Do I Need a Business Plan?
What sections do I include in my plan?
The following is a general outline of the different topics that should be
included in your business plan.
The executive summary should be one of the last sections to complete;
however, it will be the first page readers will see in your business plan. The executive summary needs to be completed last because it will essentially
provide a summary of all of the information in your plan. More or less it is an introduction to your business, a first impression to readers. As such it should include
- Major points from each section in your plan
- Company’s mission – a description of your company’s purpose
- Summary of its products or services
- Its customers
- Company’s advantages/weaknesses when compared to Competitors
- Future expectations - Sales, expenses, overall profits
- Tools required for startup – Inventory, funds, property, equipment
- If this plan is used to obtain financing then the amount of money you need should be indicated here as well as what kind of benefits investors will receive.
- No more than a page and a half in length.
In many cases, this is one of the only sections of your plan that is read by investors or financial institutions, so you have to make this section strong and emphasize all important points.
Summarize this section with a strong closing statement or a conclusion to tie the whole section together. Convince readers that your business is fully
capable of succeeding and therefore worth their investment.
It is important to remember that the summary is the first thing that readers are going to see. If the summary is poorly written and presented sloppily it reflects terribly on your business and lenders will likely sway away from
investing in your idea.
Company background is all about explaining where your business or business idea came from. It should be a summary of your company’s
history. Typically this is under a page long.
Include a brief description of how you identified a need for the business and why you think it’s a good idea.
The background section should give readers a more comprehensive idea of who you are and where your business idea came from. Remember: Quality not Quantity.
- You should describe where the idea came from and describe the different steps you have taken to develop your idea – This proves to investors/lenders that you have a plan and have worked out the details as opposed to a “fly-by-night” idea, and that there is a distinct need for your business.
- Often lenders/investors are interested in your personal history
- Your educational background
- Work experience
- Previous businesses you have started
- A description of your skills
- Knowledge of your industry
A Business Profile provides the reader with important information about your business idea and allows them to see “the big picture”. Here you will be asked to define and describe your business and exactly how you plan to
create your vision. This section should include:
- An overall description of your company – The “who, what when, where, how, and why” of your business
- Company goals and strategies
- A description of the business structure, name, members of the business and their share in the partnership (if it applies)
- Location of the business – Address and phone number
- Legal business type – Sole proprietorship, Partnership, Corporation
- Achievements to date
- Current market opportunity and how you plan to take advantage of this opportunity
- Mission statement– A mission statement should include what your business intends to offer that differs from other businesses; what sets your business apart and to whom you are offering it.
Company Philosophy is simply a means of describing a business’s core values or morals. These values create the foundation from which your business will perform work and conduct itself on a daily basis. i.e.
Commitment to customer needs
- Commitment to the environment
- Commitment to the community
It provides an explanation of the relationships the business will foster with the individuals and groups with whom it interacts. It sets the tone to define the business as a responsible member of the community.
All businesses operate in a world that is continually changing. Your
organization will be faced with external changes beyond your control that will ultimately have an effect on your business environment. When developing a business strategy you need to take into consideration all of these forces so you can recognize future opportunities and threats and take a proactive
approach to use them to your benefit.
This section lists the top 3-4 trends in the environment about which you need to stay informed.
- Identify trends that could affect your business and how you will you handle them? i.e. Free trade, recession, taxation, downsizing, elections, changes in labor legislation, political environment
An Industry Profile contains an analysis of the industry and the economy in which you are operating. It presents an understanding of the current trends and industry characteristics.
When creating the industry profile it is best to divide this section into two parts:
1. An overview of the industry
2. A look at your business position within this industry
What is the overall size of your industry?
- How many competitors are there? Who are they?
- Are there different sectors in the industry? If so what are they?
- Is there an estimate for the average sales for the year? If so what is it? Include past year’s information if available.
- What does the long-term picture look like for the industry? What does the future look like?
- What were the industry trends over the past 5-10 years? How will these affect your business?
What products and services are you selling and how will that affect the industry?
- What is unique about YOUR business? What makes you different from the competition?
- What are the complications that arise when attempting to enter into this industry? Is there anything in particular that will make it hard?
- What will you do to overcome these barriers?
- Who are your competitors?
- What is your share of this market? If all of your competitors are trying to make money from the same group of people, what “piece of the pie”can you claim as yours?
- Are there any patents, copyrights, trademarks, franchise rights that you have or plan to have?
Strengths, Weaknesses, Opportunities and Threats (SWOT):
At this point in your business plan it might be a good idea to include a SWOT analysis. Basically a SWOT analysis is a look at the Strengths, Weaknesses, Opportunities and Threats of your company.
Strengths A business’s strong resources and capabilities that can be used as an advantage over the competition. Consider:
- What do you do well?
- What resources do you have?
- What advantages do you have above and beyond the competition?
Weaknesses Sometimes the absence of certain strengths can be considered to be weaknesses. Consider:
- What expertise is lacking?
- Do you have any limited resources?
- Are you lacking competitive skills or technology?
- Does it cost you more to operate than your competitors?
Opportunities Attractive factors that exist in your external environment (industry/community) may reveal new opportunities for profit and growth. Consider:
- What areas of your industry are growing and how might you take advantage of these?
- What are people doing differently these days?
- What positive perspectives do people have of this industry and what can you do to profit from these?
- Is there an opportunity to offer a better value of products or services so that people will buy?
Threats Anything in your external environment that could be harmful to your business is considered a threat.
- Are your suppliers increasing their prices?
- Is the economy in a downturn?
- Has technology changed making your products obsolete?
- Include highlights from each of the other sections to explain the basics of your business
- Be interesting in order to motivate the reader to continue reading
- Be short and to the point
- Although this section is the first in the plan, it should be the last one you write
-financial institutions that give you money on loan to start a business. This money must be paid back, often with interest
Investors- individuals that give you money to start your business. This money allows them to have an ownership position within the business. Their rights as an owner will be outlined in your partnership agreement
The Big Picture!
Morals- a code of conduct that in specified conditions would be put forward by all rational persons
External Environment- conditions, events and factors surrounding an organization which influences its activities and choices, and determine its opportunities and risks
Industry Profile-the history, participants, characteristics, technology, and outlook of an industry
For Statistics Canada publications, check out your local library or go to the StatsCan site: www.statscan.gc.ca
For a broad range of government websites, start with the Strategis website from Industry Canada at www.strategis.ic.gc.ca or with the Services for Canadian Business site www.businessgateway.ca
Excellent analysis of economic and industry trends can be found at www.canadianeconomy.gc.ca
The website for the Canadian Chamber of Commerce www.chamber.ca offers a directory of its many local organizations
Performance Plus www.sme.ic.gc.ca, is Industry Canada’s small business database of financial and other information. You can also find financial ratios data classified by industry on various StatCan
Barriers to Entry - the things that make it difficult for a new company to compete against companies already established in the field. i.e. patents, trademarks, copyrighted technology, and a dominant brand
Patent - exclusive rights to a useful invention, granted by a government for a specified period of time
Copyright - protection against anyone (other than the creator, or someone authorized by the creator) reproducing a creative work such as a drawing, piece of writing, audiovisual production, and so on
Trademark - a word, phrase, or visual symbol that identifies the prod-ucts or services of a company
Industrial Design - registered rights to the original, visually aesthetic elements of a manufac-tured product
Franchise Rights - the particular set of rights that are sold by a company, allowing others to use its products, intellectual property, and style of doing business