You’ve been tallying the figures, fine-tuning your product or service, scouting locations, eyeballing the competition, but you still don’t know if your business idea cuts the mustard. Write up a business plan and that oughta tell you.
At least that’s what the president of Canada’s largest small business training firm thinks.
“For many, writing a business plan is a pain in the butt,” says Andrew Patricio, co-founder of BizLaunch.ca, a Toronto-based coaching firm that’s advised more than 20,000 entrepreneurs worldwide. “But here’s what your readers should know – it’s the only way to check the viability of any business idea.”
A business plan acts as a blueprint or roadmap for your proposal, laying out possible challenges, threats, strengths and opportunities. More importantly, it shows the reader how your business will succeed. Stick to plain-Jane language and avoid jargon, highly technical terms or annoying superlatives. A business plan will cover various aspects of your idea such as if there’s a demand for your product or service, whether you can source suppliers easily enough and whether your sales and cash flow forecasts indicate that you will sink or swim.
In the early days, a business plan can help you secure financing from investors, but as your business grows and develops, it can help you raise capital for expansions, identify strengths and weaknesses and develop exit and succession strategies. Many prospective business owners are averse to writing their own plans and would rather shell out $5,000 to an accountant to do so. That’s a big mistake, says Patricio. You need to poise your pencil yourself so that you can really determine if your business is doable.
“99 percent of all business plans are crappy,” says Patricio. “Your plan should be well written and well structured. The majority of people don’t put the effort in.”
According to Patricio, a typical business plan runs about 10 to 20 pages and includes an executive summary, legal information, a marketing plan, financial forecasts, an operations plan and a technology plan.
“A good starting point for any business plan is determining whether there is a market for the product or service,” says Roy Weber, a small business advisor with the Waterloo Region Small Business Centre. “Find your niche or target market and that’s who you should survey.”
Consider using focus groups, surveys, online surveys (surveymonkey.com is a great source) and, stresses Weber, good old-fashioned face-to-face talk. Because funds are often in short supply when you’re starting out you may end up doing the work yourself. If you’re trying to gauge the popularity of your new product or service, he recommends talking to about one hundred consumers. If your business is more of a business-to-business product or service then try to survey 25 businesses to see if they’re interested in your idea.
“Take your clipboard and one page questionnaire and go out into marketplace and talk and sample your market,” he advises. “Ask ‘do you like this product or service and how much would you pay for it?”
The Canada Ontario Business Service Centre (1-888-576-4444 or canadabusiness.ca) offers a wealth of information. If you need info on branding, permits, financing, market research, copyright, taxes and starting a business, look here. You won’t be sorry. There’s plenty on writing and developing a business plan, too, including templates, samples and FAQs.
How to Write a Great Business Plan Harvard Business Review
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