Advice for writing your business plan
By Janice Zimmerman | Jul-22-2014 | Blog, General Tax
Writing a business plan is the critical first step in your journey as an entrepreneur. From marketing strategies to product descriptions to sales forecasts, each part of your plan can help guide you through the often tumultuous first years of your business, and help you stay on track. By regularly revisiting and updating it as you go, your business plan can provide a roadmap for your company. But forming a business plan can be a complex process. Here are some tips to help you get the ball rolling if you’re unsure where to start:
- Understand why you need a plan: Most new entrepreneurs know that having a business plan is a requirement when applying for a business loan or approaching investors, but not everyone considers the long-term benefits. But a good business plan will also evolve as your business grows, helping you track your progress by showing exactly where you’ve been and where you should go next based on market research and sales forecasts. It helps you establish the ongoing habits (e.g., tracking sales, setting goals, researching market trends, etc.) you’ll need to run your business and keep you focused on the end goal—whether that’s breaking even your first year, opening a second location or any other milestone.
- Do your research: Knowing your competitors and your target market allows you to tailor your products or services to those who need them, and establishes why your business is the best suited for that particular niche. Try to pinpoint exactly who your customers are (e.g., working mothers aged 26 to 34 in Northern Ontario) and how to reach them. Focus on the opportunities within that segment of the industry or demographic, and be honest with yourself if you discover another company with a similar approach. You may not be able to proceed exactly the way you’d planned, but you can adapt your business model to give yourself an edge your competitors lack.
- Double-check your numbers: While you may someday have an entire team that tracks sales or creates financial projections, when putting your business plan together you need to familiarize yourself with this process and any financial software used. Take the time to learn how and why these formulas are important and double check your figures—both calculations and market research statistics—to make sure it all adds up before approaching investors.
- Don’t be afraid to ask for help: Talking with other entrepreneurs and established business owners will help you become more comfortable with your own start-up, and will provide you with valuable advice. The same applies to putting together your business plan: look for tools and templates you can use to draft your plan in a professional way. There are several small business organizations and government programs that provide guidance and resources. While you should never rely entirely on a template, especially when it comes to strategy or financials, a good template will show you what you need to include and how to get that information.
- Take tax implications into account from the start: You’ll be taxed differently depending on whether you file as self-employed or incorporate your business, and what qualifies as eligible business expenses can vary depending on several factors. You are also expected to collect taxes on behalf to the federal and sometimes provincial government when your income reaches a certain level. Structure your business in a way that makes sense financially and for tax purposes from the very start to minimize any surprises come tax season, including registering for a PST/HST number, if applicable. If you register for a GST number immediately, you must start collecting on your first sale. Many people wait until they’re closer to their $30,000 sales mark to register because that is when they must technically collect.
A great business plan will prepare you—and your business—for the future. By covering all your bases at the beginning, you’ll thank yourself down the road.
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