Aboriginal Financial Officers
Association of Canada
National Conference / February 2005

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The Business Plan is an essential tool – a road map; it should answer two fundamental questions to you
(assuming you are the entrepreneur):
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Is the opportunity worth pursuing?
Can I do it? How?
AFOA / 2005 - Business Plan Workshop 2

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Once that threshold is crossed:
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A Business Plan is essentially a selling document that must convey excitement, interest, and vision, to whoever is going to back the business.
AFOA / 2005 - Business Plan Workshop 3

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Introduces the entrepreneur (or team) to key stakeholders;
Provides tool to assess viability;
Provides a framework for the entrepreneur to conduct an analysis of the venture;
Provides a framework for the entrepreneur to assess industry and competitive forces;
Provides a tool for the entrepreneur to assess “Fit”;
Provides a framework for the entrepreneur to conduct selfassessment;
Forces the entrepreneur to define the idea, concept, and objectives;
Forces the entrepreneur to think strategically very early on;
Creates an essential document for raising funds;
Provides direction in the early stages.
AFOA / 2005 - Business Plan Workshop 4

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The PEOPLE behind the venture and their key support;
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The OPPORTUNITY, what will the business sell, to whom, can it grow?
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The ENVIRONMENT that the business operates in;
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The RISKS and REWARDS of everything that can go wrong, and right, and how the team will respond.
AFOA / 2005 - Business Plan Workshop 5

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Cover Letter – Provides focus, explains purpose;
Cover Page – Show image, quality;
Table of Contents – Ease of reference;
Executive Summary – Gain interest, showcase vision;
Research – Illustrate market size, growth, change;
Marketing – Show strategy to enter market, get clients;
Operations – Show structure, processes, key management;
Finance – Show requirements, sources/uses, and when profit is expected;
Appendices – Show relevant support documentation.
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Note: This is a basic outline, it can be modified as needed.
AFOA / 2005 - Business Plan Workshop 6

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One page maximum;
Sets the mood and focus;
Address the reader and begin a “soft sell”;
Spell names correctly; and sign;
Close on a positive;
Buzzwords:
“Our research indicates….an opportunity in the market”;
“We will target….niche…using aggressive marketing”;
“We have the resources….successful implementation”.
AFOA / 2005 - Business Plan Workshop 7

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Similar to the business card concept;
Immediately projects image, first impression;
Be appropriate, flashy versus understated;
Use color scheme, graphics, logo, brand;
Avoid similarity with an existing “look”;
Be creative.
AFOA / 2005 - Business Plan Workshop 8

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Reference point;
Should be reader friendly;
Show a clear path to information;
Link to Tabs if applicable;
Use headings and sub-headings;
Sounds obvious, but make sure pagination is correct.
AFOA / 2005 - Business Plan Workshop 9

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This is it! It might be all that that an investor reads;
One page maximum;
It MUST grab the attention of the reader;
The reader is interested in:
The market opportunity;
Your strategy to fill it;
How much will this cost, where is money coming from;
When will there be profits, and how much?
Who are the key people, what is their expertise?
What are you requesting from the reader?
AFOA / 2005 - Business Plan Workshop 10

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Industry Research
Target Market Research
Competition Research
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Purpose is to show the validity of your business expectations;
Prove to and convince a “skeptic”.
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Hopefully, it is in a growth stage;
But, change in the industry is also a good sign;
If it is stagnant and/or saturated, you will have to
“steal” customers from the competition.
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State clearly, “the target market is…”;
State who they are, “males ages 18 – 35…”;
State how many are in the area you intend to serve;
AFOA / 2005 - Business Plan Workshop 13

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Note the number, size , and “track record”;
Use easy to find data, phone directories, newspaper ads;
Use observation, visit them and pose as customer;
Assess their strengths and weaknesses;
Assess their ability and willingness to change;
Think about differentiation;
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Use easy data sources;
INTERNET;
Remember that the reader is NOT an expert in every sector of the economy, present information in an easy to read format, use charts, etc.
AFOA / 2005 - Business Plan Workshop 15

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Survey;
Consider selecting an easy target market, i.e. students;
“Expert opinion” interviews;
Critical information:
Perception of product/service;
Desired features/benefits;
Desired availability;
Price expectations;
Frequency of purchase.
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“A body at rest stays at rest”….
Sales are critical at start up;
Marketing is the most important skill in the beginning;
Describe the window of opportunity from previous section;
Discuss differentiation;
Highlight your “unique selling point”.
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Briefly describe product/service;
Highlight differentiation again;
Highlight selling points, “superior quality”, “easy to use”;
Mention add-ons, special points.
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Reflection of quality;
Don’t go too low;
Think about who is buying, is it for a gift?
Remember, it’s likely you do NOT have the power to undersell (predator pricing) your competition to steal market share.
AFOA / 2005 - Business Plan Workshop 19

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Communication to your target audience;
Critical difference, mass market vs. niche market;
Mass market, think Wal-Mart; forget about it!
Niche market:
Think how you get your message to your target market;
Get attention;
Generate interest;
Develop desire;
Take action, purchase.
AFOA / 2005 - Business Plan Workshop 20

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Location;
Look for anchor (community mall);
Look for cluster (around others);
Remember, if you are a “specialty shop” and expect others to “find” you, you better be good!
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Competencies
Process
Structure
Scheduling / Facility
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Purpose is to show the internal workings of the business;
Show “fit” between external market opportunity and internal strength of “system” to meet opportunity.
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The management team is very important;
Weakness is indicated when someone does not “addvalue”, why are they there?
Family support is important;
Indicate advisors, if applicable;
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System means work is accomplished most efficiently;
System allows for customer to move through a process in the “best” way;
Best means best for the business;
System should be designed so that product flows in most efficient way;
Compare how a customer flows through a self-serve gas station versus a casino;
AFOA / 2005 - Business Plan Workshop 24

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Sole proprietorship: Very easy to set-up, places risks on the sole owner;
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Partnership: Several owners, but as partners;
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Incorporation: Most costly, but provides for limited liability on owners and usually used as business grow larger.
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Schedules: Think of the typical week.
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Facility: Layout of business, applicable for most business plans.
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How much will it cost to start?
What is your equity?
How much is needed from external sources?
Where will the funds come from? (Debt or equity?);
How will you pay it back – debt?
How much of the business will you give up – equity?
Beak-even analysis.
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Indicate in simple format:
Major cost items;
Equipment purchases;
Supplies, etc.
Any other major cost items relevant to the specific business needs.
AFOA / 2005 - Business Plan Workshop 28

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Cash Flow is KING/QUEEN! No, they don’t teach this at the Harvard Business School.
Cash Flow (forecast) statement: key planning financial showing simply cash in and cash out, should be monthly;
Income Statement – the financial statement showing profitability over a period of time;
Balance Sheet: the financial statement showing assets, liabilities, equity, at a specific point in time.
AFOA / 2005 - Business Plan Workshop 29

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Liquidity:
Current: Current assets / current liabilities;
Quick (Acid test): Cash / current liabilities;
Profitability:
Return on equity: Net income / total equity;
Profit margin: (Net income / sales);
Solvency:
Debt / equity: (Total debt / total equity).
AFOA / 2005 - Business Plan Workshop 30

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Resumes;
Organization chart;
Ownership information;
Surveys, charts, graphs;
Layout plan;
Patents, illustration of prototypes, etc.
Any other items, not sure about something, put it in.
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Who is the intended reader?
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Back to the beginning, you will have to adjust the outline depending on who you are targeting.
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Community Government:
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Emphasize the positives to the community:
Leakage reduction;
Job creation;
Spin-off potential;
Positive for future community development.
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Government (ABC, INAC):
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Emphasize the market viability, and the background / credentials of the entrepreneur;
Be realistic, but show profitability;
Make the Business Plan “fit” their guidelines, don’t waste time arguing about the guidelines;
Be patient (especially for contribution funding.)
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Bankers:
Emphasize the fundamentals:
Positive cash flow;
Solid steady growth.
Ability to repay debt.
Investors (VC):
Fast growth into large market opportunity;
Skills of management team.
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Internal (Operational Business Plan):
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This could be done during fast growth, or as part of an annual process, emphasize:
Growth opportunities,
Security, stability;
Focus on specific issues, new market, new process.
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Banks:
Common forms of financing:
Operating or working capital;
Term loans;
Equipment (commercial pledge);
Letters of Credit.
Factoring;
Leasing is becoming more and more popular.
AFOA / 2005 - Business Plan Workshop 37

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Governments have a wide variety of programs to assist entrepreneurs;
Usually come in a variety of terms, including loan guarantees;
Industry Canada (Aboriginal Business Canada)
Know your Aboriginal Capital Corporations (ACC’s) and External Delivery Organizations
Indian Affairs (INAC)
Provincial sources, check your area.
AFOA / 2005 - Business Plan Workshop 38

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If successful in marketing the Business Plan, there are a few basic financing considerations:
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In many cases, the traditional non-repayable
“contribution” is now mixed with other forms of financing, that’s good as an entrepreneur should have something at risk.
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Debt is borrowing money that has to be repaid;
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It does not dilute ownership;
It does not result in a loss of control;
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Debt can be obtained from both private and public sources.
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Equity represents ownership in the business, raising funding this way means giving up a portion of ownership;
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It DOES dilute ownership;
It MAY result in a loss of control;
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Going public not a realistic option for many small
Aboriginal businesses.
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By nature, willing to take on more risk;
But, VC’s want some control and high returns;
VC’s place controls on entrepreneurs such as:
Approval of large capital expenditures;
Remuneration of senior management;
Approval of long term lease arrangements;
Approval of disposal of assets;
Payment of dividends;
Major borrowing or other financial decisions.
AFOA / 2005 - Business Plan Workshop 42

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In general, there really is no magic formula to market a business plan, an entrepreneur should know or become aware of the sources available.
Raising $$$$$$$$ is still major challenge for start-ups and a well developed Business Plan is the key document;
More and more emphasis is being placed on the “Team,” therefore it is becoming more and more important to present a professional management team to sell the Business Plan.
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The usual:
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Set goals, make daily plans;
Generate POSITIVE CASH FLOW!
Without sales…..think dot.bombs
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Bootstrapping means “pulling up your bootstraps” and getting the funds in any way possible:
Main points:
Move venture from idea to implementation without delay;
Keep focus on venture that will generate cash flow and break even soon, and maintain any advantage;
Avoid premature growth;
Keep attention on cash flow;
Establish relationship with key stakeholders;
Don’t build big team of “pros” too fast.
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Zen Buddhist saying:
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Really, entrepreneurship itself is:
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An orientation to take
ACTION every day to make the business successful.
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The thought process that goes into developing and writing the Business Plan is more important than actually referring to the Business Plan every day.
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