SECTION 2 – BUSINESS DESCRIPTION
-The Business Description Section is a detailed description of your business. It covers areas such as the type of your business, your business location, the products and services you are selling your customers, how you will make your customers want to buy from you, who your competition is, etc. This is where you explain your plans for today and areas of expansion for tomorrow.
-This Section explains your business and answers many basic questions.
The purpose of the Vision Statement is to establish a long term, clear and compelling statement that serves to unite, challenge and stretch your business
Create and insert a vision statement for your business that describes its purpose and competitive position and also captures the values, behaviours, standards and/or culture of your business
-Consider if your business is a…
Proprietorship – a business owned, managed and controlled by one person.
Partnership – a business where two or more people share ownership.
Limited company – a company that is legally separate from the owners.
-Consider if you are starting a brand new business or taking over of an existing business?
-Consider if your business address, will the business be home based, mobile, storefront, other, or a combination.
-You will also need to consider if this is a manufacturing business, a retail store, or a service business. A business may cover several of these areas, such as a manufacturer who sells direct to consumers. If this is the case for you will need to discuss all that apply.
Insert a paragraph discussing the structure of your business.
-The reader will want to know basic information about your skills, ability and credentials to run the business.
-This is where you identify and discuss any weaknesses you may have and your plans for overcoming them. No one is strong in every area. An effective entrepreneur knows where they are weak and has plans for compensating for those weaknesses.
-Insert paragraph describing your skills, abilities and credentials that enable you to operate the business.
-Insert a paragraph that identifies your weaknesses and your plans to compensate for them.
-Appendix your Resume.
-A product or service is a good you will sell or a service you will provide. Your business may focus on one type of product or service, or it may offer several different kinds.
-It is crucial that you have a clear understanding of the different kinds of products you offer (or plan to offer) because this will help you identify who your customers are and how you will forecast your sales.
-Group major types of products and services rather than listing every single item. Consider these examples:
- A retail jewelry store might have four areas (fine gold jewelry, fashion jewelry, giftware and china/crystal/silverware), or it may focus on one or two of those areas.
- A carpenter offering a full range of services may have two areas; major jobs (house construction, sun decks, trusses, etc.) and basic home renovation/maintenance.
- A restaurant may also offer catering services to hotels and cater private functions (home & office parties, special events, etc.) – three areas in total.
-One reason for listing each of these separately is that each group may have different types of customers with different needs. You may want to promote each area of your business in a different way from the others, since the advertising that reaches one market may not reach others. These groups may also have different mark-ups or gross profit margins associated with them.
-Listing them separately aids in determining how much inventory will be purchased in the Cash Flow Projection.
-Different products or services may also have different sales cycles (i.e.: you may sell more of one product during the summer, and more of another product during the winter). By grouping them separately it makes it easier to project expected sales.
-Insert a paragraph providing a brief description of your products or services.
-Describe what they will or will not do.
-List all features and benefits for your products, and make special note of any feature that differentiate your products or services from those of the competition.
-Complete the chart, list each product or service in the left column.
-If you have a large number of products or services you may need to group them.
-Appendix any exhibits such as drawings or photographs of the product to be manufactured.
In the right column Identify the units in which you plan to sell your product or services ie: per item, per package, per hour, per session, per meal.
Consider the geography of where your customers live and focus on your main market areas.
-Insert a brief paragraph outlining the geographic area where your customers live.
-Appendix a map of the area if necessary.
-Consider your customer surveys and the following:
Who is buying (or will buy) your products and services and why?
Who are your customers? (what is their age range, average income, marital status, average family size, average expenditure, leisure activities, education, etc.)
What do they want? How many customers are there in your target market? Why do they buy your type of product – what needs does it fulfill?
How do they shop for your product or service?
How do they perceive your business and its products and services?
How do they perceive your key competitors, and their products and services?
How sensitive are they to pricing differences?
-The better you can describe your customers the better you will be able to plan how you are going to sell, produce and advertise your product or service.
-Write a brief paragraph discussing your customers and your methods and timelines for surveying customers
-Complete the chart provided
-Appendix your Customer Survey Results
-Appendix your Letters of Intent
-This is an important area to establish an industry case for your business
-This is where you discuss the industry of your business at large (do not discuss your business in this part)
-Consider the following for your market area, BC and Canada:
Are there any economic, social, technological or regulatory trends in the industry?
Is your market growing, shrinking, or stable?
-Do you expect any major changes in the demand for your types of products in the near future (within five years)?
-Focus on the overall demand for your types of products
-Note that a shrinking market is not necessarily a bad thing, but it does affect how you sell your product or service. It will also affect your long-term strategies relating to your business.
-Insert a paragraph about your findings in your market area
-Insert a paragraph about your findings in BC
-Insert a paragraph about your findings in Canada
-Cite the sources that you used to gather your research as follows: (source, month year) for example: (Industry Canada, April 2012)
-One of the main keys to your success will be in establishing a market niche for your business. To do this, you must understand who your competitors are, where their strengths are, and more importantly, where they are weak.
-Disposable income is limited, and many businesses are competing for it! There is only a limited amount of "spending money", and many different ways of spending it. Every product has competition of some kind and it is important to know who your competitors are.
-When considering your competition, include direct competitors and substitutes. Substitutes are products that are different from yours, but can compete for your market. For example, an ethnic restaurant may have no direct competition in the community, but would still compete with other firms that cater to the limited "dine-out" market.
-Pay careful attention to your competitors’ market "niche". Are they appealing to certain types of customers? Are they focusing on certain features of their products? Why do people buy from them? This information can give you many ideas about how to set your company apart from the crowd, and create your own niche.
-Complete the provided chart.
THE MARKETING PLAN
This area considers how you will tell your customers about your products and convince them to buy from you. Marketing is more than just advertising. It also includes pricing strategies, and how your product or service will be distributed to the customer.
-The image your business reflects is valuable to establishing and retaining customers.
-Your customers will look to you to have strong knowledge about your business and establishing trust will help you to retain your customers.
-Insert a paragraph that discuss the name of your business and why you chose the name.
-Insert a paragraph that makes a statement as to what others will ideally be saying about your business.
-Your promotion strategy is where you promote your products/services and your business, trying to create a perception of value among your customers.
-This could include strategies such as customer service, discounts, special sales, charities/causes your business may support, and advertising.
-Complete the provided chart
-Include the strategies you will use and discuss the methods to achieve the strategies Include any print advertisements, business cards, rack cards etc.
-Appendix samples of your Promotional Materials
This checklist is designed to help you keep track of the costs and timing of your advertising and promotional activities. Your total cost will be the annual advertising expense in your Cash Flow Forecast and the monthly breakdown will help you identify advertising expense fluctuations.
-Complete the provided chart
-In the Details column describe the where you will be doing, purchasing or distributing the activity type.
-Delete any types that are not applicable and add others that may be relevant
Consider how you determined your prices and how your prices compare with those of your competitors. How do your customers perceive your prices?
Keep three things in mind:
- If your products are more expensive than your competitors, why will your customers be willing to pay the extra price?
- If your products are cheaper than your competitors, can that affect the way that customers view the value of your products?
- If your products are the same price as your competitors, do you have other plans to set yourself apart from the rest?
-Insert a paragraph discussing your pricing strategy
-Complete the provided chart (note you can cut and paste the first 2 columns from Products and/or Services chart).
-Location can be a vital part of your success. It can be crucial for retail sales and consumer services, along with some business-oriented services.
-Location is not crucial for all businesses – a wide range of businesses are run from home. Where location is less critical, how the product or service is delivered or distributed to customers often plays a more important roll.
-Distribution channels can also play a very important roll if your business is a manufacturer or a wholesaler.
-If you have a storefront location insert a paragraph discussing where your business will be located, why you chose the location and how your products or services will be delivered or distributed to your customer.
-If your business is home based and you do not distribute products you can delete this area.
Your skills and those of your advisors and key employees will play a vital part in your success or failure. There is far more to running a company than simply providing the goods or service itself. All businesses require skills in organization, sales, customer relations, crisis management, marketing and technical areas. Successful entrepreneurs either have sufficient experience in these areas to be reasonably effective, or have people with those skills who they can draw on.
You may need to hire staff, contract services or arrange for a professional service to provide those skills. Be sure to research and learn relevant employment standards legislation and business contract law.
-Consider the following:
What staff and skills will you have to hire?
Will you need staff for sales, management, technical or other functions?
Will some of the staff be seasonal, casual or part time?
What will be their major responsibilities and the skills/experiences they will be required to have?
-If you are planning to hire staff in your first year of business, insert a brief paragraph and complete the provided chart.
-If you are not planning to hire staff delete this section
Consider if you will you need to contract an independent business to move or delivery your product or provide other services related to your product or services.
-Complete the provided chart
-Add more if necessary
-Delete this section of you are not planning on contracting an independent business
-Appendix a Sample Agreement for an Independent Contractor
-This is where you outline who will provide the professional services required for your business operations.
-Complete the provided chart
-Add others if needed.
Your Operating Plan will outline all the functions in your business that make your product/service happen.
Consider the following about facilities:
What facilities do you require to provide your service?
Will you be operating out of your home? If not, where will you be located?
Will renovations be necessary?
-If you are not operating out of your home complete the Facility chart, if you are home based delete the chart.
-Appendix your Lease Agreement (only if leasing)
-Appendix your Landlord Agreement Letter (only if renting and homebased)
Consider the following about equipment:
Do you need equipment to make your goods or to provide your service?
How old is it? Is it reliable? If it broke down, could it be repaired or replaced quickly? Could changing technology turn your equipment obsolete?
Does it look like new regulation might force you to change your equipment, or give advantages to competitors with different machinery?
Can your equipment adjust to meet these changes?
-If you are needing equipment for your business complete the provided Equipment chart
-If you are not needing equipment delete this part.
You will need products and supplies for the operations of your business. Office supplies is a common need, consider if you need other products or supplies.
-Some products and supplies may be on the shelf of a store, others may need to be ordered.
-You may pay cash or you may charge on account, know the terms of your suppliers.
-Complete the provided chart.
-Consider if your business is in a field where technology is rapidly changing.
-If your products or equipment can become outdated quickly, you need to be aware of this and make plans accordingly.
-Insert a brief paragraph describing your technology innovation plans.
-If this not relevant to your business delete this area.
REGULATIONS AND INSURANCES
Businesses are affected by many regulations, and these cannot be ignored. Items like licensing insurance and administration can be relatively minor details, if they are handled properly. If not, they can consume a great deal of your time (and money).
-Consider and the following:
You will require a current Business License from the local government?
Unless your business is a sole proprietorship operating under your own name you must register the business name. Have you done a name search & registered your business name?
If you expect revenues of $30,000 or more an HST account is required, otherwise it is voluntary. Have you registered?
If you have employees you will require an Employer Registration number from Revenue Canada
You may require a WorkSafeBC number and you will need to know how much will the premiums will be.
Zoning regulations may apply to your business, know how your business will be affected.
If you have a business like a restaurant or a day care there may be special licenses that are required for your business, know what is required for your business.
-Insert a paragraph describing your business requirements for licensing and other regulations.
Insurances – You will need business liability and business vehicle insurance
Know what types of insurance will you need? How much does each type cost?
-Appendix your business liability insurance (or quote) and your business vehicle insurance (or quote)
-Consider what sort of things could severely affect your sales or your expenses. These may be things like a new competitor entering the market place, a change in regulations, or a key supplier going out of business.
-Consider what strategies you will use to mitigate or reduce the impact the risk may have on your business.
-Complete the provided chart using a minimum of 3 identified risks.