11 Elements Essential to a Business Plan

27 November 2020 by National Bank
Photo of a man writing in a notebook on a terrace

A business plan is not just for obtaining financing. It will help you correctly position yourself relative to the competition while ensuring your business stays on course. Ultimately, a good business plan will help you make the best decisions. Our expert shares his advice on how to write a business plan. 

What is a business plan? 

A business plan is basically a tool that helps you manage and develop a business, and it’s also a good way to get financing. “Writing a business plan gives you the opportunity to take a moment and think about what you want to do, what your strengths are, and what resources are at your disposal to help you start a business,” adds Martin Cinq-Mars, senior advisor, commercial banking sales effectiveness at National Bank. 

It’s also a good time to determine the business’s legal structure and identify all the shareholders or administrators. Creating a business plan also gives you the chance to take a look at the market and evaluate the existing offering that directly or indirectly meets the needs you’re trying to fulfill in a given sector. “Keep in mind that anything is possible, as long as you’ve found the right solution and your timing is right. Sometimes ideas are too ahead of their time or not well-adapted to the present moment.”

Why is it important to have a business plan? 

Cinq-Mars believes that the thought process that comes from creating a business plan and evaluating the market can lead to new opportunities. “A business plan is important because it allows you to think before you act. It offers you the time to take a look and come into contact with the market and uncover opportunities that will make your offer unique and your positioning relevant.”

“It allows you to analyze your strategy. Is it the right time to start your business? A business plan allows you to think, plan and get organized. It also helps you recognize your limits. Do you have the ability to carry out this project successfully? If not, do you know anyone who can help you? This is also the time to validate your idea. Will people want to buy it?” the expert explains. 

What should you include in your business plan?

1. Define your value proposition

A value proposition allows you to determine the added value of a product or service. What are the features of your product or service? What are its advantages? What sets you apart from the competition?

2. Identify your market segments

Market segments represent the various customer groups targeted by an entrepreneur. In order to properly identify your market segments, you need to ask yourself the following questions:

  • Who am I creating value for?
  • Who are my targeted customers?
  • What are their needs or problems?

3. Select your channels

Next, you need to determine the best communication and distribution channels for your company. Keeping in mind the various existing channels (website, online store, brick-and-mortar location, warehouse, etc.), think about the most effective ways to reach your customers. What is the best way to distribute your products and services?

4. Determine the kind of relationship you will have with your clientele

Identifying your market segments allowed you to pinpoint the customers you intend to target. Now you need to define the type of relationship and support service that will best answer the needs of this customer base. Some products and services require a personalized approach, while others need less after-sales service, for example. You could also opt for a self-serve kind of approach where the client doesn’t have to interact with you. Conversely, you could benefit from a relationship with the community based on discussions and two-way participation.  

5. Identify your resources

Resources include everything an entrepreneur owns that contributes to the functioning of the business. There are many possible resources and they can include, among other things, qualified personnel, material resources like tools and assets, as well as permits and patents belonging to the business. It could also include the knowledge, experience, and reputation of the entrepreneur and their team.

“Depending on your budget, you’re going to have to make some decisions,” Cinq-Mars explains. “These decisions may change your business plan. For example, it could push you to focus your positioning on the product’s quality rather than on having the lowest price.”

6. Find your core activities

Core activities are those that enable an entrepreneur to realize their value proposition and make it available on the market in a competitive way. These are the concrete actions that will create added value and help the business set itself apart from the competition. It could be the way you manufacture or design your products or service, your sales approach, or even the way you solve problems. For example, a manufacturer could differentiate themselves not only thanks to their product, but also by inventing an innovative and patentable production method. 

7. Choose your partners

To launch a company that’s profitable, an entrepreneur needs to collaborate with suppliers, subcontractors, distributors, and other facilitators that are essential to the realization of the value proposition. Ask yourself who your invaluable partners and suppliers will be, and what needs they fulfill. Which partners provide you with resources that you don’t have internally?

8. Identify your sources of revenue

The flow of revenue is as important for companies as it is for investors. Whether a company’s revenues come through fees, fixed prices, subscriptions, leasing, or licensing, it is important to determine these in relation to the price a customer is willing to pay. In what ways will you obtain your revenue? Which of your products or services will be most profitable? How will customers pay you? How would they prefer to pay you (cheque, debit card, credit card, etc.)?

9. Determine your costs

Businesses can have many expenses. These can be related to resources, employees and their training, relationships with partners, distribution, operations, and even taxes. It is essential to understand all of your business’s expenses.

10. Think about financing

“To make your project a reality, you will then have to proceed to the financial planning stage. This will allow you to validate whether your various hypotheses are profitable in the short and medium term,” Cinq-Mars points out. “This will help you in your discussions with your bank, and seeing proof of profitability will allow you to adjust your strategies and power your ideas.”

11. Expand your research

Whether you’re preparing a business plan for a daycare, a farm, or a restaurant, take into consideration the elements specific to your activity sector. “For example, for daycares, it’s important to learn about regulations so you can get the permits you need to achieve your goals. It’s the same thing in agriculture: you need to know about the sector and the relevant programs and subsidies,” Cinq-Mars concludes. 

Finally, a business plan also lets you take stock of things. It allows you to actually see all the effort, work and commitment involved in entrepreneurship. 

To help you build your business plan model, download our business model canvas online

To help you get a clearer picture, check out our guide to help you start your business. 

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