Are you starting a new business in Canada and wondering which questions you should be asking?
A basic business plan will encourage you to ask yourself the tough questions, ones that deserve to be answered. Even if you don’t need funding, business planning is an excellent process to ensure you’re putting yourself in a strong position to move forward.
You’ve heard of the saying, “you don’t know what you don’t know’? It’s true, especially when it comes to starting a business. Many new business owners are very enthusiastic and easily brush off many ‘unknowns’. This is most common when becoming an independent contractor, using specialized skills previously used in a corporate environment. Business planning helps identify the unknowns and makes it easier to spot the gaps. The process of writing a business plan—however basic— is invaluable for clarifying ideas, understanding the scope of your business, and how much money, time, and resources you really need to get started and thrive.
How do you go about business planning? Here’s a basic business plan outline that covers everything you really need to consider:
Executive Summary
Your one page executive summary gives a high-level overview of your business. Although this is the first section someone will see if they read your business plan, it’s actually the last section you should write. It should cover:
- Vision and goals – what does your business want to do?
- Product/services description and differentiation – what do you sell and why is it different from the competition?
- Target market – who are you selling to?
- Marketing plan – how are you going to reach those customers?
- Current/projected financial status – what do you earn/predict to earn?
- Team members – who’s involved/will need to be involved?
And, if you’re asking for a business grant or financing: - Request – How much capital investment are you asking for?
Company Overview
This section should answer who you are and what you stand for, as well as what you plan to do and what you hope to accomplish.
Will you be running your new Canadian business as a sole proprietorship, a corporation, a partnership or a co-operative? There are advantages and disadvantages to each type of business structure. Deciding which structure is right for your business depends on various factors, including personal liability and tax deductions. Find out Which Canadian Business Structure Is Best For You?
What types of products, services or solutions are you selling and which industry do you belong? How many team members are you going to need? When you add someone, will you use a subcontractor or hire an employee? When would it make sense to hire an employee?
Mission Statement
Your mission is what your company actually does, its reason for existence and its overall intention. Once you get an idea, condense it down to a sentence and make it easy to memorize. For example, when Microsoft was founded 45 years ago, Bill Gates and Paul Allen’s mission statement was, “a computer on every desk and in every home”. In 1975, that was considered a bold and radical idea, practically impossible to imagine. What’s the mission that will set the direction for your company?
Vision Statement
Your company vision should be inspirational and aspirational, looking towards the future. Think of it as an (adaptable) roadmap to where you want the company to be within a certain timeframe, perhaps ten years. For example, the Alzheimer Association’s vision is, “a world without Alzheimer’s and all other dementia.” What’s your company’s future successful state?
Company Values
What does your company believe in and how it will behave? Don’t just go with core values that everyone should have, such as honesty and integrity. Think about what’s unique to your company. For example, Numi Organic Tea strives to “Be the Change” as a leader in sustainability. “We are obligated to create a positive impact on the planet…Positive change is achieved through inspiration, transparency and consistency of words and actions. Our energies are focused on finding solutions.” They have realized that company value by ensuring their farmers make a fair wage via Fair Trade, use tea boxes made from 90% post-consumer waste recycled cardboard, and unbleached compostable non-GMO tea bags. In 2013, they started a program to help combat the global water crisis. So far, they’ve brought clean water to 10,500 tea farmers across Madagascar and India.
Market Analysis
Market analysis is a key section of your business plan, whether or not you expect anyone else to read it. The right market for your products/services will make or break your business. It should include an overview of the size of your potential market, and include relevant industry trends and trajectory. Get clear on who you will be selling to with an ideal client/customer profile. If you’re selling to the wrong person, it doesn’t matter how great your services or products are! At this point you should be able to make some informed guesses.
Buyer Personas
Create buyer personas, otherwise known as Customer Avatars. It should include their demographic information (age, location, gender, income), psychographic information (personality, lifestyle, interests, behaviour), their values and motivations, their worries and frustrations, sources of information that influence their decision making, and their objections to a sale. A quality persona will ensure that everything you do to bring in and serve your customers is tailored to them. It will help keep you focused on their needs, and not just what you do. Researching your ideal customers will give you information that will help you make more strategic decisions, including the wisdom to say no to an opportunity or a client that’s not the right fit.
SWOT Analysis
This exercise will help you identify your strengths and weaknesses, as well as any opportunities and threats that may exist in your particular business situation. Section a piece of paper into four quadrants (strengths, weaknesses, opportunities, and threats) and write down bullet points in each square breaking down the most relevant information for each element. What do you do well? Where do you need to improve? What are your goals? What obstacles do you face?
Competitive Overview
Whatever it is you do, there are almost probably other companies that offer a very similar product or service to yours. This exercise can give you important information and insight that could help you gain an edge over your competitors. Who are those competitors? Google search your type of product/service and at least a few top competitors will show up. What opportunities can you find to differentiate and outperform your competitors? Can you identify any particular areas of your own work that can be improved? How can you make sure your business stands out in a crowded marketplace?
Products and Services
The products and services section should be more than just a list of what your business is going to provide, it should include key details about each one. What are the features and benefits? Why is this product/service needed? How will it be priced? How does it compare to the same type of offering by your competitors? How will you go about fulfilling the order? What role will your website play in your sales efforts?
Marketing Strategy
By now you should have figured out how much your products/services will cost, and why you made that decision. You should know what you will be selling, and how you differentiate in the marketplace. That market analysis becomes useful in this section, where you detail your company’s desired image and branding strategy and how you will find new customers/clients to promote your products/services to ultimately make sales.
Come up with a positioning statement by imagining how you want the customer to think of your product/service or company. What benefits does your competitive advantage bring to the buyers in your target market? Next, break down key bits of information using the 4 Ps of marketing.
The areas you should address, at the very least, include:
Product (or Service)
- Features – what makes it appealing, different, and valuable?
- Quality Bundles – three tiers for three different prices?
- Related products or services
Price
- Bundling Prices – any packages or tiers
- Individual Prices – each standalone product/service
- Pricing strategies and flexibility
- Credit Policy
Place
- Locations – Where will you sell your product? Which platforms and places do your ideal customers hang out
- Distribution channels – sell direct to businesses/consumers or indirectly?
Promotion
- Promotional channels – where does your audience consume information? How will you get your products/services in front of them?
- Timing – ideal periods/seasonality
- Online Marketing – Website, Content, SEO, Social Media, Email
- Advertising – Google ads, Facebook ads
Logistics and Operations
Think of this part as an outline of the capital and expense requirements your business will need to operate from day to day. Where will you be physically located? Do you need space for an office or facilities? What tools and technology do you need to be up and running? What materials do you need to produce your product/service? Do you have reliable suppliers? What are their prices, terms, and conditions? Describe any alternative arrangements you’ll make if they let you down. How will you handle a busy season or an unexpected spike in demand?
Create a production workflow, a step-by-step description of how your product/service will be made and identify any problems that may occur in the process. What potential problems might interfere with the process and how are you going to do to neutralize those risks.
Financials
This is the section that causes the most anxiety and frustration. If it’s not a requirement for the bank or a loan, then just do a two year cash flow forecast to see when/if you will need more money. Numbers not your strong suit? At this point in your process, feel free to contact us for help outlining sales forecasts. We can give you cash flow management strategies along with modern Accounts Receivable management ideas, including cloud accounting platforms that can track, organize and help manage your business finances.
We hope this overview of a basic business plan outline is helpful. There’s much to be gained from a well thought out company overview with mission, vision and value statements and a market analysis that includes buyer personas, a SWOT analysis, and a competitive overview. Consider key details about every product or service you’ll be offering and create a solid marketing strategy with the 4 P’s – product, price, place and promotion. Follow up with an outline of the capital and expenses your business will need to operate, a step by step production workflow and a cash flow forecast. Finish off with a one-page executive summary, and you will have a clear path forward and significantly increase your likelihood of success.