The Business Plan and You

8/8/2019 The Business Plan and You

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BUSINESS START-UP

The BusinessPlan and You

For more information, contac t:

The Business LinkBusiness Service Cent re100 10237 104 Stree t NW, Edmonton, Alb erta

Tel: (780) 422-7722 o r 1-800-272-9675Fax: (780) 422-0055E-mail: [email protected]/alberta

A Me mb er of the C anad a Business Netwo rk


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THE BUSINESS PLAN AND YOU (0306)

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Contents

A Sample Business Plan Outline ........................................................................................ 31. Cover Sheet......................................................................................................................................32. Execut ive Sum mary.........................................................................................................................33. Tab le of Contents............................................................................................................................34. Histo ry ................................................................................................................................................35. Mission Sta te ment ............................................................................................................................36. Desc ript ion of Produc ts and Services...........................................................................................37. Marketing ..........................................................................................................................................48. e-Business..........................................................................................................................................49. Mana gement, Ow nership , a nd Organiza tion ............................................................................410. Ob jec tives a nd Goa ls...................................................................................................................511. Fina nc ia l Position ...........................................................................................................................512. Append ices....................................................................................................................................5Some Va lua b le Tips.............................................................................................................................6Start-Up Costs.................................................................................................................. 71. Furniture and Fixtures ......................................................................................................................72. Leaseho ld Imp rovements...............................................................................................................73. Equip ment ........................................................................................................................................74. Vehic les.............................................................................................................................................75. Security Deposits.............................................................................................................................. 76. e-Business Costs ...............................................................................................................................87. Other Costs.......................................................................................................................................8Exp lana tion of Start-Up Costs ...........................................................................................9


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A Sample Business Plan Outline

1. Cover Sheet

a) Inc lude your nam e, ad dress, phone a nd fa x numb er.

b ) Name the key players of the o pe ration.

c ) Date the rep ort.

2. Executive Summary

a) Give a brief ou tline o f wha t you w ill c ove r in this p lan.

b ) Describe how you will market your products and/or services

c ) Discuss the go a ls and ob jec tives of t his ven ture.

d ) Outline the amount of fund ing you will req uire a nd how you w ill use it.

e) Desc ribe your p rod uc ts and / or services.

3. Tab le o f Contents

a) Show an outline of what is to fo llow in the next pag es.

4. History

a) Give background informa tion ab out the business or how the business

evolved.

b ) Give b ac kground informa tion a bo ut the produc t and / or service , and how

they evolved .

c ) Deta il all suc cesses of the business, including the expe riences that have

contributed to tha t success.

d ) Desc ribe the c orpo ra te structure, tha t is, the sole o wne rship, partnership,

limited pa rtnership, etc . of the b usiness and how it ca me to b e.

5. Mission Stateme nt

a) Outline w hat you hope to a cc omp lish with this business and how your

prod uc ts and / or service d iffers from those a lrea dy in existenc e.

b ) Outline the d irec tion o f g row th fo r this business.

6. Description o f Produc ts and Services

a) Desc ribe your prod uc t and / or service a nd ho w it is po sitione d in the

marketplace.b ) Inc lude any cop yrights, pa tents, trad ema rks and other intellec tual

prope rty, certification numb ers and do cuments that p ertain to the

definition of ow nership of the p rod uc ts and / or services.

c ) Discuss the sta tus of resea rc h and deve lop ment for the p roduc t or service.


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d) Include photos, schematics, sketches, blueprints, technical data and

informa tion if ap plicab le.

7. Marketing

a) Describe your target market; include demographic profiles, the

ge og rap hic loc ation, eco nomic trends, and projection in the growth of the

market.

b ) Resea rch a nd inc lude a m arket sha re ana lysis. Show how your business will

affect the m arket and how m uch o f that market you c an reasonab ly

c ap ture. Indicate how you intend to cap ture this ma rket share, conside r

prom oting a nd selling your produc ts and / or services online.

c ) Ad dress the issues of c om petition by d esc ribing what ma kes you

c omp etitive. Indicate the streng ths and wea knesses of your co mp etitors

and how they affect your business. Dont forget your online competitors,

bo th loc ally and g lob ally.

d ) Plan the type of ma rketing a nd a dve rtising you intend to c arry out. Include

informa tion a bo ut bo th your offline a nd o nline p romo tiona l tac tic s.

e) Discuss your pric ing sc hem e and ho w it was dete rmined . Desc ribe how

you p lan to deliver your produc ts or services.

8. e- Business

a) Plan how you will be using e-business to increase efficiencies in your

business proc esses. E-mail ca n be used to com munica te w ith custom ers,

suppliers and pa rtners. E-procurement c an simplify the buying p rocess

through online marketplaces, portals or exchanges.

b ) Ad dress your Internet m arketing stra teg y. Identify how you w ill target youronline custom ers, what p rod uc ts and / or service you will offer online,

explain your online p ricing structure and ho w you w ill deliver your p rod uc ts

and / or services.

c ) Ide ntify what type o f commitment will be required and alloc ate

responsibility in terms of investment, time, and staffing.

d ) Estab lish ho w you will me asure suc cess and return on investment (ROI). You

can track online sales, or online visitors etc.

e) Ensure tha t the online and offline eleme nts of your business p lan a re we ll

integrated.

9. Manageme nt, Ownership, and Organization

f) Show the ow nership o f the business in terms of the partners individua l

shares and contributions to the business.

g) Rep ort cha nnels of d irec tion from m ana ge ment or use o rga nizational

hiera rchy. For examp le, list the dec ision makers a nd the ac tion takers

and their plac e in the business structure.


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h) Summ arize impo rtant emp loyee regula tions and p olic ies. Deta ils and

examp les of such po licies ma y be inc lude d in the a pp end ices.

10. Objec tives and Goa ls

a) Forec ast your reve nues and e xpenses for the next two yea rs by month, and

the ne xt three ye ars annua lly. Dete rmine a financ ial p lan in terms of the

source a nd the use o f the funds.

b ) Draft a plan for strate gic m arketing and wha t type o f aud ienc e you will

target for future expansion and wha t me thod s you will use to rea c h your

target audience.

c ) Define the a rea s for pote ntial grow th. Explore the d ifferent avenues of

ma nufac turing, expo rting, wide area distribution, e-proc ureme nt etc .

Inc lude plans of imp roving the qua lity of the p rod uc ts presently offered .

Include goals of quality assurances on products, gaining certification of

standards, etc.

11. Financ ia l Position

a) Inc lude p resent financ ial sta tem ents, present assets and liab ilities and a

projec tion for bo th. Also include a projec tion ana lysis of financ ial

state ments, and projected c ash flow s (incoming a nd outg oing) needed to

ma intain the o pe ration a nd growth o f the business.

b ) Ana lyze a nd inc lude a summa ry of ratios for cost of the product ,

p rod uc tion and d istribu tion, in relat ion to p rofits.

12. Append ices

a) Inc lude the f inanc ial information fo r the last 3-5 yea rs. This ma y be

be nefic ial in dem onstrating p rior experienc e in financ ial manage ment.

b ) Provide rationa l behind a ll assump tions ma de throug hout t he b usiness

plan.

c ) Enc lose any pic tures, samp le web pa ge s, graphics, and grap hs de ta iling

the projection of growth.

d ) Include any testimonials, letters of accomplishment for the product or

service.


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Som e Va luable Tips

a) Limit the p lan to 20-25 pa ges.

b ) Avo id using ja rgo n or tec hnic a l terminolog y.c ) Keep it p rofessiona l, not e xtravaga nt o r fanc y.

d ) Ma inta in the foc us of p resenting the p rop osa l and theneed for this business, avo id ma king the sa les p itch toyour rea der.

e) Be rea listic in your goa ls and ob jec tives, results, grow thpotential, etc .

f) Ad dress the issue o f com pet ition and their hold o n themarket.

g ) Be flexib le in your stra tegies and ma rketing...not e veryonewill think you ha ve the idea of the c entury.

h) Do not b om bard the p lan with financ ia l sta tem ents...othe raspec ts a re equa lly imp ortant.

i) Assump tions do no t eq uate p rojec tions, if you make anassump tion, bac k it up and be rea listic .

j) Do no t hide the risks, nega tives, pitfa lls of the venture,p resent them professiona lly and find solutions and wa ys ofdea ling with these p rob lem s should they arise, be fore theyarise.

Remember...No one plans to fail, they fail to p lan.


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Start-Up Costs

1. Furniture and Fixtures

a)

b)

c )

d )

Tota l

2. Leasehold Improvements Tota l

3. Equip me nt

a)

b)

c )

d )

Tota l

4. Vehic les Tota l

5. Sec urity Deposits

a)

b)

c )

Tota l


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6. e- Business Costs

Web Prog ram mer

Designe r Fee sHosting Fees

Softwa re

Payme nt Gatewa y Fees

Internet Me rc hant Ac c ount

Fees

Other

Tota l

7. Other Costs

Incorporation Costs

Accounting Costs

Pre-opening Advertising

Pre-opening Trave l

Pre-ope ning Wage s

Pre-opening Sup plies

License

Insurance

Opening Inventory

Operating Loa n

Tota l


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Explanation of Start-Up Costs

1. To d ifferentiate be twe en sta rt-up c osts and op erating c osts, simply de termine

the exac t d ate you w ill open. Any expend iture b efore this da te is a start-up;

anything a fter is an op erating cost.

Be sure yo u a re o nly co unting a c tua l expend itures in sta rt-up c osts (i.e.) item s

you ac tually pa y for. Do not include your own eq uipm ent, tools, etc. that you

alrea dy own. You a re no t pa ying for these. Simila rly, your work should no t be

counted as a c ost since you are not ac tually taking money out of your po c ket

to p ay for yourself. These a nd similar items will be a c counte d for in the

ba lanc e shee t as part of your investme nt in the business. Count ac tua l

expenditures.

2. Sta rt-up c osts plus the o perating c osts (i.e. The a mounts nec essary to a ccount

for negative cash flow ) adde d to ge ther will be the tota l am ount req uired to

op erate the b usiness. You w ill also a dd a cushion to a llow for variat ions in your

estimates and any costs you ve o verloo ked . There is no fo rmula fo r thiscushion.

3. The te rms a re as follows:

a ) Furniture & Fixtures: all office a nd sto re furniture (ta b les, cha irs, etc .) Plus

the fixtures nec essary for your business suc h a s shelves, wa ll brac kets,

racks, etc .

b ) Lea seho ld Imp rove ments: inc ludes any money spent on the ope ra ting site

on items you c anno t take w ith you whe n you leave such a s pa inting,

carpet, extra ba throom, exits, etc .

c ) Equipm ent: all ma chinery invo lved in your business, (i.e. a ll ma chines usedin manufacturing, cash registers, cleaning equipment, computers, etc.)

d ) Vehicles: the cars, trucks, etc . for your business.

e) Sec urity Dep osits: in reaching a greements, you w ill likely be req uired to put

some m oney up in ad vanc e. These ma y include :

- Lea se d ep osits: (i.e. on e qu ipme nt o r vehicles);

- Utilities: telep hone, gas, light , wa te r;

- Rent: o ften first month and last tw o.

Note: You c an ac quire these figures by a c tually talking to the p eop leinvolved . Ask them w hat the d ep osit is.

f) Inc orpo ra tion co sts: ta lk to your lawye r about this.

g) Ac counting co sts: ask an a cc ountant to set up your books; wha t rec ords

you should be keep ing, so tha t he/ she c an d o the job for you.


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h) Pre-op ening a dvertising: any expend itures to p rom ote your business

inc luding c ata logues, printing o f brochures, ads pa id before op ening, etc.

i) E-business costs: any m one y spend on an Internet servic e p rovide r, web

site design and programming, web hosting, software, Internet merchant

ac co unts and p ayment gate ways etc.

j) Pre-ope ning w ag es: money spe nt to p ay p eop le for such items as

stoc king your shelves, pre-opening p rod uc tion, training

k) Pre-opening supplies: include your office supplies such as stationary,

letterhead costs, etc ., and your plant supp lies suc h as ba gs, wrapping

pap er, tap e, etc.

l) Pre-opening travel: include trips to suppliers, trade shows, pre-opening

sa les, etc .

m) Licenses: ca ll the a pprop riate d ep artme nts to find out costs.

n) Insuranc e: talk to an insuranc e b roker for advice o n wha t insuranc e youshould carry. It va ries ac c ording to the typ e o f business you operate .

o) Opening inventory: the g ood s you purchase for store opening. Dont

skimp on this. If you are under stocked, you will give a bad first impression,

which c an seriously dama ge future sales.

p ) Operating loa n: this will be d etermined after youve do ne your ca sh flow

statements.

4. Rent - be sure you ge t the a c curate figure.

a ) Rent is often quote d as a cost per square foot (o r meter), i.e. $10.00 pe r

squa re foo t. This is for the ye ar, thus a 2000 squa re foo t bay at $10.00 per

squa re foo t mea ns $20,000.00 pe r year. Your monthly rent is this figure

divide d by 12.

b ) Ask if the q uoted f igure is gross or net . Gross me ans tha t a ll costs a re

inc lude d in the figure. You do nt p ay a ny more. Net mea ns that there will

be o ther costs.

c ) Quotes are often given as net , do uble net , triple net . Rathe r than

trying to figu re o ut what these te rms me an, simply ask: What a re a ll my

op erating costs? These m ight include pa ying yo ur po rtion of the p rop erty

tax, insuranc e, c om mo n utilities, snow remova l, etc .

Be sure to g et the to ta l figure.

5. Consider the op tion of lea sing. It s not the c ase tha t you must alwa ys ow n the

eq uipme nt or vehicles you use. Run your numbers both w ays - purcha se o r

lea se -to see if one m ethod rep resents and ad vanta ge .

6. Look for sec ond -hand item s. Often there is go od q ua lity sec ond -hand

equipment that represents a considerable savings to you.


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7. Check out a ll reg ulations tha t relate to your business. There ma y be hea lth

req uirem ents tha t req uire c ertain eq uipme nt (suc h as snee ze guards ove r

salad ba rs), po llution a nd noise controls, etc .. These reg ulations will have an

imp ac t on your costs if you a re required to m eet certain stand ards.

Essentia lly, the app end ix form outlines month-by-month projec tions of:

Sales: probab ly the only inc om e for your business;

Cost of sa les: the tota l cost to you to purchase and transport goods,

ma terials and so on;

Gross ma rgin: sa les less cost of sa les ;

Expenses*: - fixed : suc h as rent , insuranc e, licenses;

- va riab le: suc h as lab or, de live ry co sts, utilities, advertising;

Net p rofit/ loss: your gross ma rgin less to ta l expenses - tha t is, yourmonthly bottom-line.

Alternatively, you can determine your profit requirement for the next twelve

months and work the b udg et b ac kwards. In order to ma ke X do llars, Ill have to

sell suc h and suc h volume of p roduc t or services .

*Ma ny businesses use the Expense and Allow anc es c ateg ories include d in the

Reve nue Canada fo rm Sta tem ent o f Business Inc om e a nd Expenses .

In conc lusion, your business plan is a roa d ma p to g uide you through the ever-

chang ing road o f your business. With some go od planning and tho ught, your

business can sta rt off on a po sitive note and your business p lan c an be referred to

and revised to keep your goa ls and dream s on trac k.


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Sales

Cost o f Sa les

Gross Ma rgin

Variable Expenses:

- Salaries

- Payroll Taxes

- Advertising

- Automobile

- Dues and Subsc rip tions

- Layo ut a nd Design

- Supplies

- Utilities

- Misce llane ous

Tota l Variab le

Fixed Expenses:

- Depreciation

- Insurance

- Rent

- Taxes and Lice nses

- Interest Only

Total Fixed Expenses

Total Expenses

Net Profit (Loss)

Appendix: Budget

Projected Sales, Expenses and Profits

Months (of Fiscal Year)


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Disc laimer:

The informa tion p resented in this do c ument is intende d as a guide only, and while tho ught to be ac curate,

is provided strictly "as is" and without warranty of any kind. The Business Link, its em ployee s, its d irec tors and

memb ers, its age nts or contrac tors will not be liab le to you for any d am age s, direc t or indirec t, or lost p rofits

arising out o f your use o f informa tion provide d w ithin this doc ume nt, or informa tion provide d w ithin The

Business Link'swe b sites.

This ma terial ma y be used , rep roduc ed , stored or transmitted for non-co mm ercial purpo ses, howev er, TheBusiness Link'sc op yright is to b e a c knowled ge d . You ma y not use, rep roduc e, store or transmit this ma terialfor comm ercial purpo ses without p rior written c onsent from The Business Link.

2006 The Business Link

The Business LinkBusiness Service Centre

100 10237 104 Stree t NW, Edmo nton , Alberta T5J 1B1

Tel: (780) 422-7722 or 1-800-272-9675 Fax: (780) 422-0055

E-mail: buslink@cbsc .ic .gc .ca Web : ww w.cbsc .org/ a lberta

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