Business plan basics for immigrant entrepreneurs
The challenges immigrants to Canada face when trying to set up a small business are many and varied. There are, of course, cultural differences, lack of support networks, inability to get bank loans and the challenge of choosing a business that’s both a good fit in Canada, but also plays off your international experience or skills. But the number 1 challenge may be their lack of proper business planning.
Considered an essential entrepreneurial tool in Canada, the business plan is sometimes your friend, sometimes your nemesis, but it will always guide you in your efforts. It can literally make or break your business.
How to write a business plan
The basic format for all business plans is similar — it should contain a vision statement, a mission, a financial plan, a marketing plan and more. You can even find templates online with easy-to-answer questions that allow you to fill in the blanks. But is it really that simple? If so, why do some business plans lead to success, while others do not?
It’s one thing to know that your company should have a mission statement or marketing plan, it’s another to actually develop one that will attract investors and clients. Here’s an overview of the essential elements of a great business plan.
Vision and mission
Writing a vision and mission statement is the easy part of a business plan. The vision statement is essentially how you see your business in five years. In defining your vision, think of all your dreams, goals and what you want from your business. Assuming you open a shop, you might decide that your business will have more than one location, have a certain number of employees and have revenues high enough to provide you an adequate lifestyle. Write it down, it might only take a paragraph but it needs to be meaningful and attainable to you.
The mission is how you see the company’s purpose and how it’s being run. Your purpose in relation to a shop could say “All our products are guaranteed, our employees are of the highest calibre and we are recognized in our city as being the best place to go for the best service and product.” Your mission should be clear, socially meaningful and measurable so you know when you have reached it.
Plan for staff
Next is the personnel plan. This defines who is running the company and the type of employees you will hire. It also describes your forecasts for future growth in terms of employees.
Often when you are writing a business plan, the last thing people think about is “How do I deal with success?” Most focus on getting the sales, but then few prepare for it. You need to be prepared for growth in your business, how you see employees being utilized and alliances in the business community who may help you.
I know a T-shirt manufacturer had no plan for growth, so when he received a huge order for a festival, he was caught without sufficient staff to produce the quantity that was needed. He had to subcontract the job to another company and lost a great deal of money because he was unprepared.
The personnel plan will also be an asset when you are going to a bank seeking a loan as it defines who the people are who manage the company as well as the support in the business community you may have to keep your business on track.
Finances in order
The financial plan includes a startup budget that defines how much money you will need to open the doors to your business. This typically includes facilities, equipment, materials and supplies that you will need in the beginning. Once you know how much you need to set up your company, now all you need to do is calculate the money required to operate your business with a profit.
You now need to develop a cash flow forecast. Using a spreadsheet, you need to create an income/expense statement that shows by month both your revenues and expenses. Using an Excel spreadsheet, you can quickly make minor changes to costs and revenues and instantly see how the “bottom line” is affected.
If you’re seeking a bank loan, keeping your books in order is important, but the banks will want to know more than if you can keep track of money. They will want to see your plan to market and build your business.
Marketing for your business
Enter your marketing plan. The marketing plan is often the biggest stumbling block for newcomers. You’re in a new country with different ways of doing things than what you are used to in your home country. Your homeland may have been big on brochures and newspaper ads to send your message to prospective clients. But you may find that your product is best marketed in Canada by word of mouth or social media networking.
You should consult professionals to see which method works in your specific industry. It is worth the extra money to talk to professionals about marketing techniques than to go fast and furious on a marketing program that may or may not reach potential customers.
READ MORE: 5 top challenges of starting a small business in Canada
Your target market
As an extension of your marketing plan, it’s critical to identify who you are marketing to. This is based in part on demographics. Demographics are the type of data used to determine who will buy your product. Commonly, it’s based on age, race, gender, employment status, location, etc.
Psychographics contrast demographics, but are also important in determining your target customer. Psychographics are customer attitudes, personality, interests, activities and opinions. Studying a good combination of both will identify your customer and make it easier to sell to them.
A Chinese client wanted to open a restaurant in a part of Vancouver that is mainly Caucasians who are health conscious. Her restaurant offers specialty Chinese dishes liked mainly by Mainland Chinese. She chose her location because it was close to her home, not because it was close to her market. This was a recipe for failure.
Analyze your business
So before you jump in with two feet like this restaurateur almost did, analyzing your business model from all sides is a good idea as you create your business plan. To help, one of the first things you can do is to create a SWOT Analysis. On a page write the words: Strengths, Weaknesses, Opportunities and Threats. Then, under each one, write what you feel are important to you and your business. Strengths and weaknesses are internal and relate to you.
It’s good to know your personal strengths, but more importantly to know your weaknesses so you can figure out a strategy to reduce their effect on your new business. A good example of a weakness is lack of sales ability. To reduce this as a weakness, you can consider hiring a salesperson and include that cost in your startup budget.
Opportunities and threats relate to external forces you have no control over, but need to be aware of. If you have decided to start a business you must have identified a need in the community and the opportunity to make a living. You must equally consider the threat in the community that may cause you trouble, like local competitors or a rezoning change in the neighbourhood.
Follow through on your business planning
With all this strategy and analysis in hand, your next step is to create a literal action plan. This is the no-nonsense method to set your operational goals into action. The first step is to put your goals in writing, with specific requirements and deadlines. But be specific and realistic in your action plan. For example, in the first month, your goals may be to create business cards and to begin the design of a website. Next, it could be your first marketing attempts via social networking. An action plan should be broken down month by month, taking you and your business over the next 12 to 18 months.
Best-laid plans
It is often said that if you fail to plan, you plan to fail. Spending the time to write a solid business plan, and updating it as needed, will help guide your company’s direction toward success.