Will glimmers of optimism appear in Canada’s economy? After the Canadian federal election and the Liberal Party win, some believe “sunny ways” politics may lead to “sunny days” for business. Many business owners who have maintained the status quo or even reduced operations in late 2014 and through much of 2015, now face the daunting task of determining how political changes affect them.
There are various indicators to watch; interest rates, labour statistics, production and trade stats and real GDP among others – a good indicator of economic growth or contraction. Real GDP numbers for August 2015 won’t be released until October 30, 2015 just in time for Halloween. We like the RBC economic indicator calendar to keep track of those trends.
Regardless of how the numbers fall, the reality for Canadian business is prepare for any eventuality. And that means business planning.
Is your business plan the living dead or a living document?
At Business Diagnostics, we think of a business plan as a living document – something to keep updating as industry and competitive conditions change, not just a report prepared when a business wants to attract new equity investment or obtain a line of credit from their bank. Here are some practical tips to de-mystify the business plan preparation process.
Fixing your scary business plan
Knowing who you are writing for makes the process less scary and more effective. Typically there are 2 audiences you need to prepare plans for: internal audiences (senior management, employees, Boards of Directors or advisors) and external audiences (investors, bankers, other lenders).
Internal audiences usually have input into the business plan on an on-going basis. The business plan acts as a foundation document followed by a strategic plan along with a detailed budget and forecasts and the critical tactical plan that allows each department to implement the objectives of the business plan. This means you want the plan written in plain language and include specifics so each department knows what success looks like and can set targets and methods to measure success.
External audiences will typically receive an initial overview of an investment or banking opportunity by way of a short and simple ‘Business Opportunity Document’. This will be supported by a formal Business Plan and, if an investment opportunity is being pursued, a public offering and/or private placement process may be initiated via another set of documents, the Offering Memorandum and/or Prospectus. While you still want your business plan to be in plain language, usually external audiences will focus on the business fundamentals like finances, market share and competitive advantage.
Basic Business Plan Structure
There are many different templates and examples of business plans. However, most business plan structure can be summarized as follows:
- The Executive Summary
- Company and/or project description
- Marketing plan
- Production and Operations plan
- Financing plan
- Management plan
We encourage you to keep your business plan up-to-date. Economic shocks aside, there are so many other factors that can affect your business. Taking time to review your plans and your place in the industry will help you avoid frights and fights. This content is abridged from the book – Business Diagnostics- 3nd edition – authored by Richard Mimick, Michael Thompson and Terry Rachwalski, offering insight on the Business Plan preparation process. You can order your copy of the book now.