Steps to Starting a Business Plan
Think of the Business Plan as answers to a few basic and logical questions about a business. What questions would you ask in order to fully understand that new business idea?
Below are examples of questions that should be addressed in the plan. They can go into greater detail if necessary.
1. What is your business?
a. A basic description about your business.
2. Who will you sell to?
a. Describe in detail who will be your customer base.
b. Is there enough interest to support your venture?
c. Does this business fill an economic need in the area?
d. Explain why you feel your business could benefit your area.
3. Who is your competition?
a. List businesses in a similar type of business in your area.
4. How will you achieve your sales?
a. What is unique about your firm that will attract customers over the competition?
5. How much money do you need?
a. What are your projected costs for start-up and operating costs for the first year?
6. What are your profit projections for the first year?
a. If your business is an existing business include an actual financial statement.
7. Are you a good manager?
a. What previous experience do you have relevant to your business proposal?
b. How will you handle day-to-day operations?
c. How will you market your product to increase sales?
Business Plan Guide
To assist you in this regard, we put together a basic information sheet to help you understand why a business plan is important, especially if you are a brand new business, or an existing business looking to do some significant diversification.
For those clients who have access to the Internet, we have included a step-by-step instruction package to get assistance with business planning. They can also research other aspects on the following site. It is just one tool of many that can be utilized to prepare proposals.
1. Go to http://www.cbsc.org/sask (and then click on English)
2. Click on Business Toolbox
3. Choose the second item in the toolbox-Interactive Business Planner
Some banking institutions have business-planning software, two of which are Scotiabank and TD Canada Trust. If you have a computer, but no Internet access, you can request this software from the commercial lending officer.
Why is a business plan important?
Some benefits of producing a business plan include:
. The process of preparing a business plan will force you to think about your business, research some options, recognize opportunities and risks, and test some of your assumptions;
. A business plan will help you identify the cash needs of your business;
. A business plan can be used to raise funding from banks and from investors;
. A business plan can be used to tell employees, investors and others about your plans and strategies; and
. A business plan provides a benchmark against which to compare the progress and performance of your business.
It is a good idea for all businesses to prepare and regularly update their business plans. However, small businesses are most likely to prepare a business plan when they are just starting up or when a major change in their business is occurring (and often when additional investment or a loan is needed).
What is included in a business plan?
Some benefits of producing a business plan include:
. The process of preparing a business plan will force you to think about your business, research some options, recognize opportunities and risks, and test some of your assumptions;
. A business plan will help you identify the cash needs of your business;
. A business plan can be used to raise funding from banks and from investors;
. A business plan can be used to tell employees, investors and others about your plans and strategies; and
. A business plan provides a benchmark against which to compare the progress and performance of your business.
It is a good idea for all business to prepare and regularly update their business plans. However, small businesses are most likely to prepare a business plan when they are just starting up or when a major change in their business is occurring (and often when additional investment or a loan is needed).
What is included in a business plan?
Business plans come in many shapes and sizes. Think of the Business Plan as answers to a few basic and logical questions about a business. What questions would you ask in order to fully understand that new business idea?
Below are examples of questions that should be addressed in the plan. They can go into greater detail if necessary.
1. What is your business?
a. A basic description about your business.
2. Who will you sell to?
a. Describe in detail who will be your customer base.
b. Is there enough interest to support your venture?
c. Does this business fill an economic need in the area?
d. Explain why you feel your business could benefit your area.
3. Who is your competition?
a. List businesses in a similar type of business in your area.
4. How will you achieve your sales?
a. What is unique about your firm that will attract customers over the competition?
5. How much money do you need?
a. What are your projected costs for start-up and operating costs for the first year?
6. What are your profit projections for the first year?
a. If your business is an existing business include an actual financial statement.
7. Are you a good Manager?
a. What previous experience do you have relevant to your business proposal?
b. How will you handle day-to-day operations?
c. How will you market your product to increase sales?
8. A financial plan that includes pro-forma balance sheets, income statements and cash flow statements. A balance sheet compares what your business owns to what it owes. A cash flow statement compares how much money will be coming in to how much you will be spending. An income statement compares your revenues to your expenses to see if you are going to make money.
What are some guidelines for preparing a good business plan?
. Allocate enough time and resources to thoroughly research your business plan. You should do research in order to find out more about your industry, your potential customers, your potential competitors, and your potential sales and costs.
. Show drafts of your business plan to others. If the people viewing your plan have difficulty understanding the basic concepts of your business, chances are good that the lender will also have difficulty.
. Write your own business plan
. Make sure your financial projections are believable. The financial section is very important because it identifies your financial needs and shows the profit potential of your business. A good financial plan will give the reader confidence that you really understand your business. Overly optimistic assumptions or a failure to accurately reflect the full costs of operation can quickly destroy the credibility of your business plan.
. Do the Executive Summary Last! The Executive summary can be the most important section of your business plan because people will read it first and it may be the only section they read.
One common mistake is for a person to find a sample business plan and copy it verbatim, changing only the business name and the projection numbers. A good business plan should flow together like a good story, with each section working to demonstrate why the business will succeed. By copying an existing proposal, your client may end up with a plan that seems disjointed, with some sections contradicting others, or key issues being left unaddressed.
For the purposes of the SBLA program, the financial statements are the most important aspect of the business. You must be able to show us that by entering into this venture, you will be able to pay your bills, buy your groceries, and pay the taxman, as well as making the loan payments. Your financial projections must be reasonable and you must be able to justify them. For example, if you claim that you can make $10,000 in gross sales per month, you need to back up those numbers. Likewise, if you claim that utility payments will be very low, you must also be able to show proof.
Next, it is important that you show us that you researched the need for your product/service within your community. Using the above example of $10,000 per month in gross sales, you need to take into consideration things such as the number of potential clients in your area, your competition, etc. if the only way you can meet your projections is to cause your competitors to lose all of their clients to you, then you may not have a reasonable set of projections, and you should revisit them.