&555
9 7&555
9 7&555
"ariab#e
Costs
9 605
9 755
9 705
$ $!!
9 805
9 055
9 005
9 155
9 105
9 255
9 205
Price Per
Unit
9 105 9
005 9 823
$ $%& 9
7:7 9 705
9 767 9
755 9 6:4
9 618 9
605
Dotice that the brea$-even is not a point( but it varies for each diferent price point.
0f she can "et O1'2 per case for her mu"s( she needs to be able to produce
and sell ei"ht cases of mu"s per !ee$. We can plot this on a "raph as follo!s.
???????
?????
??
?????
??
?????
??
?????
??
?????
??
?????
??
?????
????
????
??
???
?
he area above the line
is profit and the area
belo! the line
represents loss.
??
? ? ? ? ? ?? ?? ?? ??
??????????????
Break Bven with a ?ross Profit )argin
Sometimes( a company does not sell products( or it sells so many diferent
products that doin" a brea$-even for each unit does not ma$e sense. When this is the
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
case( such as in a retail business( !e calculate the brea$-even in revenue rather than in
units.
A Start-up Guide ( !.
his is done !ith the follo!in" formula.
Fied Costs
?ross )argin
Where.
5Price / Cost6
Price
A Break/even in :nits
A ?ross )argin
here are industry standard financial ratios available from 0ndustry Canada for many
small businesses. hey are found at the Strate"is !ebsite !!!.strate"is.ic."c.ca.
Fied Costs
Bample
Sarah wants to start a retail gift store& She esti%ates her %onthl fi+ed costs at
8;,999 per %onth& She deter%ines that the industr standard Gross 'argin for a
gift store is <7=& She calculates her brea,-e#en as follows:
C8,999
A C%9,999 per month
,.D
Sarah %ust be con#inced that this location is able to sell at least 8>9,999 per %onth
?or 8><9,999 per ear@ before she starts her business& 1er %ar,et research, phsical
location, pro%otional plans and phsical si/e %ust all support at least this le#el of
sales capacit or the business will not wor,&
he brea$-even is a "reat first step in e#aluating business opportunities. he business
should ma$e a profit( but the brea$-even is often the first step in determinin" the
viability of a business idea.
he Balance Sheet
he Balance Sheet is a snap shot of the business at any point in time. 0n the case of
a business start-up( it is often the startin" balance sheet. A balance sheet is made
up of three parts.
2ssets- hin"s a business o!ns
4iabilities- Debts a business o!es
BEuity- he o!ners# investment and re-investment in the business
Everythin" that the business o!ns ?its assets@ must bepaid for6 free of debt o!in".
herefore !e "et the follo!in" formula.
2ssets A 4iabilities F BEuity
!1 ( Business Planning and Financial Forecasting
his is e3tremely important as it "ives the reader a picture of ho! the business is
bein" financed throu"h the o!ners#money ?e>uity@ or throu"h the creditors#money
?liabilities@. 0n a business start-up you should loo$ at the assets re>uired to "et the
business started - and then as$ yourself ho! you !ill finance that start-up. 0f you do
not have the money to invest into the business( you !ill have to borro! the
remainder.
Sample Balance Sheet
;%; #<=PA)% *!..
'ear (ndin) *u#y 3+ %!!&
,ssets
Current Assets
#ash
Accounts >eceivable
Inventory
Pre?Paid Insurance
-ota# Current ,ssets
Capital Assets
=acheriny @ $Auipment
Automobiles
*easehold Improvements
-ota# Ca.ita# ,ssets
90&555
945&555
98&555
94&655
$%!%!!
94:&555
965&555
968&555
$/%!!
!
0iabi#ities
Current Liabilities
*ine of #redit
Accounts Payable
Bages Payable
#urrent Portion of !erm .ebt
-ota# Current 0iabi#ities
Non-Current liabilities
!erm *oan
*ess #urrent Portion
Shareholders *oan
-ota# 1on Current 0iabi#ities
(2uity
Initial Investment
Retained Earnings
-ota# (2uity
96&555
94&055
94&555
96&555
$/&!!
965&555 ?
96&555
975&555
$$8!!!
$20,000
$7,700
$%33!!
Bo! to Do a Balance Sheet for A Business Start-up
This section relates to the Start-up 4osts section of the te%plate&
he start-up balance sheet is simple if you $no! ho! to ma$e and sort a list. 5ou need
to ma$e t!o lists to "et started. he first list is your list of 4urrent Assets& hese are assets
?thin"s your business o!ns@ !hich !ill be used up !ithin the first year of doin"
business. ypically they include cash( inventory and pre-paid e3penses ?such as pre-
paid insurance@. Althou"h Accounts :eceivable is another e3ample of a current asset(
there are no accounts receivables in a business start-up.
he second list is the 4apital Assets&hese are items you purchase !ith the intention of
$eepin" them and usin" them to run the business. %or e3ample( if you purchase a vehicle
to use in the business( it is a capital asset. 0f you purchase a vehicle to re-sell it( ho!ever(
then that vehicle is inventory.
A Start-up Guide ( !3
Sometimes there is a third asset list. hese are $no!n as 0ntan"ible Assets and
are thin"s such as franchise fees( "ood!ill( >uotas( licenses( patents and trademar$s.
hese are not common in most business situations e3cept !here you are purchasin"
an e3istin" business.
%orecastin" 5our Assets
2- "etermine and Budget your Current 2ssets
Startin" Cash ?5ou must have enou"h to cover your start-up e3penses@ O
Startin" 0nventory
O-re--aid E3penses ?7sually 0nsurance@
O8ther Current Assets
O#otal Current 2ssets 526 C
B- "etermine your Capital 2sset needs.
Machinery and E>uipment O
8ffice %urnishin"s( %i3turin" C 8ther
OAutomobiles
OComputers and Data -rocessin" E>uipment
O<easehold 0mprovements
Oools and other assets valued at <ess than O'**
OComputer Soft!are ?E3cludin" Systems soft!are@
O8ther Capital or 0ntan"ible Assets
O#otal Capital 2ssets 5B6 C
Your #otal 2ssets are 2 F B C
5our second step is to determine ho! you are "oin" to finance this total. What
combination of Debt and E>uity !ill allo! you to "et your business started=
%orecastin" your <iabilities and E>uity
This section relates to the Financing and Balance Sheet section of the te%plate&
Do! that you have an estimate of ho! much you need to "et started( you must
determine ho! best to finance your business start-up. here are only t!o places this
money comes from !hen you are startin" up ? loans or investment. ,enture Capital for
start-up businesses is e3ceedin"ly rare. Most businesses are financed throu"h
three sources. the o!ners( their suppliers and the ban$E
!7 ( Business Planning and Financial Forecasting
here are typically three sources of debt financin" in a business start-up. hey are.
Supplier Credit- Sometimes a supplier !ill provide credit to their customers.
7sually this is for inventory( ho!ever some suppliers !ill provide lon"er term
financin" for e>uipment or automobiles. Either !ay it is considered as a loan to the
company. Supplier credit is not al!ays afforded to a ne! business( so you may
need to finance your startin" inventory !ith ban$ debt or e>uity.
Bank #erm 4oan- A ban$ term loan is usually used for financin" the capital
assets of the business. 0t can sometimes be used to finance part of a business
start-up or business ac>uisition. he loan is repaid over a period of time( and the
interest rate may be fi3ed or floatin".
Bank 4ine of Credit- his is similar to an overdraft for a business. 0t is
important to use the line of credit to finance current assets and the term loan to
finance capital assets. 8ne sure !ay to have a cash flo! crunch is to have used all
your cash and line of credit to purchase a piece of e>uipment( only to run out of cash
due to a late payin" customer. 0t is not usual to finance a business start- up !ith a
line of credit. 0t is( ho!ever( acceptable to finance short-term cash deficits usin"
your line of credit.
Shareholders 4oans- his can only happen in a limited company. 5ou( as a
shareholder( lend money to the corporation. his is an alternative method of
investin" in the company. See$ professional advice before decidin" if usin" a
shareholder loan is the best strate"y for your business start-up.
'nvestment- his is the e>uity investment you put into your o!n company. he other
type of e>uity is $etained 3arnings( !hich are the profits( after income ta3( $ept in
the business to ensure its "ro!th. ?Ieep in mind there is no retained earnin"s in
a start-up company@.
A Start-up Guide ( !8
7sin" the information dicussed above you can create the
Starting Balance Sheet
,ssets
Current Assets
#ash
Inventory
Pre?paid $+penses
, -ota# Current ,ssets
Capital Assets
=achinery and $Auipment
<fce Furnishings& Fi+turing
and <ther
Automobiles
$
0iabi#ities
Current Liabilities
*ine of #redit
Supplier #redit
C -ota# Current 0iabi#ities
Non Current Liabilities
!erm *oans
Cendor #redit
Shareholder *oans
4 -ota# 1on Current
0iabi#ities
$
$
#omputers and .ata Processing
$Auipment
*easehold Improvements
!ools and other assets valued at
less than 9655
#omputer Softare (e+cluding
systems softare)
<ther #apital or Intangible
Assets
B -ota# Ca.ita# ,ssets
,5B -ota# ,ssets
$
$
C54 -ota# 0iabi#ities
(2uity
Investment
( -ota# (2uity
C545(
-ota# 0iabi#ities 5 (2uity
$
$
$
Dote that Total Assets 52FB6 are e>ual to Total Liabilities + Equity 5CF"FB6
he 0ncome Statement %orecast
This section relates to the Pro For%a "nco%e Sheet in the te%plate&
he purpose of the 0ncome Statement %orecast is to proAect the revenues and
e3penses of your business over a "iven period of time - usually one year. 8ther
terms for this are bud"eted income statement or pro forma income statement.
here are three thin"s that need to be predicted to forecast your income statement.
the sales proAection( the cost of "oods proAection and the overhead proAection.
#he Sales Forecast
he sales forecast is probably the most difcult part of the business to forecast(
especially for a startin" business. Sometimes( the brea$-even can provide a startin"
point for creatin" the sales forecast. A sales forecast is not li$e a !eather forecast.
A !eather forecast is somethin" you try to forecast( but somethin" over !hich
you have no control. A sales forecast is a "oal you set for the business that you
proactively try to achieve. 0n the case of an e3istin" business( you should loo$ at the
sales history. 5ou should see if your sales are trendin" up or do!n( and then account
for ne! products to be added( or old products to be ta$en a!ay. he sales forecast
%9 ( Business Planning and Financial Forecasting
must re?ect your business strate"ies and obAectives.
Forecasting using the :nit )ethod
<ist all the products or services you plan to sell. 5ou !ill need to forecast the
number of units of each type you plan to sell. Diferent businesses and industries use
diferent unit measures ?e.".( for a craftsperson( a unit may be one !ooden item6 for a
researcher( a unit could be one hour of time@. 5ou !ill have to estimate the sellin"
price for each unit. 5ou can then develop a sales forecast usin" the follo!in"
e>uation.
Price per unit G 0umber of :nits sold A $evenue
5our mar$etin" section must support sales volume and price and your operatin"
section must support this level of production. Demonstrate that you can ma$e this
number of units( sell this number of units and Austify the price you char"e.
Forecasting with the Sales )ethod
Sometimes a business cannot use unit sales( as it !ould be impossible to predict the
unit sales for each of 2(*** items in a "ift store. 0n this case( some business o!ners !ill
"o directly to revenue forecast. 0f the business is bro$en do!n into lo"ical
departments or cate"ories( then forecast the revenue in each area for the total sales
forecast. ry to compare this to the mar$et siFe and the number of competitors in the
mar$et.
#he Cost of ?oods Forecast
he cost of "oods forecast relates directly to the sales forecast. he cost of producin"
"oods varies directly !ith the level of sales. o calculate the cost of "oods forecast( you
may use either the unit costin" method or the percenta"e cost method.
:nit Costing )ethod
his method is e3actly li$e the unit sales forecast( e3cept instead of usin" price( you
use cost per unit.
Cost of goods A 0umber of units sold Cost per unit
Gust as in the unit forecast( you must do this for each unit sold. he sum of the cost
of "oods is then part of the income statement.
#he Percentage Cost )ethod
0n retail businesses( !here mar$-ups and mar$do!ns predominate( it is common to
use the cost complement to calculate the cost of "oods. he cost complement is the
percent of the revenue( or the sellin" price( !hich represents the cost of "oods. %or
e3ample( if an item costs O+'.** and is priced at O'*.** then the cost complement is
O+'.** 4 O'*.** L )*N. ?0f the cost complement is )*N then the Gross -rofit Mar"in
is 1*N@. 5ou can use the historical cost complement or industry standards to forecast the
cost of "oods and "ross profit for your income statement.
A Start-up Guide ( %!
#he *verheads Forecast
he overheads forecast is an estimate of your e3penses for the year. his list should
be similar to the list developed for the fi3ed costs of your brea$-even analysis. ypical
overhead e3penses include.
? Advertisin" and -romotion
? Automobile
? Ban$ and %inance Char"es
? Communications
? Depreciation
? 0nsurance
? Entertainment and Meals
? 8ccupancy
? 8!ners# Dra!in" or Wa"e
? Mail and 8ffice Supplies
? -rofessional %ees
? -rofessional Development
? Wa"es and Benefits
? ravel and Accommodations
? 8ther
he ne3t step is to ma$e cost estimates for each area. 5ou may do them monthly(
Sample 'ncome Statement
;%; P><P>I$!<>S,IP
Income Statement
%ear $nding .ecember 74& 6554
or annually( ho!ever( you !ill eventually need to $no! your monthly e3penditure
in each area for your cash ?o! forecast. Some of your forecasts !ill be a matter of
callin" a supplier and as$in" for a >uote - insurance is an e3ample of this $ind of
overhead. Sometimes( you !ill have to ma$e a mana"ement decision about ho!
6a#es
*ess #ost of Goods
Gross Profit
(x.enses
Advertising
.epreciation
Interest
>ent
!ravel
Bages
-ota# (x.enses
)et Profit
*ess <ner/s .ra
1et Pro7it a7ter 4raw
$+3!!!!
2:&555
06&555
4&055
0&555
6&555
8&555
155
2&555
$%!+!!
974&355
75&555
$ +8!!
much you plan to spend in order to achieve your revenue obAectives.
0f you have a business history( you should use that history as a "uide( ma$in" sure
that increases and decreases in cost are consistent !ith your revenue obAectives.
5ou should ma$e a brief note to the reader of the plan( describin" the $ey e3pense
of forecasted items ?i.e. you may have a >uote from a bro$er for your insurance
proAection@. his is especially true if( in an e3istin" business( there is a lar"e chan"e
in the statement.
0ote- The ter% draw in a Proprietorship refers to the %one that the owner ta,es out
of the co%pan& The profits ,ept in the business are ,nown as retained earnings& These
earnings are re?ected in the ownersA e2uit portion of the balance sheet& "t should also be
noted that in a proprietorship, inco%e ta+ is paid on the net profit - not the ownerAs draw&
#he Cash Flow Forecast
This in#ol#es three parts of the te%plate& The 4ash Flow "nfor%ation sheet, the
Seasonalit sheet and the resulting 4ash Flow&
A Cash %lo! %orecast is probably your most important financial tool. 0t is your
cash ?o! that sho!s you if( and !hen( you !ill run out of cash essential to run your
business. 0t allo!s you to ta$e action before problems occur and even do 9!hat if9
%% ( Business Planning and Financial Forecasting
calculations before ta$in" on ne! proAects. he cash ?o! is a +'-month proAection
that forecasts the receipts and disbursements for your business. 0n a start-up
situation( it is preferable to have a start-up month to specifically sho! the reader the costs
incurred to start the business.
Cash ?o! is ar"uably the most important aspect of business. his is due to !hat is
called the 4urrent Asset 4on#ersion 4cle& his is the time( in days( it ta$es to purchase a
product or materials( produce and sell an item( and then finally collect on that item.
Current 2sset Conversion eample
%or e3ample( suppose a business purchases O+(*** !orth of ra! materials at the
be"innin" of the month. hey ta$e one month to produce the product( one month to
sell the product for O'(*** and one-month to collect their cash from their
customer. 0f they do not receive any vendor credit for their ra! materials( the process loo$s
li$e this.
Sell
Purchase Collect
We have to put out O+(*** at the be"innin"( but do not collect O'(*** for three
months. We still need to pay the overhead e3penses in the interim. Without cash( or
access to credit( !e can "o ban$rupt before collection. hen !e need to !orry about
sellin" the product in a timely manner and collectin" in a timely manner. %ailin" to
understand this part of business is one of the reasons that many e3perts in
entrepreneurship and small business consider poor cash plannin" the sin"le bi""est
cause of business failure.
=hy do a Cash Flow Forecast;
oo often business o!ners do a cash ?o! forecast in their head. -uttin" the cash
?o! forecast on paper( ho!ever( !ill "ive you the follo!in".
? A format for plannin" the most effective use of your cash ?cash mana"ement@. ? A
schedule of anticipated cash receipts - follo! throu"h to see that you achieve itE
? A schedule of priorities for the payment of accounts - stic$ to itE
? A measure of the si"nificance of une3pected chan"es in circumstances6 e.".(
reduction of sales( stri$es( ti"ht money situations( etc.
? A list( on paper( of all the bill payin" details !hich have been runnin" around in
your head( $eepin" you a!a$e ni"hts.
? An estimate of the amount of money you need to borro! in order to finance
your day-to-day operations. his is perhaps the most important aspect of a
completed cash flo! forecast.
? An outline to sho! you and the lender that you have enou"h cash to ma$e your
loan payments on time.
A Start-up Guide ( %+
$eceipts
:eceipts occur !hen cash enters the business for any reason. 0t is li$e ma$in" a
deposit in your current account. he main reasons for receipts are.
? Cash sales.
? Collection of accounts receivable.
? <oan proceeds. his includes term loans( start-up loans( line of credit and notes.
? 8!ners# contributions. his includes both investments and shareholders# loans
?shareholders# loans only happen in incorporated companies@.
"isbursements
Disbursements occur !hen cash leaves the business for any reason. he main
reasons for disbursements are.
? Cash e3penses or inventory purchases.
? -ayments of accounts or e3penses payable.
? <oan repayment ?either ban$ or shareholders# loans@.
? 8!ner repayment ?dividends in a corporation or dra!in"s in a proprietorship@.
0n cash ?o!( !e tal$ about receipts( disbursements and deficits or surpluses rather
than revenue( e3penses and profits or losses.
How to do your Cash Flow
he cash ?o! is made up of three distinctive parts. the receipts( the disbursements
and the cash ?o! calculation. Because of the comple3ity of the disbursement
section( this section has been bro$en do!n into a series of smaller sections. hese
sections are.
!6 $eceipts
a@ :eceipts from 8perations
b@ :eceipts from <oan -roceeds
c@ :eceipts from 0nvestments
%6 "isbursements
a@ Disbursements of -urchases 4 Sub Contractin" 4 -iece!or$ <abour
b@ Disbursement of Administrative E3penses
c@ Disbursements for Capital -urchases
d@ Disbursements for Debt :epayment or Dividends
+6 Cash Flow Calculation
%, ( Business Planning and Financial Forecasting
%or business start-ups only
he Start-up column is used in start-up situations only. 0t is used for all of the
receipts and disbursements that occur as a part of startin" a business. his includes
purchasin" fi3ed assets( incurrin" start-up e3penses( the initial investment to start the
business and the initial ban$ loans. 0t is helpful to separate start-up costs from on"oin"
costs( so the reader can >uic$ly see !hy you may have lar"e deficits in the early sta"es of
business development. Detailin" Start-up e3penses ma$es your cash ?o! easier to
understand.
Part *ne / $eceipts
!6 Forecast your sales on a monthly basis. his must match the annual revenue
forecast from the pro-forma income statement. 0t is not sufficient to simply
divide by +' and forecast the same level of sales in each month( rather you
must base the monthly forecast on the seasonal nature of the business and the
"ro!th of the business.
%6 Forecast the receipts from operations based on your accounts receivable
assumptions. 0n a cash business( the sales forecast is the same as the revenue
forecast. 0n a business that offers terms( there is a time delay bet!een !hen the sale
is made and the receivable is collected. %or e3ample( you mi"ht bill your clients in
Ganuary ?revenue@ but "et paid in %ebruary ?cash receipt@. Any sales that are not
collected by the end of the year appear on the year-end balance sheet as
accounts receivable.
+6 Forecast the receipts from term loans and investments. Any initial
investments or receipts of term loans( seen on the startin" balance sheet( should
appear in the start-up month. Any subse>uent investment or loan receipts !ill be
forecast in the month in !hich they !ill be received.
,6 2dd up the total receipts.
Part #wo / "isbursements
!6 Forecast your variable costs or purchases on a monthly basis. his involves
pre-plannin" your purchases of inventory. Sometimes you simply replace the
inventory you have used durin" the previous month. Sometimes you !ill plan to
build up your inventory prior to busy sales periods. 8nce this forecast has been
made( forecast your disbursement in this area. 0f you pay cash for these
purchases( the disbursement is e>ual to the purchase. 0f you have credit terms
from the suppliers( then the purchase in one month becomes a disbursement from
accounts payable the follo!in" month. ?For e+a%ple, a purchase in 5anuar
beco%es a disburse%ent in Februar&@
%6 Forecast your overhead epenses on a monthly basis. hese are usually
forecast in one of three !ays.
A Start-up Guide ( %.
a@ Evenly throu"hout the year. <ease payments !ould be an e3ample of this
$ind of forecast.
b@ As a percenta"e of sales. Advertisin" is often disbursed this !ay.
c@ Manually( !hen you $no! a payment is due. %or e3ample( a business
licence is due every Ganuary.
+6 Forecast any principal repayments to loans. Blended monthly payments
?principal and interest@ should also be accounted for here( as lon" as the interest
is not double counted.
,6 Forecast any purchases of Capital 2ssets you plan to ma$e throu"hout the
year. 0f you purchase them to start your business( account for these purchases
in your start-up month.
.6 Forecast any dividends, or repayments of shareholders loans. 16
2dd up the total disbursements.
Part + / #he Cash Flow Calculation
he cash ?o! calculation measures the end of the month cash balance !ith the
follo!in" formula.
cash balance F cash receipts / cash disbursement A end of month cash balance.
he end of month cash balance becomes the startin" cash balance of the ne3t
month. :epeat this calculation for every month.
Bample / 4arry&s 4awn Care
$eceipts
)arr is planning to start a landscaping co%pan& 1e will in#est 869,999 in the
business, borrow 87,999 to start the business& 1e has forecast his re#enue to be
8:B,999 in the first ear& 1e reali/es that his business is seasonal, so he forecasts the
following %onthl re#enue&
6tart9u. * F M , M * * , 6 : 1 4 -ota#
;e<enue 4&555 4&555 6&555 7&555 8&555 8&555 0&555 0&555 1&555 6&555 6&555 4&555 3/!!!
)arr belie#es that half of his sales will be cash sales, and the other half will be
in#oiced and paid the following %onth& 1e then accounts for his initial in#est%ent
and his ban, loan to co%plete the receipts section& ?Cote the relationship between
the receipts and the re#enue&@
6tart9u. * F M , M * * , 6 : 1 4
;e<enue 4555 4555 6555 7555 8555 8555 0555 0555 1555 6555 6555 4555
O !anuar"#s sales, $$00 is re%eived in !anuar" and $$00 in &ebruar"'
;ecei.ts
#ash 055 055 4555 4055 6555 6555 6055 6055 7555 4555 4555 055
A> 055 055 4555 4055 6555 6555 6055 6055 7555 4555 4555
Investment 45555
*oan 0555
-ota# +&!!! &!! +!!! +&!! %&!! 3&!! $!!! $&!! &!!! &&!! $!!! %!!! +&!!
%1 ( Business Planning and Financial Forecasting
"isbursements
)arr esti%ates he will spend about 69 per cent of his re#enue on #ariable costs& 1e
recei#es :9-da credit ter%s fro% a local landscape suppl co%pan ? so the costs
incurred for 5anuar will be disbursed in Februar& ?These disburse%ents will be
%ade as Accounts Paable&@
)arr esti%ates start-up e+penses of 8:99, %onthl e+penses of 8799 and a
%onthl draw of 86799& 1e plans to purchase 87999 in gardening e2uip%ent a
86,999 trailer and a 8>999 co%puter sste%& )arrAs disburse%ents will loo, li,e
this:
6tart9u. * F M , M * * , 6 : 1 4
#ost of Goods 455 455 655 755 855 855 055 055 155 655 655 455
4isbursements
AP 455 455 655 755 855 855 055 055 155 655 655
<verheads 755 055 055 055 055 055 055 055 055 055 055 055 055
.ra 4055 4055 4055 4055 4055 4055 4055 4055 4055 4055 4055 4055
$Auipment 0555
!railer 4555
#omputer 6555
-ota# 83!! %!!! %+!! %+!! %%!! %3!! %$!! %$!! %&!! %&!! %/!! %%!! %%!!
Cash Flow Calculation
Ta,e the Total $eceipts line and the Total Disburse%ents line and forward the% to
the appropriate lines below& Then appl the following for%ula to the cash flow:
Starting Cash Balance F $eceipts / "isbursements A Bnding Cash Balance
Forward the ending cash balance to ne+t %onthAs Starting 4ash Balance
6tart9u. * F M , M * * , 6 : 1 4
#ash Balance 5 1255 0655 8455 7055 7:55 0555 1155 :255 44655 48655 40155 40855 (lus >eceipts
40555 055 4555 4055 6055 7055 8555 8055 0555 0055 8555 6555 4055 Less
.isbursements :755 6555 6455 6455 6655 6755 6855 6855 6055 6055 6155 6655 6655 E)uals
$nding Balance 1255 0655 8455 7055 7:55 0555 1155 :255 44655 48655 40155 40855 48255
Since there are no cu%ulati#e deficits, we can continue& "f the cash balance were
forecast to be negati#e at an point, then we would ha#e to reduce e+penditures,
increase initial in#est%ent, increase re#enue, or arrange for a line of credit fro% the
ban,&
Although this is a #er si%ple e+a%ple of a cash flow, it should gi#e ou an idea
of how to construct a cash flow for our situation& -our te%plate does these
calculations auto%aticall - allows ou to %a,e adEust%ents if there are an
negati#e balances& ?"f ou ha#e a negati#e cash balance, ou are using our
o#erdraft 0 line of credit to finance this deficit&@ B going through each screen, ou will
create a first draft of our starting balance sheet, pro-for%a inco%e state%ent and
cash flow forecast&
A Start-up Guide ( %3
0otes to your Pro Forma Statements
Many entrepreneurs fail to include ade>uate notes and e3planations to their pro-
forma financials. he reader must be able to clearly understand !hat is bein"
assumed !ithin the sales numbers( salaries( and other si"nificant fi"ures by includin"
detailed and !ell e3plained 9notes to financials9. 5ou !ill also have more credibility if
you compare your pro-forma statements( especially your income statement( to
outside benchmar$s. A "reat source for these benchmar$s is found in Perfor%ance
Plus& his is a part of the Strategis Website provided by 0ndustry Canada. 0t is found
at. http.44strate"is.ic."c.ca4epic4internet4inpp-pp.nsf4en4hKpm***2Pe.html here
are also boo$s on Iey %inancial :atios available in the reference sections of many
public libraries.
%inancin" 5our Business
here are t!o main types of financin" - e>uity financin" and debt financin". E>uity
is the investors# financial sta$e in the business. With e>uity financin"( an investor
ma$es money available for use in e3chan"e for an o!nership share in the business.
his could be as a silent or limited partner ?not actively involved in the business@ or
as a shareholder. Whether e>uity financin" is possible or a "ood option depends
on the business structure and relationship bet!een the borro!er and lender. As a
business "ro!s and profits are made they can remain in the business. his is
called retained earnings& A company !ith no debt is financed completely by the
shareholders or o!ners. 0n such a company the investments and profits finance the
company#s assets.
With debt financin"( the lender char"es interest for the use or rental of money
loaned( but does not "et a share or e>uity in the business. Debt financin" is familiar to
most people because it is the basis of most personal credit. Debt often comes
from ban$s( but it can also come in the form of supplier credit ?accounts payable@ or
in the form of vendor credit for capital purchases.
Bank Financing
Many entrepreneurs !ill "o to the ban$ for part of their business financin". his
can be financin" the start-up of the business or financin" the "ro!th of an e3istin"
business. Either !ay( ban$ financin" plays a maAor part in the development of small
business. Ban$s use a variety of tools to finance business. he t!o main types are
<ines of Credit and erm <oans.
4ine of Credit
<ine of credit is a loan similar to a personal overdraft and is used to finance
temporary shorta"es in cash caused by inventory and accounts receivable. 0t is
sometimes disbursed into your che>uin" account in increments of O2(***. he
interest rates are often variable and based on the prime lendin" rate.
%7 ( Business Planning and Financial Forecasting
A line of credit is often subAect to mar"in re>uirements. %or e3ample( a
condition of your line of credit mi"ht be that the total credit available is the
lesser of O'**(*** or /2 per cent of current receivables and 2* per cent of
inventory. 5ou must report to the ban$ on a monthly basis( so ma$e sure you
have done all your invoicin" before month end so it is included in your mar"in
calculation.
Many business o!ners !ill purchase capital assets( such as machinery or
e>uipment usin" their line of credit. his can create a cash flo! crisis( since the
credit re>uired to finance the inventory and receivables is tied up financin" the
current asset. Be careful to use the ri"ht form of financin" for the proper purpose.
#erm 4oans
erm loans are loans that are repaid over a fi3ed period of time - usually more than
one year. A business may have several term loans at the same time financin"
different proAects or assets. erm loans may or may not have fi3ed interest rates(
dependin" on the terms and conditions. 7sually( term loans are used to finance
capital assets( althou"h sometimes term loans are ta$en out to increase cash levels
?current assets@ in the business.
4eases
<eases are similar to term loans. hey are often called capital leases as the
business has use of the asset( and an obli"ation to ma$e the lease payment.
When you develop your startin" balance sheet( compare the o!ners# contributions
to those of outside parties. his is called the Debt to E>uity ratio. 0t sho!s ho! much
money !as invested for every dollar borro!ed. he ris$ is directly related to the
capital committed to the proAect. 5ou cannot e3pect ban$s and lendin" institutions to
ta$e more ris$ than you ta$e in the business.
<endin" Criteria
Many ban$s use the four C#s to evaluate loan proposals. hey represent.
Cash Flow-
he ability to repay the loan !ith cash. his is measured usin" the Cash %lo! %orecast
in your business plan.
Collateral-
he value of internal and e3ternal security that may be li>uidated. his is measured
by ta$in" the mar$et value of the business assets and comparin" this value to all
outstandin" term debts. his determines !hat mi"ht happen if the business defaults on
the loan. Sometimes an asset outside of the business !ill secure a business loan. his is
e3ternal security. An associated company may hold the asset or it may be a
personal asset of the business o!ner. ?See loan "uarantees.@
A Start-up Guide ( %8
Character-
Aspects about the business o!ner or o!ners( !hich lead you to believe in their credit
!orthiness. Ban$s often use the business o!ners# personal history to determine
attitudes to!ards credit. hey !ill also loo$ at the technical and business s$ills
presented in the business plan.
Commitment-
he financial commitment by the o!ners in this business venture. his is measured
by e3aminin" the e>uity or shareholders loans in the business( and the retained
earnin"s history of the business.
Statement of -ersonal Det Worth
A statement of personal net !orth is a measure of the !ealth of the o!ner or o!ners
of the business. 0t is similar to a balance sheet - e3cept those assets are measured at
their mar$et value. he formula for net !orth is.
0et =orth A 2ssets 5)arket @alue6 / 4iabilities
Personal 4oan ?uarantees
When a small corporation borro!s money from a ban$( the shareholders !ill often
be re>uired to si"n !hat is $no!n as a personal loan "uarantee. his is li$e the
individual co-si"nin" a loan "ranted to the corporation.
0t means that if the corporation ?business@ defaults on the loan then the individual
shareholders must re-pay for the corporation. 0t is not unusual for the spouses of
shareholders to si"n "uarantees as !ell. his prevents the "uarantor ?the person
!ho si"ns the "uarantee@ from transferrin" their net !orth to their spouse. -ersonal
loan "uarantees are re>uired for most business loans. Al!ays remember that the
"uarantee is a le"al document( and it is advisable to see a la!yer before si"nin" any
such document. Couples !ill often be re>uired to see$ independent le"al advice
before si"nin" a personal loan "uarantee.
Program and Financing
52lso known as source ( application of funds6
he pro"ram and financin" is a description of the loan re>uirement and the asset
purchase. 0t loo$s li$e a small balance sheet in that it states !hat you are "oin" to
purchase( and ho! you are "oin" to pay for it.
Supposing that F Proprietorship wants to purchase a 87,999 piece of e2uip%ent&
The decide to borrow 8:,999 use 86,999 of the businessesA cash, and in#est an
additional 86,999 into the co%pan&
+9 ( Business Planning and Financial Forecasting
The starting balance sheet, progra% and financing and pro-for%a balance sheet would
loo, li,e this:
6tartin) Ba#ance 6heet Pro)ram and Financin) Pro9Forma Ba#ance 6heet
,ssets
Current Assets
#ash
Inventory
Accounts >eceivable
*otal Current Assets
Capital Assets
Boo' Calue (Cehicle)
Boo' Calue ($Auipment)
*otal Capital Assets
-ota# ,ssets
0iabi#ities
Current Liabilities
!rade Payables
Bages Payable
*ine of #redit
*otal Current Liabilities
Long *erm +ebt
!erm *oan
)ote Payable
*otal *erm +ebt
-ota# 0iabi#ities
:wners (2uity
-ota# 0iabi#ities and
:wners (2uity
97&555
940&555
946&555
$3!!!
!
940&555
946&555
$%3!!
!
$&3!!!
96&555
97&555
90&555
$+!!!!
945&555
91&555
$+/!!!
$%/!!!
$3+!!!
$&3!!!
?94&555.55
90&555.55
97&555
$+!!!
96&555
940&555
946&555
$3!!!!
940&555
942&555
$%3!!!
$&3!!!
96&555 97&555
90&555
$+!!!!
947&555
91&555
$+/!!!
$%/!!!
$3%!!!
$&3!!!
The progra% and financing and the state%ents of personal net worth %ust be pro#ided along
with the business plan to ensure the credit-worth nature of the business #enture&
Where to access financin"
Contrary to popular myth( very fe! businesses start !ith any form of venture
capital outside of family and friends. Sometimes( businesses !ill "et venture capital
throu"h an"els( people !ho specialiFe in helpin" business "et started( but only after a
product has been developed or a mar$et has been established. 8!ner investment and
debt financin" are the most common means of financin" a business.
Canadian Chartered ban$s have made every attempt to streamline the business loan
application. :ecently( the credit application process for business loans( even for start-
up loans( has been reduced to sin"le pa"e applications. <oans for up to O2*(*** are
readily available( even to ne! businesses or business start-up situations.
A Start-up Guide ( +!
hese loans are based on the personal net !orth of the principal o!ners of the
business and the credit history of these principals. Don#t for"et credit unions( !ho
tend to $no! their local economies very !ell( and if you are in a rural or smaller
urban centre( try the Community %utures Development Corporation ?C%DC@ in your
area. o locate your nearest C%DC "o http.44!!!.communityfutures.ca.
0f you do not >ualify for traditional ban$ financin"( you may be able to access
financin" from other sources. here are pro"rams for.
? Abori"inal Entrepreneurs
? 5oun" Entrepreneurs
? Women Entrepreneurs
? De! 0mmi"rants
hese pro"rams chan"e on a re"ular basis so chec$ Small Business BC at
!!!.smallbusinessbc.ca for up-to-date information. The financing page at this
site( !!!.smallbusiness.bc.ca4financin"( provides information on "overnment(
private and venture capital sources of financin". 0ndustry Canada#s Strate"is site(
!!!.strate"is.ic."c.ca also has e3tensive information on financin". Clic$ on Business
Support( %inancin" located in the left-column menu.
A hallmar$ of entrepreneurial thin$in" is the person !ho thin$s of alternatives.
his includes alternatives to start-up costs( li$e buyin" used e>uipment instead of
ne! e>uipment - alternative product lines that are easier to manufacture and of
course researchin" ne! venues for mar$etin" your product.
A final !ord on your %inancial -lan
A common mista$e made by many businesses is developin" a financial plan for a
ban$ or an investor( and then promptly puttin" it a!ay and for"ettin" all about it.
5our financial plan should be revie!ed every month. Chec$ your plan a"ainst the
actual. his !ill help you anticipate problems before they arise.
After completin" your financial plan( you should re-e3amine the entire business
concept in li"ht of the results. As$ yourself if this is a "ood investment of your
money and your time. 0s the financial re!ard !orth the lifestyle chan"e= hese are
personal >uestions( !hich should be as$ed before that fateful trip to the ban$. "t is
eas to 2uit a Eob, it is difcult to 2uit a business. he completed financial plan spells out
the financial ris$s and re!ards re>uired for your ne! business. 8nly you can
determine if it is !orth the ris$.
%inance is difcult for most entrepreneurs. 7se professionals such as accountants or
consultants to help you ma$e sense of your financial statements. %inancial plans and
financial statements are a critical part of mana"in" your business. Good luc$ !ith
your plannin" and !ith your business.
+% ( Business Planning and Financial Forecasting
he %inancial emplate
A Brief 8peratin" Guide
0f you are !or$in" !ith a print-out of this document you can locate the E3cel
template by clic$in" here or "oin" to http.44!!!.cse."ov.bc.ca4:eports-ublications4
%inancialemplate.;<.
Start/up 'nformation Page
his is the startin" pa"e. he !hite cells are for re>uired information. 8n this pa"e
you must.
!. #ype in the name of the business
%. Select the startin" month and year from the drop do!n menu. 5ou must have
a startin" point at the be"innin" of the month.
+. Select continue and the start-up costs pa"e !ill appear.
A Start-up Guide ( ++
Start/up Costs Page
his pa"e is to document your start-up costs. 5ou must estimate ho! much it !ill
cost to start your business. We recommend you 9Save As9 an .3ls !or$sheet as your first
step. his !ay( your ori"inal blan$ template remains intact.
Current 2ssets
!. Bstimate the amount of cash you !ill have in the ban$ after purchasin" your
other assets. 0t must be at least as "reat as your start-up e3penses if you plan
to avoid a cash deficit before you start. 5ou !ill also estimate your startin"
inventory and your pre paid e3penses. ?:emember that you can al!ays re-visit
this pa"e after you have completed your first draft and chan"e these estimates
based on sales and cash flo!.@
%. Bstimate your capital asset re>uirements. Capital assets are thin"s you
"enerally $eep for lon"er than one year. he depreciation on these assets ?an
income statement item@ is automatically calculated for you usin" the prescribed
CCA percenta"es from Canada :evenue A"ency ?C:A@. E3cept for <easehold
0mprovements( depreciation is calculated usin" the9declinin" balance9method
and uses the C:A half-year rule.
+. Start/up epenses are non-asset purchases incurred prior to startin" the
business.
Select 4ontinue to go to the ne+t screen
+, ( Business Planning and Financial Forecasting
Financing ( Balance Sheet
he asset information has been for!arded from your 9Start-up Costs9 pa"e. 5ou must
decide ho! you !ill receive accounts payable from your suppliers for inventory( if
you plan to use a line of credit to finance your business start-up ?not recommended@(
and ho! much you !ill put into the business in terms of the initial investment and4or
shareholders loans. The re%ainder will auto%aticall be borrowed in the for% of a ter%
loan&
At the bottom of the pa"e( you !ill see space for the term loan information
?0nterest rate and :epayment period@ and the line of credit interest rate. hese are
defaulted at /.2 per cent( 2 5ears and 2.** per cent respectively. Chan"e these to the
actual rates and time periods you !ill be payin".
<i$e the other pa"es( you can e3periment !ith diferent combinations of debt and
e>uity( and see the results on the Balance Sheet( 0ncome Statement and Cash %lo!
%orecast.
Select 4ontinue to go to the ne+t screen&
A Start-up Guide ( +.
#he Pro/Forma 'ncome Statement
5ou must no! forecast your income statement. his is based on your idea of
annual revenue( cost of "oods( and the annual overhead e3penses. Dote that
the 9Start-up E3penses9 are for!arded from the Start-up e3pense sheet( and the
depreciation and interest are calculated for you. 5ou can try diferent amounts of
revenue( cost of "oods and overhead e3penses( and immediately see the results of
the chan"e on your net profit.
he Det -rofit ?Corporation@ represents the profit !hen the o!ners
!a"e is subtracted( as is the case !ith a corporation. he Det -rofit
?-roprietorship@ does not subtract the o!ners# !a"e or dra!. Select continue
to go to the %ain screen&
0ote- The re#enue is defaulted at 89&6 to eli%inate the GDi# 9& The rounding pre#ents
the figure fro% being shown&
+1 ( Business Planning and Financial Forecasting
Cash Flow 'nformation
2ccounts $eceivable
and 2ccounts Payable
5oumayno!ma$eassumptions
!ith respect to your Accounts
:eceivable and Accounts
-ayable. 5our choices are to
receive your payment( or to pay
your suppliers in.
? Cash
? +2 Days ?
J* Days ?
12 Days ?
)* Days
Base this on the terms you ofer
your clients( and the terms you
are ofered by your suppliers.
2dministrative "isbursements
%or each of your cash disbursements( you can choose bet!een t!o alternatives. he
cash is disbursed evenly throu"hout the year or as a percenta"e of the monthly
sales.
A lease payment( for e3ample( !ould "enerally be paid out evenly throu"hout the year(
ho!ever advertisin" is typically paid out as a percenta"e to sales. 0f there are other
choices( you must ma$e them manually !hen you "et to the cash ?o! sheet. Select
4ontinue to go to the ne+t sheet&
A Start-up Guide ( +3
Seasonal
2dIustment
s
he Seasonality sheet ta$es the annual revenue( and allocates it into diferent
months. here are t!o steps to this process. ,ariance is the term for the diference
bet!een re"ular( slo! and busy months. A hi"hly seasonal industry !ould have
hi"h variance. A less seasonal industry !ould be medium or slo!.
he e3pected activity as$s for one of three choices for each month. Will it be a
slo!( re"ular or busy month= hese decisions tri""er a formula for a monthly percent
of sales that is displayed in the percenta"e of sales column. he monthly revenue
forecast is the percenta"e of monthly sales multiplied by the annual revenue( !hich
is ta$en from the pro-forma income statement. 5ou can immediately see the efect of
each choice on the monthly revenue forecast.
Select 4ontinue, and ou will see our cash ?ow forecast&
-ou can now go bac, and change assu%ptions until ou are happ with the results of
the financial plan& 'an people find it helpful to sa#e diferent #ersions& Si%pl select
"Sa#e As" fro% the File %enu to sa#e diferent #ersions of our plan&
+7 ( Business Planning and Financial Forecasting
Small Business BC
Comprehensive business information and business plannin" resources for
startin" and "ro!in" a business in British Columbia
+ &** ))/-''/'
!!!.smallbusinessbc.ca
Business?ateway.ca
he Government of Canada#s main site for business information
+ &)) '&/-1'&J
!!!.business"ate!ay.ca
*neStop Business $egistry
8nline Business :e"istration and Chan"e of Business Address
!!!.bcbusinessre"istry.ca
eBC eBusiness Connection
e-business information resources for small and medium-siFed businesses
+ )*1 //2-/2J'
!!!.e-bc.ca
'nvestment Capital Programs
Accelerate access to capital
,enture Capital -ro"ram - Employee 8!nership -ro"ram
+ &** ))2-)2P/
!!!.e>uitycapital."ov.bc.ca
?overnment 2gents
-rovince-!ide access to "overnment services includin" $ey "overnment
transactions for business
+ &** ))J-/&)/ ?En>uiry BC@ to be transferred to the nearest Government A"ents 8fce
!!!."overnmenta"ents."ov.bc.ca
Community Futures "evelopment 2ssociation of British Columbia
Business counselin" and assistance for ne! and e3istin" business in rural British Columbia
!!!.communityfutures.ca4provincial4bc4
=omen&s Bnterprise Society
Business information counselin" and s$ills trainin" for !omen entrepreneurs
+ &** )1J-/*+1
!!!.!es.bc.ca
4a SociJtJ de dJveloppement JconomiEue
he %rancophone Economic Development 8r"aniFation enhances the vitality of minority
lan"ua"e communities and assists !ith economic development
!!!.sdecb.com
Ministry of Small
Business
and Economic
Development
!!!.smallbusinessbc.ca !!!.!d.ca !!!."ov.bc.ca4sbed
doc_467770127.docx
The planning outline provided in this guide leads you through a series of questions and issues that you should consider when thinking about your business. Remember that you are an investor in your own business. You are the first person who must have confidence in the validity of your business concept.
Business Planning and
Financial Forecasting
A Start-up Guide
Ministry of Small
Business and
Economic
Development
Ministry of Small
Business and
Economic
Development
Business Planning and
Financial Forecasting
A Start-up Guide
Western Economic Diversification Canada and the
Ministry of Small Business and Economic Development are pleased to publish
Business Planning and Financial Forecasting: A Guide for Business Start-Up.
his !eb-based "uide is available on Small Business BC#s !ebsite by clic$in" on
Small Business Guides at !!!.smallbusinessbc.ca.
%or all your other business information needs "o to British Columbia#s a!ard-
!innin" resource centre for business information and plannin" tools.
Small Business BC
Suite &'( )*+ West Cordova( ,ancouver( BC ,)B +G+
-hone. oll %ree + &** ))/ ''/'
0n Greater ,ancouver )*1 //2-22'2
%a3. )*1 //2-22'*
e-mail. visit !!!.smallbusinessbc.ca4email
!ebsite. !!!.smallbusinessbc.ca
he
Business -lan
0ntroduction
5ou !ant to start a business - or e3pand your e3istin" business. 5ou have a "reat
idea( super attitude and the entrepreneurial spirit. So you head do!n to your local
ban$ or financial institution6 you sit do!n in front of the credit mana"er and start to
e3plain this brilliant idea !hen she interrupts you. "That sounds great, but where
is our business plan!"
his scenario is played out every day in Canada - people !ith ideas !ho !ant to
plun"e into business !ithout havin" done a business plan. he purpose of this "uide
is to e3plain in simple terms the business plan concept and to sho! you ho! to put your
o!n plan to"ether.
A Start-7p Guide leads entrepreneurs throu"h the business plannin" process. By
describin" everythin" from ,ision and Mission to 8perational Strate"ies( the Guide
provides an easy to read description of your ne! business concept. he afliated
9%inancial -lannin" emplate9 helps entrepreneurs assemble their Startin" Balance Sheet(
-ro-%orma 0ncome Statement and first year Cash %lo! %orecast. his MS E3cel template
is available at http.44!!!.cse."ov.bc.ca4:eports-ublications4 %inancialemplate.;<.
There is plenty of help available to you including courses from your local colle"e or
school board and of course the services and information resources of Small Business
BC( includin" the "nteracti#e Business Planner located at !!!.smallbusinessbc.ca4ibp.
Why do a Business -lan=
Your own thinking process is solidified through the planning
process.
he plannin" outline provided in this "uide leads you throu"h a series of >uestions
and issues that you should consider !hen thin$in" about your business. $e%e%ber that
ou are an in#estor in our own business& 5ou are the first person !ho must have
confidence in the validity of your business concept.
Your bank or financial institution will need to be convinced of the
viability of your business, or your business epansion.
he business plan is a co%%unications tool to inform and in?uence the reader to!ards
some action - providin" a loan( e3tendin" credit or investin" in your business.
Your business plan provides some guideposts in running your
business.
5ou !ill set "oals and then( once you are in business( you can measure those "oals
a"ainst the actual performance. Goals should be specific( measurable( achievable(
realistic and time limited - S'A$T.
A Start-up Guide ( !
What is in a business plan
here seem to be as many $inds of business plans as there are business
plannin" "uides. here are t!o !ays to loo$ at the business plan. by sta"e of
development( and by tar"et reader. 7nder the sta"e of development( there
are "enerally t!o !ays to divide the plannin" style. start-up plans and plans for
on"oin" businesses. 7nder the tar"et reader there are also t!o !ays to loo$ at
the plan. an inside reader and an outside reader.
Graphically( !e can loo$ at it this !ay.
E3istin" Business )oan or "n#est%ent Strategic Plan
Stage of
"evelopment
Start-up )oan Proposal *perational Start-up
E3ternal 0nternal
#arget $eader
here are of course many variations on the "eneral cate"ories. ?%or e3ample( a
rapidly "ro!in" business re>uires a sli"htly diferent emphasis for both its strate"ic
and loan 4 investment plan.@ Althou"h there are diferent plans and diferent readers(
there are similarities in each of the four plans - includin" the financial forecast( !hich is
common to all business plans.
A business plan "eared to an e+ternal reader is !ritten !ith a specific obAective in
mind - usually a loan or an investment. Before !ritin" the e3ternal plan( you as the
business o!ner must believe in your business. After all( ho! can you convince a
ban$ or financial institution to lend( or an investor to invest( unless you are personally
convinced of the validity of the business=
A business plan "eared to the internal reader serves t!o purposes. 0t is a road
map for ta$in" the business in a particular direction. 0t is also a litmus test for the
business. Settin" "oals and obAectives is one thin"( but determinin" the steps
needed to accomplish these "oals is >uite another. he plannin" process allo!s
the entrepreneur to determine !hat mi"ht or mi"ht not !or$. %or e3ample( a
business o!ner may research the idea of openin" a chain of stores only to discover
that franchisin" is a more efective !ay to e3pand the business. <i$e!ise( in a
start-up situation( an entrepreneur may discover durin" her mar$et research that
her hometo!n is not lar"e enou"h to provide a sustainable mar$et for her chosen
endeavor. She can then consider a diferent type of business( or start her business in
a diferent location.
% ( Business Planning and Financial Forecasting
his Guide
This guide to Business Planning
and Financial Forecasting is written for the Start-up
Business to co%%unicate with an e+ternal reader, with special e%phasis on ban,s or
financial institutions&
Be clear and inform
5ou cannot assume that the reader of your plan $no!s anythin" beyond !hat
you have stated in the plan. 5ou may $no! !hat you mean( but have you clearly
e3plained it to the reader= As you "o throu"h this outline( constantly as$ yourself
if you are ma$in" yourself clear to a reader !ho is not familiar !ith your industry or
your business. -our business plan %a be our onl representation to an outside part
such as a ban, or financial institution. 0n most business start-up situations( the lender is
basin" their decision on the viability of the business and the character of the
entrepreneur. 5our business plan not only represents your business ? it represents
you.
Bere are a fe! tips on the actual !ritin" of the plan.
"o&s
? ry to $eep it fe!er than t!enty pa"es( e3clusive of the appendi3.
? 7se bullet points and numbered lists !herever possible.
? 7se( but do not overuse( "raphs( dia"rams and photo"raphs.
? Bave a neutral third party read the plan - especially someone unfamiliar !ith
your industry.
? 0nclude a table of contents and pa"e numbers in your plan.
"on&ts
? Avoid bi" !ords and lon" sentences. hey only serve to confuse the reader.
? Don#t use technical !ords and unnecessary Aar"on. 0f you need to introduce a
technical term( then you should define it.
? Avoid usin" acronyms and initials to e3press !ords is another common error.
5ou may be very familiar !ith the acronym but your reader mi"ht not. 0f an
acronym has become as common as a !ord( such as SC7BA or <ASE
then use them. 0f they are still technical( such as 7:< then you may need to define the
acronym and its meanin".
8utlinin" your business plan
here are many diferent outlines you can use for your business plan. he follo!in"
outline is desi"ned specifically for the reader. A "ood plan for an outside reader
anticipates and ans!ers the readers concerns and important issues. o see a sample
plan( "o to. !!!.smallbusinessbc.ca.
-lannin" 8utline
'ntroduction
? Business Concept
? -lan Goals and 8bAectives
? Mana"ement 4 8!nership
Products ( Services
? -roduct 4 Service Mi3
? -roduct 4 Service :is$s
)arket $esearch
? 0ndustry :esearch
? Customer :esearch
)arketing Strategies
? -ricin"
? -hysical Distribution
? -romotion
*perations
? -rocess
? -rocurement
? -ersonnel ?Buman :esources@
? <e"al and Administrative
Finance
? Brea$even
? Startin" Balance Sheet
? -ro-forma 0ncome Statement
? Cash %lo! %orecast
? -ro"ram and %inance
A Start-up Guide ( +
Eurpose. The purpose of aecuti#e su%%ar is to get the readers attention
b
P
lements of the e+ Business -lan
su%%ari/ing the ,e ele%ents of the business plan& "t %ust be short, to the point and
#er well written&
his is ar"uably the most important part of the business plan. he "ntroduction must
ma$e your reader !ant to $eep readin". 0t is a "ood idea to !rite as much of the
"ntroduction as you can at the outset of the plannin" process. his initial !ritin" !ill
help you to focus your attention on the "oals of the plan. 5ou should then rewrite
the "ntroduction after you have completed the rest of the business plan. his !ay
the specifics of the plan( and the chan"es made durin" the plannin" process are
accounted for. 5ou are addressin" the issues of !hat you do( !here you are "oin" in
the short term and !hat you !ant from the reader of the plan. This section of the
plan should be two to three pages long&
Business Concept
? Describe !hat your business does in "eneral terms.
? 0nclude your mission or vision statement.
? Describe !hat differentiates your business from others. his is important to
the reader( as they !ant to $no! ho! your business !ill be able to create ne!
customers. What do you offer that !ill ta$e customers a!ay from competitors=
? Briefly describe your business history if applicable.
? -rovide any other information that !ill e3cite the reader about your business.
Goals C 8bAectives
? ell the reader !hat you !ant ?e.". a business loan for a specific amount to
purchase e>uipment@.
? State your sales( production and profit "oals. Be specific in amount and time
line.
? 0f this is for a ban$ loan( comment on "oals such as anticipated time to achieve
a positive cash flo! and the ability to service debt. ?Dote you cannot complete
this section until the rest of the plan is complete.@
Mana"ement 8!nership
? Briefly describe the technical >ualifications of each principal in this enterprise.
? Briefly describe the business >ualifications of each principal in this enterprise.
? ell the reader your business structure ?i.e. proprietorship( partnership( and
incorporation@.
? -rovide a fact sheet !ith contact information such as name( address( telephone(
e-mail( etc.
, ( Business Planning and Financial Forecasting
-roducts and Services
Purpose- The purpose of the product0ser#ice section is to detail e+actl what our
business does for the custo%er and what %a,es these oferings desirable&
Product *riented Businesses
? Describe each product you sell. he combination of products is your
product mi3.
? 0f you cannot list each product( brea$ the business do!n into lo"ical
cate"ories.
? Describe the $ey product features( and ho! your products are different from
those of your competition. ?%unctionality( durability( ease of use( etc@.
? Describe product protection such as patents( copyri"hts and trademar$s.
Service Businesses
? Describe each type of service you offer ?be specific@.
? Describe the service features in terms important to the customer. ?
Describe any service protection such as copyri"hts or trademar$s.
Product $isks
0f there are any ris$s associated !ith your product or service such as product liability(
professional liability( or ease of duplication by competition( state them and describe ho!
you !ill miti"ate these ris$s.
Mar$et :esearch
Purpose- The purpose of the "ndustr and 'ar,et $esearch section is to pro#e that
the %ar,et is large enough in our area to support the sur#i#al and growth of our
business&
'ndustry $esearch
Describe your industry. 0f you are in a ne! industry( or an industry not !ell $no!n
to a reader( this !ill be a fairly comprehensive section. A better $no!n industry
re>uires less e3planation.
? Describe the state of the industry. 0s it a ne! industry( "ro!th industry(
competitive industry( or a stable mature industry=
? Document industry trends on a local( national or !orld scale. Sales( number
of customers( number of units sold( trends in related industries are all "ood
industry indicators.
? Describe the $ey customers for your specific industry.
? -rovide other national4international economic indicators that encoura"e the
health of your industry.
? E3amine ris$s to the industry caused by le"islation( technolo"ical chan"e or
any threat to the industry as a !hole.
A Start-up Guide ( .
#arget )arket / Customer $esearch
he ar"et Mar$et is the "roupin"s of consumers or businesses most li$ely to
purchase your products or services. he first "roup you plan to tar"et is your
Pri%ar Target 'ar,et6 the second is your Secondar Target 'ar,et. 0t is very
important that you understand your tar"et mar$ets ? after all( these are the
customers you need to $eep happyE
Who is the customer? (Provide
both the description and the
information in this section.)
Where is the customer?
Consumer Markets
• Age
• Gender
• Income
• Family Status
Be sure to include ho many
customers there are in each
grouping.
!arget the geographic radius of
Business Markets
• Industry !ype
• Si"e of #ustomer
• Annual Sales
$stimate the number of companies
using directories or %ello Pages.
!he geography of business to
your customer base by city& region business mar'ets tends to be larger
province or country. than consumer mar'ets.
When do they buy? Is there a particularly busy season If you are selling to seasonal
What do they buy?
Why do they buy?
How much do they buy?
for your product or service(
• )ecessity
• *u+ury Item
• ,igh involvement-Big tic'et
• *o involvement-consumable
,o does your product or service
help the consumer(
.etermine ho much is spent on
your product by your customers.
businesses& the timing can be
everything. (e.g. holesaling)
• Inventory Item
(e.g. item that is resold)
• #apital Item
• #onsumable Item
,o does your product enhance
the performance of the customers/
business(
$stimate the commercial
e+penditure by the industries in
your target area.
0ote- "f ou are using indirect distribution, it %a be necessar to describe both our
custo%ers as a target %ar,et, and the end user as a target %ar,et&
0t is a "ood idea to state your sources. his "ives the reader more confidence in
the information and in the case you are ma$in" for your business.
1 ( Business Planning and Financial Forecasting
Competitive 2nalysis
? -rovide the results of any customer survey !or$ you have done and the sources
of information.
? <ist the direct competitors in your local mar$et. hese are firms !ho offer
e3actly !hat you offer. <ist the current number and the number in e3istence for
the past three-year period.
? <ist the indirect competitors in your local mar$et. hese are firms !ho offer
substitute products.
? AnalyFe any competitors !ho have "one out of business in the past and if
possible describe !hy their business failed.
? E3plain ho! your firm !ill compete !ith these competitors to prove ho! you
can survive in their mar$ets.
? E3amine ris$s that could occur !hen you enter the mar$et. %or e3ample( !hat
if your $ey competitor cuts their price !hen you open your business=
? -osition your product. Sho! ho! your products4services or company is
different from your competition.
Mar$et Strate"ies
Purpose- The purpose of the 'ar,eting section is to de%onstrate how ou plan to tap
our %ar,et& This includes pricing, distribution, sales and pro%otional strategies&
Mar$etin" is one of the most misunderstood aspects of business.o many( mar$etin"
is sales and promotion. Sales and promotion are important elements of mar$etin"( but
mar$etin" is a broader concept. 0t envelops the desi"n and pac$a"in" of a product
- the price and discountin" strate"ies for the business - and the intimate $no!led"e of
the current and future needs and !ants of the tar"et mar$et. o create a balanced
approach you should research all elements of mar$etin"? not Aust advertisin"( sales and
promotion. Bere are some of the $ey elements of mar$etin" you !ant to address in
your business plan.
Price Strategy
? What are your prices for different products and services=
? Bo! did you arrive at those prices= ?i.e.( Char"e "oin" rate( industry standard
mar$-up( etc.@
? Do you have any price pac$a"es=
? What is your price ima"e= ?i.e.( bar"ain( middle of the road( hi"h end@ 0s this
consistent !ith your tar"et mar$et=
? Bo! do your prices compare !ith your competition=
? Bave you accounted for mar$do!ns and off price promotions=
A Start-up Guide ( 3
Physical "istribution
Describe !hich of the follo!in" distribution systems you plan to use in your
business.
? Direct Distribution - sellin" directly from producer4provider to the customer. ?
Wholesale Distribution - sellin" to a retailer !ho sells to the customer.
? Bro$ers or A"ents - usin" a third party to sell the product - usually on a
commission basis. his can be done for "oods ?Manufacturers# A"ents@ or for
services ?Spea$er#s Bureau@.
? Bybrid Distribution - 7sin" more than one of the above. ?
0nternet Sales - See 0nternet Strate"ies Section.
4ocation
? Dei"hbourhood <ocation ?use a [email protected] counts and supportin" information
such as population radius is helpful. $e%e%ber to include direct and indirect
co%petitors on our %ap&
? Site <ocation - place in a mall( shoppin" centre( or city bloc$. Sho! the other
tenants and access4e"ress for par$in" if applicable.
? %acility <ocation - includin" a dia"ram of the business layout. ?
Si"na"e - both inside and outside the business.
? <ocation ris$s. %or e3ample( a median placed in the middle of your road !ill cut
off access to your business. Chec$ !ith your city-plannin" department before
si"nin" a lease.
Advertisin" C -romotion
5our promotional strate"y is made up of three main areas. Dot all businesses use
all three( so only include the parts relevant to your situation. Small Business BC has
resource people dedicated to help clients !ith this aspect of your business.
2dvertising Plan 5Paid 2dvertising6
? -rovide a list of the media you plan to use. 5ou may include ne!spapers(
ma"aFines( radio( television( direct mail or 0nternet advertisin".
? Develop a monthly advertisin" schedule !ith planned bud"et amounts.
? 0f you have !ritten any ads or brochures( include them as appendices to the
business plan.
Public $elations Plan
? 0nclude media sources you plan to use to promote your business.
? 0nclude press releases in the appendices to the business plan.
? 0f you are usin" a -ublic :elations firm indicate the name of the firm in this
section.
Personal Selling Plan
? Describe ho! you !ill prospect and find ne! customers.
7 ( Business Planning and Financial Forecasting
? Describe ho! you !ill provide ne! customers !ith information.
? 0f you have letters of a"reement( contracts or other sales tools( it is sometimes
advisable to include them as appendices to the business plan.
'nternet
Canada uses a consumer benefit model $no!n as 0CE. 5ou should describe your
0nternet strate"y in the same !ay !ith the follo!in".
? 0nformation Gatherin" -his includes the information provided to the consumer
about your business( products and services.
? Communication - his includes more specific forms of t!o-!ay communication
such as customer service and feedbac$ mechanisms.
? Entertainment - his is the multimedia aspect approach to your site. his
includes animation( sound clips and video clips.
? ransactions - his is the ability to actually order and pay for products over the
0nternet.
8perations
Purpose- The purpose of the *perations section is to indicate how ou plan to operate
the business& This %eans how ou will produce the ser#ices or pro#ide the products&
Production Plan 5)anufacturing Businesses6
he production plan demonstrates your ability to produce products. his section
may not apply to service businesses.
Production Flow Chart 5)anufacturing businesses6
? -rovide a flo! chart4process dia"ram sho!in" the entire production process
from start to finish.
? <ist and bud"et production e>uipment re>uired for the business.
Procurement 5Businesses that manufacture or sell products6
? Sources of supply and order lead time.
? erms and conditions of sale.
? Alternate sources of supply ?this addresses procurement ris$@.
? 0nventory control systems.
? -hysical space re>uirements ?unless covered in location sections@.
Sub Contractors 5both goods and services6
? -rovide a list of sub-contractors.
? Sho! e3actly !hat these sub-contractors do and !here they fit into the
production of the business.
? Sho! alternative sub-contractors ?this addresses sub-contract ris$@.
A Start-up Guide ( 8
Buman :esources
Purpose- The 1u%an $esources section de%onstrates how ou will deter%ine our 1$
needs, fill the%, %anage our staf and pa the%&
Stafng
? 8r"aniFational chart ?sho! reportin" structure@.
? Gob descriptions ?sho! !hat people do@.
? Gob specifications ?sho! the s$ills and $no!led"e re>uired to do each Aob@.
? :ecruitin" - Where !ill you find "ood people=
? Mana"ement - Bo! !ill you treat those "ood people=
? Compensation - Bo! much !ill you pay your people= his includes base !a"es(
commissions( bonuses and other incentives. ?Don#t for"et your statutory benefits
of E0( C--( WCB C Boliday pay( in addition to any benefits you plan to add.@
? Buman resources ris$s. <oo$ at contin"ent plans for loss of $ey personnel(
labour shorta"es or stri$es.
Professionals ( )entors
? Accountant
? <a!yer
? Ban$ Services
? Business Advisors and Mentors ?it can be helpful to provide sin"le-para"raph
bio"raphies on $ey business advisors.@
4egal ( 2dministrative
? <e"al %orm ?proprietorship( partnership( corporation( cooperative@.
? Share Distribution ?Corporation 8nly@
? Directors C 8fficers ?Corporation 8nly@
? Buy Sell A"reement ?Corporation and -artnerships 8nly@
? <ist of $ey le"al a"reements such as contracts( leases( a"reements( franchise
a"reements( personal loan "uarantees etc. he actual documentation is often
put into the appendi3 of the business plan.
? 0nsurance4:is$ mana"ement
%inancial -lan
Purpose- To show the financial re2uire%ents to start the business, and to ,eep the
business profitable and li2uid&
? Startin" Balance Sheet
? -ro-%orma ?%orecast@ 0ncome Statement
? Cash %lo! %orecast
? Dotes to the %inancial -lan
? Statement of -ersonal Det Worth ?for lendin" purposes@
!9 ( Business Planning and Financial Forecasting
Appendices
Purpose- The purpose of the appendices is to pro#ide supporting docu%ents for clai%s
%ade in the business plan& The %a not necessaril be read, but are there for reference
purposes&
? :esumH?s@ of principals
? <etters of a"reement 4 intent ?potential orders( customer commitments( letters
of support@. his adds a "reat deal of credibility to the outside reader( includin" the
ban$ or financial institution.
? Sample ads and brochures ?
Collation of mar$et surveys
? 8ther
? -rice lists
? -ersonal net !orth statement ?includin" personal property values( investments(
cash( ban$ loans( char"e accounts( mort"a"es( other liabilities. his !ill
substantiate the value of your personal "uarantee if re>uired for security.
? <ist of inventory ?includin" type( a"e( value@
? <ist of leasehold improvements ?includin" description( !hen made@
? <ist of fi3ed assets ?includin" description( a"e( current mar$et value of any
e>uipment6 le"al description of any lands6 description of any encumbrances on
assets to be pled"ed for business purposes@
? Description of insurance covera"e ?e.". insurance policies( amount of
covera"e@
? A"ed accounts receivable summary
? A"ed accounts payable summary
? Copies of le"al a"reements ?e.". contracts( lease( franchise a"reement( mort"a"e(
debentures@
? Appraisals ?include recent appraisals of assets such as buildin"s( property( and
e>uipment or provide a mar$et evaluation of the business and an asset list
outlinin" the asset( the year purchased and amount paid@
? %inancial statements for associated companies ?!here appropriate@
? Dame of present lendin" institution ?includin" branch( type of accounts@
? <a!yer#s name ?include address and phone4fa3 number@
? Accountant#s name ?include address and phone4fa3 number@
Some final thou"hts on plannin"
A famous "eneral once said. ""n preparing for battle, " ha#e found that plans are useless,
but planning is indispensable&" Startin" a business is a "reat underta$in". 5ou !ant to
be prepared. So here are some tips to $eep in mind !hile in the plannin" process.
? Ieep an open mind. Don#t try to ma$e somethin" !or$ that cannot !or$( Aust
because you li$e the idea.
A Start-up Guide ( !!
? :emember the :ule of ' and J. 0t ta$es t!ice as much money and three times
as lon" as !e anticipate. So plan accordin"ly.
? Be fle3ible - !hile developin" the business plan other ideas( mar$ets( products
or services may come to mind. E3plore them.
? Ma$e your mista$es on paper - it is far cheaper than ma$in" them in real life.
? Ieep plannin"E 0t can be difficult to plan !hen you are runnin" your business(
but it is very useful to re-e3amine your "oals and obAectives on a re"ular basis.
Don#t ever let the business s>uee"ee out the creative entrepreneur.
:se all available resources to help you develop your plan.
his can include formal and informal mentors( other entrepreneurs or friends
!ho !ill act as the 9devil#s advocate.9 Small Business BC provides a business plan
revie! service( and an "nteracti#e Business Planner at !!!.smallbusinessbc.ca4ibp.
Community %utures Development Corporations ?C%DCs@( throu"hout rural British
Columbia( are another e3cellent source of business advice. o locate your nearest
C%DC "o to !!!.communityfutures.ca4provincial4bc and clic$ on )ocations.
2re you ready for the lifestyle;
Self-employment is not for everybodyE ry one of the many self-assessment "uides.
Western Economic Diversification Canada ofers such a test at http.44!!!.!d."c.
ca4tools43inde3Ke.asp. It will at least make you more aware of the entrepreneurial
lifestyle and the challen"es.
)ost of all / be persistent.
Sometimes you !ill try many variations on a theme. 5ou may have to increase
or decrease a product mi3 - chan"e the !ay you distribute your product or even
chan"e the business.
!% ( Business Planning and Financial Forecasting
' he %inancial -lan
0ntroduction
he financial plan is critical to the success of your business plan - especially if it is
for the purpose of "ettin" a ban$ loan. he Cash %lo! %orecast is ar"uably the most
important part of the plan( but each of the other documents is important from a
plannin" perspective. here are three sections in a financial plan.
• he Startin" Balance Sheet
• he -ro-%orma ?or %orecast@ 0ncome Statement
• he Cash %lo! %orecast ?each of these sections should have notes of e3planation
for the reader@.
he %inancial -lannin" emplate
o assist you in this process( !e have created a template !ritten for MS4E3cel. Clic$
here to access the template. his !ill ta$e you throu"h seven !or$sheets( each
as$in" for financial information. his information is then assembled into the three
statements described above. 0nformation can be chan"ed( and the results of the
chan"e are immediately calculated. his !ill ta$e you to a reasonable first draft
of your financials ? but you !ill have to ma$e some final adAustments for your particular
situation.
0f you are usin" a printout of this "uide you can find the E3cel template under
http.44!!!.cse."ov.bc.ca4:eports-ublications4%inancialemplate.;<.
Before 5ou Get Started
#he Beauty of <=hat 'f;<
0t is almost impossible to "et thin"s ri"ht the first time. 0n all business plannin"( but
especially in the financial section( it is important to try diferent scenarios. What if
0 purchase used e>uipment instead of ne! e>uipment= What if 0 raise or lo!er
prices= What if 0 reduce my personal dra!= By tryin" diferent scenarios( you !ill
soon determine !hat it !ill ta$e to ma$e your business financially viable.
With business plannin"( you must $eep tryin" until you have a result that is
reasonable and that you are convinced is achievable.
Five #ips on your Financial Plan
!. Be persistent> Most people do not have e3pertise in finance so preparin" a
financial plan is a Aourney into the un$no!n. Be patient.
%. $ead the entire planning guide before startin" on the plan. 5ou !ill learn
!hat information you re>uire to assemble the financial part of the plan.
+. ?et help in assembly, but not in research. hese should be your numbers
and assumptions. 5ou !ill be responsible for achievin" these obAectives so you
should believe in the numbers.
%inancial -lan
8utline
Starting Costs
? Estimate Current Assets
? Estimate Capital Assets
? Estimate Start-up E3penses
Starting Balance Sheet
? otal Assets ?from above@
? -lanned 0nvestment ?E>uity@
? -lanned <oans ?<iabilities@
? Balance Sheet %ormula
? Assets L <iabilities M E>uity
'ncome Statement
? Start-up E3penses ?from
above@
? %orecast :evenue
? %orecast Cost of Goods
? %orecast 8verhead E3penses
? :evenue - E3penses
L Det -rofit
Cash Flow
? Estimate Monthly Sales
? AdAust Monthly Sales for A:
? Account for loans C
investments
? Calculate otal :eceipts
? Estimate Monthly -urchase
? AdAust for A-
? Estimate Monthly 8verheads
? Estimate <oan :epayment
? %or!ard Start-up Costs
? Calculate Disbursements
? Startin" Balance
M :eceipts
- Disbursement
L Endin" Balance
A Start-up Guide ( !+
,. Be consistent. Ma$e sure that your financial plan is consistent !ith the rest
of the business plan. %or e3ample( if your pricin" section mentions a mar"in of
1*N( this should be reflected in your 0ncome Statement.
.. :se the simple template provided. ?0t is an 3+cel do!nload.@ Althou"h it !ill
not provide a final plan( it !ill "et you !ell on your !ay in the Aourney. Go to
http.44!!!.cse."ov.bc.ca4:eports-ublications4%inancialemplate.;<.
Calculating #he Break/even
he brea$-even point in your business is the point at !hich your sales revenue
e>uals your total e3penses. At that point you neither ma$e money( nor do you lose
any. he brea$-even lets you $no! !hat it is "oin" to ta$e in sales Aust to survive. 0t
provides a "ood indication of the viability of a business proAect.
he brea$-even can also be used to evaluate a business e3pansion or any other
business e3penditure. 5ou are simply as$in" ho! much additional revenue !ill be
re>uired to cover the additional cost. here are some $ey definitions necessary to
determine the brea$-even for the business. hey are.
Fied Costs 5*verhead6 are costs that do not vary directly !ith sales. 7tilities(
salaries( advertisin"( office supplies and telephone are Aust a fe! e3amples. hey
do not have to be the same every month. What is important is that you pay
them re"ardless of sales made.
@ariable Costs 5Cost of ?oods6 are the actual costs of ma$in" the product
or providin" the service. hey can include materials( shippin" and contract
labour.
Capacity governs your output. 0t can be measured in units of production(
billable hours( or sales volume. o calculate the brea$-even in units !e use the
follo!in" formula.
Fied Costs
A Break/even in :nits
5:nit Price / :nit Cost6
his method is $no!n as Total Absorption 4osting( because dividin" the total cost by
the units sold absorbs the fi3ed costs. Every business plan - be it for "ro!th or for
start-up - needs to establish proAect and business costs before proceedin".
0ote- For planning purposes treat the entire ter% loan pa%ent, both principal and
interest, as a fi+ed cost to the business&
!, ( Business Planning and Financial Forecasting
Bample
5an is a ho%e-based potter who %a,es custo% %ugs b the case& 1er capacit
is no %ore than 67 cases of %ugs per wee,& She has calculated the #ariable cost for
each case, including cla, gla/e and pac,aging to be 879 per case& "t costs 5an 8:,999
per wee, to run her business, including her wage& The cost per case, when we include
the 8:,999 per wee, in fi+ed costs, changes depending on the nu%ber of cases
produced each wee,& This is calculated in the table following&
Units
Produced
0
1
2
8
3
45
44
46
47
48
40
Fixed
Costs
9 7&555
9 7&555
9 7&555
$
3!!!
9 7&555
9 7&555
9 7&555
9 7&555
9 7&555
9 7&555
9 7&555
"ariab#e
Costs
9 605
9 755
9 705
$ $!!
9 805
9 055
9 005
9 155
9 105
9 255
9 205
Price Per
Unit
9 105 9
005 9 823
$ $%& 9
7:7 9 705
9 767 9
755 9 6:4
9 618 9
605
Dotice that the brea$-even is not a point( but it varies for each diferent price point.
0f she can "et O1'2 per case for her mu"s( she needs to be able to produce
and sell ei"ht cases of mu"s per !ee$. We can plot this on a "raph as follo!s.
???????
?????
??
?????
??
?????
??
?????
??
?????
??
?????
??
?????
????
????
??
???
?
he area above the line
is profit and the area
belo! the line
represents loss.
??
? ? ? ? ? ?? ?? ?? ??
??????????????
Break Bven with a ?ross Profit )argin
Sometimes( a company does not sell products( or it sells so many diferent
products that doin" a brea$-even for each unit does not ma$e sense. When this is the
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
case( such as in a retail business( !e calculate the brea$-even in revenue rather than in
units.
A Start-up Guide ( !.
his is done !ith the follo!in" formula.
Fied Costs
?ross )argin
Where.
5Price / Cost6
Price
A Break/even in :nits
A ?ross )argin
here are industry standard financial ratios available from 0ndustry Canada for many
small businesses. hey are found at the Strate"is !ebsite !!!.strate"is.ic."c.ca.
Fied Costs
Bample
Sarah wants to start a retail gift store& She esti%ates her %onthl fi+ed costs at
8;,999 per %onth& She deter%ines that the industr standard Gross 'argin for a
gift store is <7=& She calculates her brea,-e#en as follows:
C8,999
A C%9,999 per month
,.D
Sarah %ust be con#inced that this location is able to sell at least 8>9,999 per %onth
?or 8><9,999 per ear@ before she starts her business& 1er %ar,et research, phsical
location, pro%otional plans and phsical si/e %ust all support at least this le#el of
sales capacit or the business will not wor,&
he brea$-even is a "reat first step in e#aluating business opportunities. he business
should ma$e a profit( but the brea$-even is often the first step in determinin" the
viability of a business idea.
he Balance Sheet
he Balance Sheet is a snap shot of the business at any point in time. 0n the case of
a business start-up( it is often the startin" balance sheet. A balance sheet is made
up of three parts.
2ssets- hin"s a business o!ns
4iabilities- Debts a business o!es
BEuity- he o!ners# investment and re-investment in the business
Everythin" that the business o!ns ?its assets@ must bepaid for6 free of debt o!in".
herefore !e "et the follo!in" formula.
2ssets A 4iabilities F BEuity
!1 ( Business Planning and Financial Forecasting
his is e3tremely important as it "ives the reader a picture of ho! the business is
bein" financed throu"h the o!ners#money ?e>uity@ or throu"h the creditors#money
?liabilities@. 0n a business start-up you should loo$ at the assets re>uired to "et the
business started - and then as$ yourself ho! you !ill finance that start-up. 0f you do
not have the money to invest into the business( you !ill have to borro! the
remainder.
Sample Balance Sheet
;%; #<=PA)% *!..
'ear (ndin) *u#y 3+ %!!&
,ssets
Current Assets
#ash
Accounts >eceivable
Inventory
Pre?Paid Insurance
-ota# Current ,ssets
Capital Assets
=acheriny @ $Auipment
Automobiles
*easehold Improvements
-ota# Ca.ita# ,ssets
90&555
945&555
98&555
94&655
$%!%!!
94:&555
965&555
968&555
$/%!!
!
0iabi#ities
Current Liabilities
*ine of #redit
Accounts Payable
Bages Payable
#urrent Portion of !erm .ebt
-ota# Current 0iabi#ities
Non-Current liabilities
!erm *oan
*ess #urrent Portion
Shareholders *oan
-ota# 1on Current 0iabi#ities
(2uity
Initial Investment
Retained Earnings
-ota# (2uity
96&555
94&055
94&555
96&555
$/&!!
965&555 ?
96&555
975&555
$$8!!!
$20,000
$7,700
$%33!!
Bo! to Do a Balance Sheet for A Business Start-up
This section relates to the Start-up 4osts section of the te%plate&
he start-up balance sheet is simple if you $no! ho! to ma$e and sort a list. 5ou need
to ma$e t!o lists to "et started. he first list is your list of 4urrent Assets& hese are assets
?thin"s your business o!ns@ !hich !ill be used up !ithin the first year of doin"
business. ypically they include cash( inventory and pre-paid e3penses ?such as pre-
paid insurance@. Althou"h Accounts :eceivable is another e3ample of a current asset(
there are no accounts receivables in a business start-up.
he second list is the 4apital Assets&hese are items you purchase !ith the intention of
$eepin" them and usin" them to run the business. %or e3ample( if you purchase a vehicle
to use in the business( it is a capital asset. 0f you purchase a vehicle to re-sell it( ho!ever(
then that vehicle is inventory.
A Start-up Guide ( !3
Sometimes there is a third asset list. hese are $no!n as 0ntan"ible Assets and
are thin"s such as franchise fees( "ood!ill( >uotas( licenses( patents and trademar$s.
hese are not common in most business situations e3cept !here you are purchasin"
an e3istin" business.
%orecastin" 5our Assets
2- "etermine and Budget your Current 2ssets
Startin" Cash ?5ou must have enou"h to cover your start-up e3penses@ O
Startin" 0nventory
O-re--aid E3penses ?7sually 0nsurance@
O8ther Current Assets
O#otal Current 2ssets 526 C
B- "etermine your Capital 2sset needs.
Machinery and E>uipment O
8ffice %urnishin"s( %i3turin" C 8ther
OAutomobiles
OComputers and Data -rocessin" E>uipment
O<easehold 0mprovements
Oools and other assets valued at <ess than O'**
OComputer Soft!are ?E3cludin" Systems soft!are@
O8ther Capital or 0ntan"ible Assets
O#otal Capital 2ssets 5B6 C
Your #otal 2ssets are 2 F B C
5our second step is to determine ho! you are "oin" to finance this total. What
combination of Debt and E>uity !ill allo! you to "et your business started=
%orecastin" your <iabilities and E>uity
This section relates to the Financing and Balance Sheet section of the te%plate&
Do! that you have an estimate of ho! much you need to "et started( you must
determine ho! best to finance your business start-up. here are only t!o places this
money comes from !hen you are startin" up ? loans or investment. ,enture Capital for
start-up businesses is e3ceedin"ly rare. Most businesses are financed throu"h
three sources. the o!ners( their suppliers and the ban$E
!7 ( Business Planning and Financial Forecasting
here are typically three sources of debt financin" in a business start-up. hey are.
Supplier Credit- Sometimes a supplier !ill provide credit to their customers.
7sually this is for inventory( ho!ever some suppliers !ill provide lon"er term
financin" for e>uipment or automobiles. Either !ay it is considered as a loan to the
company. Supplier credit is not al!ays afforded to a ne! business( so you may
need to finance your startin" inventory !ith ban$ debt or e>uity.
Bank #erm 4oan- A ban$ term loan is usually used for financin" the capital
assets of the business. 0t can sometimes be used to finance part of a business
start-up or business ac>uisition. he loan is repaid over a period of time( and the
interest rate may be fi3ed or floatin".
Bank 4ine of Credit- his is similar to an overdraft for a business. 0t is
important to use the line of credit to finance current assets and the term loan to
finance capital assets. 8ne sure !ay to have a cash flo! crunch is to have used all
your cash and line of credit to purchase a piece of e>uipment( only to run out of cash
due to a late payin" customer. 0t is not usual to finance a business start- up !ith a
line of credit. 0t is( ho!ever( acceptable to finance short-term cash deficits usin"
your line of credit.
Shareholders 4oans- his can only happen in a limited company. 5ou( as a
shareholder( lend money to the corporation. his is an alternative method of
investin" in the company. See$ professional advice before decidin" if usin" a
shareholder loan is the best strate"y for your business start-up.
'nvestment- his is the e>uity investment you put into your o!n company. he other
type of e>uity is $etained 3arnings( !hich are the profits( after income ta3( $ept in
the business to ensure its "ro!th. ?Ieep in mind there is no retained earnin"s in
a start-up company@.
A Start-up Guide ( !8
7sin" the information dicussed above you can create the
Starting Balance Sheet
,ssets
Current Assets
#ash
Inventory
Pre?paid $+penses
, -ota# Current ,ssets
Capital Assets
=achinery and $Auipment
<fce Furnishings& Fi+turing
and <ther
Automobiles
$
0iabi#ities
Current Liabilities
*ine of #redit
Supplier #redit
C -ota# Current 0iabi#ities
Non Current Liabilities
!erm *oans
Cendor #redit
Shareholder *oans
4 -ota# 1on Current
0iabi#ities
$
$
#omputers and .ata Processing
$Auipment
*easehold Improvements
!ools and other assets valued at
less than 9655
#omputer Softare (e+cluding
systems softare)
<ther #apital or Intangible
Assets
B -ota# Ca.ita# ,ssets
,5B -ota# ,ssets
$
$
C54 -ota# 0iabi#ities
(2uity
Investment
( -ota# (2uity
C545(
-ota# 0iabi#ities 5 (2uity
$
$
$
Dote that Total Assets 52FB6 are e>ual to Total Liabilities + Equity 5CF"FB6
he 0ncome Statement %orecast
This section relates to the Pro For%a "nco%e Sheet in the te%plate&
he purpose of the 0ncome Statement %orecast is to proAect the revenues and
e3penses of your business over a "iven period of time - usually one year. 8ther
terms for this are bud"eted income statement or pro forma income statement.
here are three thin"s that need to be predicted to forecast your income statement.
the sales proAection( the cost of "oods proAection and the overhead proAection.
#he Sales Forecast
he sales forecast is probably the most difcult part of the business to forecast(
especially for a startin" business. Sometimes( the brea$-even can provide a startin"
point for creatin" the sales forecast. A sales forecast is not li$e a !eather forecast.
A !eather forecast is somethin" you try to forecast( but somethin" over !hich
you have no control. A sales forecast is a "oal you set for the business that you
proactively try to achieve. 0n the case of an e3istin" business( you should loo$ at the
sales history. 5ou should see if your sales are trendin" up or do!n( and then account
for ne! products to be added( or old products to be ta$en a!ay. he sales forecast
%9 ( Business Planning and Financial Forecasting
must re?ect your business strate"ies and obAectives.
Forecasting using the :nit )ethod
<ist all the products or services you plan to sell. 5ou !ill need to forecast the
number of units of each type you plan to sell. Diferent businesses and industries use
diferent unit measures ?e.".( for a craftsperson( a unit may be one !ooden item6 for a
researcher( a unit could be one hour of time@. 5ou !ill have to estimate the sellin"
price for each unit. 5ou can then develop a sales forecast usin" the follo!in"
e>uation.
Price per unit G 0umber of :nits sold A $evenue
5our mar$etin" section must support sales volume and price and your operatin"
section must support this level of production. Demonstrate that you can ma$e this
number of units( sell this number of units and Austify the price you char"e.
Forecasting with the Sales )ethod
Sometimes a business cannot use unit sales( as it !ould be impossible to predict the
unit sales for each of 2(*** items in a "ift store. 0n this case( some business o!ners !ill
"o directly to revenue forecast. 0f the business is bro$en do!n into lo"ical
departments or cate"ories( then forecast the revenue in each area for the total sales
forecast. ry to compare this to the mar$et siFe and the number of competitors in the
mar$et.
#he Cost of ?oods Forecast
he cost of "oods forecast relates directly to the sales forecast. he cost of producin"
"oods varies directly !ith the level of sales. o calculate the cost of "oods forecast( you
may use either the unit costin" method or the percenta"e cost method.
:nit Costing )ethod
his method is e3actly li$e the unit sales forecast( e3cept instead of usin" price( you
use cost per unit.
Cost of goods A 0umber of units sold Cost per unit
Gust as in the unit forecast( you must do this for each unit sold. he sum of the cost
of "oods is then part of the income statement.
#he Percentage Cost )ethod
0n retail businesses( !here mar$-ups and mar$do!ns predominate( it is common to
use the cost complement to calculate the cost of "oods. he cost complement is the
percent of the revenue( or the sellin" price( !hich represents the cost of "oods. %or
e3ample( if an item costs O+'.** and is priced at O'*.** then the cost complement is
O+'.** 4 O'*.** L )*N. ?0f the cost complement is )*N then the Gross -rofit Mar"in
is 1*N@. 5ou can use the historical cost complement or industry standards to forecast the
cost of "oods and "ross profit for your income statement.
A Start-up Guide ( %!
#he *verheads Forecast
he overheads forecast is an estimate of your e3penses for the year. his list should
be similar to the list developed for the fi3ed costs of your brea$-even analysis. ypical
overhead e3penses include.
? Advertisin" and -romotion
? Automobile
? Ban$ and %inance Char"es
? Communications
? Depreciation
? 0nsurance
? Entertainment and Meals
? 8ccupancy
? 8!ners# Dra!in" or Wa"e
? Mail and 8ffice Supplies
? -rofessional %ees
? -rofessional Development
? Wa"es and Benefits
? ravel and Accommodations
? 8ther
he ne3t step is to ma$e cost estimates for each area. 5ou may do them monthly(
Sample 'ncome Statement
;%; P><P>I$!<>S,IP
Income Statement
%ear $nding .ecember 74& 6554
or annually( ho!ever( you !ill eventually need to $no! your monthly e3penditure
in each area for your cash ?o! forecast. Some of your forecasts !ill be a matter of
callin" a supplier and as$in" for a >uote - insurance is an e3ample of this $ind of
overhead. Sometimes( you !ill have to ma$e a mana"ement decision about ho!
6a#es
*ess #ost of Goods
Gross Profit
(x.enses
Advertising
.epreciation
Interest
>ent
!ravel
Bages
-ota# (x.enses
)et Profit
*ess <ner/s .ra
1et Pro7it a7ter 4raw
$+3!!!!
2:&555
06&555
4&055
0&555
6&555
8&555
155
2&555
$%!+!!
974&355
75&555
$ +8!!
much you plan to spend in order to achieve your revenue obAectives.
0f you have a business history( you should use that history as a "uide( ma$in" sure
that increases and decreases in cost are consistent !ith your revenue obAectives.
5ou should ma$e a brief note to the reader of the plan( describin" the $ey e3pense
of forecasted items ?i.e. you may have a >uote from a bro$er for your insurance
proAection@. his is especially true if( in an e3istin" business( there is a lar"e chan"e
in the statement.
0ote- The ter% draw in a Proprietorship refers to the %one that the owner ta,es out
of the co%pan& The profits ,ept in the business are ,nown as retained earnings& These
earnings are re?ected in the ownersA e2uit portion of the balance sheet& "t should also be
noted that in a proprietorship, inco%e ta+ is paid on the net profit - not the ownerAs draw&
#he Cash Flow Forecast
This in#ol#es three parts of the te%plate& The 4ash Flow "nfor%ation sheet, the
Seasonalit sheet and the resulting 4ash Flow&
A Cash %lo! %orecast is probably your most important financial tool. 0t is your
cash ?o! that sho!s you if( and !hen( you !ill run out of cash essential to run your
business. 0t allo!s you to ta$e action before problems occur and even do 9!hat if9
%% ( Business Planning and Financial Forecasting
calculations before ta$in" on ne! proAects. he cash ?o! is a +'-month proAection
that forecasts the receipts and disbursements for your business. 0n a start-up
situation( it is preferable to have a start-up month to specifically sho! the reader the costs
incurred to start the business.
Cash ?o! is ar"uably the most important aspect of business. his is due to !hat is
called the 4urrent Asset 4on#ersion 4cle& his is the time( in days( it ta$es to purchase a
product or materials( produce and sell an item( and then finally collect on that item.
Current 2sset Conversion eample
%or e3ample( suppose a business purchases O+(*** !orth of ra! materials at the
be"innin" of the month. hey ta$e one month to produce the product( one month to
sell the product for O'(*** and one-month to collect their cash from their
customer. 0f they do not receive any vendor credit for their ra! materials( the process loo$s
li$e this.
Sell
Purchase Collect
We have to put out O+(*** at the be"innin"( but do not collect O'(*** for three
months. We still need to pay the overhead e3penses in the interim. Without cash( or
access to credit( !e can "o ban$rupt before collection. hen !e need to !orry about
sellin" the product in a timely manner and collectin" in a timely manner. %ailin" to
understand this part of business is one of the reasons that many e3perts in
entrepreneurship and small business consider poor cash plannin" the sin"le bi""est
cause of business failure.
=hy do a Cash Flow Forecast;
oo often business o!ners do a cash ?o! forecast in their head. -uttin" the cash
?o! forecast on paper( ho!ever( !ill "ive you the follo!in".
? A format for plannin" the most effective use of your cash ?cash mana"ement@. ? A
schedule of anticipated cash receipts - follo! throu"h to see that you achieve itE
? A schedule of priorities for the payment of accounts - stic$ to itE
? A measure of the si"nificance of une3pected chan"es in circumstances6 e.".(
reduction of sales( stri$es( ti"ht money situations( etc.
? A list( on paper( of all the bill payin" details !hich have been runnin" around in
your head( $eepin" you a!a$e ni"hts.
? An estimate of the amount of money you need to borro! in order to finance
your day-to-day operations. his is perhaps the most important aspect of a
completed cash flo! forecast.
? An outline to sho! you and the lender that you have enou"h cash to ma$e your
loan payments on time.
A Start-up Guide ( %+
$eceipts
:eceipts occur !hen cash enters the business for any reason. 0t is li$e ma$in" a
deposit in your current account. he main reasons for receipts are.
? Cash sales.
? Collection of accounts receivable.
? <oan proceeds. his includes term loans( start-up loans( line of credit and notes.
? 8!ners# contributions. his includes both investments and shareholders# loans
?shareholders# loans only happen in incorporated companies@.
"isbursements
Disbursements occur !hen cash leaves the business for any reason. he main
reasons for disbursements are.
? Cash e3penses or inventory purchases.
? -ayments of accounts or e3penses payable.
? <oan repayment ?either ban$ or shareholders# loans@.
? 8!ner repayment ?dividends in a corporation or dra!in"s in a proprietorship@.
0n cash ?o!( !e tal$ about receipts( disbursements and deficits or surpluses rather
than revenue( e3penses and profits or losses.
How to do your Cash Flow
he cash ?o! is made up of three distinctive parts. the receipts( the disbursements
and the cash ?o! calculation. Because of the comple3ity of the disbursement
section( this section has been bro$en do!n into a series of smaller sections. hese
sections are.
!6 $eceipts
a@ :eceipts from 8perations
b@ :eceipts from <oan -roceeds
c@ :eceipts from 0nvestments
%6 "isbursements
a@ Disbursements of -urchases 4 Sub Contractin" 4 -iece!or$ <abour
b@ Disbursement of Administrative E3penses
c@ Disbursements for Capital -urchases
d@ Disbursements for Debt :epayment or Dividends
+6 Cash Flow Calculation
%, ( Business Planning and Financial Forecasting
%or business start-ups only
he Start-up column is used in start-up situations only. 0t is used for all of the
receipts and disbursements that occur as a part of startin" a business. his includes
purchasin" fi3ed assets( incurrin" start-up e3penses( the initial investment to start the
business and the initial ban$ loans. 0t is helpful to separate start-up costs from on"oin"
costs( so the reader can >uic$ly see !hy you may have lar"e deficits in the early sta"es of
business development. Detailin" Start-up e3penses ma$es your cash ?o! easier to
understand.
Part *ne / $eceipts
!6 Forecast your sales on a monthly basis. his must match the annual revenue
forecast from the pro-forma income statement. 0t is not sufficient to simply
divide by +' and forecast the same level of sales in each month( rather you
must base the monthly forecast on the seasonal nature of the business and the
"ro!th of the business.
%6 Forecast the receipts from operations based on your accounts receivable
assumptions. 0n a cash business( the sales forecast is the same as the revenue
forecast. 0n a business that offers terms( there is a time delay bet!een !hen the sale
is made and the receivable is collected. %or e3ample( you mi"ht bill your clients in
Ganuary ?revenue@ but "et paid in %ebruary ?cash receipt@. Any sales that are not
collected by the end of the year appear on the year-end balance sheet as
accounts receivable.
+6 Forecast the receipts from term loans and investments. Any initial
investments or receipts of term loans( seen on the startin" balance sheet( should
appear in the start-up month. Any subse>uent investment or loan receipts !ill be
forecast in the month in !hich they !ill be received.
,6 2dd up the total receipts.
Part #wo / "isbursements
!6 Forecast your variable costs or purchases on a monthly basis. his involves
pre-plannin" your purchases of inventory. Sometimes you simply replace the
inventory you have used durin" the previous month. Sometimes you !ill plan to
build up your inventory prior to busy sales periods. 8nce this forecast has been
made( forecast your disbursement in this area. 0f you pay cash for these
purchases( the disbursement is e>ual to the purchase. 0f you have credit terms
from the suppliers( then the purchase in one month becomes a disbursement from
accounts payable the follo!in" month. ?For e+a%ple, a purchase in 5anuar
beco%es a disburse%ent in Februar&@
%6 Forecast your overhead epenses on a monthly basis. hese are usually
forecast in one of three !ays.
A Start-up Guide ( %.
a@ Evenly throu"hout the year. <ease payments !ould be an e3ample of this
$ind of forecast.
b@ As a percenta"e of sales. Advertisin" is often disbursed this !ay.
c@ Manually( !hen you $no! a payment is due. %or e3ample( a business
licence is due every Ganuary.
+6 Forecast any principal repayments to loans. Blended monthly payments
?principal and interest@ should also be accounted for here( as lon" as the interest
is not double counted.
,6 Forecast any purchases of Capital 2ssets you plan to ma$e throu"hout the
year. 0f you purchase them to start your business( account for these purchases
in your start-up month.
.6 Forecast any dividends, or repayments of shareholders loans. 16
2dd up the total disbursements.
Part + / #he Cash Flow Calculation
he cash ?o! calculation measures the end of the month cash balance !ith the
follo!in" formula.
cash balance F cash receipts / cash disbursement A end of month cash balance.
he end of month cash balance becomes the startin" cash balance of the ne3t
month. :epeat this calculation for every month.
Bample / 4arry&s 4awn Care
$eceipts
)arr is planning to start a landscaping co%pan& 1e will in#est 869,999 in the
business, borrow 87,999 to start the business& 1e has forecast his re#enue to be
8:B,999 in the first ear& 1e reali/es that his business is seasonal, so he forecasts the
following %onthl re#enue&
6tart9u. * F M , M * * , 6 : 1 4 -ota#
;e<enue 4&555 4&555 6&555 7&555 8&555 8&555 0&555 0&555 1&555 6&555 6&555 4&555 3/!!!
)arr belie#es that half of his sales will be cash sales, and the other half will be
in#oiced and paid the following %onth& 1e then accounts for his initial in#est%ent
and his ban, loan to co%plete the receipts section& ?Cote the relationship between
the receipts and the re#enue&@
6tart9u. * F M , M * * , 6 : 1 4
;e<enue 4555 4555 6555 7555 8555 8555 0555 0555 1555 6555 6555 4555
O !anuar"#s sales, $$00 is re%eived in !anuar" and $$00 in &ebruar"'
;ecei.ts
#ash 055 055 4555 4055 6555 6555 6055 6055 7555 4555 4555 055
A> 055 055 4555 4055 6555 6555 6055 6055 7555 4555 4555
Investment 45555
*oan 0555
-ota# +&!!! &!! +!!! +&!! %&!! 3&!! $!!! $&!! &!!! &&!! $!!! %!!! +&!!
%1 ( Business Planning and Financial Forecasting
"isbursements
)arr esti%ates he will spend about 69 per cent of his re#enue on #ariable costs& 1e
recei#es :9-da credit ter%s fro% a local landscape suppl co%pan ? so the costs
incurred for 5anuar will be disbursed in Februar& ?These disburse%ents will be
%ade as Accounts Paable&@
)arr esti%ates start-up e+penses of 8:99, %onthl e+penses of 8799 and a
%onthl draw of 86799& 1e plans to purchase 87999 in gardening e2uip%ent a
86,999 trailer and a 8>999 co%puter sste%& )arrAs disburse%ents will loo, li,e
this:
6tart9u. * F M , M * * , 6 : 1 4
#ost of Goods 455 455 655 755 855 855 055 055 155 655 655 455
4isbursements
AP 455 455 655 755 855 855 055 055 155 655 655
<verheads 755 055 055 055 055 055 055 055 055 055 055 055 055
.ra 4055 4055 4055 4055 4055 4055 4055 4055 4055 4055 4055 4055
$Auipment 0555
!railer 4555
#omputer 6555
-ota# 83!! %!!! %+!! %+!! %%!! %3!! %$!! %$!! %&!! %&!! %/!! %%!! %%!!
Cash Flow Calculation
Ta,e the Total $eceipts line and the Total Disburse%ents line and forward the% to
the appropriate lines below& Then appl the following for%ula to the cash flow:
Starting Cash Balance F $eceipts / "isbursements A Bnding Cash Balance
Forward the ending cash balance to ne+t %onthAs Starting 4ash Balance
6tart9u. * F M , M * * , 6 : 1 4
#ash Balance 5 1255 0655 8455 7055 7:55 0555 1155 :255 44655 48655 40155 40855 (lus >eceipts
40555 055 4555 4055 6055 7055 8555 8055 0555 0055 8555 6555 4055 Less
.isbursements :755 6555 6455 6455 6655 6755 6855 6855 6055 6055 6155 6655 6655 E)uals
$nding Balance 1255 0655 8455 7055 7:55 0555 1155 :255 44655 48655 40155 40855 48255
Since there are no cu%ulati#e deficits, we can continue& "f the cash balance were
forecast to be negati#e at an point, then we would ha#e to reduce e+penditures,
increase initial in#est%ent, increase re#enue, or arrange for a line of credit fro% the
ban,&
Although this is a #er si%ple e+a%ple of a cash flow, it should gi#e ou an idea
of how to construct a cash flow for our situation& -our te%plate does these
calculations auto%aticall - allows ou to %a,e adEust%ents if there are an
negati#e balances& ?"f ou ha#e a negati#e cash balance, ou are using our
o#erdraft 0 line of credit to finance this deficit&@ B going through each screen, ou will
create a first draft of our starting balance sheet, pro-for%a inco%e state%ent and
cash flow forecast&
A Start-up Guide ( %3
0otes to your Pro Forma Statements
Many entrepreneurs fail to include ade>uate notes and e3planations to their pro-
forma financials. he reader must be able to clearly understand !hat is bein"
assumed !ithin the sales numbers( salaries( and other si"nificant fi"ures by includin"
detailed and !ell e3plained 9notes to financials9. 5ou !ill also have more credibility if
you compare your pro-forma statements( especially your income statement( to
outside benchmar$s. A "reat source for these benchmar$s is found in Perfor%ance
Plus& his is a part of the Strategis Website provided by 0ndustry Canada. 0t is found
at. http.44strate"is.ic."c.ca4epic4internet4inpp-pp.nsf4en4hKpm***2Pe.html here
are also boo$s on Iey %inancial :atios available in the reference sections of many
public libraries.
%inancin" 5our Business
here are t!o main types of financin" - e>uity financin" and debt financin". E>uity
is the investors# financial sta$e in the business. With e>uity financin"( an investor
ma$es money available for use in e3chan"e for an o!nership share in the business.
his could be as a silent or limited partner ?not actively involved in the business@ or
as a shareholder. Whether e>uity financin" is possible or a "ood option depends
on the business structure and relationship bet!een the borro!er and lender. As a
business "ro!s and profits are made they can remain in the business. his is
called retained earnings& A company !ith no debt is financed completely by the
shareholders or o!ners. 0n such a company the investments and profits finance the
company#s assets.
With debt financin"( the lender char"es interest for the use or rental of money
loaned( but does not "et a share or e>uity in the business. Debt financin" is familiar to
most people because it is the basis of most personal credit. Debt often comes
from ban$s( but it can also come in the form of supplier credit ?accounts payable@ or
in the form of vendor credit for capital purchases.
Bank Financing
Many entrepreneurs !ill "o to the ban$ for part of their business financin". his
can be financin" the start-up of the business or financin" the "ro!th of an e3istin"
business. Either !ay( ban$ financin" plays a maAor part in the development of small
business. Ban$s use a variety of tools to finance business. he t!o main types are
<ines of Credit and erm <oans.
4ine of Credit
<ine of credit is a loan similar to a personal overdraft and is used to finance
temporary shorta"es in cash caused by inventory and accounts receivable. 0t is
sometimes disbursed into your che>uin" account in increments of O2(***. he
interest rates are often variable and based on the prime lendin" rate.
%7 ( Business Planning and Financial Forecasting
A line of credit is often subAect to mar"in re>uirements. %or e3ample( a
condition of your line of credit mi"ht be that the total credit available is the
lesser of O'**(*** or /2 per cent of current receivables and 2* per cent of
inventory. 5ou must report to the ban$ on a monthly basis( so ma$e sure you
have done all your invoicin" before month end so it is included in your mar"in
calculation.
Many business o!ners !ill purchase capital assets( such as machinery or
e>uipment usin" their line of credit. his can create a cash flo! crisis( since the
credit re>uired to finance the inventory and receivables is tied up financin" the
current asset. Be careful to use the ri"ht form of financin" for the proper purpose.
#erm 4oans
erm loans are loans that are repaid over a fi3ed period of time - usually more than
one year. A business may have several term loans at the same time financin"
different proAects or assets. erm loans may or may not have fi3ed interest rates(
dependin" on the terms and conditions. 7sually( term loans are used to finance
capital assets( althou"h sometimes term loans are ta$en out to increase cash levels
?current assets@ in the business.
4eases
<eases are similar to term loans. hey are often called capital leases as the
business has use of the asset( and an obli"ation to ma$e the lease payment.
When you develop your startin" balance sheet( compare the o!ners# contributions
to those of outside parties. his is called the Debt to E>uity ratio. 0t sho!s ho! much
money !as invested for every dollar borro!ed. he ris$ is directly related to the
capital committed to the proAect. 5ou cannot e3pect ban$s and lendin" institutions to
ta$e more ris$ than you ta$e in the business.
<endin" Criteria
Many ban$s use the four C#s to evaluate loan proposals. hey represent.
Cash Flow-
he ability to repay the loan !ith cash. his is measured usin" the Cash %lo! %orecast
in your business plan.
Collateral-
he value of internal and e3ternal security that may be li>uidated. his is measured
by ta$in" the mar$et value of the business assets and comparin" this value to all
outstandin" term debts. his determines !hat mi"ht happen if the business defaults on
the loan. Sometimes an asset outside of the business !ill secure a business loan. his is
e3ternal security. An associated company may hold the asset or it may be a
personal asset of the business o!ner. ?See loan "uarantees.@
A Start-up Guide ( %8
Character-
Aspects about the business o!ner or o!ners( !hich lead you to believe in their credit
!orthiness. Ban$s often use the business o!ners# personal history to determine
attitudes to!ards credit. hey !ill also loo$ at the technical and business s$ills
presented in the business plan.
Commitment-
he financial commitment by the o!ners in this business venture. his is measured
by e3aminin" the e>uity or shareholders loans in the business( and the retained
earnin"s history of the business.
Statement of -ersonal Det Worth
A statement of personal net !orth is a measure of the !ealth of the o!ner or o!ners
of the business. 0t is similar to a balance sheet - e3cept those assets are measured at
their mar$et value. he formula for net !orth is.
0et =orth A 2ssets 5)arket @alue6 / 4iabilities
Personal 4oan ?uarantees
When a small corporation borro!s money from a ban$( the shareholders !ill often
be re>uired to si"n !hat is $no!n as a personal loan "uarantee. his is li$e the
individual co-si"nin" a loan "ranted to the corporation.
0t means that if the corporation ?business@ defaults on the loan then the individual
shareholders must re-pay for the corporation. 0t is not unusual for the spouses of
shareholders to si"n "uarantees as !ell. his prevents the "uarantor ?the person
!ho si"ns the "uarantee@ from transferrin" their net !orth to their spouse. -ersonal
loan "uarantees are re>uired for most business loans. Al!ays remember that the
"uarantee is a le"al document( and it is advisable to see a la!yer before si"nin" any
such document. Couples !ill often be re>uired to see$ independent le"al advice
before si"nin" a personal loan "uarantee.
Program and Financing
52lso known as source ( application of funds6
he pro"ram and financin" is a description of the loan re>uirement and the asset
purchase. 0t loo$s li$e a small balance sheet in that it states !hat you are "oin" to
purchase( and ho! you are "oin" to pay for it.
Supposing that F Proprietorship wants to purchase a 87,999 piece of e2uip%ent&
The decide to borrow 8:,999 use 86,999 of the businessesA cash, and in#est an
additional 86,999 into the co%pan&
+9 ( Business Planning and Financial Forecasting
The starting balance sheet, progra% and financing and pro-for%a balance sheet would
loo, li,e this:
6tartin) Ba#ance 6heet Pro)ram and Financin) Pro9Forma Ba#ance 6heet
,ssets
Current Assets
#ash
Inventory
Accounts >eceivable
*otal Current Assets
Capital Assets
Boo' Calue (Cehicle)
Boo' Calue ($Auipment)
*otal Capital Assets
-ota# ,ssets
0iabi#ities
Current Liabilities
!rade Payables
Bages Payable
*ine of #redit
*otal Current Liabilities
Long *erm +ebt
!erm *oan
)ote Payable
*otal *erm +ebt
-ota# 0iabi#ities
:wners (2uity
-ota# 0iabi#ities and
:wners (2uity
97&555
940&555
946&555
$3!!!
!
940&555
946&555
$%3!!
!
$&3!!!
96&555
97&555
90&555
$+!!!!
945&555
91&555
$+/!!!
$%/!!!
$3+!!!
$&3!!!
?94&555.55
90&555.55
97&555
$+!!!
96&555
940&555
946&555
$3!!!!
940&555
942&555
$%3!!!
$&3!!!
96&555 97&555
90&555
$+!!!!
947&555
91&555
$+/!!!
$%/!!!
$3%!!!
$&3!!!
The progra% and financing and the state%ents of personal net worth %ust be pro#ided along
with the business plan to ensure the credit-worth nature of the business #enture&
Where to access financin"
Contrary to popular myth( very fe! businesses start !ith any form of venture
capital outside of family and friends. Sometimes( businesses !ill "et venture capital
throu"h an"els( people !ho specialiFe in helpin" business "et started( but only after a
product has been developed or a mar$et has been established. 8!ner investment and
debt financin" are the most common means of financin" a business.
Canadian Chartered ban$s have made every attempt to streamline the business loan
application. :ecently( the credit application process for business loans( even for start-
up loans( has been reduced to sin"le pa"e applications. <oans for up to O2*(*** are
readily available( even to ne! businesses or business start-up situations.
A Start-up Guide ( +!
hese loans are based on the personal net !orth of the principal o!ners of the
business and the credit history of these principals. Don#t for"et credit unions( !ho
tend to $no! their local economies very !ell( and if you are in a rural or smaller
urban centre( try the Community %utures Development Corporation ?C%DC@ in your
area. o locate your nearest C%DC "o http.44!!!.communityfutures.ca.
0f you do not >ualify for traditional ban$ financin"( you may be able to access
financin" from other sources. here are pro"rams for.
? Abori"inal Entrepreneurs
? 5oun" Entrepreneurs
? Women Entrepreneurs
? De! 0mmi"rants
hese pro"rams chan"e on a re"ular basis so chec$ Small Business BC at
!!!.smallbusinessbc.ca for up-to-date information. The financing page at this
site( !!!.smallbusiness.bc.ca4financin"( provides information on "overnment(
private and venture capital sources of financin". 0ndustry Canada#s Strate"is site(
!!!.strate"is.ic."c.ca also has e3tensive information on financin". Clic$ on Business
Support( %inancin" located in the left-column menu.
A hallmar$ of entrepreneurial thin$in" is the person !ho thin$s of alternatives.
his includes alternatives to start-up costs( li$e buyin" used e>uipment instead of
ne! e>uipment - alternative product lines that are easier to manufacture and of
course researchin" ne! venues for mar$etin" your product.
A final !ord on your %inancial -lan
A common mista$e made by many businesses is developin" a financial plan for a
ban$ or an investor( and then promptly puttin" it a!ay and for"ettin" all about it.
5our financial plan should be revie!ed every month. Chec$ your plan a"ainst the
actual. his !ill help you anticipate problems before they arise.
After completin" your financial plan( you should re-e3amine the entire business
concept in li"ht of the results. As$ yourself if this is a "ood investment of your
money and your time. 0s the financial re!ard !orth the lifestyle chan"e= hese are
personal >uestions( !hich should be as$ed before that fateful trip to the ban$. "t is
eas to 2uit a Eob, it is difcult to 2uit a business. he completed financial plan spells out
the financial ris$s and re!ards re>uired for your ne! business. 8nly you can
determine if it is !orth the ris$.
%inance is difcult for most entrepreneurs. 7se professionals such as accountants or
consultants to help you ma$e sense of your financial statements. %inancial plans and
financial statements are a critical part of mana"in" your business. Good luc$ !ith
your plannin" and !ith your business.
+% ( Business Planning and Financial Forecasting
he %inancial emplate
A Brief 8peratin" Guide
0f you are !or$in" !ith a print-out of this document you can locate the E3cel
template by clic$in" here or "oin" to http.44!!!.cse."ov.bc.ca4:eports-ublications4
%inancialemplate.;<.
Start/up 'nformation Page
his is the startin" pa"e. he !hite cells are for re>uired information. 8n this pa"e
you must.
!. #ype in the name of the business
%. Select the startin" month and year from the drop do!n menu. 5ou must have
a startin" point at the be"innin" of the month.
+. Select continue and the start-up costs pa"e !ill appear.
A Start-up Guide ( ++
Start/up Costs Page
his pa"e is to document your start-up costs. 5ou must estimate ho! much it !ill
cost to start your business. We recommend you 9Save As9 an .3ls !or$sheet as your first
step. his !ay( your ori"inal blan$ template remains intact.
Current 2ssets
!. Bstimate the amount of cash you !ill have in the ban$ after purchasin" your
other assets. 0t must be at least as "reat as your start-up e3penses if you plan
to avoid a cash deficit before you start. 5ou !ill also estimate your startin"
inventory and your pre paid e3penses. ?:emember that you can al!ays re-visit
this pa"e after you have completed your first draft and chan"e these estimates
based on sales and cash flo!.@
%. Bstimate your capital asset re>uirements. Capital assets are thin"s you
"enerally $eep for lon"er than one year. he depreciation on these assets ?an
income statement item@ is automatically calculated for you usin" the prescribed
CCA percenta"es from Canada :evenue A"ency ?C:A@. E3cept for <easehold
0mprovements( depreciation is calculated usin" the9declinin" balance9method
and uses the C:A half-year rule.
+. Start/up epenses are non-asset purchases incurred prior to startin" the
business.
Select 4ontinue to go to the ne+t screen
+, ( Business Planning and Financial Forecasting
Financing ( Balance Sheet
he asset information has been for!arded from your 9Start-up Costs9 pa"e. 5ou must
decide ho! you !ill receive accounts payable from your suppliers for inventory( if
you plan to use a line of credit to finance your business start-up ?not recommended@(
and ho! much you !ill put into the business in terms of the initial investment and4or
shareholders loans. The re%ainder will auto%aticall be borrowed in the for% of a ter%
loan&
At the bottom of the pa"e( you !ill see space for the term loan information
?0nterest rate and :epayment period@ and the line of credit interest rate. hese are
defaulted at /.2 per cent( 2 5ears and 2.** per cent respectively. Chan"e these to the
actual rates and time periods you !ill be payin".
<i$e the other pa"es( you can e3periment !ith diferent combinations of debt and
e>uity( and see the results on the Balance Sheet( 0ncome Statement and Cash %lo!
%orecast.
Select 4ontinue to go to the ne+t screen&
A Start-up Guide ( +.
#he Pro/Forma 'ncome Statement
5ou must no! forecast your income statement. his is based on your idea of
annual revenue( cost of "oods( and the annual overhead e3penses. Dote that
the 9Start-up E3penses9 are for!arded from the Start-up e3pense sheet( and the
depreciation and interest are calculated for you. 5ou can try diferent amounts of
revenue( cost of "oods and overhead e3penses( and immediately see the results of
the chan"e on your net profit.
he Det -rofit ?Corporation@ represents the profit !hen the o!ners
!a"e is subtracted( as is the case !ith a corporation. he Det -rofit
?-roprietorship@ does not subtract the o!ners# !a"e or dra!. Select continue
to go to the %ain screen&
0ote- The re#enue is defaulted at 89&6 to eli%inate the GDi# 9& The rounding pre#ents
the figure fro% being shown&
+1 ( Business Planning and Financial Forecasting
Cash Flow 'nformation
2ccounts $eceivable
and 2ccounts Payable
5oumayno!ma$eassumptions
!ith respect to your Accounts
:eceivable and Accounts
-ayable. 5our choices are to
receive your payment( or to pay
your suppliers in.
? Cash
? +2 Days ?
J* Days ?
12 Days ?
)* Days
Base this on the terms you ofer
your clients( and the terms you
are ofered by your suppliers.
2dministrative "isbursements
%or each of your cash disbursements( you can choose bet!een t!o alternatives. he
cash is disbursed evenly throu"hout the year or as a percenta"e of the monthly
sales.
A lease payment( for e3ample( !ould "enerally be paid out evenly throu"hout the year(
ho!ever advertisin" is typically paid out as a percenta"e to sales. 0f there are other
choices( you must ma$e them manually !hen you "et to the cash ?o! sheet. Select
4ontinue to go to the ne+t sheet&
A Start-up Guide ( +3
Seasonal
2dIustment
s
he Seasonality sheet ta$es the annual revenue( and allocates it into diferent
months. here are t!o steps to this process. ,ariance is the term for the diference
bet!een re"ular( slo! and busy months. A hi"hly seasonal industry !ould have
hi"h variance. A less seasonal industry !ould be medium or slo!.
he e3pected activity as$s for one of three choices for each month. Will it be a
slo!( re"ular or busy month= hese decisions tri""er a formula for a monthly percent
of sales that is displayed in the percenta"e of sales column. he monthly revenue
forecast is the percenta"e of monthly sales multiplied by the annual revenue( !hich
is ta$en from the pro-forma income statement. 5ou can immediately see the efect of
each choice on the monthly revenue forecast.
Select 4ontinue, and ou will see our cash ?ow forecast&
-ou can now go bac, and change assu%ptions until ou are happ with the results of
the financial plan& 'an people find it helpful to sa#e diferent #ersions& Si%pl select
"Sa#e As" fro% the File %enu to sa#e diferent #ersions of our plan&
+7 ( Business Planning and Financial Forecasting
Small Business BC
Comprehensive business information and business plannin" resources for
startin" and "ro!in" a business in British Columbia
+ &** ))/-''/'
!!!.smallbusinessbc.ca
Business?ateway.ca
he Government of Canada#s main site for business information
+ &)) '&/-1'&J
!!!.business"ate!ay.ca
*neStop Business $egistry
8nline Business :e"istration and Chan"e of Business Address
!!!.bcbusinessre"istry.ca
eBC eBusiness Connection
e-business information resources for small and medium-siFed businesses
+ )*1 //2-/2J'
!!!.e-bc.ca
'nvestment Capital Programs
Accelerate access to capital
,enture Capital -ro"ram - Employee 8!nership -ro"ram
+ &** ))2-)2P/
!!!.e>uitycapital."ov.bc.ca
?overnment 2gents
-rovince-!ide access to "overnment services includin" $ey "overnment
transactions for business
+ &** ))J-/&)/ ?En>uiry BC@ to be transferred to the nearest Government A"ents 8fce
!!!."overnmenta"ents."ov.bc.ca
Community Futures "evelopment 2ssociation of British Columbia
Business counselin" and assistance for ne! and e3istin" business in rural British Columbia
!!!.communityfutures.ca4provincial4bc4
=omen&s Bnterprise Society
Business information counselin" and s$ills trainin" for !omen entrepreneurs
+ &** )1J-/*+1
!!!.!es.bc.ca
4a SociJtJ de dJveloppement JconomiEue
he %rancophone Economic Development 8r"aniFation enhances the vitality of minority
lan"ua"e communities and assists !ith economic development
!!!.sdecb.com
Ministry of Small
Business
and Economic
Development
!!!.smallbusinessbc.ca !!!.!d.ca !!!."ov.bc.ca4sbed
doc_467770127.docx