In this step-by-step guide, we will walk you through each section of a business plan and provide valuable tips to help you write an effective plan that stands out and inspires confidence from potential lenders.

The Importance of a Business Plan

A well-structured business plan serves as a roadmap, outlining your goals, strategies, and vision. It provides direction and clarity, ensuring everyone in your business is on the same page and working towards a common objective.

Externally, a comprehensive business plan impresses investors and lenders by showcasing your professionalism, market analysis, and financial projections. It instills confidence and increases the likelihood of securing funding or partnerships.

Internally, a business plan aligns your team, providing a solid foundation for decision-making and action. It forces you to critically evaluate your ideas, market potential, and financial feasibility, ensuring you are well-prepared to overcome challenges.

Executive Summary

The executive summary needs to be compelling in two ways; it should grab attention and provide a concise overview of your business plan. Use this section to effectively communicate your unique value proposition and outline the key points that will entice potential investors or lenders to dive deeper into your plan.

Pro tip: Craft a captivating opening sentence that hooks readers from the start.

Company Description and Vision

Tell your readers a story about your company that includes its history, mission, vision, and values. In your company story, showcase your products or services, define your target market, and highlight your competitive advantage. This section of your business plan should capture the essence of your business and demonstrate your understanding of the market landscape.

Pro tip: Clearly define your target market and address a specific need or problem that your business solves. Show how your unique value proposition sets you apart from competitors.

Market Analysis and Strategies

In this section, you dive deeper into the market landscape by identifying your target audience, assessing competitors, and analyzing industry trends. Share your marketing and sales strategies, the reasons why you’ve chosen them, and the success you’ve already had. Providing data-driven insights and actionable plans demonstrates your market expertise.

Pro tip: Conduct thorough market research to identify emerging trends, customer preferences, and potential growth opportunities.

Organization and Management

When presenting a business plan to investors, it is important to showcase the people who make up the company. Introduce yourself and your management team, and highlight relevant qualifications and experience. To help people have a better understanding of how the company works, include a clear organizational structure, and define roles and responsibilities. Showcasing a capable leadership team instills confidence in investors and demonstrates your ability to execute your business plan effectively.

Pro tip: Emphasize your team’s ability to drive the company’s success and showcase any unique skills or expertise that differentiate your team.

Product or Service Offering

Now is the time to delve into the specifics of your products or services, highlighting their unique features, benefits, and pricing. Clearly outline your value proposition and address customer pain points. If applicable, include details on your production processes, technology, and intellectual property to showcase your operational capabilities.

Pro tip: Highlight the unique features and benefits of your product or service, but also focus on the emotional appeal it brings to customers. Clearly articulate how your offering solves their pain points or improves their lives. By emphasizing the emotional connection, you grow stronger brand affinity and differentiate yourself from competitors in a meaningful way.

Sales and Marketing Strategies

This is a key section of your business plan because, without sales, your business will not be successful. Outline your sales and marketing strategies, including customer acquisition plans, pricing models, and promotional activities. Add a comprehensive marketing plan that aligns with your target audience and differentiates your business from competitors. Be sure to highlight key metrics and milestones you will use to measure success.

Pro tip: Craft engaging narratives that showcase the value of your products or services and demonstrate how they solve customer problems. Incorporating storytelling techniques into your marketing strategies helps you create a memorable and impactful impression on potential investors and lenders.  

Financial Projections and Funding Requirements

Investors and lenders will be very interested in this financial information. Objective and realistic financial projections, including sales forecasts, income statements, cash flow analysis, and break-even analysis should be included in this section. Be sure to justify your assumptions and demonstrate financial viability. Present a clear understanding of your funding requirements, showcasing your plans for utilizing investment or loan proceeds effectively.

Pro tip: Provide a well-supported explanation of your financial projections, demonstrating a thorough understanding of your industry’s trends and market conditions. Incorporate key performance indicators (KPIs) and benchmarks to track your progress and demonstrate your ability to achieve sustainable growth.

Risk Assessment and Contingency Plans

Risk is part of any business venture and should be tackled head-on, not swept under the rug until it can’t be ignored. Identify potential risks and outline strategies to mitigate them. By anticipating challenges and developing contingency plans, you will maximize your risk management capabilities and be prepared for potential hurdles.

Pro tip: Conduct a comprehensive SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis to identify potential risks and develop robust contingency plans. Show that you have considered various scenarios and have strategies to mitigate risks, ensuring your business’s long-term stability and success.

An effective business plan requires careful thought, research, and attention to detail. By following this comprehensive guide, you will be well-equipped to create a compelling business plan that captures the attention of potential investors and lenders. Your plan also serves as a roadmap for your business’s success.

Start writing your winning business plan today and pave the way for a prosperous future!

The post Mastering the Art of Writing an Effective Business Plan: A Step-by-Step Guide first appeared on Acuity Business Group.

Background

Approximately five ago, I helped a client to buy a business. The transaction was a success and I was confident he had what it takes to do well. Last year, I received a phone call from this client. He had grown a wholesale distribution business to over $3M in annual revenue. The owner was now ready to retire and knew that Acuity Business Group could help him do that.

Key achievements

This business owner came prepared to sell. He had done his due diligence in a number of different ways. First, he interviewed other business brokers to see if there was someone else he wanted to work with. Ultimately he chose Acuity Business Group again, citing our “practice of setting realistic expectations and being reasonable throughout the valuation process” as key reasons to reengage.

Second, the owner had meticulous and accurate records about every aspect of the business and was ready to share that information. This made it easier for our team to put together a detailed overview of the business, price it accurately, and start to attract qualified buyers ready to make an offer.

Finally, the owner stepped back and let me handle as many aspects of the transaction as possible. He focused on the business while I answered inquiries, screened potential buyers, negotiated terms, and dealt with anything else that arose. By continuing to work hard during the sale process, he maintained strong revenue, inspiring buyer confidence.

Challenges overcome

As with all business for sale transactions, there were challenges. Revenues had been affected by the early months of Covid-19, and this was reflected in the financial records. However, the owner worked hard to rebound from those months and posted a significant increase in revenue in 2021 and onwards.

The business was listed for sale during the height of global and national supply chain issues. The owner quickly responded by increasing focus on customer pricing. The price increase was well accepted for a few reasons. There had not been any significant price increases since 2017, and customers were very aware of rising product transport and purchase costs. The business implemented and communicated the increases without any decrease in product demand.

Due to the overall economic climate, there were concerns that accessing financing would be a hurdle for buyers. In this transaction, the Business Development Bank of Canada (BDC) played a significant role in financing the sale. BDC is a bank that specializes in helping Canadian entrepreneurs to access small business loans with competitive rates. 

The end result   

The business sold relatively quickly and the owner was able to retire. When asked about his experience, the owner said, “The listing process and buyer vetting went very smoothly, largely in part to Ken’s facilitations. He did a great job shielding me from tire kickers and poor-quality leads, allowing me to focus on my business. As with any major negotiations, there were a few surprises, but Ken remained flexible and ensured that everything was taken care of. My business sold more quickly than I had anticipated, and the entire process went much smoother than I thought was possible. Having worked with Ken on both sides of the process, I highly recommend him to anyone looking to sell their business. You can be assured he will be completely straightforward through the entire process and will work on your behalf until the deal is closed.”

Selling a business can feel overwhelming, but preparation and the right partners can help it go smoothly. I was thrilled to have the opportunity to work with this client for a second time. My goal as your business broker is to ensure your experience is so good that you invite me to partner together when you decide to sell or grow! If you are thinking about selling your business this year, let’s talk. 

The post Why one business owner came back to Acuity Business Group first appeared on Acuity Business Group.

If you are considering selling your business in the next twelve months, you should not reduce expenses related to updating and maintaining business records.  This means no DIY accounting, no skipping legal advice, and no eliminating financial advisors.  Read on to learn how scaling back in these areas could cost you.

Accounting

Did you know that accurate accounting records can help increase the value of your business?  This is critical when you are planning to sell.  Accurate accounting records make it easy for buyers to evaluate the

• Income and expense history,
• Assets and liabilities, and
• Financial health of the business.

When working with potential buyers, presenting accounting records in a transparent and verifiable way shows the value of the business, and it goes a long way in helping them to obtain funding.  As you prepare your business for sale, a qualified accountant can provide an income statement, balance sheet, and cash flow statement.  Buyers need to review this information before they can make a reasonable offer. 

Over the past few years, more buyers have requested review engagements from accountants.  A review engagement is a thorough examination of financial information used to provide limited assurance that the data is correct.  These documents are helpful when the buyer needs a loan for $300,000 or more.   Some buyers are unwilling to move forward with the transaction without a review engagement. 

An accountant can also help owners determine the financial and tax implications of selling their business by reviewing considerations like

• A share sale versus an asset sale,
• Personal tax liability, and
• Proper reporting on personal and business tax returns. 

Legal Advice

Lawyers can be expensive, but their expertise is worth it when selling a business.  There are two important ways that lawyers help owners sell their business.  The first is ensuring the business is compliant with industry-specific regulations and legislation.  Selling a business not in compliance can have significant legal and financial ramifications.

Lawyers must also draft, review, and execute paperwork throughout the process.  This includes offers, counteroffers, business transition details, financial documents, licensing, contracts, and final payment terms.  Skimping on any of these steps can cause a deal to fall through and cost the business owner money.  In worst-case scenarios, it can lead to legal proceedings that waste valuable time and resources.   

Financial Advice

The right financial advice can take a business for sale from precarious to successful!  A qualified financial advisor will analyze the business’s overall health and help owners optimize different areas.  They review things like

• Inventory levels,
• Obsolete stock,
• Current inventory turnover,
• Staffing levels, and
• Overall efficiencies and barriers to growth.

Working with a financial advisor helps business owners to focus on improving finances and ensure changes are properly documented. 

Without these key players, you may lose money during business operations and when you try to sell.  After helping you get the right team of advisors in place, a qualified business broker can mitigate some of these losses and enhance your return on investment by

• Providing strategic recommendations to improve the saleability of the business,
• Eliminating barriers to a successful sale,
• Determining the accurate market value of the business,
• Providing education and expertise on vendor financing,
• Working with your lawyer and accountant to draft a vendor financing agreement that benefits all parties,  and
• Determining the next steps for an eventual sale by comparing market conditions with the current state of the business. 

Selling a business is a team effort, and each member adds significant value.  Eliminating any of these players is like benching your star quarterback right before the championship game!  Instead of considering these services as expenses, reframe them as investments that will pay a return when you sell your business.  If you are considering selling your business, get in touch to learn more about how we can help.  

The post Learn about the costly mistake business owners are making (and how working with a business broker can help recoup some of those losses) first appeared on Acuity Business Group.

• Increasing inventory to meet demand,
• Purchasing equipment that is more efficient or that operates at a higher capacity, and
• Moving into a new location with more space or increased foot traffic.      

A good business loan offers flexibility, allowing business owners to use it to meet their business goals.  However, borrowing money is never without some risk.  To maximize the positive impact of a business loan, there are three mistakes that you need to avoid.

1.            Not borrowing enough money

This one sometimes confuses people.  Isn’t it better to have a smaller loan amount to minimize the total cost?  Not always.  You need to borrow enough money to have an impact.  Take the time to determine how you will use the additional funds and calculate the amount needed to achieve those business goals.  Then, put together a cash flow forecast and include potential contingencies and delays.  This can help you more accurately calculate how much money you need to turn the loan into profits.  If you skip this step and don’t borrow enough, you risk getting caught with a loan repayment that didn’t generate additional revenue.

2.            Not understanding the value of loan repayment terms

The first thing most people look at when taking on a loan is the interest rate.   The interest rate is important because it affects the total cost of the loan, but it isn’t the only thing to be considered.  Working together with your accountant and loan officer, look for ways to optimize aspects of the agreement like

• The repayment schedule,
• Loan length,
• Flexibility for seasonal payments,
• Interest-only options, and
• The guarantee terms. 

3.            Paying back the loan too quickly

Business owners love to get loans and debt off the balance sheet and often accelerate loan repayments to do so.  Sometimes, paying it back too quickly doesn’t make financial sense.  The first reason is that there may be a penalty for completing the loan repayment before the agreed-upon date.  The second reason is that by doing so, you may expose your business to a cash flow shortfall in the event of low revenue or unexpected expenses.  The third reason is that without access to the additional capital, you may miss out on the opportunity to take action that can help increase the business’s overall financial health. 

Loans are a significant commitment for small businesses and should be treated accordingly.  While a loan is considered a financial liability, it has the potential to add real value and improve the bottom line.  If you think your business would benefit from a loan, start by talking to your accountant and a loan officer to learn more about your options and crunch the numbers. 

The post Borrowing money can be a great business move (as long as you do it right) first appeared on Acuity Business Group.

Get to know yourself

Different personality types are better suited to the franchise business model.  Franchisors expect franchisees to operate within the established systems, processes, and rules.  There is not always room for creativity or impulsivity.  For someone who finds it difficult to operate within a highly regulated environment, adapting to the franchise business model may be difficult.

It is also important for business owners to know where their strengths and interests are.  For example, someone who is tech-savvy may excel in a franchise concept like cell phone repair or IT solutions for small businesses.  A person with a background in education may gravitate towards a concept like tutoring or educational products.

Learn what franchises are available

Many people still equate a franchise with businesses like fast food or a retail concept such a pet supplies.  There are hundreds of types of franchise businesses that are profitable options.  Start by doing some online research to learn more about the available options.  One great resource is Franchise Canada Online.

Know your numbers

Before making an offer on a franchise, you need to have a firm grasp on two important sets of numbers.  These numbers are what you can afford to spend and franchise costs.  Reviewing your financial situation should be done with a qualified accountant or bank officer that has experience working with small business owners and franchises.  In addition to the cost to purchase the franchise, you also need to confirm ongoing expenses such as franchise fees, inventory or equipment, and employee costs.  These expenses should be assessed alongside sales projections and other financial information included in the franchise disclosure document.

Understand your local demographics

Take a look at what businesses are in place locally and what is lacking.  Understanding what products and services are currently being underserved despite a demonstrated need is a great way to narrow down your franchise options.  Take a look at things like the local demographics, infrastructure, and areas similar to your own where franchise concepts are thriving.

Look for agile franchisors

This year all types of businesses had to be creative, flexible, and agile in response to the global pandemic.  When assessing franchisors, take a look at their ability to successfully pivot things like offerings or delivery methods during these past few months.  Also look at how franchisors have stepped up to support franchisees, both during the initial phase of the pandemic and ongoing.

Franchise businesses have long been a great model for new and experienced entrepreneurs.  Taking time to consider the five things listed above is one way to start down the road to a successful franchise purchase.  If you have questions about buying a franchise, contact us to learn how we have helped people just like you to make a successful franchise purchase.

The post 5 things to consider when buying a franchise first appeared on Acuity Business Group.

Determine the overall business objective

In order to find the right business to buy, owners need to know their overall objective for the acquisition.  Is it to increase market share?  Does the business want to add new products?  Is it time to enter a new market?  Some business owners may feel ready to buy a new business but are unclear on what their objective is.  There are few things owners can do to figure this out.

• Review the existing business plan to determine where an acquisition would help in achieving more growth.
• Determine what areas of the existing business could be further strengthened.
• Determine where economies of scale could be improved by purchasing another business.

This can be a challenging process.  One way to determine the right objective is to work with a Certified Business Intermediary who has experience in helping companies to grow by acquisition.

Put together an acquisition plan

Most businesses have a general plan in place when they are looking for another business to buy.  This isn’t enough.  Successful acquisitions are guided by a strategic plan.  According to a recent report from Business Development Canada, “companies that followed a structured acquisition process were 94% more likely to experience high revenue growth after the acquisition”.  The acquisition plan should be drafted before the owner even glances at a business for sale listing.  The acquisition plan is important for internal and external stakeholders and keeps all involved parties focused on

• The objective for the purchase,
• The timeline and budget, and
• Individual roles and responsibilities.

In addition to providing the framework for the initial stages of the acquisition, the plan should also include a strategy for making an offer on a business, the ownership transition phase, and developing a target operating model for moving forward.

Work with acquisition experts

Buying another business is a complex transaction that requires a great deal of forethought, planning, and strategy.  Business owners should have an experienced team of acquisition experts in place.  The right acquisition team will be there from the initial stages, when the business is determining the objective for the purchase, through to the post-merger integration.

Professionals that will help an acquisition be successful, both initially and over the long-term, include

• Certified Business Intermediary,
• Financial advisor,
• Accountant, and
• Lawyer.

It is important to seek out professionals that have recent experience in facilitating acquisitions, which means business owners may need to look beyond the professionals they have existing relationships with.

Strategically purchasing another business is a great way to grow but only if it is done correctly.  Consulting with a qualified business broker at the beginning of the process is the best first step a business owner can take.  Contact Acuity Business Group today to learn more about how we can help!

The post Tips for buying another business first appeared on Acuity Business Group.

Managing expenses

This might sound obvious but many business owners overlook this important financial chore.  Managing involves more than saving on office supplies.  Business owners can save a significant amount of money by doing things like negotiating better lease terms, streamlining processes, and improving overall operational efficiency.  These efforts take time and sometimes require an outside expert but can make a real difference to the bottom line.

Maximizing current and potential markets

Business owners can create some insulation from boom and bust cycles by having a good understanding of how to serve their current market and how to tap into additional markets.  Strategies like increasing market share, getting into new markets, and diversifying offerings can help a business to grow even during difficult times.  These strategies are available to all businesses, regardless of industry or niche.

Responding to changing market conditions

Many business owners understand when changes are occurring that affect their market but do not alter their business model or offerings in response to it.  Adapting to market conditions can help keep a business moving forward when others are stagnating.  Responding to changing market conditions can include things like changing product or service offerings, moving the business to a different location where the ideal customer will be more likely to continue visiting, or expanding online offerings.

Continuous marketing

Businesses should have a solid and consistent marketing strategy in place to ensure that new customers can find them and previous customers don’t forget about them.  Marketing should include more than just social media posts.  Doing things like networking with other businesses, offering promotions, and keeping in contact with customers can be highly effective and financially rewarding.

No one ever said that running a business would be easy.  Even in challenging economic times, it can be done successfully.  Business owners don’t have to do it alone.  Working with a professional, like a Certified Business Intermediary, can be a great way to identify strategies for improvement and provide a blueprint for execution.  Contact us today to learn more about services that will help you grow your business.

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