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Details of Initial Research. Steps when documenting a business plan.

1 Write a sentence that identifies the products or services that you provide. Alternatively write your company's vision, mission and goals for the next three to five years. You will use this statement all the time so it has to be clear and focused - your future depends on it. Test it with potential customers, friends, lenders, suppliers - if they are confused go back to the drawing board.

2 Check out your competition. What type of market are you entering - mature, growing, specialized/high-tech, declining? Define your niche in the marketplace. Are you positioned by price, quality, service, convenience, innovation? This research will help you gauge just how long it is going to take to break into the marketplace, forecast revenues and estimate costs for marketing/ advertising start-up costs.

3 Research the costs of building your product or service: materials, supplies, equipment, manpower, building specifications. Does it add up to a smart idea? Are you competitive? How long will it take to pay off your initial investment? Can you grow the business, expand your product line, adjust for market risks beyond your start-up costs? These numbers will be a key factor in your cash flow and break-even analysis.

4 Consider distribution costs and methods. Review the communications discussion and consider the methods used by your competitors. Obtain estimates for the likes of business cards, telephone hookups, yellow pages listings, website hosting and design. Marketing and advertising are considered "soft" costs after the core costs of building your product/service, and yet, without some investment in this area you may not be able to build your business. Look for ways to trade services in the areas that you require or to slowly increase your spending as revenues increase.

5 Decide where you will conduct your business and choose a location that balances budget, traffic, visibility, safety parameters. Of course, this area will be zoned appropriately by your municipality. Is this a business that you can start in your home before incurring building/rental space costs? How does that affect your professional business appearance? Can you share the space with another small business?

6 Now take a closer look at obtaining raw materials or supplies. Are there preferred customers in the marketplace? Will you be able to get materials in smaller quantities, in a timely manner, with/without credit terms? Are there a few, or many, suppliers in your marketplace? New businesses may or may not be able to obtain credit terms from suppliers. Find out how much time/how many orders you will have to place in order to obtain credit terms. These figures will form an important part of your cash flow planning.

7 Find out how many employees and/or subcontractors you need. What is the market rate for their skills? Are these people in high demand? Are training programs locally available? Does your business culture make you a desired employer? People are the new "green" for companies. Refer to the Best Workplaces in fortune 500 companies.

8 Recruit your advisory team of professional advisors, partners and mentors that will work with you and support and analyze your decisions. Some professional advisement will be included in your accountant's fees or perhaps your industry association membership costs. Include those in your annual expenses and consider joining your local chamber of commerce as well.

9 Key risks in your own business, as well those prevalent in your industry need to be identified: key employees illness, injury to clients/staff on work premises, loss of a key supplier, and regulatory changes in the near future are just a few examples. Probable risks require mitigation planning that should be documented in you risk management strategy. Insurance coverage can be purchased for certain risks. Consult with your local commercial insurance representative.

10 Forecast your finances in a rough draft form. If the initial projections look reasonable you can venture into the full forecasting tools provided on this website. If you have an accountant or banker that you can talk to at this point, ask them for their initial opinion on your ability to qualify for financing. If you do not, your business plan may be designed for attracting partners or investors.

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Product/service information

This section of the plan describes the nature of your product of service, its key features, benefits and its competitive advantage.

1. What is your product or service? Describe its features in a "brochure" format that is designed for your intended audience (consumers, other businesses, government, others).

2. What are your product's or service's key features? Give a list of the features, for example:specialized materials, workmanship, geography, convenience, delivered, customized, educational, etc. What are the benefits to your customers?

3. Describe the price structure in your industry including: mark-ups, commissions, discounts and refund policies. Where does your product/service fit in the price matrix? Determine your prices and volume of sales. Document the assumptions that you have made to derive these figures. They will make up the "revenue" side of your cash flow forecasts. It is required by some financial lenders that you come up with a best and worst case scenario matrix.

4. Describe the distribution methods (wholesalers, agents, etc) that are typically used in your industry. Note the terms for volume discounts, incentives, factoring for cost increases/decreases and include in our cash flow forecasts.

5. Describe the customer service policy? e.g. guarantees, layaways, warranties, return policies, etc.

6. Does your product or service require you to rent/lease/own commercial space, property or licenses? What are the advantages/disadvantages of the space available to you? What is your plan for projected business growth and at what stage in your business plan do you need to take this into account?

7. What are the product/service risks in your business or industry? Can you obtain liabililty insurance to protect your business from these risks? Are they required by your industry associations? Can you join an industry association to become an accredited business to reduce these costs, join group insurance policies, learn best practices, etc?

8. Does your product or service competitive advantage include joint venture , partnering businesses, brand name suppliers, et al? What kind of support can you expect from them/provide for them?

Complete the sales forecast for your product or service below: Sales Assumptions must be supported by research in order to be credible. Past history of the business is one way to arrive at the numbers, as are trends in the industry and consumer spending habits, and competitor figures.

Make a list of sales assumptions and research to support sales assumptions in the table below. Add more rows if you require them.

Marketing / Advertising Plan

One of the main difficulties faced by any entrepreneur is that advertising has changed and evolved over the last few years. It now includes audio, visual and electronic media. Website programming of all sorts allows you to interact with your customers. And that is just the tip of the iceberg!

The Internet has made unbelievable amounts of information accessible, but it has also contributed to information overload. An effective advertising/marketing campaign is not about being everything to everyone, but is about having a conversation with your ideal customer and measuring those results through sales and/or feedback.

Advertising: Advertising is an attempt to influence the buying behavior of your customers or clients by providing a persuasive selling message about your products and/or services. Technically, advertising in only one way of promoting your business, and you will want to be sure that whatever form of advertising you choose fits in with your marketing plan, strategy and budget.

Forms of advertising:

• Paid ads on tv and radio, and in newspapers and magazines;
• Billboards and signage
• Yellow page listings
• Sponsored links on websites
• Pay per click advertising on the Internet
• Direct mail
• Business cards
• Vehicle advertising
• Sending promos with invoices
• Bench/bus stop advertising

Marketing: Marketing is a process of interesting potential customers and clients in your products and/or services. The key word in this marketing definition is "process"; marketing involves researching, promoting, selling and distributing your products or services. Marketing involves everything you do to get your potential customers and your product or service together.

Forms of marketing:

• Attend industry tradeshows and networking events.
• Volunteer on a board related to your industry.
• Include positive customer feedback on your website or brochure.
• Create a customer feedback form and make improvements that are possible.
• Respond in a timely fashion to telephone messages, emails and written correspondence.
• Write a letter or article in your local newspaper or trade magazine offering tricks and tips from your industry.
• Create joint ventures.
• Reward your present customers for passing on the word to your future customers - rebates, discounts, thank you letters.
• Sponsor a youth sports team or fundraising event.
• Satisfy your customers needs or wants to the best of your ability and to the level of service that you advertise. Do as you say.
• If your staff or company has made mistake - apologize immediately and compensate your customer appropriately.

Here are some of the major areas and questions, by category, that you can ask in order to develop your marketing plan:

1. Know your audience.

• What do they want?
• Where do you shop?
• What do you read?
• How old are they?
• Where do they hang out?
• Do they need your product or service?
• Can they afford your product or service?

2. Know your competition - be prepared to do a little detective work.

• What are your three main competitors doing to advertise?
• Where are they advertising? How often?
• What types of advertising methods are they using?
• What types of marketing methods are they using?
• How long have they been running?
• Are you reaching the same audience?
• Is your message different?
• What about your message differentiates you from the crowd?

3. Examine what the larger businesses in your industry are doing.

• Adapt their tactics for your audience, business niche and budget.

4. Know your message.

• What exactly are you trying to say?
• What do your customers want to hear?
• Why should they buy from you and not someone else?

Write your marketing plan in five subsections:

(1) Target Market/Competitive Analysis
You will need to understand the size of the target market for your product or service, and the number of competitors that already satisfy (or don't) the market you are attempting to break into with your new business idea. The target market section should cover:

• Outline your target market - age, gender, where they live, income, buying habits, etc.
• Total size of target market in terms of gross sales and/or numbers of units sold.
• Trends affecting the target market (refer to your SWOT and PEST analyses).
• Summarize your competition - estimates of market share, your sense of their financial health, comparison of products/services to yours; include your direct and indirect competition in this analysis.

(2) Services/Products
Your marketing strategy should communicate what makes your product or service unique.

• What is the one thing that makes your product or service unique?
• What other features does your product have: packaging, utility, quality, price, service, availability, etc?
• What benefits will your customers enjoy by buying your product or service: save money, feel better, experience new sights, etc?

(3) Pricing Strategy
An important part of marketing is determining the price of your product or service. If your prices are too high for your customers, some will pass you by. If you do not charge enough, some may question the value of your service/product. Some markets and products will be price sensitive - consider what pricing says about your company and your products.

• Using the worksheet provided, calculate your fixed and variable costs. Summarize how you arrived at your base costs and/or justify it through market price, and then calculate how long it will take to break-even.
• Are you offering discounts to volume customers, wholesale prices to distributors or agents, discounts to cash vs. credit card payments?
• What does fair market value mean in the context of your business? Does fair market price allow you to run a profitable business from which the owners can make a decent living?

(4) Sales/Distribution Plan
Your sales/distribution plan should detail how the transaction between you and your customer will take place. You need to explain in detail what type of distribution channels are available to you - account representatives, sales people, internet referrals, delivery services, wholesalers and retailers. Analyze the various stops and routes in your distribution plan for possible efficiences or duplications, cost-savings and excessive costs.

• How will you distribute your product or service? Will it be in one region, provincial, national, international? Outline all the steps and different companies in the chain. Consider what might happen if a business defaults or closes. Do you have alternate sources for the same service?
• How can your customers pay for their product? Will you provide credit terms? How will you handle deposits, refunds, returns, discounts?
• What kind of after-sales support will you offer? Will you charge for this service?

(5) Advertising and Promotions Plan
Your advertising and promotions plan must detail how you are going to communicate to your customers and prospects. If possible, provide an example of a mock-up of your brochure, website pages, advertisements, etc.

• What principles, operating procedures and company objectives will embed your marketing plan in day-to-day operations of your business?
• What training will you offer your staff in the areas of promotion, customer service and support, and industry "best" notoriety?
• What is your annual advertising plan? Is there some initial start-up advertising that will get sales flowing? Consider your annual buying habits of your customers, cyclical nature of your business and cash flow constraints of your company?
• What are your start-up costs for producing: brochures, business cards, hosting and creation of a website, signage for your vehicle and office location, association membership dues, telephone directory listings and grand opening celebrations (to name a few!).
• How will you measure the success of your advertising and marketing? How will you research new trends in communications, public relations and advertising?

OPERATIONS PLAN

Your plan needs to address the day-to-day running of your business. The operations section should address the stage of development and production process.

The development section should cover the following:

• How will your product or service be made? Describe the workflow in the creation of your product or service.
• What is your quality control in the development of your product or service? Have you created a process and checklist to ensure these problems are discovered?
• Is your work site WorkSafe, OSHA Standards, municipal/building inspector ready and do you have procedures in place to mitigate risk and train staff?
• Outline which industry associations you will be or already are a member of. Most businesses are legally obliged to do so. Employers who should register but do not may be subject to fines.
• Who are your primary and secondary suppliers? Do you have any back-ups or options of other suppliers if they dont' work out? What are their terms of payment?

The production process section should cover the following:

• What are the essential requirements of your business - building space, land, office style (home or commercial space), zoning - and if you own, lease or rent include the value/costs in your start-up costs. Are any of these absolutely vital to the business, and if so, what makes it so?
• When can you start producing and deliver to customers? How long does it take to make one unit? How much lead time do you need from order to delivery? Will you produce on spec or on demand? What are the risks of each (time to customer, competitor modes of production, etc)?
• What materials do you require? How much do they cost? How are they delivered to your location and how long does it take? Do you have on-demand access to these supplies if you have rush orders?
• What will you do if your demand for your goods or services fluctuates?
• Have you done a test run of your facilities? processes? with the required people? Do your competitors have any stories of struggling at the beginning of operations?
• How will you track materials and production inventory? If you are not computerized how will you manage your data?

If you are a manufacturer, then your proposal should also briefly cover the:

• mechanics of your business' work flow,
• inventory controls,
• personnel requirements, and
• production schedules.

RISK ANALYSIS


Every business has some degree of risk. Acknowledging the worst case scenarios and how you will minimize or mitigate the risks inherent in your business, is the first step in avoiding the problems.

Often risk awareness and mitigation will warrant an operational or administration expense category, i.e. a particular type of insurance, an employee with certain credentials/salary scale, training program for staff, etc.

Consider the following:

• What if you run out of cash? What would you do to pay the bills?
• What if your key employees quit?
• What if you get seriously hurt on (or off) the job? Do you have a plan for someone to take over key management roles?
• What are the standard risks of your industry? Have you adopted industry standards to protect the health and safety of your workers?
• What if the demand for your product or service decreases?
• What if the number of competitors increases?
• What if you are considering buying a business with liabilities (outstanding debts) to workers compensation or commissions?
• What if your major suppliers run into financial difficulties?
• What other unique risks does your business/industry face in light of pandemics, border security, globalization, rare resources, unique geography, multi-culturalism, etc?
• What is the age of your equipment? Could new regulations force you to upgrade?
• What are the technological advances in your business and are you able to keep up?
• Could zoning bylaw changes require you to move in the near future?

Risk Conclusions: Clearly restate your goals and objectives for your business. Address the risks and liabilities in light of a positive way forward and the resources available to you, for example: equipment, superior technology, a talented workforce, deep and wide networks.


And the Most Important Step of them All; IMPLEMENTATION PLAN & TIMELINE

If your business plan is complicated, requiring many steps or construction of a facility, a project plan with a timeline will be required at this step of the business plan.

Lenders may time payment advances with the various steps in the projects. At each step of the project, actual costs will be compared with estimated costs of the business plan. There will be decision points with regards to cost overruns or cost savings and the reallocation of monies from other parts of your business plan.

It provides a way of planning your time and resources so that all the necessary tasks are carried out within a given timescale.  It will provide whoever sees your business plan with a 'snapshot' of how you intend to go about setting up your business.  It should be broken down into the following sections:

• Objectives or targets
• Tasks/Actions
• Timescale
• Monitoring Progress

The plan does not need to be complex.  It is a simple, disciplined means of getting your project completed in a reasonable time and with minimum confusion as to each person's responsibilities.

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