Preparing a business plan
Starting a business or planning changes to an existing business requires a well thought-out plan. A business plan is a blueprint for your business’s future. It outlines what you will do and how you will do it. It details your business goals, any potential risks and strategies to deal with them, your competition, your marketing strategy, your organizational structure, and your cash requirements - in other words, a business plan details all aspects of your business. 

Many people go into business without thoroughly thinking through a plan, and unfortunately, many businesses do not succeed. A sound business plan can greatly improve your chances of success. Furthermore, lenders and suppliers to a new business may request a plan before extending financing or credit. Most importantly, a business plan will help you better manage your business.

While it may seem like an imposing task, a business plan can be simple to start and well worth the effort. No two plans will be exactly the same, as each business is unique. To help you organize your plan, think about it in three parts:

The Need – often referred to as market research. In this section, you must answer some basic questions such as:

• Who will buy your product or service? Specifically, describe your target customers, include their age, gender, income level or anything else that specifically identifies them. 
• How many target customers are in your market area? If you’re marketing over the Internet, your customer base could be very wide; if you’re opening a storefront, your market would be much more localized.
• Why will customers buy from you? 
• Any seasonal trends in your industry.

The Approach – after identifying and describing the need, you must explain how you are going to fill it. Describe your business in terms of:

• Specific products or services you will offer. What makes your business unique?
• Location of the business and facilities you have or will require.
• Ownership and management structure - include details of key personnel. Outline the relevant strengths of your team. Who is assisting the team – include your business advisors, accountants, lawyers, and any others you will rely on for expertise.
• The size of your operations.
• The potential risks in your business and how you will reduce them.
• Details on the major suppliers and major costs.
• Who is your competition? What are their strengths and weaknesses and how will your business compete with them?
• How will your customers find you? Outline any planned advertising programs and marketing opportunities. 
• How will you distribute your products and services to your customers? What is your pricing strategy? Are you a low cost supplier, or will you charge a premium in exchange for high quality and service?

The Financial Details – this demonstrates that your business will be profitable and have sufficient cash flow to succeed. If you are using your business plan to secure financing, it will show potential investors the opportunity you are offering. This is where you may want some help from your accountant. You will need to include:

• An analysis of start up costs and capital expenditures.
• Projected income statements.
• Projected cash flows.
• Projected balance sheets.
• Break-even analysis.
• An outline of any financing needed/
• An outline of any assets that you already have and any financing that is already in place (including your own contributions).            

After all the details are completed, create an executive summary outlining the key information. It should allow someone to quickly get an idea of what you are planning, and will help them determine if they are interested in reading further. Potential investors and lenders see many business plans - the executive summary is their first impression, so spend the time to make it good.

There are many variations to business plans. Does your plan explain your idea effectively and efficiently? Have someone review the plan before you give it an investor or a lender.

The key is that any plan is better than none!  And a good business plan can be the single most important tool in being successful.

By Reg Ens, Farm Business Advisor. For more information, contact your local MNP advisor or Reg at 1.800.444.4070.

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