The Business Plan is a statement in words and numbers that explains what you want to do and how you will accomplish your objectives. It is a written report of the company’s finances, management, employees, products and marketing strategy. The Business Plan is an essential planning and tracking tool for both new and existing businesses. While the Business Plan can be used to obtain the financing you need, it is also an important step to improving your chance of success.

Acting as a basic road map, a Business Plan is essential for:
Starting a new business
Purchasing an existing business (or franchise)
Planning for the future
Planning for expansion
Restructuring or overcoming obstacles

A Business Plan should clearly state:
Who you are, What you do and How you do it
Where you want to go with your business
How you are going to get there
What resources are needed to achieve your goals
When you intend to see results
Why you are presenting the business plan to the reader

Business Plan allows you to access the following about your business:
Is there a need for your product or service in the marketplace?
Are people willing to pay for your product or service?
Will the business be profitable enough to satisfy your needs?
What type of financing will be needed to get your business off the ground?
What obstacles exist that may affect the success of your business?

Here is a list of just some of the reasons why a Business Plan is an essential tool:
To determine whether the business is feasible and/or potentially profitable
Helps set objectives that can be measured or are obtainable
Necessary to get the financing you may need
Maintain sight of your direction, objectives and goals rather than straying from the actual plan
Allows you to make your startup decisions and day to day operating decisions
Prevents wasting time, energy and money


The length of a Business Plan will be dependent upon the business, however a comprehensive plan will be required to obtain any type of financing. A final checklist at the end of the section can be used to make sure everything has been covered before
putting your Business Plan into a complete, easy to follow report.


A cover sheet should include the name of business, name of principals, address, telephone number of business, and other contact information.
Business Name
Business Address


The purpose of an Executive Summary is to provide a brief overview of your business. As a summary of the business, it should be written last but appear first in the Business Plan. Make sure the executive Summary highlights the following about the business:

Type of business and industry
Assessment of competition
Objective of the business
Management team/staff experience
Form of business structure
Projected financial information
Products and services offered
Funds invested and required
Key product or service features


Questions to answer:
How do I set up my business?
What advisors will I need?
What are my business objectives?

1. Structures – There are three basic business structures:
      Sole Proprietor – owned by one person
      Partnership – two or more people have ownership in the business 
      Corporation – is a distinct legal entity that gives owners limited liability

Factors to consider when choosing a business structure:
Taxes: can be very complex topic and should be discussed with an accountant
Risk of loss: sole proprietorships or partnerships are not legally separate from owner. Personal assets are at risk if business assets are not sufficient to coveryour business debts. Incorporation generally limits to your investment in the corporation.

2. Business Advisors – list of recommended advisors for starting and running a business
     Insurance Agent
     Real Estate Agent

Reasons for selecting trusted advisors:
Get sound business advice
Help you avoid costly mistakes
Keeping advisors up to date allows them to help you get where you want to go

3. Business Objectives – Knowing the purpose and objectives of your business is important in determining where you will fit in the marketplace and who your intended market will be. Business objectives should include what your business will do and what products or services will be provided.

Questions to answer:
1. How will I be gathering information about my business?
2. What is the size and characteristics of the market?

1. Gathering Information

Market Research
Talk to suppliers, other entrepreneurs, the competition, and potential customers
Read trade magazines, Industry Association literature, phone books and other industry directories
Use statistics and literature prepared by organizations including Ministry of Economic Development and Trade, Industry Canada, Statistics Canada and human Resources Development Canada

Market Surveys
determine if there is a need for your product or service, get first hand information from your potential customers or competition by conducting a survey.

Local Resources – The local resources section contains a listing of free resource areas that you can use to research your business idea. They can provide published material, how to books & videos, computers & Internet access and other statistical data.

2. Analyzing the Information

Market Size and Trends
Overall size of market i.e. area, population, industry revenues
Demographics and Psychographics of customers, competition, etc.
What areas do you intend to target? Local, regional, national, international.
Average customer expenditures on your product or service?
Trends, seasonality, buying cycle, growing or declining market?
Where do you intend to sell your product or service?

Market Share
Overall scope of market: revenue and demand
Your realistic share of the market
Estimated Annual Sales (estimated total market X your % of market)

Note: analyzing the market share may require conducting your competition analysis first


Questions to Answer:
1. What research have I done?
2. What are my potential customers like?
3. How do I market to my customers?
4. Market Research: Research is the only way to find out what your potential customers are like. Research may include doortodoor,
telephone or mail surveys, discussions with suppliers or competitors, or statistical data. What market research have
you conducted?

2. Customer Profile
Who they are aWhat is important to them
What are the needs of your customer aHow to get them to buy from you
How to fulfil those needs aWhat they buy
How large is the customer base aFrequency of purchases
How to reach your target customer aWhy they would buy your product

Geographics: Location or areas Demographics:
A) Individual: Age, Gender, Income, Education, Occupation
B) Business: Location, Size, Product/Service, # of Employees, Trends
Psychographics: Lifestyles, Values, Interests, Preferences, Motivations, Buying Habits

3. Marketing to your customer: One key to success is understanding what your
customers want. How do you get them to buy from you? What form of advertising
would be most effective for your business?


Questions to Answer:

1. How do I evaluate my competition?
2. How can I use this information to my advantage?
3. Who are my potential suppliers?

1. Evaluating your competition: Compile a list of all direct and indirect competitors. Select up to ten direct competitors and learn more about them.
product and services acustomer service atarget customers
location, size aestimated sales astrengths/weaknesses
price anumber of employees abrand names

2. Analyzing your competition: Compile a Competitive Analysis with the information just learned will help you identify how to create or what competition advantage you have. A SWOT Analysis is a tool used to assess Strength, Weakness, Opportunities, Threats

3. Locating suppliers: Identify and analyze potential suppliers to determine who will be right for your business. Prepare backup list of suppliers. Some sources to help locate suppliers are:

Yellow Pages, Trade associations, or the Directory of Associations
Trade Shows – Annual Directory of Show and Exhibits or International Trade Fairs and Conferences
External Affairs Canada, US Trade and Tourism Development Division
Directories: Chamber of Commerce, Fraser’s, Scott’s, Vernon’s, Canadian Trade Index, City’s Industrial Directories, Strategis, COBSC (Canada Ontario Business Service Centre)


Questions to Answer:
1. What does it cost to offer my product/service?
2. What do I plan to charge for my product/service?
3. If and when will I make money?

1. Costs: Whether you manufacture or sell a product or service you have three major costs: material, labour and overhead. Provide a complete breakdown of costs.

2. Pricing: What price will you be charging for your product/service? Factors to consider:
Your costs Material, labour and overhead to breakeven plus a return on investment
Competitor’s Price – Influences your pricing but you do not have to charge less
Customer’s Demand – You must have an awareness of the product or service demand and your customers’ sensitivity to price
Other Factors – Hours of operation, location, service, quality, image and reputation

3. Price vs. cost: You are now able to calculate whether the business can be profitable. Calculate the following ratios (explanation of ratios can be found in Summary of Terms)
GROSS PROFIT MARGIN (GPM) = {salescost of sales}/sales
MARKUP = cost/(1GPM)
BREAKEVEN UNITS = annual fixed costs/(unit selling priceunit variable costs)
BREAKEVEN DOLLARS = # units to breakeven X selling price per unit
INVENTORY TURNOVER = the amount on hand divided by the amount of inventory sold annually. Inventory turnover should be within industry standards


Questions to Answer:
1. How will I create a business image?
2. How will I attract customers and build awareness?
3. What marketing strategy will I use to attract customers?

1. Marketing Material: To create a well recognized business image, colour scheme, typeface and layout of all business materials should be consistent. Your business image can be presented through a logo, letterhead, business cards, flyers, brochures, printed
materials and website. What marketing material will you be using?

2. Advertising: When choosing to advertise you must consider how often to advertise to be effective and budget how much you plan to spend. What advertising will you be doing and how much will it cost?

3. Marketing Strategy: (use the 4 P’s of marketing)
PRODUCT – Customers do not buy products, they buy the benefits and features they receive from a product.
PRICE – Is your product “price sensitive” meaning the higher it is the more likely your customer will go elsewhere, or does higher price mean a perceived higher value?
PLACE – (location and distribution) How will you distribute your product of service? Identify what benefits your location offers customers and suppliers and describe your location in terms of traffic, visibility, hours of operation, space, leased vs. owned etc.
PROMOTION – What promotion will you use: referrals, joining associations, sponsorship, volunteering, networking, press, public speaking or trade shows?


Questions to Answer:
1. What are the major business decisions or hurdles that I will face?
2. What do I need to know about the management team?
3. What do I need to know about the employees?
4. What legal issues will I face?

1. Business: What is the overall cost of running your business? Identify the major opportunities or obstacles facing the company at this time and how the company will be handling them.

2. Management: Describe your role in the company as Manager. What is the vision that management has developed for the business? List short term and long term goals.

3. Employees: Identify key employees and the professional services that you will need to employ to assist the business from time to time. Calculate the number of employees your business currently employs and what you will need in the future. What
skills/positions are or will be required? Identify whether training will be provided and how much it will cost.

4. Legal Issues: What licenses, parents, government regulations, inspections and insurance will affect your business? Research any government regulations, changes in the economy, changes in trends that may affect the busines or industry now and in the
near future.


Questions to Answer:
1. What financial statements do I need for external users?
2. What financial statements do I need for internal users?
3. How can these financial statements help me make decisions?
4. How will I finance my business?

1. External Financial Statements: These statements are for external users such as your creditors, bankers and shareholders. They generally include:
Review Engagement Reports to shareholders/proprietors/partners
Balance Sheet
Statement of Income and Retained Earnings
Statement of Changes in Financial Position

2. Internal Financial Statements: These statements help make key decisions and therefore management will regularly require up-to-date financial data and reports such as:
Cash flow
Inventory Levels
Accounts Receivable
Production Schedules
Accounts Payable
Assets Management

3. Internally accurate records help answer the following questions:
How can we plan for the company’s growth or declines in business?
How quickly can we expand if business is better than expected?
Which customers buy more and more often than others do?
What is the cost to operate our business monthly?
Are we prepared for seasonal fluctuations in cash flow?
What expanses are increasing or decreasing?

4. Types of Financing: There are two main types of financing that a business will use:

  A – Debt Financing
Long-term debt
Demand loans
Line of credit and credit cards

  B – Share capital
Equity Financing
Retained earnings
Owner’s investment

Lenders often require collateral to secure the loan. Financial institutions will also check your personal credit rating and the credit capacity of your business.

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