2016
Business Plan
Guide
Economic Partners Sudbury East/West Nipissing Inc. – Business Plan Guide
2016
Economic Partners Sudbury East / West Nipissing is a community-based, non-profit organization that is
dedicated to creating opportunities for entrepreneurship and to the pursuit of economic growth in our
community. We are your local branch of the Community Futures Development Corporation (CFDC) and a
member of the Ontario Association of Community Futures Development Corporations (OACFDC). Funded
by Industry Canada and FedNor, CFDC is a community economic development initiative designed to help find
local solutions for local economies.
Who We Serve
We service a total catchment population of 21,277 people that includes the following communities:
Sudbury East
 Dokis First Nation
 French River
 Markstay-Warren
 St. Charles
West Nipissing
 Nipissing First Nation
 Nipissing
What We Do
We are people helping people. Run by a board of local volunteers and professional staff, we take a grass roots
approach to investing in local entrepreneurs, exporters, and community initiatives.
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Here are the key services that we offer you:
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Community economic planning and development
Access to funding for community projects and small businesses
Business counselling, services, and resources
30 Front Street, Unit A
Sturgeon Falls, ON P2B 3L4
Telephone: 705-753-5450
Fax: 705-753-3456
Website: www.economicpartners.com
Email: info@economicpartners.com
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Table of Contents
INTRODUCTION ............................................................................................................................................. 5
What is an Entrepreneur? ......................................................................................................................... 5
Advantages & Disadvantages of Being an Entrepreneur .......................................................................... 5
Assessment Questions .............................................................................................................................. 6
Traits of a Successful Entrepreneur .......................................................................................................... 7
Questions to Answer before Getting Started ........................................................................................... 7
Where do I start? .................................................................................................................................... 10
What is a business plan? ......................................................................................................................... 12
THE BUSINESS PLAN OUTLINE ..................................................................................................................... 15
Table of Content ..................................................................................................................................... 16
Executive Summary................................................................................................................................. 16
Business Overview .................................................................................................................................. 17
Description of the Business................................................................................................................. 17
Description of Products and Services ................................................................................................. 18
Mission, Vision, Goals and Objectives ................................................................................................ 19
Human Resources ............................................................................................................................... 20
Operational Plan ..................................................................................................................................... 21
Production........................................................................................................................................... 21
Planning Considerations ..................................................................................................................... 21
Location Considerations...................................................................................................................... 22
Production Plan ................................................................................................................................... 23
Service Plan ......................................................................................................................................... 23
Business Policies.................................................................................................................................. 24
Legal Environment .............................................................................................................................. 24
Implementation plan .......................................................................................................................... 25
Contingency Plan ................................................................................................................................ 27
Market Research ..................................................................................................................................... 29
Industry Analysis and Trends .............................................................................................................. 29
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Market Analysis/Research .................................................................................................................. 30
Target Market ..................................................................................................................................... 36
Competitive Analysis ........................................................................................................................... 47
S.W.O.T. Analysis................................................................................................................................. 48
Marketing Plan ........................................................................................................................................ 50
First “P” of Marketing: Product or Service .......................................................................................... 50
Second “P” of Marketing: Price........................................................................................................... 51
Third “P” of Marketing: Place (Distribution) ....................................................................................... 52
Fourth “P” of Marketing: Promotion .................................................................................................. 53
Financial Plan .......................................................................................................................................... 54
The Start-up Budget ............................................................................................................................ 55
The Monthly Cash Flow Statement ..................................................................................................... 56
The Balance Sheet ............................................................................................................................... 82
APPENDIX .................................................................................................................................................... 86
GLOSSARY.................................................................................................................................................... 87
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INTRODUCTION
So you have a great idea or just tired of working for someone else. Maybe you think
there is something more profitable you could be doing. Whatever your reasons, your
decision to become an entrepreneur has to be based on knowledge of yourself, your
business and the industry it is part of.After deciding to start your business, it is crucial
you take time to formulate a realistic path for yourself. One of the most certain ways to
be successful in business is to adequately plan where you want to go with your ideas.
People who enter a business venture without properly mapping their road to success
often find themselves in serious administrative and financial trouble several months
later, when they realize they have failed to prepare properly. This guide is by no means
the complete guide for entrepreneurs but a reference tool for people considering starting
a venture in West Nipissing. We hope this guide helps you in identifying some key
factors and reference tools in the pursuit of your business goals.
What is an Entrepreneur?
“It is one who owns, launches, organises, manages,
and assumes the risks of an economic venture”.
At the heart of every new business is an entrepreneur; someone not content to leave
things as they are, but wanting to strike out on his own. This individual brings two
important ingredients to the new business: confidence in an idea and a willingness to
accept the hard work and long hours necessary for success.
Advantages & Disadvantages of Being an Entrepreneur
Advantages:
Independence
Personal satisfaction
Chance for financial success
Control
Freedom
Disadvantages:
Risk of failure
Insecurity
Hard work
Risk of financial loss
Long hours
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Assessment Questions
Your Personality: Fear of failure?
What is your reaction when you fail?
How do you respond to setbacks, defeat, big problems, and little
problems?
How do you deal with stress?
Are you a positive thinker who can overcome failure easily?
Most business owners rebuild from failure and turn problems into opportunities.
Your Lifestyle:
How important are your friends?
Are you willing to change your lifestyle and social environment?
How comfortable are you with your lifestyle now?
Do you have career plans?
Most small business owners are forced to sacrifice their present lifestyle to devote more
time and energy to their businesses. Eighty hour work weeks are not uncommon.
Your Family:
Have you discussed your plans with your family and will they
support you?
Do you know what demands will be placed on your energy,
emotions and time?
Do you and your family realize that it may be necessary to put up to
16 hour per day into the operation of your business?
Family support will be a great help in operating your business.
Your Finances:
Are you prepared to take the risk of financial failure?
What sacrifices are you prepared to make?
Many new owners have their entire life savings invested in the
business, or the equity in their home committed. At the very least,
you may have a lower standard of living to contend with.
Do you have money of your own to invest?
Can you handle the pressure of additional financial obligations?
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Some owners go for a long period of time before they can actually withdraw a salary for
themselves. Many businesses take quite some time to get off their feet. If you are
unable to live with some degree of financial uncertainty, owning your own business may
not be for you.
Traits of a Successful Entrepreneur
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Ability to withstand business reversals without quitting
Business and Product/Service knowledge
Willingness to handle uncertainty well
Strong goal orientation
Persistence
Strong desire for independence
Versatility and resourcefulness
Self-confidence and self-reliance
The habit of seeking and using feedback
Self-determination
Physical health, with high degree of stamina and energy
The habit of looking for and creating opportunities
Openness to change
Objective and realism
Ability to apply ideas in creative ways
Human relations ability
Sense of purpose
Achievement orientation
Questions to Answer before Getting Started
Here are some questions to help you think through what you need to know and do. This
will
guide you to know where you may have some work to do.
Before you start…
 Are you the kind of person who can get a business started and make it go?
 Think about why you want to own your own business. Do you want to badly enough to
keep working long hours without knowing how much money you’ll end up with?
 Have you worked for someone else as a foreman or manager?
 Have you had any business training in school?
 Have you saved any money?
How about the money?
 Do you know how much money you will need to get your business started?
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 Have you determined how much money of your own you can put into the business?
 Do you know how much credit you can get from your suppliers?
 Do you know where you can borrow the rest of the money you need to start you
business?
 Have you figured out what net income per year you expect to get from the business?
 Count your salary and your profit on the money you put into the business. Can you live
on less than this so that you can use some of it to help your business grow?
 Have you talked to a banker about your plans?
How about a partner?
 If you need a partner with money, do you know someone who will fit – someone you can
get along with?
 Do you know the good and bad point about doing it alone, having a partner and
incorporating your business?
 Have you talked to a lawyer about it?
How about your customers?
 Do most businesses in your community seem to be doing well?
 Have your tried to find out whether stores like the one you want to open are doing well in
your community and in the rest of the country?
 Do you know what kind of people will want to buy what you plan to sell?
 Do people like to live in the area where you want to open your store?
 Do they need a store like yours?
 If not, have you thought about opening a different kind of store or going to another
neighbourhood?
Your building
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Have you found a good building for your store?
Will you have enough room when your business gets bigger?
Can you fix the building the way you want it without spending too much money?
Can people get to it easily from parking spaces, bus stops, or their homes?
Have you had a lawyer check the lease and zoning?
Equipment and Supplies
 Do you know just what equipment and supplies you need and how much they will cost?
 Can you save money by buying second-hand equipment?
Your Merchandise
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Have you decided what things you will sell?
Do you know how much or how many of each you will buy to open your store with?
Have you found suppliers who will sell you what you need at a good price?
Have you compared the prices and credit terms of different suppliers?
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Your records
 Have you planned a system of records that will keep track of your income and expenses,
what you owe people, and what other people owe you?
 Have you worked out a way to keep track of your inventory so that you will always have
enough on hand for your customers but not more than you can sell?
 Have you figured out how to keep your payroll records and take care of tax reports and
payments?
 Do you know what financial statements you should prepare?
 Do you know an accountant who will help you with your records and financial
statements?
Your store and the Law
 Do you know what licenses and permits you need?
 Do you know what business laws you have to obey?
 Do you know a lawyer you can go to for advice and help with legal papers?
Buying a Business Someone Else Has Started
 Have you made a list of what you like and don’t like about buying a business someone
else has started?
 Are you sure you know the real reason why the owner wants to sell this business?
 Have you compared the cost of buying the business with the cost of starting a new
business?
 Is the stock up to date and in good condition?
 Is the building in good condition?
 Will the owner of the building transfer the lease to you?
 Have you talked with other business owners in the area to see what they think of the
business?
 Have you talked with the company’s suppliers?
 Have you talked with a lawyer about it?
Advertising
 Have you decided how you will advertise? (newspapers, posters, handbills, radio, mail)
 Do you know where to get help with your ads?
 Have you watched what other stores do to get people to buy?
The Prices you Charge
 Do you know how to figure what you should charge for each item you sell?
 Do you know what other stores like yours charge?
Buying
 Do you have a plan for finding out what your customers want?
 Will your plan for keeping track of your inventory tell you when it is time to order more
and how much to order?
 Do you plan to buy most of your stock from a few suppliers rather than a little from many,
so that those you buy from will want to help you succeed?
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Selling
 Have you decided whether you will have sales clerks or self-service?
 Do you know how to get customers to buy?
 Have you thought about why you like to buy from some sales clerks while others turn
you off?
Your Employees
 If you need to hire someone to help you, do you know where to look?
 Do you know what kind of person you need?
 Do you have a plan for training your employees?
Credit for Your Customers
 Have you decided whether or not to let your customers buy on credit?
 Do you know the good and bad points about joining a credit-card plan?
 Can you tell a deadbeat from a good credit customer?
A Few Extra Questions
 Have you figured out whether or not you could make more money working for someone
else?
 Does you family go along with your plan to start a business of your own?
 Do you know where to find out about new ideas and new products?
 Do you have a work plan for yourself and your employees?
If you have answered all of these questions carefully, you’ve done some hard work and
serious thinking. That’s good. But you have probably found some things you still need
to know more about or do something about. Do all you can for yourself, but don’t
hesitate to ask for help from people who can tell you what you need to know.
Remember, running a business takes guts! You’ve got to be able to decide what you
need and then go after it.
Where do I start?
Getting started in a small business can happen in many different ways, but each of
these approaches shares some common elements you must consider:
Time
How much time do you have to develop your business idea? By allowing yourself
enough time, you will more likely avoid mistakes that could prove costly.
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Money
How much money is at your disposal? Most entrepreneurs discover their
businesses require more capital than originally anticipated. And while the
question of how much is enough varies from business to business, you should
ensure that you have access to enough money to allow for all possible
contingencies so that you don't have cash flow problems or miss opportunities.
Expertise
Do you have the knowledge and skills required to make a success of this
business? If not, it may be worthwhile to take some courses or work in the
industry until you gain the knowledge you need.
Risk tolerance
How much risk is involved? You need to honestly assess your personality and
finances to determine how much risk you can tolerate. This may rule out some
high-risk opportunities.
Financial return
Can you make a living from this business? Some people go into business without
a clear idea of just how profitable the venture will be. Take the time to determine
if your business will be profitable enough to justify your effort and provide you
with the income you need.
Enjoyment
Will you enjoy the business? This is a major consideration, especially since small
business is often difficult and involves long hours. There will also be challenges
and rough spots. You may need substantial commitment and self-sacrifice in the
months that lie ahead.
Family Considerations
Will this new business adversely affect your family? The reality is that substantial
sacrifices in time and money are required in the early stages of any business.
Therefore, you have to determine whether your savings or profits from the business will
provide you and your family with an adequate standard of living, especially in the early
stages of the business. As well, you will need to find out how committed your family is to
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the business. Will they, for example, be able to cope with the amount of time you will
have to put into your business?
Professional Help
Finally, getting started means starting out right. It is important to realize before
you start out that there are many important decisions to be made involving legal
and taxation issues, insurance, finance, bookkeeping and accounting, hiring
employees, etc. These can often be complicated and difficult to address without
specialized expertise. Consequently, you should consult professionals such as
lawyers, accountants, insurance brokers, professional or accredited financial
planners, bankers, and government agents to get the best possible advice and
avoid mistakes that may come back to haunt you later on.
After having answered these questions and deciding to pursue entrepreneurship, you
need to do your business plan.
What is a business plan?
A business plan is a recognized management tool used by successful and/or
prospective businesses of all sizes to document business objectives and to propose
how these objectives will be attained within a specific period of time. It is a written
document which describes:
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Who you are
What you plan to achieve
Where your business will be located
When you expect to get underway
How you will overcome the risks involved
What are the anticipated returns
Why do you need a business plan? What’s in it for me?
A business plan will provide information of your proposed venture to lenders, investors,
and suppliers to demonstrate how you plan to use their money, and to establish a basis
for credibility of your project. You should do a business plan for a number of important
reasons. Some of these reasons include:
• Your own thinking process is solidified through the planning process. The planning
outline leads you through a series of questions and issues that you may have forgotten
about when just
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thinking about your business idea. Remember that you are an investor in your own
business. You are the first person who must be convinced of the validity of your
business concept.
Hint: Your business plan is a highly recommended tool that will map out the future of
your
business. Take it step by step, just like the directions you would follow to get to a
destination.
• Your bank will need to be convinced of the viability of your business, or your business
expansion. The business plan is a communications tool. Inform and influence the reader
towards some action – providing a loan, extending credit or investing in your business.
• Your business plan provides some guideposts in running your business. You will set
goals and then, once you are in business, you can measure those goals against the
actual performance.
The most important purpose of the business plan is to help you to be sure your
business makes financial and operating sense. A business plan clearly sets out short
and long term objectives, guidelines and milestones on paper.
When should a business plan be prepared?
The sooner you develop your business plan, the better. You will find that the final copy
of your business plan may differ from the original draft, as you will be updating, revising
and refining it as you go. It is important that you examine all the relevant factors now.
Therefore, you will be able to anticipate any surprises after your business has opened
the doors.
Who should prepare your business plan?
Your business plan should be prepared by the owner(s) and manager(s) of the firm, the
ones who will be implementing it.
Outside assistance from consultants, accountants, bookkeepers and experienced
business people can definitely help, but YOU must draft the initial plan. You should be
able to present it, summarize it and answer questions about it. After all, you are the one
that is going to run the business once it is open.
Here’s the bad news…
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Creating a business plan for your new company will be one of the toughest jobs you’ve
ever tackled. You will ruthlessly question every aspect of your business operations and
every assumption about your product or service and your market. You’ll rigorously
evaluate the strengths and shortcomings of your management team, the capabilities of
your competition and your ability to forecast external events that could cause your
company to stumble or soar. Not much fun right?
Now, here’s the good news…
A good business plan is your company’s roadmap to the future. It describes, in detail,
the company you will be running, and identifies every important step you must take to
build that company. It even gives you advance warning of the dangers you may
encounter along the way.
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THE BUSINESS PLAN OUTLINE
1) COVER PAGE
2) TABLE OF CONTENT
3) EXECUTIVE SUMMARY
4) BUSINESS OVERVIEW
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5) OPERATIONAL PLAN
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Production
Quality Control
Customer Service
Suppliers
Legal environment of business
Implementation plan
Contingency Plan
6) MARKET RESEARCH
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analysis
7) MARKETING PLAN
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8) FINANCIAL PLAN
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-up budget
me statement
8) APPENDIX
Hint: Follow
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Table of Content
The purpose of the Table of Content is to quickly find information throughout your
business plan document. A table of content is a list of the sections of a book or
document organized in the order in which the sections appear. It usually appears after
the title page and they indicate page numbers where each section begins.
A
tes
Executive Summary
Write this section last. The purpose of the Executive Summary is to get the reader’s
attention by summarizing the key elements of the business plan. It must be short, to the
point and very well written. We suggest that you make it two pages or fewer. Include
everything that you would cover in a five-minute interview. It is your business plan in a
nutshell!
The Executive Summary of the business plan provides your readers with an overview of
the business plan. Think of it as an introduction to your business. Therefore, your
business plan’s executive summary will include summaries of:
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A description of your company, including your products and/or services
Your business’s management
The market and your customer
Marketing and sales
Your competition
Your business’s operations
Financial projections and plans
If applying for a loan, state clearly how much you want, precisely how you are going to
use it, and how the money will make your business more profitable, thereby ensuring
repayment.
The executive summary should end with a summary statement, a sentence or two
designed to persuade the readers of your business plan that your business is a winner.
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Business Overview
The Business Overview section is where you can elaborate on the details of your
business. The who, what, where, when, and why of the business should fall into place
and readers should have a clear understanding of how the company will function. In this
section, consider covering the Description of the Business, the Description of Products
and Services, the Human Resource requirements and the Operations.
Description of the Business
The Description of the Business section should outline your basic business concept.
What business will you be in? What will you do? You should detail exactly what your
business does for the customer and what makes these offerings desirable to the
customer. Your business description should clarify why you are, or why you want to be,
in business.
 Describe what your business does in general terms.
 Describe what differentiates your business from others.
 Briefly describe your business history if applicable. If this is a new business and has no
background, discuss your background.
 Business Structure: is it a new independent business, a purchase of an existing
business, an expansion, a franchise?
 Business type: retail, manufacturing or service.
 To whom will you market your products? (State it briefly here, you will do a more
thorough explanation in the Marketing Plan section).
 Legalities - business form: sole proprietorship, partnership or corporation. The licenses
or permits you will need.
 Business information: What you have learned about your kind of business from outside
sources (trade suppliers, bankers, other franchise owners, franchisor, publications).
 Profitability: Why your business will be profitable. Describe your industry. Is it a growth
industry? What changes to you foresee in the industry, short term and long term? How
will your company be poised to take advantage of them?
 Describe your most important company strengths and core competencies. What factors
will make the company succeed? What do you think your major competitive strengths
will be? What background experience, skills, and strengths do you personally bring to
this new venture?
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 Provide any other information that will excite the reader about your business. Emphasize
any special benefits that you feel will appeal to customers and explain how and why
these benefits are appealing.
Hi
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Description of Products and Services
The purpose of the Product and Services section is to detail exactly what your business
does for the customer and what makes these offerings desirable to the customer.
Describe in depth your products or services (technical specifications, drawings, photos,
sales brochures, and other bulky items belong in Appendices).
Key Products (Goods Business)
 Describe each product you sell. This is your product mix. If you cannot list each product,
break the business down into logical categories.
 Describe the key product features, and how your products are different from those of
your competition. (Functionality, durability, eases of use etc.) What factors will give you
competitive advantages or disadvantages? Examples include level of quality or unique
or proprietary features.
 What are the pricing, fee, or leasing structures of your products or services?
 Describe product protection such as patents, copyrights and trademarks. (If applicable)
Key Services (Service Business)
 Describe each type of service you offer. (Be specific)
 Describe the service features in terms important to the customer.
 Describe any service protection such as copyrights or trademarks. (if applicable)
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Mission, Vision, Goals and Objectives
 Mission Statement: A mission is a statement which specifies what the business’ broad
program of activities shall be. It establishes the parameters upon which objectives are set,
strategies are developed and tactics are implemented. The mission is a statement of core
organizational values and is referred to as the “Invisible hand” which guides employees to
work independently and yet collectively towards the organization prime objectives. Be clear
and to the point and make it obvious what your business is attempting to do. Many
companies have a brief mission statement, usually in 30 words or fewer, explaining their
reason for being and their guiding principles. Hint: Your mission statement will help you
determine how you want to market your product/services.
Examples:
1. Canadian Tire
To be the first choice for Canadians in Automotive, Sports and Leisure, and Home
products, providing total customer value through customer-driven service, focused
assortments and competitive operations.
2. TELUS
To be recognized as the premier Communications Company in the world. To help
people communicate effortlessly.
 Vision
A vision involves thinking or planning about the future of the business. It is planning for
the future based on the mission statement specified at the inception of the business.
 Company Goals and Objectives: Goals and objectives refer to something that is wished
for (a purpose or a target). They are things that a person or a business pursues or
desires to achieve.
Goals are destinations, where you want your business to be. Objectives are progress
markers along the way to goal achievement. For example, a goal might be to have a
healthy, successful company that is a leader in customer service and that has a loyal
customer following. Objectives might be annual sales targets and some specific
measures of customer satisfaction.
Goals and objectives may include but are not limited to:
Achieve x% market share by end of the first year
Increase sales 5% each year
Reduce customer complaints to 10% of all sales
Ensure profit margin of 2% by the second year
Generate sales of $100,000 by end of the second year
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Human Resources
The purpose of the Human Resources section is to provide the reader with a thorough
understanding of the people who will contribute to running the business. Managing a
business requires more than just the desire to be your own boss. It demands dedication,
persistence, the ability to make decisions and the ability to manage both employees and
finances. It's imperative that you know what skills you possess and those you lack,
since you might have to hire personnel or retain a professional advisor to complement
your skill set.
Management summary
 How does your background/business experience help you in this business?
 What are your weaknesses and how can you compensate for them?
 Demonstrate how team members’ skills complement each other. Show the balance of
marketing, financial, management and production skills, as well as experience with the
product or service you are developing.
 Who will be on the management team?
 What are the qualifications of each principle in this enterprise? What are their duties and
responsibilities?
 What are their strengths/weaknesses? If there are critical skills missing, how will this be
overcome (ex. Training, outside advisors, etc….)?
Key personnel (if applicable)










What are your current personnel needs? Number of employees.
Type of labor (skilled, unskilled, and professional)
Where and how will you find the right employees?
What are your plans for hiring and training personnel?
What are their duties?
What salary, benefits, vacations and holidays will you offer? If a franchise, are these
issues covered in the management package the franchisor will provide?
Do you have schedules and written procedure prepared?
Have you drafted job descriptions for employees? If not, take time to write some. They
really help internal communications with employees.
For certain functions, will you use contract workers in addition to employees?
List all experts that will be utilized. (Lawyers, Accountants/Bookkeepers, Bankers,
Insurance providers
Compensation and Ownership
 State how each person will be compensated (salary, incentive bonus, profit sharing) and
what investment each has in the company.
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 If you have formed a corporation, identify board members and what each individual bring
to the corporation.
Operational Plan
The purpose of the Operations section is to summarize how you plan to operate the
business. It explains the daily operation of the business, its location, equipment,
people, processes, and surrounding environment.
Production
How and where are your products or services produced?
Explain your methods of:
 Production techniques and costs – Describe how you produce your product or service,
do you use any unique technologies, ingredients, know-how’s (you are not expected to
share exact recipes, but you should proudly list any exclusive production techniques you
use). If you are writing business plan for internal use (it remains private and you’ll not
share it with potential investors), you can be much more detailed: list all the pieces of
equipment you’ll need, set up system requirements for water, gas and electricity
supplies, outline requirements for location and premises etc. Thus considering the
amount of technical data needed for this section delegating it to your chief engineer (or
side technology consultants) might be the wisest decision possible.
 Quality control – Write a short paragraph about quality control measures that you’ve set
up or are going to establish. As with any part of operational plan the amount of details
depends on the audience of your business plan. Investors would require just strategic
level information while your engineers would appreciate the list of approved standards
and procedures.
 Customer service – Here you should describe client service strategy and after-sales
support in your company. The principles of customer service and quality control are
much interconnected: in most cases your customers will report about quality issues. So
think how you can get a synergy effect in here.
 Inventory control and Product development
Planning Considerations
 What are the hours of operation? Will that best serve your clients?
 What are the requirements for the facilities and equipment? What are the costs? (onetime or ongoing costs)
 What are the plant overhead costs going to be? Will you be able to afford what is
required?
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 What are the purchasing requirements?
 What is the best manufacturing process? Cost effective?
 What licensing is required for your venture?
 What are your legal requirements?
 What potential internal and external risks exist for this business?
Location Considerations
What qualities do you need in a location? Describe the type of location you’ll have.
Physical requirements:
 Amount of space
 Type of building
 Zoning
 Power and other utilities
Access:
 Is it important that your location be convenient to transportation or to suppliers?
 Do you need easy walk-in access?
 What are your requirements for parking and proximity to freeway, airports, railroads, and
shipping centres?
 Is it easily accessible? Is public transportation available? Is street lighting adequate?
 Construction? Most new companies should not sink capital into construction, but if you
are planning to build, costs and specifications will be a big part of your plan.
 Cost: Estimate your occupation expenses, including rent, but also including
maintenance, utilities, insurance, and initial remodeling costs to make the space suit
your needs. These numbers will become part of your financial plan.
 Will you work from home?
 Why is the area desirable? The building desirable?
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 Neighbourhood Location (use map). Traffic counts and supporting information such as
population radius is helpful.
 Site Location – place in mall or centre, or city block. Is parking available? Will it affect
your business?
 Facility Location – Include a drawing or layout of your proposed facility.
.
 Signage both inside and outside the business.
Look at your business through a magnifying glass when you are writing your business
plan. What you see will be your stepping stones to success.
Hint: The location of your business can play a decisive role in its success or failure.
Your location should be build around your customers, it should be accessible and it
should provide a sense of security.
The
Check for location risks. A median placed in the middle of your road will cut off access
to your business. Check with your city-planning department before signing a lease.
Production Plan
The production plan demonstrates your ability to produce products. It explains how and
where your products or services are produced. This section may not apply in service
businesses.
 Explain your methods of production techniques and costs. Provide a flow chart / process
diagram showing the entire production process from start to finish.
 List and budget production equipment required for the business.
 Procurement (Businesses that manufacture or sell products)
 Who are your suppliers? Order lead time with your suppliers.
 Terms & Conditions of sale.
 Alternate sources of supply (this addresses procurement risk)
 Inventory control systems
 Physical space requirements (Unless covered in location sections)
Service Plan
 What area of the city do you plan to service?
 Will you complete a job entirely, or will you be hiring contractors?
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 How many jobs can you complete in a day?
 Who are your suppliers? What do they charge? Do you have alternative sources of
supply? In many industries your business success depends greatly on your key
suppliers. And since they are your major business partners, building relationship with
suppliers is as important as building customer relationships. So evaluate your current
list of suppliers and remember that your business is a strong as its weakest chain (which
is in many cases some of the supplying companies.
Business Policies
 Write policies that should be developed for your business. Depending on the topics,
these may need to be posted in your place of business.
 Example: Return or exchange policies
Legal Environment
Think about major legal regulations of your business. These could be licensing, permits,
health, workplace or environmental regulations, trademarks, copyrights, patents, etc.
Don’t underestimate legal risks (and opportunities) for you business and do talk to
lawyer before ever entering the market.
Describe the following:
 Licensing and bonding requirements
 Permits
 Health, workplace, or environmental regulations
 Special regulations covering your industry or profession
 Zoning or building code requirements
 Insurance coverage
 Trademarks, copyrights, or patents (pending, existing, or purchased)
 Industry Association Membership - Sometimes membership in industrial unions and
alliances might contribute greatly to your business success. Local chambers of
commerce and business associations can also be a place to find investors.
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Implementation plan
 Implementation plan is usually presented in the form of Gantt chart. (See example
below). So list major tasks of your project. Then divide each task into key operations
(operation should have clear and measurable results). After that give realistic timing for
each task and operation and mark their duration as boards on your calendar. Think
about the order you should fulfill them: some operations should be performed one after
another while others could be done simultaneously.
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In the following example there are seven tasks, labeled A through G. Some tasks can be done
concurrently (A and B) while others cannot be done until their predecessor task is complete (C
cannot begin until A is complete). Additionally, each task has three time estimates: the optimistic
time estimate (O), the most likely or normal time estimate (M), and the pessimistic time estimate
(P). The expected time (TE) is computed using the formula (O + 4M + P) ÷ 6.
Time estimates
Activity
Predecessor
Expected time
Opt. (O)
Normal (M)
Pess. (P)
A
—
2
4
6
4.00
B
—
3
5
9
5.33
C
A
4
5
7
5.17
D
A
4
6
10
6.33
E
B, C
4
5
7
5.17
F
D
3
4
8
4.50
G
E
3
5
8
5.17
Once this step is complete, one can draw a Gantt chart or a network diagram.
A Gantt chart created using Microsoft Project. Note (1) the critical path is in red, (2) the slack is
the black lines connected to non-critical activities, (3) since Saturday and Sunday are not work
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days and are thus excluded from the schedule; some bars on the Gantt chart are longer if they
cut through a weekend.
Contingency Plan
When you draw up business plans, apart from forecasting bottom lines and sources of
investment, you also need to work on contingency plans for your business. All
businesses go through a rough patch occasionally, so it is best to be prepared for any
contingency. This way, you will not be taken unawares by any unforeseen event.
A contingency is an unexpected event or situation that affects the financial health,
professional image, or market share of a company. It is usually a negative event, but
can also be an unexpected windfall such as a huge order. Anything that unexpectedly
disrupts a company’s expected operation can harm the company even if the disruption
is because of a windfall. That is why companies create contingency plans for many
possible situations, so company management has a pre-researched plan of action to
immediately follow.
A contingency plan helps you tide over difficulties in your business. It helps you prepare
for loss prevention and covers topics such as crisis management, business continuity,
asset security, mismanagement and reorganization. This plan helps your business
recover from crime, fraud, theft, accidents, and other difficulties.
Also, in the event that the business fails, what type of exit strategy has been
considered?
No new business owner likes to consider this possibility. However, if factors beyond
your control force you to discontinue your business, you should consider what can be
done to lessen the problems this situation presents.
Here are some other things to consider when drawing up contingency plans.
 Crisis Management - Many types of crises that can affect the well-being of a company
include natural disasters, terrorist attacks, fire in the warehouse, on the job injuries or
even angry customers. Plans to deal with crises generally include department by
department SWOT analysis (strengths, weaknesses, opportunities, threats) that attempt
to identify vulnerabilities and potential challenges.
 Continuity Plan - Business continuity plans cover a range of situations, including the
death of a key executive or manager, crisis events that threaten to shut down business
operations for an extended period of time, and any other financial situation or
unexpected event that threatens to destroy or injure the company. Continuity plans
generally involve insurance policies that provide for the cost of keeping the company in
operation, and the cost and hiring of consultants that are specialists in solving the types
of problems besetting the company.
 Asset Security - Theft or destruction of intellectual property, such as trade secrets or
computer programs, key machinery or equipment, or any other valuable assets a
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company needs for its operations and maintenance of its market position are generally
covered by a security plan. This also includes the security of the company's internal
computer network and confidential files. A security plan attempts to block any negative
contingencies that might occur, but when they do, the company's contingency plan
prescribes backup of certain customer and corporate records, and intellectual assets.
Legal strategies are also included in a contingency plan for the purpose of helping to
mitigate the damage created by such events.
 Mismanagement - Fraud, theft, operational errors, mismanagement and personal scandal
are all crises that require special public relations strategies as well as various types of
insurance. The handling of these crises involves careful attention to legal considerations
and liability to the shareholders and if not handled immediately with efficiency and
confidence, they can ruin the company's professional image and ability to do business.
For this reason, companies create a system of checks and balances to prevent such
problems in addition to creating detailed action plans to deal with these contingencies.
 Reorganization - After the worst has happened, the company's contingency plan also
covers how the company will re-establish normal operations and reorganize to limit any
future contingencies. Reorganization to meet new challenges is important whether the
company is dealing with negative events or the unexpected pressure of having to rapidly
expand production to function in spite of the demands of a windfall order.
Here are other important information to gather:
 Have a list of people or firms you can call in case of an emergency.
 Have a good data backup system so that you can retrieve all data you might lose due to
some emergency.
 Prepare for unexpected equipment failures or repairs.
 Have a good idea of the location of the mains switches and valves for electricity water
and gas. Ensure that your employees also know their location.
 Ask your attorney to make a will that provides for the future of your business in case of
any unfortunate event. Otherwise, the business may get into the wrong hands owing to
intestacy laws.
 Have a central information base where you have details of business numbers, tax
numbers, and contact addresses of business partners, directors, shareholders and
suppliers
 Simple Practices Can Prevent Accidents. Have a system to ensure that daily inspections
are carried out after work hours to check that AC and lights have been switched off, no
electrical appliances are left running, and doors and windows are shut.
 Maintain a directory of investments, business plans, licenses/permits, insurance details
etc.
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 Plan for loss of market; what sector you want to invest in case your market stops
existing.
 Prepare for power outages, flood and fire disasters, etc…
 Leave instructions to people related to your business so they can find relevant
information related to your business in case of a contingency.
 Involve outside experts to help you draw up your business contingency plans. Take the
advice of financial experts, legal advisors etc. to provide for every possible event.
 Prepare for threats from competitors, and have a plan of action ready in case your
competitors form alliances against your company.
Therefore, if you have not drawn up a contingency plan for your business yet, it is not
too late yet. Invest a little time and resources in drawing up a sound contingency plan,
so you do not have any regrets tomorrow.
The plan must always be kept up to date and applicable to current business
circumstances. This means that any changes to the business process or changes to the
relative importance of each part of the business process must be properly reflected
within the plan.
Market Research
The purpose of the Market Research section is to prove that the market is large enough,
in your area, given the competition to support the survival and growth of your business.
Industry Analysis and Trends
Here is where you get to assess the environment in which you are planning on entering.
What external factors are influencing your industry? This analysis will ensure you
understand the needs of your own industry and educate the reader.
Considerations:
 What has been happening in the industry?
 What are the trends? Growing, steady, declining?
 Who are the major players (i.e.: suppliers, distributors, clients) in your industry? What is
their influence or impact on it?
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 Are there specific government regulations influencing your industry?
Industry Research
 Describe your industry. The less well known the industry, the more description
necessary. (An industry analysis looks at the big picture – what is going on in the
industry beyond your city?)
 Describe the state of the industry. Is it a new industry, growth industry, competitive
industry, or a stable mature industry?

 Document industry trends on a world or national size. Sales, number of customers,
number of units sold, trends in related industries are all good industry indicators.
 Describe the key customers for your specific industry.
 Provide other national / international economic indicators that encourage the health of
your industry.
 Examine risks to the entire industry caused by legislation, technological change or any
threat to the industry as a whole.
Market Analysis/Research
Why do market research?
Just because your friends and family love the way you take pictures, doesn’t necessarily
mean that your wedding photography business will be an overwhelming success. Also,
innovative ideas and gut feelings aren’t enough when it comes to predicting success for
a product or service.
Although you think that your idea is great, it’s simply impossible to sell people what they
don’t want. Market research is essential in helping you find out what people want and
who wants it.
Types of Market Research: Primary Research
Primary research is the gathering of information that does not already exist. It is data
that you have to collect on your own or hire research specialists to do.
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The survey is, without a doubt, the most popular method of gathering primary data. In
general, there are 3 types of surveys: the telephone survey, the postal or mail survey,
and the personal interview or ‘mall’ survey.
Building a questionnaire for your survey
A questionnaire is an information gathering tool which can be used to tabulate, analyze
and discuss your research. In many situations a questionnaire serves as the major
source of primary information. Writing questions and constructing a questionnaire takes
time and attention. Before
you begin, it is essential to know what kind of information you need to obtain and how
the information will be used. Each questionnaire must be custom built to the
specifications of your business.
Here are some guidelines:
 Make a list of what you need to know. What do you want to achieve with the
questionnaire.
 Does the information you need already exist? Always check for secondary information.
 Don’t ask a question unless it has a purpose.
 Eliminate confusing questions.
 What is the purpose of each piece of information? How will you analyze each piece of
information?
 As you write questions, try to view them through the respondents’ eyes. Will the
respondents be able and willing to answer the question?
 Pay attention to where you place questions. In general, a funnel approach is advised.
Broad and general questions at the beginning of the questionnaire, followed by more
specific questions, and closing with more general questions like demographics.
 Avoid loaded or leading words and questions. Could and should, might sound almost the
same, but may produce a 20% difference in agreement to a question. Leading questions
may influence respondents to answer in a socially desirable way.
 At the end of your survey, provide a place for respondents to add comments and thank
them for their assistance.
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Formatting the questionnaire
The following guidelines offer some tips to help you put the questionnaire together.
1. Begin with an introduction that includes the questionnaire’s purpose, identifies its source,
explains how information obtained will be used, and assures respondents’ of
confidentiality.
2. The first questions should be easy, avoiding controversial topics.
3. Write interesting questions that are clearly related to the questionnaire’s purpose. Don’t
use open-ended or long questions with lengthy answer choices in the beginning of the
questionnaire.
4. Address important topics early, rather than late, in the questionnaire.
5. Arrange questions so they flow naturally. Keep questions on one subject grouped
together. Start with general questions then move to those that are specific.
6. Try to use the same type of questions and response throughout a series of questions on
a particular topic.
7. Place demographic questions at the end of the questionnaire.
8. Print it in easy-to-read typeface.
9. A numbered response should mean the same thing throughout the questionnaire.
10. Avoid making respondents turn a page in the middle of a question or between a question
and answer.
11. Be sure that the question is distinguishable from the instructions and the answers. You
could put the instructions in boldface or italics.
12. Questions and answers are easiest to read if they flow vertically.
13. Give direction about how to answer. Include directions in parentheses immediately
following questions. It is better to repeat directions too often than not often enough. Here
are some
a. examples of specific instructions you might use: Circle the number of your
choice; circle only one or check all that apply; please fill in the blank.
14. Make sure to use the KISS rule, Keep It Short and Simple.
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Survey Bias
Remember, there will always be survey bias (margin of error) which you must take into
account. The industry average is 20% and it is used to eliminate respondents that have
not been truthful or honest.
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SAMPLE SURVEY
Hello, my name is ____________________. I’m conducting a survey to determine the
potential for a butcher store in the Sturgeon Falls. Do you have a moment to answer a
few questions?
1. Have you shopped at a butcher store in this past year? Yes_______ No_______
If no, why not? Is it the:
Price____ Lack of
convenience____Quality_____Selection_____Availability_____Other_____
If no, go to question 6.
2. If yes: Which one do you shop at?
Company A _______ Company B _______ Company C_______
Other: (Please specify)________________
3. Are you satisfied with this (these) store(s)? Yes_______ No_______
If no, why not? Is it the:
Price_______Selection_______Inconvenience_______Availability_______Other______
______
4. On average, how much do you spend at a butcher store in a month?
$5-$25____ $26-$50____ $51-$75____ $76-$100____ 100+____
5. How often per month do you visit a butcher store?
1-3_____ 4-6_____ 6-8_____ Over 9 _____ Other__________
6. Would you support the establishment of a new butcher store in Sturgeon Falls?
Yes_______ No_______
If yes, can I record your name and address, so when I open the store, I can let you
know?
Yes_______ No_______
Name ____________________ Address __________________
Phone ____________________
7. If yes: Under what conditions would you consider supporting a new butcher store?
Quality_______ Price_______ Location_______ Selection_______ Availability_______
Service_______ Cleanliness_______ Other_______
The following questions are for statistical purposes only.
1. What age category do you fall into? Are you:
Under 19___ 20-29___ 30-39____40-49___ 50-59___ 60-69___70+_____
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2. Do you have any children living at home?
Yes_______ No______ If yes, how many? 1__ 2__ 3__ 4__ 5+____
3. Are you?
Male_______ Female_______
Thank you for your time and cooperation!
Types of Market Research: Secondary Research
Secondary research represents information that has already been gathered and
published. It is a tremendously important source of data for any marketing researcher.
Secondary research is crucial and the quantity of data available is tremendous. A huge
amount of secondary research information is available at little or no cost. The ideal
places to access this type of information are:
 Economic Partners Sudbury East West Nipissing (The Business Centre)
 Canada-Ontario Business Service Centre
 Scott’s Directory of Canadian Manufacturers and Suppliers
 Ontario Business Directory
 Financial Post Canadian Markets
 Canadian Almanac Directory
 The Franchise Annual
 Family Expenditures in Canada
 Government Offices (Federal, Provincial, Municipal)
 Statistics Canada
 Self Counsel Press
 Trade Journals
 Internet (Stats Can, Strategis, Government Sites)
 Public Library
 Reliable Article Sources
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Target Market
The Target Market is the groupings of consumers or businesses most likely to purchase
your products or services. The first group you plan to target is your Primary Target
Market; the second is your Secondary Target Market.
Through research, identify the age group, gender, lifestyle and other demographic
characteristics of the people who have shown interest in your product or service. Also
from your research, provide statistics, analysis, numbers and supporting facts that show
the reader that there is a demand for your product or service.
It is very important that you understand your target market – after all these are the
customers you need to keep happy!
Who is your customer?
Before you begin selling something, you need to know who you are selling to. If you
haven't determined who your target market is, you are likely to try to be all things to all
people and end up with a product nobody likes or a service that doesn't meet anyone's
needs.
When developing a general profile of your customers, you might want to define them by
their demographic characteristics, such as:
 Age, usually given in a range (20-35 years)
 Sex
 Marital status
 Location of household
 Family size and description
 Income, especially disposable income (money available to spend)
 Education level, usually to last level completed
 Occupation
 Interests, purchasing profile (what are consumers known to want?)
 Cultural, ethnic, racial background
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For example, a clothing manufacturer may consider a number of possible target
markets — toddlers, athletes, grandparents, teenagers and tourists. A general profile of
each of these possible markets will reveal which ones are more realistic, pose less risk
and are more likely to show a profit.
A test market survey of the most likely target groups, or those who buy for them, such
as parents for babies and toddlers, can help you separate real target markets from
unlikely possibilities.
Once you have defined your target customers, you must learn about their needs and
preferences.

What challenges do they have that could be solved with your product or service?

What are their needs and expectations regarding this product or service?

What types of things do they desire?

What do they spend their money on?

Where do they shop?

How do they make spending decisions?

Are the markets large enough to expand?
 How many potential clients in your area? (population count) Note: If you are using
indirect distribution, it may be necessary to describe both your customer as a target
market, and the end user as a target market.
 Provide the results of any customer survey work you have done
 Provide the sources of information for any of the above
Those are just a few of the many things you might want to learn about your prospective
customers.
To develop a profile of your customers and understand their needs, you will have to do
some market research.
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What is market research?
Successful businesses have extensive knowledge of their customers and their competitors.
Market research is the process of gathering information which will make you more aware of how
the people you hope to sell to will react to your current or potential products or services.
Whether you are aware of it or not, as a business owner you conduct market all the time.
When you talk to customers about your business or check out the prices of your competitors
you are conducting market research. Formalizing the process can produce a wealth of
information about your products and services, your customers and the marketplace you operate
in.
The level of complexity used in your market research campaign is up to you, as market research
can cover a broad spectrum of activities. You can undertake simple activities that can be done
on your own, such as creating a short customer satisfaction questionnaire or studying
demographic data for your area, or undertake complex ones that require assistance from a
professional market research firm.
Regardless of the size of your market research budget, the time you have available or your level
of experience, some form of market research is possible and it can help you to improve your
business decisions.
Why conduct a market research?
At the heart of all market research is the desire to learn what customers want and how to best
present your products and services to them. Market research can provide you with data that can
help you to make informed decisions to put your business in the best position to succeed.
Market research should be the primary driver of changes to your company's marketing mix - the
combination of product, price, place and promotion, commonly referred to as 'the 4 Ps'. Using
these four components, you can put your business in the best possible position to reach your
target market (the people or businesses you want to sell to).
 Product: the kinds of goods and services your customers need or want
o Function
o Appearance
o Customer service and warranty
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 Price: setting the right price while considering what customers are willing to pay
o
o
o
o
Profit margins
Competitors' prices
Discounts
Financing options
 Placement: how the product gets to the customer
o Business location (particular locations and concentration within markets)
o Point of sale (retail locations, wholesale, online)
o Segment targeted (such as families, students, business people)
 Promotion: communicating with potential customers
o
o
o
o
Advertising and publicity
Sales promotion
Personal selling
Branding
Some business owners rely solely on their intuition or their years of experience in a given
industry when making decisions that affect the marketing mix. While experience as a business
owner is invaluable, experience alone should not be relied upon to guide your business
decisions.
The environment that your business operates within can be very dynamic, and assumptions
made today can be dashed tomorrow by shifts in economic conditions, demographic changes,
new regulations and technological breakthroughs.
Market research can help you to:
 Better understand the characteristics and preferences of your customers
o Learn the profile of your customers (location, age, gender, income level,
etc.)
o Create more effective marketing campaigns
o Establish optimal geographic business locations
 Identify opportunities to increase sales and grow your business
o Recognize changes in the demand for your goods and services
o Offer new products or services that consumers desire
o Find markets for your business in other Canadian centres or in foreign
countries
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 Recognize and plan for problems in your industry and in the economy at large
o Establish appropriate inventory, price and staff levels based upon the
economic outlook
 Monitor the level of competition in your market
o Identify competitors in your industry and target market
o Obtain information on how your competitors operate
o Learn how customers view your offerings and service levels compared to
those of your competitors
 Mitigate risk in your business decisions
o Use information to drive your business decisions, not just intuition
When to conduct market research
Market research is widely viewed as a component of the planning stage of a business. Indeed,
market research is critical for new start-ups and should be a key element of any entrepreneur's
business plan. Market research data feeds into a number of areas of the business plan,
contributing to sections on:
 Determining the sales potential of your products and services
o Identifying the demographic characteristics of your customers
o Selecting the appropriate business location
o Setting the price for your products and services
 Attracting customers to your business
o Establishing your company image
o Setting prices for your products and services
o Ensuring advertising is on target
 Selling to customers and earning repeat business
Business plans and market research are not solely for new businesses. Accurate assessment of
the market and development of an effective plan is critical to the success of both new and
existing businesses.
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Businesses contemplating significant changes, such as business expansion and relocation, are
also wise to use market research to support their decisions. Examples of situations that might
call for market research include:
 New advertising campaigns
 Opening a new location or changing business locations
 Increasing production levels
 Introducing new lines of products or services
The kind of information gathered through marketing research during the planning and growth
stages of your business can also be very useful in its day-to-day operation. A regular flow of
market research information can help you to maximize the potential of your current business
activities and help you to create a roadmap for future growth.
How to conduct market research
First, it is important to establish clear goals for the market research activity you will undertake.
You need to make sure you have defined what you need to know and why.
Once you have established your goals, it is important develop a strategy and select techniques
you will use to gather data. The two broad types of research you can use are primary and
secondary research.
Primary research
Primary research is original information gathered through your own efforts (or on your behalf by
a hired research firm) to respond to a specific question or set of questions. This information is
normally gathered through surveys, observation, or experimentation.
The following are examples of questions that can be addressed through primary research:
 Who are my customers and how can I reach them?
o Customer profiles
o Prospective business locations
o Marketing strategies
 Which products and services do buyers need or want?
 What factors influence the buying decisions of my customers?
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o Price, service, convenience, branding, etc.
 What prices should I set for my products and services?
o Customer expectations
 Who are my competitors, how do they operate and what are their strengths and
weaknesses?
Some drawbacks of primary research are that it can be time consuming and expensive if not
performed yourself, and the results are not available immediately. The benefits of this type of
research are that you can specifically target desired groups (such as your customers or the
geographic market for your business) and can tailor your research instrument to answer specific
questions.
In addition to keeping the costs down, an added benefit of doing the research on your own is
that you will get to know the market for your business better.
Surveys are the most common way to gather primary research. Surveys can be conducted:
 Through direct mail
o Hand out at the place of business or mail out with survey returned in
person or via mail
o Questionable effectiveness; follow-up reminders necessary
 Over the telephone
o Cost-effective
o Can be difficult to reach participants
o Little appetite in the public for telephone interruptions
 On the web or via email
o Allows participants to complete the survey on their own time with little
effort
o Cost-effective
 In person
o Personal interviews or focus groups
o Can introduce follow-up questions or change the focus of the survey on
the spot
o Can be difficult to recruit participants
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When designing your own research questionnaire, be sure to:

Keep it as short and simple as possible

Make sure it is visually appealing and easy to read

Move from general questions to more specific questions

Make sure questions are brief and easily understood

Avoid leading questions, questions with ambiguous words, questions that are too
difficult to answer (due to recall problems, etc.)

Make sure any response scales used are logical with categories that are mutually
exclusive

Always pre-test your questionnaire to identify potential problems
The web is a good resource for sample questionnaire questions that can be adapted to answer
your suit your particular research needs. There are also a number of companies that allow you
to create and conduct surveys online.
Some business owners are reluctant to ask their customers to complete a questionnaire for fear
that their customers will be made to feel uncomfortable or annoyed at the inconvenience. A
good way to reduce any awkwardness is to offer your customers an incentive to fill out a
questionnaire.
You might reward them with coupons or hold a prize drawing for customers that turn in a
completed questionnaire. Good information on your customers can often be obtained without
engaging them directly.
Interviewing your employees can provide excellent insight, as they are in constant contact with
your customers and can provide information on:

Customer profiles

Goods and services that customers demand

Satisfaction with price levels and quality of service

Experiences with your competitors
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Secondary research
Secondary research exploits existing resources like company records, surveys, research
studies and books and applies the information to answer the question at hand. It is normally less
time consuming than primary research, and can be less expensive as well.
While secondary research is less targeted than primary research, it can yield valuable
information and answer some questions that are not practical to address through primary
research (such as assessing macro-economic conditions) or questions that may make
customers uncomfortable if asked directly (such as questions on age and income levels).
The following are examples of questions that can be addressed through secondary research:

What are the current economic conditions that my business is operating in and are these
conditions changing?
o

International, national, provincial and local economic conditions
What trends are influencing the industry my business operates in?
o
o
o
Consumer preferences
Technological shifts
Prices for goods and services

Are there international markets for my products or services that could help me to grow
my business?

What are the demographic characteristics of my customers or where do they live?
o

Populations, age groups, income levels, etc.
What is the state of the labour market?
o
o
How many people have the skills I require?
How much should I expect to pay my employees?
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Existing company records such sales invoices, receipts and formal complaints are important
secondary resources that businesses can utilize. Often times these records shed light on the
same issues businesses seek to address through primary research, and therefore an
examination of company records should be done before considering a customer survey or other
form of primary research.
Some specific examples of using existing company data in market research include:
 Examining sales receipts to find trends in the demand for particular goods and
services
 Cross referencing sales receipts with customer addresses or products and services
to determine the effectiveness of advertising
 Compiling complaints to determine areas for improvement in customer service,
prices or products and services offered
Another key secondary resource is statistical data from official statistics providers and other
organizations. These statistics in turn can feed into analytical papers and market profiles that
can help to put the numbers in context.
Identifying statistics and analysis that can help you with your business decisions can be difficult,
and some datasets are expensive to purchase. There are, however, a number of quality
statistics and analytical resources available to you, as well as guidance to help you make sense
of all the materials available.
The Research and Statistics section of the Canada Business website offers a number of
categorized links to data and analytical resources, many of which are free to access.
Canada Business Service Centres are found in each province and offer research materials that
you can access free of charge, as well as expertise to help you with your research.
Other sources of secondary research materials include libraries, universities, industry
associations and government departments at various levels.
If you are starting or expanding your business, getting the rights information can mean the
difference between success and failure. Plan for business success by using Canada Business
Ontario (CBO) to get the information you need on Federal and provincial business programs,
services and regulations.
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They are a free service provided by the federal and provincial governments and will answer your
questions on subjects ranging from planning to financing, no matter what stage of business you
are in. You can find them at:
Canada Business at www.canadabusiness.ca
1-888-745-8888

Take advantage of their online resources to learn more about market research, how to
conduct it and where to find free information and statistics to support your market
research project.

Get data that sheds light on population characteristics such as location, age, income,
education level, and more.

Find Canadian and foreign trade statistics and other information that can help
you to grow your business, both abroad and in Canada.

Find search tools for grants and loans, permits and licences, as well as new
social networking features to keep you in touch with the latest in business
information.
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Competitive Analysis
The purpose of the Competitive Analysis section is to thoroughly analyze the
competition that will exist for your business. Part of developing a successful business
involves being aware of possible competitors and their products.
Competitors are any business which can sell a product/service that accomplishes a
similar type of result as yours; therefore, the features and
benefits of a competitor's product can also appeal to your target market. There is
ALWAYS competition!
Ask yourself:
 Who are your direct competitors (exactly what you offer)? Who are your indirect
competitors (offer substitutes)?
 How long have they been in business? How are their businesses: Steady? Increasing?
Decreasing?
 What have you learned from their operations? From their advertising?
 What are their strengths and weaknesses? Ensure you are being unbiased.
 Are there any opportunities and threats that your competition may present?
 How does their product or service differ from yours? What is your competitive
advantage?
 List the direct competitors in your local market. These are firms who offer exactly what
you offer. List the current number and the number in existence for the past three-year
period.
 List the indirect competitors in your local market. These are firms who offer substitute
products.
 Analyze any competitors who have gone out of business in the past and if possible why.
 Explain how your firm will compete with these competitors to prove how you can survive
in their markets.
 Examine risks that could occur when you enter the market. For example what if your key
competitor cuts their price when you open your business.
H
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A chart may be easiest to compare your competition using a chart in your business
plan.
Example:
It may simplify your data if you separate the direct and indirect competitors in your chart:
Direct
Competitors
Strengths
Weaknesses
Observations
Strengths
Weaknesses
Observations
A
B
C
Indirect
Competitors
A
B
C
Once you’ve completed your chart, observe and evaluate your findings.
How can your business be different or better than the competition?
S.W.O.T. Analysis
This tool/exercise will identify the Strengths, Weaknesses, Opportunities and Threats of
an organization.
Specifically, SWOT is a basic, straightforward model that assesses what an
organization can and cannot do as well as its potential opportunities and threats. The
method of SWOT analysis is to take the information from an environmental analysis and
separate it into internal (strengths and weaknesses) and external issues (opportunities
and threats). Once this is completed, SWOT analysis determines what may assist the
firm in accomplishing its objectives, and what obstacles must be overcome or minimized
to achieve desired results.
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When using SWOT analysis, be realistic about the strengths and weaknesses of your
organization. Distinguish between where your organization is today, and where it could
be in the future. Also remember to be specific by avoiding gray areas and always
analyze in relation to the competition (i.e. are you better or worse than competition?).
Finally, keep your SWOT analysis short and simple, and avoid complexity and overanalysis since much of the information is subjective. Thus, use it as a guide and not a
prescription.
SWOT Analysis Template
In SWOT, strengths and weaknesses are internal factors.
A strength could be:




Your specialist marketing expertise
A new, innovative product or service
Location of your business
Any other aspect of your business that adds value to your product or service
A weakness could be:




Lack of marketing expertise
Location of your business
Poor quality goods or services
Damaged reputation
In SWOT, opportunities and threats are external factors.
An opportunity could be:



A developing market such as the Internet
Moving into new markets that offer improved profits
A market vacated by an ineffective competitor
A threat could be:




A new competitor in your home market
Price wars with competitors
A competitor has a new, innovative product or service
Taxation is introduced on your product or service
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Marketing Plan
The marketing plan is developed based on careful planning. This ensures that the
company uses its limited resources wisely and effectively. The marketing plan is the
master plan in a company’s effort to satisfy the needs of a particular market segment
(portion of the population). This is achieved by coordinating all the elements of the
marketing mix (4 P’s: product, price,
place/distribution, promotion).
First “P” of Marketing: Product or Service
Unlike the Business Overview section, in which you listed and described the products or
services offered, in this section it is important to describe your products and services in
terms of their features and benefits.
Features are product characteristics such as size, color, horsepower, functionality,
design, hours of business, fabric content, and so forth. Benefits answer the customer's
question: Why would I want to own it?
The key features and benefits you identify should help you determine the focus of your
marketing plan. Some of the features and characteristics you should discuss are, but
are not
limited, to:









Functionality
Styling
Quality
Safety
Repairs and Support
Warranty
Accessories and services
Etc…
Hint:
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Second “P” of Marketing: Price
Setting the right price involves taking three important factors into account:
1. What it costs you to produce or purchase a product or service.
2. What your competitors are charging.
3. What the customer is willing to pay.
There are many ways in which the price of a product or service can be determined. The
following are some of the pricing strategies:









Retail cost and pricing
Competitive position
Pricing below competition
Pricing above competition
Service costs and pricing (for service businesses only)
Service components
Material costs
Labor costs
Overhead costs
Consider addressing the following questions in this section of your business plan:
What are your prices for different products and services?
How did you arrive at those prices? (Charge going rate, industry standard mark-up etc.)
Do you have any “price packages”?
What is your price image? (Bargain, middle of the road, high end) Is this consistent with
your target market?
How do your prices compare with your competition?
What are your profit margins?
Once you have determined your price, it is important to conduct a Break Even Analysis.
Break Even Analysis
The Break Even Point in your business is the point at which your sales revenue is equal
to your total expenses. At that point you neither make money, nor do you lose any. This
point is where your business has sold enough products or services to pay for all costs.
The break-even can also be used to evaluate a business expansion or any other
business expenditure. You are simply asking how much additional revenue will be
required to cover the additional cost. There are some key definitions necessary to
determine the break-even for the business.
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They are:
Fixed Costs (Overhead) are costs that do not vary directly with sales. Utilities, salaries,
advertising, office supplies and telephone are just a few examples. They do not have to
be the same every month. What is important is that you pay them regardless of sales
made.
Variable Costs (Cost of Goods) are the actual costs of making the product or providing
the service. They can include materials, shipping and contract labour.
Capacity governs your output. It can be measured in units of production, billable hours,
or sales volume.
Now we will display how to calculate the break-even point.
Break-Even Point
=
Fixed Expenses
Gross Margin
Example:
Total Sales:
$10,000
Fixed Expenses:
5,000
Variable Expenses:
3,000
Gross Margin:
 gross margin is the difference between total revenues and cost of goods sold, expressed
as a percentage)
Total Sales – Variable Expenses
Total Sales
Break-Even Point
=
= $10,000 - $3,000
$10,000
Fixed Expenses
Gross Margin
=
=
$7,000 =
$10,000
$5,000
=
70%
$7,142.86
0.70
This demonstrates that you need $7,142.86 in sales in order to break-even.
Third “P” of Marketing: Place (Distribution)
A good location means more than just your chosen physical business address. Location
also has meaning in your distribution strategy. The characteristics of the product can
play a determining role in the choice of distribution channel. Perishable items, like fruits
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and vegetables, must be distributed quickly by using direct channels. The producer may
ship the goods directly to the retailer or even to the consumer. Whereas, mass
consumption items such as canned foods have a long distribution channel: from
manufacturer, to wholesaler,
to retailer, to the consumer.
 What channels will you use to get your product(s) to the customer?
 Consider the benefits to the customer: time, accessibility and possession.
 Having the products on location when the customers wish to purchase them can save
precious time.
 Having the products accessible to the customer where they want to purchase them is
favorable.
 Possession is realized when the goods pass from the manufacturer or the retailer to the
end consumer.
H
Fourth “P” of Marketing: Promotion
The promotion section of the marketing plan is also known as the communication
strategy. It serves to inform the consumers, to persuade them to buy and influence their
purchasing decision. The appropriate communication strategy will be a combination of
all the promotional factors (advertising, promotion, public relations and personal sales)
acting hand-in-hand to
transmit your business’ message.
 Provide a list of the media you plan to use. You may include newspapers, magazines,
radio, television, direct mail, Internet advertising, etc.
 Develop a monthly advertising schedule with planned budgeted amounts.
 Personal selling or service plan? (Personal one-on-one contact with your target
customers. It is the one personal and direct link between your business and your target
market.)
 Describe how you will prospect and find new customers.
 If you have letters of agreement, contracts or other sales tools, it is sometimes advisable
to include them as appendices to the business plan.
Examples of advertising ideas:
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-Point of sales promotion (POP)
-Promotional items
-Samples
-Coupons/ discounts
-Contests
-Trade fairs
-Newspapers ads
-Television ads
-Radio ads
-Public relations/Networking
2016
-Website
-Vehicle Decals
-Online Ads/Banners
-Bill Boards
-Signage
-Business Cards
-Brochures
-Newsletters (print/online)
-Social Media
-Postal or mail advertisements
Example of a Marketing plan:
This table suggestion is a great way to organize your marketing strategy in your
business plan.
Description of
Advertising
Target
Audience
Media Type
Timeline
Cost
Online Pay
per click ad
West Nipissing
teens (age 1518)
Facebook
Jan 2011 to
Dec 2011
¢ 30 per click
(Max budget of
$250)
Financial Plan
The financial plan is critical to the success of your business plan, especially if it is for the
purpose of getting a bank loan. Sound financial management is one of the best ways for
your business to remain profitable. As a business owner, you will need to identify and
implement policies that will lead to and ensure that your will meet your financial
obligations. Your financial plan should include the following 4 sections:
1. Start-up Budget
2. Cash Flow
3. Projected Income Statement
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4. Balance Sheet
The Start-up Budget
The start-up budget is generated by creating a list of all the items you must buy and
services you must pay for to open your business.
Start-Up Budget
Items
Estimated
Costs
Owners Cash
Funder #1
Funder #2
Renovations
Equipment
Materials
Insurance
Rent
Marketing
Licenses/Permits
Utilities
Telephone/Internet
Legal
Accounting
Working Capital
Total Start-Up
Costs
THE START-UP BUDGET EXPLANATION
Begin by determining what you will need "day one" of your business, in order to open
the doors and begin accepting customers.
The included budget template will help you develop your very own start-up budget for
your business.
Here are some examples of the most common expenses:
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 Facility: lease security deposits, furniture and fixtures, leasehold improvements, and
signage.
 Equipment: office furniture, computers, and equipment.
 Materials and supplies: for your office and production areas and a supply of start-up
advertising and promotion materials.
 Other costs: initial attorney and accounting set-up fees, licenses and permits and
insurance deposits.
The template will also allow you to divide the expenses depending on the lending
opportunity – this is a great way to organize who is paying for what.
Some lenders will fund only specific expenses.
For example:
Start-Up Budget
Items
Items
Estimated
Costs
Renovations
Owners Cash
NOHFC #1
Bank #2
20,000
17,000
3,000
Equipment
5,000
4,250
750
Materials
5,000
1,540
Insurance
1,200
1,200
Rent
1,400
1,400
Marketing
1,000
800
Licenses/Permits
60
60
3,460
200
Utilities
Telephone/Internet
Legal
Accounting
Working Capital
2,000
Total Start-Up
Costs
$35,660
2,000
$5,000
$21,450
$9,210
Estimated
The Monthly Cash Flow Statement
What is a Cash Flow Statement?
One of THE most important tools for any business, the cash flow statement often
appears more intimidating to prepare, than it actually is. The cash flow statement, on a
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month-by-month basis, summarizes cash coming in and cash going out of the business.
It displays how much cash a business will have at the end of each month.
A cash flow statement can be based upon actual amounts or on forecasted figures.
Both forms of cash flows ARE valuable financial tools.
Why should I prepare a cash flow forecast?
 To determine if your business idea, after costs, will make money.
 To highlight months where there is not enough cash to cover expenditures. This step will
allow time to consider other sources of cash, for example, a line of credit.
 To assist in securing money from lending institutions as it outlines the viability of a
business venture.
 To highlight months were it might be possible to take drawings from the business.
 To outline cash that may be available for additional expenditures, for example, hiring
new staff, purchasing equipment or increasing marketing budget.
How Do I Prepare a Cash Flow Forecast?
A cash flow forecast comprises of the following 5 parts:
1)
2)
3)
4)
5)
Estimated Sales
Cash Receipts (Cash in)
Cash Payments (Cash out)
Cash Summary
Notes to a Cash Flow
It is a good idea to commence with the "Estimated sales" section.
Hint:
1) Estimated Sales
Estimated sales are both cash and credit sales that your business expects to make in
the first year. Begin by projecting your yearly sales figure.
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Project your yearly sales figure
If you distributed a survey, the results can help you project your yearly sales
figure. From your completed survey, extract what age group and what gender
gave the strongest positive approval for your business idea. This group is your
primary target group. For example, you may believe your target group is men
between the ages of 30-39 years.
Next:
 obtain demographic information relating to the area you surveyed. The demographic
information for the area surveyed will tell you how many of your target group lives there.
For example, if you conducted a survey in West Nipissing, you would look for the
demographical information available for the West Nipissing area.
Your completed survey will also tell you:
 on average how much people spend per visit and
 the frequency of the visit.
From all this information, you can generate an estimated yearly sales figure.
Confused?
Let's take a look at the survey Florence conducted to determine if there was a
demand for a craft store in West Nipissing.
Florence conducted a survey in West Nipissing and received 200 responses. Of
the 200 responses, 81 people said they would support the opening of a new craft
store in West Nipissing.
From the survey results, Florence was able to summarize the 81 "yes votes" into
the following age and gender splits.
Female
Age
> 19
20-29
30-39
40-49
50-59
60+
Total
Yes Vote
5
7
11
32
17
6
78
Male
Age
> 19
20-29
30-39
40-49
50-59
60+
Total
Yes Vote
0
1
0
2
0
0
3
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Florence believes her primary target market to be females between the ages of
40-49 living in West Nipissing. From the demographical information Florence
found, there are 4,223 females living in West Nipissing.
Next:
 determine the percentage of females with respect to the total population of West
Nipissing:
Total females in West Nipissing =
Total population of West Nipissing
4,223 = 0.51 (51%)
8,207
Next:
 determine what percentage of the West Nipissing population is aged 40-49:
Age 40-44 = 8.3%
Age 45-49 = 7.1%
Total = 8.3 + 7.1 = 15.4%
15.4% x 8,207 (total population of West Nipissing) = 1264 people
Finally:
 determine how many women are aged 40-49 in West Nipissing:
51% (percentage of females in West Nipissing) x 1264 people = 645 females in West
Nipissing
In addition, the survey revealed that:
 the average purchase from a craft store = $45
 the average visit = every 2 months or 6 times a year
With the above information, an estimated yearly sales figure can be generated.
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Begin by determining your potential target market:
 The demand for Florence's product is 81 (total yes votes) / 200 (total votes) = 40.5%
The potential market is:
 645 (female population in West Nipissing) x 40.5% = 261 potential customers
Allow for a 20% survey bias:
 261 x 0.8 = 209 potential customers
Estimate of total yearly sales:
 209 (potential customers) x $45 (average purchases amount) x 6 (purchase
frequency/year) = $56,430 for 12 months
Allocate the yearly estimate of sales to each month
The yearly sales figure of $56,430 must be allocated to each month of your first year.
Consider a variety of different factors:
 What are similar businesses generating in sales revenue? Investigate industry trend
information.
 Is your business seasonal or affected by special events, for example, Christmas?
 Is your estimate reasonable in terms of the value of the products you sell? For example,
if the maximum value of your product is $10, is it reasonable to assume you will sell
$20,000 in a month? This amount would equate to 100 items a day.
 What did your survey results suggest? For example, what on average did the survey
participants say they would spend and how often?
 What is your promotional plan? Will this increase your sales for any particular month?
 What are your competitors doing? For example, are they having a major promotion? Will
this affect your sales?
Page 60 of 89
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Let's return to Florence's results.
Hint:
Month
Season
Activity
# Customers
Average
Purchase
Estimated
Sales $
January
Winter
Busy
180
45
8100
February
Winter
Busy
95
45
4275
March
Spring
Quiet
80
45
3600
April
Spring
Quiet
50
45
2250
May
Spring
Very Quiet
43
45
1935
June
Summer
Very Quiet
43
45
1935
July
Summer
Very Quiet
25
45
1125
August
Summer
Very Quiet
44
45
1980
September
Autumn
Moderate
105
45
4725
October
Autumn
Moderate
99
45
4455
November
Autumn
Very Busy
240
45
10800
December
Winter
Very Busy
250
45
11250
Total
1254
$56430
Therefore, in one year approximately 1254 (209 x 6) people will visit the store and on
every visit, they will spend $45. From research it is apparent the craft industry booms
around Christmas and in the winter months.
However, for summer and spring, the industry is quiet. Florence believes that the
$56,430 should be allocated to each month based upon her expected number of
customers each month.
Page 61 of 89
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Page 62 of 89
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2016
Estimated sales figures are inserted on the first line of your cash flow work sheet
Refer Florence's Forecasted Cash Flow
2) Cash Receipts
Decide how much of your sales will be credit or cash
Your business may only make sales on a cash basis. If this is the case, the
numbers you inserted in your "Estimated Sales" row, will be the same numbers
you insert in the row "Cash from Sales" under the Cash Receipts section.
However, if some or all of your sales will be a mixture of cash and credit, you
must estimate when your credit customers will pay for the goods they bought off
you on credit.
Be realistic in estimating when your creditors will pay! Larger corporations may
delay payment for up to 90 days. A cash flow will only be a useful tool to your
business if you are realistic in your assumptions and expectations of cash
collection!
Florence will grant 30 days credit on craft sales, but only for her major customers
who regularly shop with her. Florence has researched these customers and they
are prompt payers with good credit histories. These customers, in the survey,
estimated they would spend the following:
January
February
March
April
May
June
July
August
September
October
November
December
$3,500 ***
$2,200
$650
$670
$500
$500
$500
$500
$700
$900
$5,000
$4,500
*** Therefore, the $3,500 of purchases in January won't be received, by Florence, until
February.
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Economic Partners Sudbury East/West Nipissing Inc. – Business Plan Guide
2016
Florence estimated her sales for January to be $8,100. As $3,500 of it will be sales
made on credit, Florence will only receive $4,600 (8,100-3,500) in cash for January.
For January, the cash flow worksheet will show $4,600 in the "Cash from Sales"
row and $0 in the "Account Receivable Collected" rows.
In February the "Cash from Sales" row will show $2,075 [$4,275 (estimated
sales) - $2,200 (credit sales)]. Accounts Receivable Collected records collection
of prior credit sales. For February, this will be $3,500. (Credit sales made in
January).
Insert the amount you expect to borrow
On the "Small Business Loan" row, of your cash flow forecast, insert the money
in the month you will receive it. This amount can be revised later.
Florence wants to borrow $15,000 and will receive it in January.
Insert your Contribution
In the row “Owner’s Equity Contribution", insert the amount of money that you,
the business owner, will be investing in the business.
Florence will contribute $5,000 in January, from her personal savings.
Refer to Florence’s cashflow.
3) Cash payments
Initial Start up Costs
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Economic Partners Sudbury East/West Nipissing Inc. – Business Plan Guide
2016
List all the items you must buy and services you must pay for to open your
business. Completing this step will help you decide how much money you may
need to borrow.
(This was done on a previous page)
Page 65 of 89
Economic Partners Sudbury East/West Nipissing Inc. – Business Plan Guide
2016
To open her craft store, Florence has the following start up costs.
Advertising
$200
Business name search and registration
$68
Business License
$50
Equipment: Cash Register
$50
Equipment: Adding Machine
$40
Equipment: Computer and Printer
$3,000
Fixtures: Shelving
$2,000
Furniture: Chairs
$500
Furniture: Coffee Table
$200
Furniture: Counter
$400
Insurance (1st months)
$200
Inventory
$15,000
Legal expenses (signing of lease)
$200
Office Stationery
$200
Plastic Bags
$200
Rent (first and last months)
Security Alarm
Telephone (Connection and rental)
Total
$1,400
$500
$150
$24,358
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2016
What recurring expenses can you expect?
After deciding what it will cost to commence your business, it is now necessary to
determine what it will cost to stay in business.
Your expenses may be either fixed or variable. Fixed costs, such as rent, are not
affected by how much the business sells. Fixed costs will stay the same month to
month. Variable costs will change depending upon the volume of sales. Variable
costs include wages, advertising, heat and hydro. Begin by listing all the
expenses that your business is likely to incur, in the first 12 months of operation.
Note if they are a fixed or variable expenditure and when they will have to be
paid.
To run the craft store, Florence thinks she will incur the following expenditures.
Expenses
Advertising
Bank Fees
Insurance
Inventory
Loan Payment
Office stationary
Owners drawings
Plastic Bags
Rent
Security Monitoring
Telephone
Heat and Hydro
Fixed/Variable
Variable
Variable
Fixed
Variable
Fixed
Variable
Variable
Variable
Fixed
Fixed
Fixed
Variable
Payment Date
Bimonthly
Monthly
Monthly
Monthly
Monthly
Bimonthly
Monthly
1/2 yearly
Monthly
Monthly
Monthly
Monthly
Record the cash payments you will make
Record the expenses in the month you will actually pay cash for it. For example,
if you pay $1,500 in January for insurance for 12 months, record the $1,500 as
an expense in January. DO NOT, divide the $1,500 by 12 and record it as an
expense each month.
For variable expenses, such as materials/inventory purchases, you will not know
exactly the level of expenditure. You must estimate this figure based on your
revenue figure. For example, if you estimate that the sale of your products will
increase in December, you would expect your materials/inventory expenses to
increase in December.
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NEVER "flat line" expenses! Not every month will incur the same level of
expenditures. Research your expenditures to make them as accurate as
possible.
Refer to Florence's cash flow. Remember in the first month, of your cash flow,
you will have start-up and recurrent costs.
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2016
4) Cash Summary
Calculate Net Cash
For each month, take Total Receipts and subtract Total Payments to end with a
Net Cash figure.
For Florence, January's net cash will be -$413 ($24,600 - $25,013).
Complete the Cash Summary section
Insert your opening cash balance; this will normally be zero for the first month.
Add the Net Cash figure to your Opening Cash Balance, the total is the Closing
Cash Balance.
This balance then becomes the Opening Cash Balance for the next month and
so on.
The Closing Cash Balance amount is the amount of cash that the business has
at the end of the month. This is NOT a profit figure. The profit figure comes from
the Income Statement.
Refer to Florence's cash flow. At the end of January,
Total Receipts
Total Payments
Net Cash
$24,600
($25,013)
-$ 413
Opening Cash
0
Net Cash Movement
Closing Cash
-$413
-$413
For February, -$413 will be the opening cash balance.
Page 69 of 89
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2016
5) Notes to the Cash Flow
Make sure you include notes to explain your cash flow
Below are the notes Florence inserted to explain her craft shop expenses.
Estimated Sales
Based upon Florence’s prior industry knowledge and her survey results, she has
estimated her sales as per the table below.
Month
Season
Activity
# Customers
Average
Purchase
Estimated
Sales $
January
Winter
Busy
180
45
8100
February
Winter
Busy
95
45
4275
March
Spring
Quiet
80
45
3600
April
Spring
Quiet
50
45
2250
May
Spring
Very Quiet
43
45
1935
June
Summer
Very Quiet
43
45
1935
July
Summer
Very Quiet
25
45
1125
August
Summer
Very Quiet
44
45
1980
September
Autumn
Moderate
105
45
4725
October
Autumn
Moderate
99
45
4455
November
Autumn
Very Busy
240
45
10800
December
Winter
Very Busy
250
45
11250
Total
1254
56430
At the peak of her business, Florence has estimated 250 customers for the month of
December. In December, she plans to be open for 25 days. This calculation would
average to 10 customers per day. She will trade for 9 hours per day; therefore, she
would be serving 1.1 customers per hour. She believes this number to be a reasonable
estimate.
Page 70 of 89
Economic Partners Sudbury East/West Nipissing Inc. – Business Plan Guide
2016
Cash Receipts
Cash from Sales and Accounts Receivable
Florence will only grant credit to major customers. She has researched their
credit histories and checked their references. There were no "black" marks, they
have good credit histories and usually pay within 30 days.
From the survey, these customers indicated they would spend the following:
January
February
March
April
May
June
July
August
September
October
November
December
$3,500
$2,200
$650
$670
$500
$500
$500
$500
$700
$900
$5,000
$4,500
Small Business Loan
Florence will borrow $15,000 from her bank in January and $10,000 in
September.
Owner’s Equity
She will invest $5,000 from her personal savings in January and $5,000 in
September.
Cash Payments
Bank Fees
Page 71 of 89
Economic Partners Sudbury East/West Nipissing Inc. – Business Plan Guide
Standard monthly charge $20
Cheque Book
2016
$50
(This entitles Florence to 200 cheques. Every 3 months, she will need another
book.)
Advertising
Florence plans to advertise promotions and competitions in the slower months
(May - August) to boost sales.
On-going advertisement in local paper $50 per month
Quarter page promotion
$500 May
Flier insert in local paper
$150/month (June-Aug)
Coupon insert in local paper
$150 December
Insurance
Yearly quote payable monthly $2,400 ($200/month)
Inventory
Florence’s opening inventory will be $15,000. In September, she plans to buy
another $15,000 in stock.
Line of Credit Repayment
Florence will need a $2,000 line of credit in May. She is required to pay 2% of the
outstanding balance each month. The interest rate is 10%. Her monthly payment
is $44.
In September, she will draw another $5,000 on her line of credit. She will owe
$7,000 and her monthly payment will be $154.
Loan Repayment
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2016
Florence will initially borrow $15,000 from the bank in January at 10% repayable
over 5 years. Her monthly payment is $325. In September, she will borrow
another $10,000 on the same terms. Her monthly payment will increase to $543.
Office Stationary
Initial supply should easily last 2 months. Florence then plans to order every 2
months spending $100 per order.
Owners Drawings
In order to live, Florence must withdraw $1,400 from the business each month,
commencing in February.
Plastic Bags
Florence initially bought 1,000 for $200, which should last 6 months. Her next
purchase will be in June.
Rent
Rent is $700 per month.
Security Monitoring
This expense is a set rate at $30 per month.
Telephone
This expense is a flat fee of $50 per month
Long distance would be minimal. Expect it to be $10/mth
Heat and Hydro
Based upon the prior tenant's bills, winter hydro peaked at $170/mth, while
summer hydro peaked at $80/mth.
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List of Likely Expenses
-Accounting Fees
-Advertising
-Bank Fees
-Business Taxes
-Conferences
-Equipment Purchases
-Insurance
-Inventory
-Legal Fees
-Licenses
-Loan Repayment
-Office Expenses
-Owners Drawings
-Professional Development
-Salary
-Shipping
-Source Deductions
-Tax Remittance
-Telephone
-Trade Shows
-Training
-Travel Expenses
-Utilities
-Vehicle Operating Costs
-Wages
-Rent
-Research Expenses
-Promotion Expenses
Page 74 of 89
Economic Partners Sudbury East/West Nipissing Inc. – Business Plan Guide
2016
SAMPLE- Florence's - CASH FLOW FORECAST FOR THE FIRST 12 MONTHS OF OPERATION
Estimated Sales
Notes
1
Jan
8100
Feb
4275
Mar
3600
Apr
2250
May
1935
June
1935
Jul
1125
Aug
1980
Sept
4725
Oct
4455
Nov
10800
Dec
11250
Total
56430
2
4600
0
2075
3500
2950
2200
1580
650
1435
670
1435
500
625
500
1480
500
4025
500
3555
700
5800
900
6750
5000
36310
15620
4255
6700
11750
25000
10000
7000
93930
Cash Receipts (IN)
Cash from Sales
Accounts Receivable
Collected
Small Business Loan
Owners Equity Cont.
Other: Line of Credit
Total Receipts (A)
3
4
5
Cash Payments (OUT)
Fixed Expenses
Rental Expense
Business License
Insurance Expense
Security Monitoring
Telephone Expense
Variable Expenses
Advertising Expense
Bank Charges/Account Fees
6
15000
5000
24600
5575
5150
2230
2000
4105
1935
1125
1980
10000
5000
5000
24525
1400
50
200
30
210
700
700
700
700
700
700
700
700
700
700
700
200
30
60
200
30
60
200
30
60
200
30
60
200
30
60
200
30
60
200
30
60
200
30
60
200
30
60
200
30
60
200
30
60
9100
50
2400
360
870
200
70
50
20
50
20
50
70
550
20
200
20
200
70
200
20
50
20
50
70
50
20
200
20
1850
440
3090
3100
1320
200
30000
Equipment Purchases
Furniture and Fittings
Heat and Hydro
Legal Fees
Materials/Inventory Expense
3090
3100
170
200
15000
Office Stationary
Personal Drawings
Plastic Bags
Security Alarm
Other:
Sub-total Payments
200
170
170
80
80
80
80
80
80
80
170
15000
1400
100
1400
1400
100
1400
2630
2730
2590
3140
200
500
24620
80
1400
200
2890
100
1400
1400
100
1400
1400
100
1400
1400
2840
2690
17640
2590
2640
2780
700
15400
400
500
0
69780
Page 75 of 89
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2016
Other Expenses
Line of Credit Repayment
7
Loan Repayment
Total Payments B
Net Cash A-B=C
Cash Summary
Opening Cash Balance
Net Cash Movement
Closing Cash Balance
(Overdraft of $500 available)
8
44
44
44
44
154
154
154
154
792
4772
75344
18518
325
24945
-413
325
2955
2620
325
3055
2095
325
2915
-685
325
3509
596
325
3259
-1324
325
3209
-2084
325
3059
-1079
543
18337
6188
543
3287
968
543
3337
3363
543
3477
8273
0
-413
-413
-413
2620
2207
2207
2095
4302
4302
-685
3617
3617
595
4213
4213
-1324
2889
2889
-2084
805
805
-1079
-274
-274
6188
5914
5914
968
6882
6882
3363
10245
10245
8273
18518
NOTES TO CASHFLOW
Cash Receipts (IN)
Estimated Sales: $56,430 based on 1254 clients in one year with an average purchase of $45.00(Average purchased price based on market
research data).
Month
Season
Activity
# Customers
Average Purchase
Estimated Sales $
January
February
March
April
May
June
July
August
September
October
November
December
Total
Winter
Winter
Spring
Spring
Spring
Summer
Summer
Summer
Autumn
Autumn
Autumn
Winter
Busy
Busy
Quiet
Quiet
Very Quiet
Very Quiet
Very Quiet
Very Quiet
Moderate
Moderate
Very Busy
Very Busy
180
95
80
50
43
43
25
44
105
99
240
250
1254
45
45
45
45
45
45
45
45
45
45
45
45
8100
4275
3600
2250
1935
1935
1125
1980
4725
4455
10800
11250
56430
Page 76 of 89
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Cash Payments (OUT)
1. The business will grant a 30 days credit on craft sales to major customers. These customers were surveyed and have estimated these
monthly purchases.
2. A small business loan of $25,000 from the Bank will be injected in the business. One injection in January of $15,000 and another in
September of $10,000.
3. The owner expects to inject a total of $10,000 from personal savings during the first year in business.
4. The business will utilize its Line of Credit at two periods in the first year to top off the cashflow for a total of $7,000.
5. The business plans to advertise promotions in the slower months (May-August) to boost sales:

On-going advertisement in The Tribune
$50 per month

Quarter page promotion – North Bay Nugget
$500 May
Flier insert in Community Voices
$150 per month (June-August)
Coupon insert in North Bay Nugget
$150 December


6. The business will need a $2,000 Line of Credit injection in May and will be required to pay 2% of the outstanding balance each month.
The interest rate is 10%. The monthly payment is $44.
7. The business will initially borrow $15,000 from the Bank in January at 10% repayable over 5 years. The monthly payment is $325.
Page 77 of 89
Economic Partners Sudbury East/West Nipissing Inc. – Business Plan Guide
2016
In September, the business will borrow a $10,000 on the same terms. The monthly payments will increase to $543.
Page 78 of 89
Economic Partners Sudbury East/West Nipissing Inc. – Business Plan Guide
2016
The Projected Income Statement
The purpose of the Projected Income Statement is to summarize the operating activities
of a business over a specific period of time. All projected income statements are
prepared in a standardized style. This statement is valuable as both a planning tool and
a key management
tool to help control business operations. It enables the owner/manager to develop a
preview of the amount of income generated each month and for the business year,
based on reasonable predictions of monthly levels of sales, costs and expenses.
The following is an example of a Projected Income Statement for a typical small
business.
Name of Business
Projected Income Statement
For the 12 months ending
31-Dec-98
$$$
%
Sales (Revenue)
Cost of Sale
Gross Profit
Variable Expenses
Wages
Payroll Expenses
Outside Services
Supplies
Repair/Maintenance
Advertising
Travel
Professional fees
Fixed Expenses
Rent
Depreciation
Utilities
Insurance
Interest Paid
Misc.
Total Operating Expenses
Next Profit/(Loss)
(before taxes)
Page 79 of 89
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Taxes
Net Profit (Loss)
(after taxes)
Instructions to the Projected Income Statement
Total Net Sales (Revenues)
Determine the total number of units of products or services you realistically expect to
sell each month in each department at the prices you expect to get. Use this step to
create the projections to review your pricing practices.
 What returns, allowances and markdowns can be expected?
 Exclude any revenue that is not strictly related to the business.
Cost of Sales
The key to calculating your cost of sales is that you do not overlook any costs
that you have incurred. Calculate cost of sales of all products and services used
to determine total net sales. Where inventory is involved, do not overlook
transportation costs. Also include any direct labour.
Gross Profit
Subtract the total cost of sales from the total net sales to obtain gross profit.
Gross Profit Margin
The gross profit is expressed as a percentage of total sales (revenues). It is
calculated by dividing the Gross Profit figure by the Total Sales.
Variable Expenses (examples)
Wages: Base pay plus overtime.
Payroll expenses: Include paid vacations, sick leave, health insurance,
unemployment insurance and CPP.
Outside services: Include costs of subcontracts, overflow work and special or
one-time services.
Supplies: Services and items purchased for use in the business.
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Repair and maintenance: Regular maintenance and repair, including periodic
large expenditures such as painting.
Advertising: Include desired sales volume and classified directory advertising
expenses.
Travel: Include charges if personal car is used in business, including parking,
tools, buying trips, etc.
Professional fees: Outside professional services.
Fixed Expenses (examples)
Rent: List only real estate used in business.
Depreciation: Amortization of capital assets.
Utilities: Water, heat, light, etc.
Insurance: Fire or liability on property or products. Include workers'
compensation.
Loan repayments: Interest on outstanding loans.
Miscellaneous: Unspecified small expenditures without separate accounts.
Net Profit or Loss (before taxes)
Subtract total expenses from gross profit.
Taxes
Include inventory and sales tax, excise tax, real estate tax, etc.
Net Profit or Loss (after taxes)
Subtract taxes from net profit (before taxes).
Page 81 of 89
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The Balance Sheet
The Balance Sheet is designed to show how much is owned (assets) by the business,
how much is owed (liabilities) by the business and net worth (share capital) of a
business at a
given point in time.
Name of the business
Opening Balance Sheet
As at (insert date)
Assets
Current Assets
Cash
Petty Cash
Accounts
Receivable
Inventory
Short Term
Investments
Prepaid Expenses
Long-term
investments
Liabilities
Current Liabilities
Bank overdraft
Taxes Payable
Accounts Payable
Interest Payable
Payroll accrual
.
Total Current
.
.
.
Total Current
Fixed Assets
Land
Buildings
Improvements
Equipment
Furniture
Vehicles
.
Less: Accum.
Depreciation
.
Total Fixed
.
Total Assets
.
Long Term
Mortgage Loan
Equipment Loan
Notes payable
.
Total Long Term
Total Liabilities
.
Net Worth
Share Capital
Retained Earnings
.
Total Net Worth
.
Total Liabilities and
Net Worth
.
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Instruction to the Balance Sheet
At the top of the balance sheet, fill in the legal name of the business, the type of
statement (in this case it would be 'Balance Sheet') and the day, month and year.
Assets
List anything of value that is owned or legally due to the business. Total assets
include all net values. These are the amounts derived when you subtract
depreciation and amortization from the original costs of acquiring the assets.
Current Assets
Cash: List cash and resources that can be converted into cash within 12 months
of the date of the balance sheet (or during one established cycle of operation).
Include money on hand and demand deposits in the bank, e.g., chequing
accounts and regular savings accounts.
Petty cash: If your business has a fund for small miscellaneous expenditures,
include the total here.
Accounts receivable: The amounts due from customers in payment for
merchandise or services.
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Inventory: Includes raw materials on hand, work-in-progress and all finished
goods, either manufactured or purchased for resale.
Short-term investments: Also called temporary investments or marketable
securities, these include interest- or dividend-yielding holdings that are expected
to be converted into cash within a year. List stocks and bonds, certificates of
deposit and time-deposit savings accounts at either their cost or market value,
whichever is less.
Prepaid expenses: Goods, benefits or services a business buys or rents in
advance. Examples are office supplies, insurance protection and floor space.
Long-term investments: Also called long-term assets, these are holdings the
business intends to keep for at least a year and that typically yield interest or
dividends. Included are stocks, bonds and savings accounts earmarked for
special purposes.
Fixed Assets
Also called plant and equipment. Includes all resources a business owns or acquires
for use in operations and not intended for resale. Fixed assets may be leased.
Depending on the leasing arrangements, both the value and the liability of the
leased property may need to be listed on the balance sheet.
Land: List original purchase price without allowances for market value.
Buildings
Improvements
Equipment
Furniture
Automobile/vehicles
Liabilities
Current Liabilities
List all debts, monetary obligations and claims payable within 12 months or within
one cycle of operation. Typically they include the following:
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Accounts payable: Amounts owed to suppliers for goods and services
purchased in connection with business operations.
Notes payable: The balance of principal due to pay off short-term debt for
borrowed funds. Also includes the current amount due of total balance on notes
whose terms exceed 12 months.
Interest payable: Any accrued fees due for use of both short- and long-term
borrowed capital and credit extended to the business.
Taxes payable: Amounts estimated by an accountant to have been incurred
during the accounting period.
Payroll accrual: Salaries and wages currently owed.
Long-term Liabilities
Notes payable: List notes, contract payments, mortgage payments due over a
period exceeding 12 months or one cycle of operation. They are listed by
outstanding balance
Net worth: Also called owner's equity, net worth is the claim of the owner(s) on
the assets of the business. In a proprietorship or partnership, equity is each
owner's original investment plus any earnings after withdrawals.
Total Liabilities and Net Worth
The sum of these two amounts must always equal the amount for Total Assets.
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APPENDIX
For a business plan to flow smoothly and to enhance its readability, it is important to
minimize excessive details and background information. That’s where the appendices
come in handy. Instead of including a lengthy piece of information directly in the body of
your plan, you can make reference to it and request that the reader refer to the
appendices at the back for further
details.
Appendices should include any exhibits, supporting documents, graphs, charts or data
that you referred to or referenced within the written sections of your business plan.
Make sure all copies that you include are legible and complete.
Here is a list of what can often be found in a business plan’s appendices:
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Management Resumes
Blueprints or Diagrams
Patents and/or Trademarks
Personal Financial Statements and Credit Reports
Demographic Data
Newspaper or Magazine Articles
Letters of Reference
Product Samples and Marketing Literature
Press Coverage or Clippings
Photos of the Business or Product
Additional Financial Documentation
Vendor Estimates and Quotes
Organizational Charts and Diagrams
Significant contracts
o Leases or rental agreements
o Sales contacts
o Purchases contracts
o Partnership / ownership agreements
o Stock option agreement
o Employment / compensation agreements
o Noncompetition agreements
o Customer Contracts or Letters of Intent
o Insurance
You'll be surprised. Some of the most sought after documentation can be found in the
appendices of a business plan. Make sure yours includes all necessary information that
best supports and validates your business idea.
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GLOSSARY
A plan
 a statement of intent - a calculated intention to organize effort and resource to achieve
an outcome - in this context a plan is in written form, comprising explanation, justification
and relevant numerical and financial statistical data. In a business context a plan's
numerical data - costs and revenues - are normally scheduled over at least one trading
year, broken down weekly, monthly quarterly and cumulatively.
A business
 an activity or entity, irrespective of size and autonomy, which is engaged in an activity,
normally the provision of products and/or services, to produce commercial gain,
extending to non-commercial organizations whose aim may or may not be profit (hence
why public service sector schools and hospitals are in this context referred to as
'businesses').
Business plan
 this is now rightly a very general and flexible term, applicable to the planned activities
and aims of any entity, individual group or organization where effort is being
converted into results, for example: a small company; a large company; a corner shop;
a local window-cleaning business; a regional business; a multi-million pound multinational corporation; a charity; a school; a hospital; a local council; a government agency
or department; a joint-venture; a project within a business or department; a business
unit, division, or department within another organization or company, a profit centre or
cost centre within an organization or business; the responsibility of a team or group or an
individual.
 The business entity could also be a proposed start-up, a new business development
within an existing organization, a new joint-venture, or any new organizational or
business project which aims to convert action into results. The extent to which a
business plan includes costs and overheads activities and resources (eg., production,
research and development, warehouse, storage, transport, distribution, wastage,
shrinkage, head office, training, bad debts, etc) depends on the needs of the business
and the purpose of the plan. Large 'executive-level' business plans therefore look rather
like a 'predictive profit and loss account', fully itemized down to the 'bottom line'.
Business plans written at business unit or departmental level do not generally include
financial data outside the department concerned. Most business plans are in effect sales
plans or marketing plans or departmental plans, which form the main bias of this guide.
Strategy
 originally a military term, in a business planning context strategy/strategic
means/pertains to why and how the plan will work, in relation to all factors of influence
upon the business entity and activity, particularly including competitors (thus the use of a
military combative term), customers and demographics, technology and
communications.
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Marketing
 believed by many to mean the same as advertising or sales promotion, marketing
actually means and covers everything from company culture and positioning, through
market research, new business/product development, advertising and promotion, PR
(public/press relations), and arguably all of the sales functions as well. Marketing is the
process by which a business decides what it will sell, to whom, when and how, and then
does it.
Marketing plan
 logically a plan which details what a business will sell, to whom, when and how, implicitly
including the business/marketing strategy. The extent to which financial and commercial
numerical data is included depends on the needs of the business. The extent to which
this details the sales plan also depends on the needs of the business.
Sales
 the transactions between the business and its customers whereby services and/or
products are provided in return for payment. Sales (sales department/sales team) also
describes the activities and resources that enable this process, and sales also describes
the revenues that the business derives from the sales activities.
Sales plan
 a plan describing, quantifying and phased over time, how the sales will be made and to
whom. Some organizations interpret this to be the same as a business plan or a
marketing plan.
Service contract
 a formal document usually drawn up by the supplier by which the trading arrangement is
agreed with the customer.
Philosophy, values, ethics, vision
 these are the fundamentals of business planning, and determine the spirit and integrity
of the business or organization.
Business plans are often called different names - especially by senior managers and directors
delegating a planning exercise that they do not understand well enough to explain. For example:
sales plans, operational plans, organizational/organizational plans, marketing plans, marketing
strategy plans, strategic business plans, department business plans, etc. Typically these names
reflect the department doing the planning, despite which, the planning process and content
required in the document is broadly similar.
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30 Front Street, Unit A
Sturgeon Falls, ON P2B 3L4
Tel: 705-753-5450 / 1-866-448-4478
Fax: 705-753-3456
www.economicpartners.com
neil.fox@economicpartners.com
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