I was thinking about the problems newcomers to Canada face when trying to setup a business. In past articles I’ve talked about cultural differences, support groups and finding a business you can relate to probably from past experience or skills you’ve learned in your home country.
I think it is important to discuss the planning of your business, the strategies defining your market and the method in which you will approach the necessary steps in setting up your new business as an entrepreneur.
The Business Plan is your guide, your friend and sometimes your nemesis but always it will guide you, remind you of problems you will face and it will define you as an entrepreneur. It will make or break your business.
The Business Plan format and template is easy to find, go to any bank (RBC has a nice one) and you will find a template with easy to answer questions allowing you to fill in the blanks â€“ but wait a moment, it really is not that easy.
Of course , the easy part is the Vision of your business and the Mission statement is also not complicated. The Vision is how you see your business in 5 years. In defining your Vision, think of all your dreams, goals and how you always thought a business should look like if you had the opportunity. 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 being run and its purpose. Your purpose in relation to a shop could say â€œ 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 productâ€. Your mission should be clear, socially meaningful and measurable so you know when you have reached your goals.
The Personnel Plan 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 â€œHow do I deal with success?â€ Most focus on getting the sales few prepare for it. You need to be prepared for growth of your business, how you see employees being utilized and alliances in the business community who may help you.
A t-shirt manufacturer client of mine had no plan for growth so when he received a huge order for a festival he was caught without enough 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 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 success and your business on track.
Financial statements are still financial statements whether you are in India, China or Vancouver. You know your product and what it costs to sell so the only thing holding you back is how to put the sales/revenues on paper so you can track it and how to sell your product in Canada.
The Financial plan includes a start up budget which defines how much money you will need to open the doors to your business. This typically is facilities, equipment, materials and supplies that you will need in the beginning. Once you know how much you need to setup your company now all you need to do is calculate the money required to operate your business and to make a profit for you.
You now need to develop a cash flow forecast. Using a spreadsheet you need to create a income/expense statement that shows by month where your revenues and expenses will come and the expenses associated with it. Using an Excel spreadsheet you can quickly make minor changes to costs and revenues to see how the ‘bottom line’ is affected. While the Marketing plan is important most feel keeping an eye on your expenses and revenues by your spreadsheet is the most important aspect of your business plan.
Enter your Marketing Plan; the Marketing plan is often the stumbling block for newcomers. You’re in a new country with new standards, new ways of doing things and certainly a new attitude about doing business than what you are used to in your home country. Your home may have been big on brochures and newspapers to send your message to prospective clients. You may find that your product is best marketed in Canada, by word of mouth or social media networking. You will need to 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 will not meet Canadian standards or fall within the usual ways of reaching customers.
One of the first things to do is create a SWOT Analysis. Don’t worry this is easy! On a page write Strengths, Weaknesses, Opportunities and Threats and then under each 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 as once you have identified them you can figure out a way 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 start up budget.
Opportunities and Threats relates to external forces you have no control over but need to know. 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. A client asked for advice when negotiating for a lease for a coffee shop on a popular street corner in downtown Vancouver. The location with large pedestrian traffic seemed like a great opportunity. The threat was Starbucks who wanted the same location. Starbucks of course, was a better choice as a tenant for the leasing agent. You need to know and understand all the threats.
Your demographics need to be addressed when finding a location for your business. Demographics is the type of data used to determine who will buy your product. Commonly it’s age, race, gender, employment status etc. You need to setup your shop in a place whose demographics suit those who will purchase your product or service. Psychographics contrast demographics. Psychographics are attitudes, personality, interests, activities and opinions of the customer. You may have a client base of 55-65 year old people as demographic who have a psychographic being baby boomers ,who are health conscious and are resisting retirement. A good combination of study 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 which is mainly Caucasians who are health conscious. Her restaurant is a speciality Chinese dish liked mainly by Mainland Chinese. She chose her location because it was close to her home not because it was close to her speciality market. This was a recipe for failure.
An Action Plan is the no nonsense method to set your goals when setting up your business. Putting your goals in writing with a plan on when you plan to attain them is a major step in providing a follow through plan to opening and operating your company. Be specific and realistic in your action plan. A good example is creating an action plan by month with one goal of creating your business cards with a cost attached to it. The next item may be your website started with a completion date. Remember the Action plan is broken down by month and takes you and your business over the next 12-18 months or so as a concrete plan to attain these goals.
Going to the bank requires the best prepared plan you can put together. The bank wants to see the personnel, your sales and marketing plan as well as your forecast for your revenues. With a good business plan, Vancity Credit Union will offer you a character based loan of up to $35,000 through their Be My Own Boss Loan program. If you are under 34 years old, the Canadian Youth Business Foundation (www.cybf.ca) will provide inexpensive loans up to $45,000. Traditional lending options exist for you but typically are based on credit worthiness and whether you own your own home or have other assets.
It is often said that the best laid plans fail because of lack of planning, for newcomers, the marketing of a product is more important than the price or the uniqueness of that product to the Canadian public.
People define how your business makes money or not, whether your product lies on a shelf or not and you must tune in to their needs. Spend your time writing a solid business plan.