When handling a business as the owner, there are various things that you have to keep in mind. It is difficult to be on top of everything which is why you need proper planning to move forward. Whether you are just starting a business or running one, it is very crucial that you make a comprehensive business plan. All established entrepreneur always make a proper and effective business plan to guide their business and you will also need one, if you want to be successful.
What is a business plan?
A business plan is essentially a written document where you as the owner describe your business, its objectives, strategies, strengths and weakness, market and its financial position and forecast. It is also essential that you make the plan at the start of your business and regularly update it.
Why should you write a business plan?
A business plan helps you reflect on the overall financial, market and industrial position of your business. It help you set realistic and timely goals, manage funding and growth and clarify operational resources and requirements. In addition to this, most investors and banks make decisions by looking at the business plan of their corresponding business partners. The structure and the effectiveness of a business plan ultimately determine the company’s success and growth.
What do you need, before writing your business plan?
Before writing or updating your business plan, gather the most recent of the following documents:
- Your existing personal and business’s financial statements (balance sheet, cash flow information and projections, income statement)
- Business and personal banking and investment statements
- Canada Revenue Agency Notice of Assessment
- Market Analysis Statistical Reports
What are the things that your business plan should include?
- The business profile of your company:
Making a business profile will assist you to understand your business environment, identify the strength and weaknesses of your business, challenges, and target areas for future growth.
- At first, you should write general info of your business such as its name, address, form of business ownership, the owners and their share, number of employees and their positions, list of products and services.
- You need to mention the sector of your industry like manufacturing, service or franchise. You need to identify your competitors and suppliers (include payment terms) too.
- In addition to this, also include your business’s strengths and weaknesses, top objectives, your competitive advantage and market potential.
- Make a list of political and social factors that affect your business (like government policies, current affairs, trends, various associations’ regulations, internet and social media marketing and others).
- The financial profile of your business
- Identify the economic factors that affect your business (like taxes, interest rates, current economic cycle, level of consumer spending and others).
- Make a short description of your current investments, assets, liabilities and revenues.
- Mention the financing needs of your business. It should include the funds invested in the business, major business purchases or change in certain time frame and information on borrowed money, loans or credits.
- Similarly, also make a financial chart for future growth that contains information on your current financial growth, your expectations of growth in next couple of years, funding required for the growth and how are you going to manage that fund.
- Make a general assessment of your current banking arrangements (include information of your bank, loans, repayment terms, and others)
- Make Financial Statements
One of the major components of an effective business plan is the information on the financial statements. Doing this will help you reflect on the business’ current financial situation and identify its growth potential.First, make the financial statement of your business. The statement should also comprise the following components.
- Business Balance Sheet
- Business Income Statement
- Business Cash Flow Forecast or Projections
- Then, make a personal financial statement. It is important to include this information because, it will help you understand your own personal financial strength. Upon reflecting on you financial strength, you will able to make proper decisions by finding effective solution to the financial problems. This statement should contain the following components:
- Information on your assets (like cash, saving, bank balances, stocks, bonds, GICs, CSBs and others)
- Information on the liabilities (like credit card balances, personal loans, income taxes, mortgages and others)
- Information on your family income and total expenditure
These are the few things that you need to contemplate upon, while writing an effective business plan. There could be some other information that you might want to include depending on your business goals and interest. While making a business plan, you should also consult your trusted and close employees, advisors and mentors.