Are you a small business owner without a business plan? Perhaps you think that you are too busy to write one or that you don’t need one. In fact these days, you can’t afford to be without one! Here are some tips from the experts on why you need a business plan and how to develop one.
A business plan is not just for the bank – “Business owners often think they need a business plan to get financing,” says Chartered Professional Accountant Robert Gold, FCPA, FCA, Managing Partner with Bennett Gold LLP in Toronto. “But you need to think of your business plan in terms of internal focus, as well as external focus. An internally focused plan can guide you on cash flow management, capital expenses and cyclical issues. It can help you focus and forecast. It is your crystal ball.” External audiences for your business plan may include investors, suppliers and your bank who will be a part of your financial forecast.
A good plan will help you make good decisions – “Anyone starting a business should do a business plan,” agrees Chartered Professional Accountant Chi Ho Ng, Principal, Auditing and Assurance Standards for the Chartered Professional Accountants of Canada. “It provides a road map for the business owner to determine whether he or she is on the right track, which, in turn, provides the information required to make important decisions, such as whether to continue the business or go to Plan B.”
Customize your content – “A comprehensive business plan includes a cover page, table of contents, executive summary, business description, analysis of the business environment in which you are operating, industry background, analysis of your competitors, market analysis, marketing plan, operations plan, description of the management team and financial plan,” says Gold. “You can pick and choose from these elements, depending on your plan’s focus and audiences.”
Include goals and timelines – “Ask yourself what you realistically want to achieve in the next three months, six months, nine months, year, two years and five years,” suggests Ng. “Then set out what you have to do to get there. For example, within the first three months you may want to have a client list and marketing materials. Within the first six months, your goal may be to contact 100 potential customers.” The plan should also identify break-even points and timelines. “This will help you know when to go to Plan B,” explains Ng.
Write the first draft yourself… – “The business owner is the most knowledgeable about the business, so the owner should write the first draft,” says Ng. You can start from scratch or use one of the many business plan templates that are available.
…then seek professional assistance – “You will need a Chartered Professional Accountant to help draft the financial part of the plan and a communications person who has written business plans before, and who understands the market and the industry,” advises Gold. “The communications person should work with the CPA to ensure that the financial and other information flows through the entire plan.” Banks often insist that the financial part of the plan be prepared by a CPA. “The owner is the best person to predict revenues. The owner and CPA need to work together on this part of the plan,” explains Gold.
Monitor, update and adjust – “Once you write the plan you have to work the plan,” says Gold. “See your CPA on a regular basis to compare your financial projections to your actual results and then adjust the plan as needed.”
© 2015 Chartered Professional Accountants of Ontario