By Romal Bryce
After spending countless hours studying multiple industry sectors, franchise networks, business models, and geographies that fit his vision for entrepreneurship, it’s time to make the courageous decision to enter the world of self-employment.
When figuring out where to start, many entrepreneurs get caught up in the weed of the many things to be resolved: sourcing materials, talking with homeowners, and finding funding, to name a few. a few.
These are all things that need to be done in the future, but not before the most important activity: planning. In today’s business environment, preparation, a thoughtful approach, and a plan to adapt will provide your business with the solid foundation it needs not only to survive, but also to thrive.
Lay the foundation
Preparing a business plan is an essential first step for anyone looking to start a small business. Jotting down your thoughts on paper emphasizes the importance of thinking about the key elements of the business. It should be seen as a road map to success.
A business plan is also a living document that can be modified, adapted and amended as the business environment changes. In particular, having a plan during the pandemic would help franchisees and small business owners pivot under changing circumstances. It also performs an external function, which consists of convincing potential investors or lenders that the company deserves loans or investment funds. A well thought out plan shows his vision for success.
When developing a business plan, it is important to understand the following:
• Executive Summary: This is a summary of what is expected of your business and serves as a high level overview of what is contained in the business plan. It should be written after the other sections of the business plan have been completed.
• Business Description — This should include details about what the business does, as well as its goals, mission statement, points of differentiation, and an overview of the target market for the business. Equally important, a description of the products and services offered by the company should also be included in this section.
• Market Analysis — Ideally, you should discuss in detail the industry in which your business is located and the size of the market opportunity. Finding statistics and data for your market is vital; this will confirm that an opportunity exists or allow you to reflect. The facts are user-friendly and the data is essential to make good decisions.
• Competition — Who are the company’s competitors? What are their strengths and weaknesses? How can the business take advantage of the gaps?
• Management overview: depending on the size of the business, help may be needed to manage the operation. This section should help to think about the organizational structure and whether it is necessary to separate management tasks (for example sales, marketing and human resources). In this section, discussing your own expertise is good. Remember that most investors and lenders consider management to be a key part of any business.
• Marketing and Sales — Here it is important to describe how the company’s products or services will be sold. Consider the overall strategy, then break it down to determine how the strategy will be executed; for example, things like hiring a sales team or raising awareness around the company. Being specific in this section should be well thought out.
• Monetary / Financial Projections — Here, you reveal your financial goals and expectations. Creating a better, worse and more likely scenario for sales and profitability is important not only for oneself, but also for other interested parties. Making monthly cash flow projections will help you understand your business’s cash flow needs and determine the capital required. If funding is required, these projections will show lenders and investors how much is required as well as how much the business owner is investing in the business.
A good plan should reflect the change
No owner can prepare for every future outcome; any plan must reflect the constantly changing nature of the business. During the pandemic, many have learned that companies that have good strategic plans and are adaptable have a better chance of surviving than those without. Disaster contingency planning is not a typical part of a business plan; However, as an owner it is important to think about the future and the ever-changing landscape. Having an idea in mind of how you could pivot your business and what the short and long term impacts would be, both for yourself and for your business, can be crucial in overcoming obstacles.
Carrying out a business plan doesn’t have to be a daunting task. There are many free business plan templates available on the Internet that follow the same guidelines referenced in this article. Most Canadian banks have user-friendly online business plan templates that can be customized to suit a particular industry. Whether you choose to use an online template or create your own plan, it should be customized as needed. Keep in mind that the amount of information you put into your business plan is less important than the quality of the information and the thinking behind it. Now it’s time to start planning.
Romal Bryce is National Director of Growth and Strategy, Industry Programs, for the Bank of Montreal (BMO). Visit bmo.com/franchising for more information.