Creating and continuallyrevising a business plan is crucial to building a company that thrives. Aproper plan is the blueprint that guides your business and gives it the bestopportunity to grow.
When the time comes to lookfor financing, a well-documented plan will also demonstrate to potentialfunders that you have the knowledge, expertise and planning skills required to earntheir financial support.
To make your business planas strong as possible, consider the following five tips:
1)Build your business plan with your customers in mind
You’ve got a great idea for a business, and you’veplanned for rent, salaries and other expenses. But do you know if there really isa demand for your company’s product or service?
It’s important to look at your business from yourcustomers’ perspective:
- Whospecifically will place orders when you open for business and why? Start bynaming your top five customers.
- Beyondthe top five, who else are you going to sell to? Make sure you define the exactdemographic you’ll be targeting.
- You’lllikely be entering a competitive marketplace. Why will consumers leave thecompetition for you, and what’s your competitive advantage?
Steve Ennis, business advisor with BlueShoreFinancial, suggests, “Identifying and focusing on the demands of your targetmarket is a crucial first step in the business planning process. Withoutresearch and insight into your potential customers’ needs, your business planwill be missing a critical component.”
2) Design your marketingplan wisely
Planning to reach your target market usingsocial media, digital ads and newspapers is great, but do you know if yourtarget market is using those channels?
Allocating your marketing energy and budget whereyour target market is most active is critical. Some of this may be trial anderror, but try to steer your marketing dollars where they’re resulting inmeasurable returns.
“I reviewed a client’s marketing plan recently,”comments Ennis, “only to find out that under one of his marketing strategies hewas paying $1.20 for every $1 in sales!”
Creating a marketing plan that is relevant toyour target audience and to your industry is an important component of a strongbusiness plan, as is including the research or data on which your decisions arebased.
3) Know your costsintimately
While it may sound somewhat obvious, there’s adifference between “guesstimating” your overhead and cost of sales and trulyknowing what they are.
For example, while you may estimate that yourcommercial space will cost about $2,000 per month, when it comes time tonegotiate a lease, the costs may be more than you expect. Location, a tightrental market as we are currently experiencing in the Lower Mainland and hydro,insurance and common area costs can all add up.
It’s important to include as many details oncosts as possible when you create your plan. The more information you gather inadvance, the fewer surprises you’re likely to face down the road.
If you’re seeking commercial space, a commercialleasing broker will be helpful in your research and can even start negotiatingthe details of the lease agreement.
4) Include best- andworst-case scenarios in financial projections
Including historical andprojected financial information is crucial to a strong business plan.
As a business owner you’relikely optimistic about future opportunities. But what if everything doesn’t goaccording to plan? You can be forced to cut back on staffing, inject personalmoney into the business or offer heavy discounts to drive sales if disasterstrikes.
In this type of scenario, willyou still be able to afford your overhead or will yourbusiness struggle? It’s important to be optimistic, but you have to be preparedfor the worst.
“Lenders will want to knowthat even in the worst-case scenario their loans will be repaid in full from surpluscash flow,” says Ennis.
5) Amend your business planas needed and seek expert advice
And finally, life throws opportunities at youthat you might not expect. This is also true in business.
As you encounter both opportunities and challenges,you’re going to have to adapt quickly. New revenue streams may presentthemselves and suppliers will start competing for your business. Making sureyour business plan is always up to date helps ensure you stay on track to reachyour goals.
Experience and specialized knowledge can also goa long way to helping your business reach its full potential. A long-termrelationship with a business advisor who knows your business can help yourplans stay on track.
