By Romal Bryce
After spending countless hours investigating multiple industry sectors, franchise networks, business models, and geographic regions that fit one’s vision of entrepreneurship, it becomes time to make the courageous decision to jump into the world of self-employment.
When looking at where to start, a lot of entrepreneurs get caught up in the weeds looking at the numerous items that need to be tackled: sourcing materials, speaking to landlords, and arranging for financing, to name a few.
These are all things that must be done in the future but not before the most important activity: planning. In today’s business environment, preparedness, having a thoughtful approach, and a plan to adapt will provide one’s business with the strong foundation needed—not only to survive but also to thrive.
Laying the groundwork
Preparing a business plan is an essential first step for anyone looking to start a small business. The act of committing one’s thoughts to paper stresses the importance of thinking through the key components of the business. This should be viewed as one’s roadmap to success.
A business plan is also a living document that can be changed, adapted, and amended depending on the changing business environment. In particular, having a plan during pandemic would help franchisees and small business owners pivot during changing circumstances. It also serves an external function, which is to convince potential investors or lenders the business deserves loans or investment funds. A well-thought-out plan shows one’s vision for success.
When coming up with a business plan, it is important to capture the following elements:
• Executive summary—This is a summary of what one expects their business to accomplish and serves as a high-level overview of what’s contained in the business plan. It should be written after the other sections of the business plan are completed.
• Company description—This should include details about what the company does, as well as one’s goals, mission statement, points of differentiation, and an outline of the businesses’ target market. Equally important, a description of the products and services the business offers should also be included in this section.
• Market analysis—Ideally, one should discuss in detail the industry their business is in and the size of the market opportunity. Researching statistics and data for one’s market is vital; it will either confirm an opportunity exists or allow one to pause for thought. Facts are friendly and data is key to driving good decisions.
• The competition—Who are the company’s competitors? What are their strengths and weaknesses? How can the company take advantage of any gaps?
• Management overview—Depending on the size of the business, help may be needed to run the operation. This section should help one think about organizational structure and whether there is a need for a separation of management duties (e.g. sales, marketing, and human resources). In this section, discussing one’s own expertise is a good thing. Remember: most investors and lenders view management as a key ingredient for any business.
• Marketing and sales—Here it is important to outline how one will sell the company’s products or services. Consider the overall strategy and then break it down to determine how the strategy will be executed; for example, things like hiring a sales team or driving awareness around the business. Being specific matters in this section and it should be well thought out.
• Money/financial projections—Here one reveals their financial goals and expectations. Creating a best, worst, and probable scenario for sales and profitability is important for not only oneself, but also other interested parties. Completing monthly cash flow projections will help one understand their business’s cash needs and determines how much capital will be required. If financing is needed, these projections will show lenders and investors how much is required as well as how much the business owner is putting into the venture.
A good plan should reflect change
No owner can prepare for every future outcome; any plan should reflect the ever-evolving nature of business. Over the course of the pandemic, many have learned businesses that have good strategic plans and are adaptable have a better chance of surviving than those that do not have one in place. Catastrophic contingency planning is not a typical part of any 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 one would pivot their business and what the short- and longer-term impacts would be, to both oneself and their company, can be crucial to overcoming hurdles.
Completing a business plan does not have to be a daunting task. There are many business plan templates available for free on the internet that follow the same guidelines referenced in this article. Most Canadian banks have user-friendly business plan templates online that can be customized based on a particular industry. Irrespective of whether one chooses to use an online template or opt to craft their own plan, it should be customized as needed. Keep in mind, the quantity of information one puts into their business plan is less important than the quality of information and thought behind it. Now, it is time to start planning.
Romal Bryce is the national director of growth and strategy, industry programs, for Bank of Montreal (BMO). Visit bmo.com/franchising for more information.