By Romal Bryce
After spending countless hours researching multiple industry sectors, franchise networks, business models, and geographies that fit his vision of entrepreneurship, it’s time to make the brave decision to venture into the world of self-employment.
When figuring out where to start, many contractors get caught up in the weeds looking at the many things that need to be resolved: sourcing materials, talking to landlords, and finding financing, 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 necessary 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. Putting your thoughts on paper emphasizes the importance of thinking through 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 according to the changing business environment. 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 involves 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 of what the business does, along with 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, one should discuss in detail the industry in which one’s 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. Facts are user-friendly and data is essential for making good decisions.
• Competition — Who are the company’s competitors? What are their strengths and weaknesses? How can the company take advantage of the gaps?
• Management overview — Depending on the size of the business, assistance may be required to complete 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: Most investors and lenders see management as 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. Completing monthly cash flow projections will help understand their business’s cash flow needs and determine how much capital is needed. If financing is required, these projections will tell lenders and investors how much money is required as well as how much the business owner is investing in the business.
A good plan should reflect change
No owner can prepare for every future outcome; any plan should 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.
Developing 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 develop 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, Industrial Programs, for the Bank of Montreal (BMO). Visit bmo.com/franchising for more information.