There are many great reasons to have a business plan. When you are just getting started in business, the time and effort you put into a plan can help you know if your idea is viable. If you will be applying for financing, a business plan is required as part of your application.
A business plan also serves as a great starting point to conduct an annual performance analysis on your business. It can be used as a basis for setting and reaching goals in your business. It’s also a handy reminder of where you started and can be easily adjusted to reflect where you want your business to go in the future.
The Standard Business Plan
If you are writing a strategic plan because you are applying for a loan, the financial institution expects your plan to discuss specific areas of your business. This applies even if your business is new. In this case, you are expected to make projections.
Lending institutions like to know you’ve done your research. While success is never guaranteed in business, research can definitely go a long way to ensuring your business idea is viable.
The Business Development Bank of Canada recommends your plan includes the following seven sections:
- Business Overview
- Sales and Marketing Plan
- Operating Plan
- Human Resources Plan
- Action Plan
- Executive Summary
- Financial Appendix
Not all business plans will include all seven areas above, and if they do, they won’t necessarily be in this order. For example, it’s common to include an executive summary first to give readers a snapshot of your entire document.
Business Plan Sections
Whether you are just starting out or are creating a plan to achieve specific goals over the coming year, considering these seven sections will ensure you’ve covered all the major areas of your business. Here’s a brief description of each section.
The Business Overview is a description of your business, including your industry and how many years you’ve been in business or if you’re a startup.
Your Sales and Marketing Plan section will include market analysis data, a competitor analysis, product and/or services, including their pricing and promotion strategies, and information about your target customers. Some people consider this the main section of a business plan. Without a good sales and marketing plan, even the best business ideas can easily fail.
In the Operating Plan section, you highlight the physical aspects of your business noting existing capital assets such as buildings and equipment and any planned asset purchases. Often a reason for applying for a business loan is to fund equipment, so include any pertinent details as to why you need these assets.
The Human Resources Plan details any staff you currently have or plan to hire, and the Action Plan includes specific actions you plan to take in your business over the next two to three years.
The Executive Summary is a snapshot of your entire business plan. Think of this as the Coles Notes version of your plan. It gives the reader an idea if they want to delve into further details of your plan.
Finally, in the Financial Appendix, you will include all relevant financial data such as an income statement, balance sheet, and cash flow statement as well as an annual budget. Any financial data you mention in your business plan should be included in your Financial Appendix.
The Year in Review
As you can see from the level of detail that goes into a planning document, it requires a considerable amount of time to prepare. Once you have a starting point though, it is fairly easy to update on a regular frequency that you determine. We recommend doing this at least annually.
A year in review meeting with key employees or even on your own will help you see where you started and where you are. Financial statements can help you do this too, but the beauty of using your plan is it allows you to review all areas of your business. Making a habit of reviewing and updating your plan annually will help you see necessary changes.
Finding Inspiration in Your Industry
If you find you compare yourself to competitors or industry leaders and wind up feeling bad about your own business, try using your plan as a starting point to draw inspiration from these businesses instead.
Start by thinking of those competitors or businesses you envy. What is it you envy about them?
Now, rather than thinking about how envious you are, how can you use this for inspiration instead? For example, let’s say your local paper just published an article about one of your competitors. When you read it, you wish your business was in the paper too. What a great advertising opportunity.
Rather than wishing your business was in the paper, turn this into a goal. Let your competitor’s success inspire you to think of some things you could do to have an article published. If they did it, so can you! Why not use the article as a conversation starter? Maybe the paper is open to publishing some tips you share based on a product or service you offer. As you work through each section of your business plan, what businesses inspire you?
As you can see, a comprehensive plan for what you’d like to achieve in your business is a valuable document that can be used for more than just applying for financing. Did you know we offer business coaching which includes preparing a business plan? If you need a hand with this, get in touch.
If you are looking to do it yourself, we are also big fans of LivePlan. Check them out, they are a great business planning software tool!