B. Business Planning

Skill 1. Define Business Planning Terms

1.1 define business planning terms

a) business plan - document which details operating plans and how plans will be implemented

b) business philosophy - shared values and beliefs which create behavioural norms to guide activities

c) goals - medium- or long-term targets, e.g. provide good customer service, raise market share

d) objectives - short-term, specific and measurable targets

e) strategic plan:

• framework which describes nature of business and guides business activities
• projects one to three years into future
• may include partnership, and/or strategic alliances with other businesses, and expansion plans

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Skill 2. Evaluate Status of Business

2.1 evaluate status of business

a) determine type of research needed:

• primary research
• secondary research

b) determine method of conducting research:

• if doing primary research, consider client surveys or service audits
• if doing secondary research, locate appropriate source, for example:
• business associations
• chambers of commerce
• media
• trade publications
• Statistics Canada, e.g. demographics

c) review:

• own business, evaluating:
• goals versus results
• legal business structure
• public’s perception of business
• competition
• market
• industry trends

d) identify:

• potential new products and services
• changes needed to existing products and services to maintain necessary profit levels

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Skill 3. Implement Business Plan

3.1 update business plan

a) review business concept, e.g. are you achieving your concept? Do you want to change your concept?

b) review previous year’s business plan:

• identify strengths and weaknesses of plan
• compare goals to results, e.g. return on investment:
  • consider:
    • human resources
    • strategies for diversification and innovation

c) update mission, goal and objective statements:

• for mission statements:
  • state business purpose or reason for existence, philosophy and target market
  • be concise, e.g. no more than three sentences
  • focus on client
• for long-term goal statements:
  • describe how business will achieve mission by outlining long-term targets
• for short-term objective statements:
  • set annual objectives which are in line with mission and goals
  • for each objective, identify:
    • specific actions
    • time frame for completion
    • performance measurement
  • consider:
    • core products and services
    • past performance
    • strategies for diversification, if necessary
    • research and development

d) identify details of business, including:

• description of:
  • competition
  • current technology
  • facilities and equipment
  • location
  • market niche
  • pricing structure
  • products and services
  • profit centres
  • staffing needs
  • support resources, e.g. industry associations, chamber of commerce
  • target markets
  • present state of business
• history, including:
  • legal structure, e.g. partnership, corporation
  • organizational structure
  • skills and background required of key personnel year-end summary

e) seek professional assistance, if necessary, for example:

• accountant
• bookkeeper
• consultant
• industry colleague
• lawyer
• Statistics Canada

f) develop marketing plan

g) develop financial summary:

• compile existing and projected financial information
• outline financial information, for example:
  • post financial results, e.g. sales, costs, net profit or loss, for last three years
  • current financial position, e.g. name of lender, amount of debt outstanding
  • source and application of funding, e.g. where money is coming from, where and how it will be used
  • variations in financial projections due to market fluctuations and factors beyond control
  • current balance sheet detailing assets, liabilities and equity
  • statement of operational costs
  • monthly income statement
  • cash flow statements:
    • monthly for first year
    • summarized statements for next two years
  • projected closing balance sheets
  • break-even analysis
  • projected return on investment
  • ratio analysis, e.g. assets/liabilities, current ratio, quick ratio
• seek external advice, as necessary, e.g. accountants, bankers

h) evaluate business plan and adjust as required

i) develop executive summary, i.e. highlights of business plan:

• distribute to employees

3.2 follow business plan

a) share business plan with key people, e.g. investors, partners, bankers, management, employees: customize for different stakeholder groups, e.g. mission and goals for employees, financial summary to bank

b) create action plan: prioritize personal and professional objectives identify resources available, for example: employees financial material time determine time lines for goals and objectives determine activities needed to achieve goals and objectives

c) monitor progress of activities

d) adjust activities as required

4.1 describe benefits of strategic alliances

to:

a) increase business

b) allow focus on core business

c) better meet client needs

d) increase supporting businesses by referring clients to each other

e) fill in for each other during holidays or illness

f) reduce staffing costs

4.2 describe ways to form strategic alliances

a) share staff

b) share suppliers of products or services, e.g. delivery person

c) purchase together to get volume discounts, e.g. buying group

d) share professional services, e.g. marketing expert

e) locate near complementary business, e.g. put rental car company in same building as collision repair business

f) refer clients to each other

g) provide discount coupons for each other’s businesses, e.g. historic tour hands out discount coupons for restaurant and vice versa