Updated: Feb 8
In most cases over the years, many articles I have written revolve around a topic or issue that a prospect or client was having, which inspired me to write a blog article. If one business owner had the problem, others did, and writing an article on the subject would help the masses.
This time isn't any different, but it was not an issue a client had. A misunderstanding of expectations led me to believe that many more new entrepreneurs may have the same misconception. Before a business owner engages a professional to develop a business plan, they should understand what it is and is not. It is also essential that one understands what the requirements are of the business owner versus the consultant.
We were contacted by an immigration consultant looking to develop a Business Plan for their client who was looking to move to Canada under one of the current immigration programs. In Ontario, there is an OINP (Ontario Immigrant Nominee Program), which allows foreign workers with the right skills to apply for nomination for permanent residence in Canada. One of the streams under this program enables entrepreneurs to open a business in Ontario, generating jobs for Canadian residents and citizens as long as they meet a specific criterion. Where they plan to open a business in Ontario will determine how much money they must bring into the country and invest in the business.
We develop business plans for financing regularly, which are similar to the requirements of the government, with a few subtle differences, so we decided to move forward.
We prepared basic questions about the business and those required by the government about the company. The client wanted to start a trucking business in Ontario but had not investigated the industry, did not understand the costs of vehicles, and couldn't even tell us what type of trucking business they wanted to run. We find this scenario prevalent with many who want to open their own business and gain financing through a bank.
The immigration consultant was frustrated as he thought we would develop the actual business for them and supply the answers to the questions from the government, which pertained to the knowledge of the industry, the number of employees, asset spending, and even the background of the applicant. I wonder if they expected us to create a fictitious business that we would open.
What a Business Plan Is and Is Not
A business plan is not a writing exercise; it is one where you ask the owner questions about their business that will give you the information to put together to apply for a loan, grant or, in this case, a visa. A bank and the government will only grant you money or entry if you know your business. It is not the job of a consultant to develop your business for you. Otherwise, the consultant would be the one granted the money or entry. A business plan documents the implementation plan for your business strategy. If you have a business strategy or a basic understanding of the business you plan to run, it is easier for someone else to write a plan.
A business plan focuses on achieving the projected 5-year financial statements outlined in the financial section. The market analysis has to support that there is a market large enough to have another entrant. They can make money if there is a limited market, but that is a considerable risk, and a lender or the government will question whether you can deliver the financials. The rest of the business plan supports those financials.
Just because you love food may not mean you can succeed in running a restaurant. The potential business owner's background and experience play a role as well. One must be able to show how sales are made and whether you have a marketing plan to support your forecasted revenue.
It would be best if you had the right staffing in place and operations to support the business. The bank or government is taking the risk on you, not the company that developed your plan; otherwise, the consultant would start the business.
If you are going to start a business, you need to spend the time and effort investigating what it takes to run the type of business you want to create. It is up to you to do the research or pay for research about your industry. Do not wait until you have a business plan developed to think about this. It is up to you to know the costs you will incur in opening the business and understand the inner workings. Suppose you cannot tell someone how you will generate revenue for the business. How can you expect a lender to give you the money or the government to let you in the country?
Develop your business strategy before writing a business plan, especially for financing. If you are still trying to figure out how to start, there are consultants, coaches, and agencies out there that can help you do just that, but do not expect it to be priced into a business plan engagement. We provide that service to clients, but at a different price than developing a business plan.
You don't develop a business strategy in a couple of days. It is a process you go through to set goals and objectives for your business and determine how you will meet them. Your business plan is the implementation plan of how you will do just that. This exercise should be done by every potential business owner every 3-5 years. If you are a start-up, you must have one before starting your business. Existing businesses may only have a partial-blown strategy, but they do have a history and a background. They also have revenue and some experience and can answer questions about their business.
For start-up businesses, plenty of services are available to help you until you can afford the external services of a consultant or coach. In Ontario, Small Business Enterprise Centres have courses, mentoring and programs to help you get started. Some will be for free, and others will be offered at a reduced rate. Once you have an understanding of the business you are going to open, you can then engage help for developing a business plan if you require financing, a grant, or even entry into an Entrepreneur Immigration Program.
If you are looking for a business plan for financing, a grant, or for one of the Canadian immigrant business visas, we can provide you the help you need. Set up a free consultation with us to discuss your requirements. We also provide an e-book for those that want to learn how to write a business plan for themselves for financing which is available on our website.