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Introduction 4
Where to begin 6
Conclusion 55
Writing an Effective Business Plan
Introduction
Workbook Objectives
• What is a Business Plan?
• Why do you need a Business Plan?
• Where to start?
• How to write a Business Plan?
• How to use the Plan?
What is it?
Business Planning is not just about
producing a report. The work of writing, of
thinking things through is as important as
Of the primary functions
the final document.
of management, planning
is the most important. It's a tool for understanding how your
Plan your work and work business is put together. The process will
your plan. Old...but help you learn how to manage your own
it holds. company more effectively while you
become an expert in your industry and
Grant Hooker, business. It creates a framework for you to
Beavertails Pastry start and grow your business.
4
Writing an Effective Business Plan
Feasibility study
• Is your idea viable?
• Is your business going to be profitable?
• Will you require outside financing to start or
operate this business?
• What are your barriers to success?
Starting a business
without a Business Plan is
Become a better decision maker
like driving from • It will help you anticipate problems.
downtown Ottawa to • Gathering information for your plan will
downtown Toronto without increase your knowledge of the industry thereby
assisting you in making more informed
a map. Chances are you'll
decisions.
make it, but with • Your plan provides an organized way to
guidelines the trip will be conduct your investigation.
shorter and much more
pleasant. Reality Check
• Your plan raises questions that will help
Angela Sutcliffe, inspire solutions before a crisis occurs.
President, • It helps you to know what will be required of
Mrs. Mop you as an entrepreneur.
• By identifying strengths and weaknesses, it
reveals where you will need assistance.
Implementation plan
• Use the Business Plan as a guide to keep you
focused and making progress during the
business start up phase.
Selling tool
• Use the Business Plan to sell your business
opportunity to potential investors, employees
5 and suppliers.
Writing an Effective Business Plan
6
Writing an Effective Business Plan
What is it?
B. Primary Data
• Questionnaire/Survey - telephone, mail, e-
mail, personal
• Focus Groups
• Product or Service Sampling
• Books Market Research Made Easy
Successful Market Research
7
Writing an Effective Business Plan
1. Table of contents
2. Executive Summary
3. Company Profile
4. Marketing Plan
• Industry Trends
• Product/Service
• Target Market
• Competitive Analysis
• Marketing Mix P Promotion
P Place
P Price
P Product
5. Operational Plan
• Suppliers
• Manufacturing Plans
• Operating Requirements
• Human Resources
6. Financial Plan
• Start up Costs
• Cash Flow Statement
• Income Statement
• Balance Sheet
7. Appendix
8
Writing an Effective Business Plan
Executive Summary
What is it?
Where do I conduct my
research?
9
Writing an Effective Business Plan
Executive Summary
What do I include?
Introduction to your business opportunity
MARKETING HIGHLIGHTS
Product/service distinctive features
Competitive analysis
10
Writing an Effective Business Plan
OPERATIONAL HIGHLIGHTS
Critical legal issues related to your business
Supplier summary
FINANCIAL HIGHLIGHTS
Summary of financial requirements and projections
11
Writing an Effective Business Plan
Company Profile
What is it?
It is a snapshot of your business and who is involved
in it.
Owners: My name
12
Writing an Effective Business Plan
Company Profile
What do I include?
FORM OF BUSINESS
qSole Proprietorship
qPartnership
qCorporation
OWNERS/PRINCIPALS
NAME OF BUSINESS
START DATE
BUSINESS OPERATION
BUSINESS DESCRIPTION
13
Writing an Effective Business Plan
LOCATION
CONTACT INFORMATION
BUSINESS ADVISORS
Lawyer:
Accountant:
14
Writing an Effective Business Plan
BUSINESS LOGIC
Industry Overview
DIAGRAM
Þ
INDUSTRY OVERVIEW
What is it?
Þ
GAP/NEED • This is an analysis of the industry and
Þ economy that you are operating in. It
PRODUCT /SERVICE
demonstrates an understanding of the current
Þ
TARGET MARKET trends and industry characteristics.
Þ • A trend is a definite, predictable direction or
COMPETITION sequence of events.
Þ
MARKETING MIX
(PROMOTION , PLACE, Why is this information
PRICE & PRODUCT )
important?
15
Writing an Effective Business Plan
Where do I conduct my
BUSINESS LOGIC research?
DIAGRAM
Þ
INDUSTRY OVERVIEW • Statistics Canada (www.statcan.ca)
Þ • Trade Magazines, Canadian Almanac and
GAP/NEED Directory
Þ • Business Magazines, print version and internet
PRODUCT /SERVICE • Micromedia Voyageur database
Þ
• Economic Indicators - inflation,
TARGET MARKET
Þ
unemployment levels
COMPETITION • Industry Canada (strategis.gc.ca)
Þ
MARKETING MIX
(PROMOTION, PLACE,
PRICE & PRODUCT )
16
Writing an Effective Business Plan
BUSINESS LOGIC
Industry Overview
DIAGRAM
Þ What do I include?
INDUSTRY OVERVIEW OVERALL BUSINESS OR CONSUMER TRENDS AND
Þ BUSINESS OPPORTUNITIES AS A RESULT OF:
GAP/NEED
Þ
PRODUCT /SERVICE
Þ Social Change
TARGET MARKET
Þ
COMPETITION
Þ
MARKETING MIX Ecomonic Change
(PROMOTION , PLACE,
PRICE & PRODUCT )
Demographic Change
Environmental Change
Technological Change
Political Change
17
Writing an Effective Business Plan
18
Writing an Effective Business Plan
Service or Product
BUSINESS LOGIC In many cases it is not just a service or a product you
DIAGRAM
are providing but both.
Þ
INDUSTRY OVERVIEW Your product or service may be redefined or refined
Þ at different stages of the business planning process.
GAP/NEED The first definition of your offering probably won't
Þ be the last.
PRODUCT /SERVICE
Þ
TARGET MARKET What is it?
Þ
COMPETITION
Þ • This section describes the features and benefits
MARKETING MIX of the product or service that you are selling.
(PROMOTION, PLACE,
PRICE & PRODUCT ) How will your product be used?
Where do I conduct my
research?
• Competition Analysis
• Primary Market Research
• Suppliers (Ontario Business Directory, Scott's
19 Directory)
Writing an Effective Business Plan
BUSINESS LOGIC
Service or Product
DIAGRAM
Þ
INDUSTRY OVERVIEW
What do I include?
Þ
GAP/NEED
What are your product's/service's unique features?
Þ
PRODUCT /SERVICE
Þ
TARGET MARKET
Þ
COMPETITION
Þ
MARKETING MIX
(PROMOTION , PLACE,
PRICE & PRODUCT )
20
Writing an Effective Business Plan
21
Writing an Effective Business Plan
BUSINESS LOGIC
Target Market
DIAGRAM
Þ
INDUSTRY OVERVIEW
Þ
GAP/NEED
Þ
PRODUCT /SERVICE
Þ
TARGET MARKET
Þ
COMPETITION
Þ
MARKETING MIX
(PROMOTION , PLACE,
PRICE & PRODUCT )
What is it?
You can't know enough • A target market is a homogeneous group of
about your target market. potential customers that have both a need and a
You must keep them top of willingness to pay for the business' product or
service.
mind in everything you do • A target market could be other businesses or
- the customer is the focus consumers.
for all your efforts. • You may have more than one target market.
For example, it is very common to have a
primary target market and various secondary
Christine Kincaid, markets.
Mediaplus Advertising
Why is this information
important?
• Understanding the size of your target market
will help you forecast your sales for your cash
flow projections.
• You need to determine if there are enough
people who want to buy your product to assess if
you will be profitable.
• Knowing your target market profile helps in
making critical and focused marketing mix
decisions
22
Writing an Effective Business Plan
Where do I conduct my
BUSINESS LOGIC research?
DIAGRAM
Þ
INDUSTRY OVERVIEW • Statistics Canada (www.statcan.ca)
Þ • Industry Canada (strategis.gc.ca)
GAP/NEED • Internet
Þ • Survey, Focus Groups, Interviews, Competitor
PRODUCT /SERVICE Analysis
Þ
TARGET MARKET
Þ
COMPETITION
Þ
MARKETING MIX
(PROMOTION, PLACE,
PRICE & PRODUCT )
23
Writing an Effective Business Plan
Target Market
BUSINESS LOGIC
DIAGRAM
Þ What do I include?
INDUSTRY OVERVIEW CONSUMER DEMOGRAPHICS
Þ
GAP/NEED
Age range
Þ
PRODUCT /SERVICE
Þ Income range
TARGET MARKET
Þ
COMPETITION Gender
Þ
MARKETING MIX
(PROMOTION , PLACE, Marital status
PRICE & PRODUCT )
Number of children
Occupation
Location boundaries
Average purchase
Frequency of purchase
CONSUMER PSYCHOGRAPHICS
Lifestyle
24
Writing an Effective Business Plan
BUSINESS LOGIC
DIAGRAM
Þ
INDUSTRY OVERVIEW
Þ What/who influences their purchasing decision?
GAP/NEED
Þ
PRODUCT /SERVICE
Þ
TARGET MARKET
Þ BUSINESS DEMOGRAPHICS
COMPETITION
Þ Number of businesses
MARKETING MIX
(PROMOTION , PLACE,
PRICE & PRODUCT )
Location of businesses
Frequency of purchase
Size of business
BUSINESS PSYCHOGRAPHICS
25
Writing an Effective Business Plan
Competitive Analysis
BUSINESS LOGIC
DIAGRAM
Þ What is it?
INDUSTRY OVERVIEW
Þ
GAP/NEED • This is a thorough analysis of both direct and
Þ indirect competitors.
PRODUCT /SERVICE • Your analysis must identify the strengths and
Þ weaknesses of the competitors.
TARGET MARKET • Your indirect competitors are not providing
Þ
the same product or service but are competing
COMPETITION
for the same consumer's dollars.
Þ
MARKETING MIX
(PROMOTION, PLACE,
PRICE & PRODUCT ) Why is it important?
Where do I conduct my
research?
26
Writing an Effective Business Plan
BUSINESS LOGIC
Competitive Analysis
DIAGRAM
Þ What do I include?
INDUSTRY OVERVIEW
Þ
YOUR COMPETITION
GAP/NEED
Þ
PRODUCT /SERVICE
Hours of Operation
Þ
TARGET MARKET
Þ
COMPETITION Years in Business
Þ
MARKETING MIX
(PROMOTION , PLACE, Product/Service description
PRICE & PRODUCT )
Product/Service differentiation
Customer profile
27
Writing an Effective Business Plan
Pricing
BUSINESS LOGIC
DIAGRAM
Þ
INDUSTRY OVERVIEW
Þ
GAP/NEED Marketing/Advertising
Þ
PRODUCT /SERVICE
Þ
TARGET MARKET
Þ
COMPETITION
Þ
MARKETING MIX
(PROMOTION , PLACE,
PRICE & PRODUCT )
28
Writing an Effective Business Plan
Why is it important?
If you can combine
common sense,
• A new business must create awareness with an
marketing research and action plan to generate business.
a strong customer • This is a critical link in the overall marketing
focus, strategy.
you can design a • The timing of promotional methods will have
marketing strategy that a direct impact on cash flow, both cash receipts
works. and disbursements.
29
Writing an Effective Business Plan
Promotional Strategy
BUSINESS LOGIC
DIAGRAM
Þ What do I include?
INDUSTRY OVERVIEW Costs
Þ Readership
GAP/NEED
Target market profile
Þ
PRODUCT /SERVICE Distribution coverage
Þ Distribution frequency of the chosen promotional
TARGET MARKET mediums
Þ
COMPETITION
Þ Your promotions may
MARKETING MIX
(PROMOTION , PLACE,
include:
PRICE & PRODUCT )
qAssociation publications
Choose more than one qBillboards
method to reach your qBusiness cards
market. qBus boards/shelters
qCommunity newspapers
qContests
qCoupons
qDirect mail
qFlyer
qGiveaways
qInternet - Banner advertising
qMagazines
qPersonal selling
qRadio
qSigns
qSponsor an event
qTelevision
qTrade magazines
qTrade shows
qWrite an article
qYellow Pages
30
Writing an Effective Business Plan
31
Writing an Effective Business Plan
BUSINESS LOGIC
Place
DIAGRAM
Þ What do I include?
INDUSTRY OVERVIEW
Þ
GAP/NEED
Where is it?
Þ
PRODUCT /SERVICE
Þ
TARGET MARKET
Þ
What are all the costs associated with your location?
COMPETITION
Þ
MARKETING MIX
(PROMOTION , PLACE,
PRICE & PRODUCT )
32
Writing an Effective Business Plan
1. Sales
2. Service
3. Promotion
4. Timing
5. Economics
33
Writing an Effective Business Plan
• Competitor Analysis
• Suppliers (business directories)
• The promotions, human resources, location
and operations components of your business
plan
34
Writing an Effective Business Plan
Pricing Strategy
BUSINESS LOGIC
DIAGRAM
Þ What do I include?
INDUSTRY OVERVIEW
Þ PRICING FOR A SERVICE
GAP/NEED
Labour
Þ
PRODUCT /SERVICE
Þ
TARGET MARKET Overhead
Þ
COMPETITION
Þ
MARKETING MIX Profit Margin
(PROMOTION , PLACE,
PRICE & PRODUCT )
PRICING FOR A PRODUCT
Labour
Overhead
Materials
Profit Margin
PRICING CONSIDERATIONS
Low, medium, high
35
Writing an Effective Business Plan
36
Writing an Effective Business Plan
What is it?
• These are the companies, which will provide
the necessary materials, products and services to
Visit our Resource operate your business.
Centre and search • This research of determines which suppliers
a business directory best meet the needs of your business.
to source suppliers.
Why is it important?
Where do I conduct my
research?
37
Writing an Effective Business Plan
Operations Suppliers
What do I include?
NAME OF SUPPLIER
PRODUCT LINE
PRICING
38
Writing an Effective Business Plan
Trade discounts
Shipping restrictions
References
Back up suppliers
39
Writing an Effective Business Plan
Operating
Regulations
What is it?
Why is it important?
Check out our
Key Contact Sheet to • It ensures the business meets all legal
locate the phone numbers requirements to minimize the small business
for the various start up risks.
government departments. • It ensures that all elements of legal
requirements are followed.
FOR EXAMPLE:
ücost;
üfiling dates;
ürestrictions;
üindustry specifics consideration;
ünumber of permits required;
üqualifications required;
üinsurance.
Where do I conduct my
research?
40
Writing an Effective Business Plan
Operating
Regulations
What do I include?
LEVELS OF GOVERNMENT
q Municipal
q Regional
q Provincial
q Federal
q Other Countries
TAX CONSIDERATIONS
q Retail Sales Tax
q Goods and Services Tax
q Commercial Business Tax
q Home Based Business Tax
q Personal/Corporate tax rates
q Employer Health Tax
SAMPLE REGULATIONS
q Business Name
q Business Identification Number (BIN
- Provincial)
q Business Signage
q Zoning
q Intellectual property (CIPO)
q Packaging and Labelling
q Business Number (BN - Federal)
q Export Permit
q Import Permit
q Product Standards
q Workplace Safety and Insurance
Board
q Source Deductions (EI, CPP...)
41
Writing an Effective Business Plan
Manufacturing Plan
What is it?
Why is it important?
42
Writing an Effective Business Plan
Where do I conduct my
research?
43
Writing an Effective Business Plan
Manufacturing Plan
What do I include?
Production methodology
Time requirements
44
Writing an Effective Business Plan
Facilities description
Leasehold improvements
Warehousing requirements
Sub-contracting arrangements
45
Writing an Effective Business Plan
Human Resources
What is it?
Why is it important?
46
Writing an Effective Business Plan
Human Resources
What do I include?
ORGANIZATIONAL STRUCTURE/STAFFING PLAN
Full-time
Part-time
Seasonal
Include the
management team's Legal considerations
resumes as an
appendix.
Salaries
Rates
Benefits
47
Writing an Effective Business Plan
JOB DESCRIPTIONS
Detailed listings
48
Writing an Effective Business Plan
49
Writing an Effective Business Plan
Financial Statements -
Balance Sheet and
Income Statement
What is it?
Why is it important?
50
Writing an Effective Business Plan
Income Statement
Sales/Revenue
Expenses
(Variable and Fixed)
Profit/Loss
Tax Owed
51
Writing an Effective Business Plan
Why is it important?
There are always
opportunities to improve
• It helps determine whether or not the business
upon a negative cash flow is viable and if you will be able to draw funds
experience. from the business.
• Knowing your monthly sales and expenses
CFO of Laidlaw upon helps you make good decisions such as when to
viewing a $250 million purchase equipment or hire staff and if you need
cash flow deficit. to obtain a line of credit.
52
Writing an Effective Business Plan
q Loans
USES OF CASH
q Expenses to be paid
q Start-up Costs
53
Writing an Effective Business Plan
FACTORS TO CONSIDER:
q Seasonality
q Return on Promotions
q Payment terms
Sales
Loans
Investment
Total Receipts
Disbursements
Salaries
Advertising
Insurance
Etc.
Total Disbursements
Total Disbursements
54
Writing an Effective Business Plan
55