Starting a business requires more than just a good idea. A business plan is a comprehensive document detailing all aspects of your business. For Canadian entrepreneurs, a business plan is also a typical requirement for obtaining funding from banks, government programs and investors.
What Is a Business Plan, and Why Does it Matter?
A business plan is a detailed roadmap spelling out all aspects of your business, from your strategy and operations to pricing models, market analysis, and positioning.
A living document, a business plan is an important tool at all stages of your business (including all types of businesses, from a small franchise to a larger corporation). In the earliest stages of launching a new company, your business plan will inform how you bring your organization to fruition, from your mission to your plan to attract clients or customers. Banks and investors will generally want to see your business plan before deciding to loan your business money or invest in your concept. And whether or not you need funding, numerous studies have found that early-stage companies who take the time to formally document their plans are more likely to achieve viability.
Business plans are important even for established organizations because they are a roadmap for ensuring that growth is aligned with your business objectives, and that you are prepared to navigate market changes and other factors that may affect your company.
What makes a great business plan
While there is no standard business plan template, there are some basic things most business plans include. Also called the “lean startup format,” a simple business plan can be as short as one page, consisting of the following details:
- Business mission and goals, offering(s) and value proposition
- Target market
- Revenue model
- Key milestones
A detailed business plan provides a comprehensive analysis and roadmap for your business. It is a lengthier document that includes the components of a simple business plan, along with:
- Detailed executive summary and company description
- Financial projections, including cash flow analysis and sales forecasts
- In-depth market analysis, including trends, target demographics and market segmentation
- Competitive analysis
- Operational plans, including leadership and staffing, resource needs, logistics, etc.
- Long-term plans and goals
Whether simple or detailed, a great business plan should be clear, concise, and realistic, based on data rather than your assumptions.
Simple vs. detailed business plans
Whether you need to create a simple or detailed business plan depends on your business goals.
A simple business plan is often good enough for small, side businesses; startups; or if you are testing a new idea. A detailed business plan is typically a requirement for obtaining business funding. It’s also a good idea for larger and more complex business ideas.
Writing a business plan step by step
While a business plan is a critical document, it does not have to be complicated to create. Here are the basic steps:
Write your executive summary
This is a documentation of your business idea or mission and core objectives.
Document the things you know about your business
From your leadership team to detailed descriptions of your products and services.
Research and document
All factors that will affect and influence your business plan and decisions. You can include competitors, opportunities, and market analysis.
Compile this information into an organized document
This is the first draft of your business plan.
Seek feedback from mentors, financial experts, or stakeholders
Consult trusted advisors to gain valuable insights, identify potential gaps, and strengthen your overall business strategy.
Review and revise your plan as needed
Continuously refine your business plan based on feedback and new information to keep it accurate, relevant, and effective.
Make sure to include these core sections
- Executive summary
- Market analysis
- Operations
- Marketing strategy
- Financial projections
How to create a financial and budget plan for a business
Your financial and budget plans are an important part of your business plan, especially if you need to borrow money from a bank to start your business, or if you want to attract investors.
Your financial and budget information are used to create a revenue forecast, detailing both anticipated income and the costs of running your business.
To get started, create a detailed list of all the expenses related to starting and running your business. This will include costs such as rent, staffing, supplies, insurance, and any other one-time or ongoing expenditures you will incur.
Once you’ve calculated all these costs, you can determine the cashflow required both to start your business and maintain it. For the initial phase, you will want to consider whether you have the capital to fund your business yourself or whether you will need loans or investors.
To forecast revenue and future operating budgets, you will also need to estimate how much your business will bring in each month.
In creating your financial and budget plans, it is important to be realistic. Underestimating costs or overestimating sales can lead to budget shortfalls that can imperil your business.
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Creating a business plan based on your project type
While most business plans have key elements in common, the details you include or structure of your business plan may vary depending on your business sector, mission, or growth stage. Here are some best practices based on your type of business.
Small business and startup business plans
Small businesses and startups often use simple business plans, focusing on their value proposition and the market opportunity. If you are seeking investors, you will want to emphasize your business readiness and scalability by highlighting details such as sector experience, your leadership team, and the market opportunity.
Franchise business plan
A franchise business plan should speak to both franchisors and lenders. You will want to include details reflecting your experience and commitment to operating within franchise standards, while also addressing the local market need and opportunities for the specific franchise brand (things like street traffic statistics, local competitors, etc.).
Nonprofit and community organization plans
Non-profit and community organizations typically require funding from grants and donors, and positioning business plans to these audiences is key. This includes clearly defining your mission and why it is needed, as well as the impact your organization will make and how you intend to measure it.
Creating a business plan for funding and investors
If you want to attract funding and investment from Canadian sources, it is helpful to understand current political and economic priorities at play in Canada, and to address these influences in your business plan. For example, according to BDC, the Canadian government is currently prioritizing infrastructure and energy projects, along with those focused on reducing waste and growing productivity.
Regardless of your business idea, understanding what is currently driving investment in Canada can help you position your business to be most attractive to Canadian investors and lenders.
How long does it take to create a business plan?
How long it takes to create a business plan will depend on its level of detail. A simple business plan can take as little as an hour to write, whereas it may take weeks or months to conduct all the research necessary for a detailed business plan.
Planning beyond launch: continuity and long-term growth
A business plan is not a one-off document you create at the outset and then forget about. It is a long-term roadmap for your business you should periodically update to guide future growth and strategies and to help your organization navigate risks and market changes.
A forward-thinking business plan can prepare you for future challenges and ensure your business is ready and resilient in the long-term. As you update your business plan, things to consider include:
- Business continuity planning
- Emerging risks and opportunities
- Aspirational milestones
- Financial projections and considerations
When you’re eager to get moving on a new business idea, spending time on a business plan might feel like a drag. But the thought and research required to inform a business plan can help prepare you for the challenges you will face, and also help to instill confidence in banks, investors, and other key sources of business support.
The information provided in this article is for general informational purposes only and does not constitute legal, financial, or investment advice. Franchise laws in Canada are governed at the provincial level and vary by jurisdiction. Readers should consult qualified legal and financial advisors familiar with the applicable provincial franchise legislation before making any franchise-related decisions.
