Business Planning

Business Planning and

Financial Forecasting

A Start-up Guide

Ministry of Small Business and

Economic Development

Ministry of Small Business and

Economic Development

Western Economic Diversification Canada and the

Ministry of Small Business and Economic Development are pleased to publish

Business Planning and Financial Forecasting: A Guide for Business Start-Up.

This web-based guide is available on Small Business BC's website by clicking on

Small Business Guides at www.smallbusinessbc.ca.

For all your other business information needs go to British Columbia's awardwinning

resource centre for business information and planning tools.

Small Business BC

Suite 82, 601 West Cordova, Vancouver, BC V6B 1G1

Phone: Toll Free 1 800 667 2272

In Greater Vancouver 604 775-5525

Fax: 604 775-5520

e-mail: visit www.smallbusinessbc.ca/email

website: www.smallbusinessbc.ca

Business Planning and

Financial Forecasting

A Start-up Guide

A Start-up Guide | 1

The Business Plan

Introduction

You want to start a business - or expand your existing business. You have a great

idea, super attitude and the entrepreneurial spirit. So you head down to your local

bank or financial institution; you sit down in front of the credit manager and start

to explain this brilliant idea when she interrupts you: "That sounds great, but where

is your business plan?"

This scenario is played out every day in Canada - people with ideas who want

to plunge into business without having done a business plan. The purpose of this

guide is to explain in simple terms the business plan concept and to show you how

to put your own plan together.

A Start-Up Guide leads entrepreneurs through the business planning process.

By describing everything from Vision and Mission to Operational Strategies, the

Guide provides an easy to read description of your new business concept. The

affiliated "Financial Planning Template" helps entrepreneurs assemble their Starting

Balance Sheet, Pro-Forma Income Statement and first year Cash Flow Forecast. This

MS Excel template is available at http://www.cse.gov.bc.ca/ReportsPublications/

FinancialTemplate.XLT. There is plenty of help available to you including courses

from your local college or school board and of course the services and information

resources of Small Business BC, including the Interactive Business Planner located at

www.smallbusinessbc.ca/ibp.

Why do a Business Plan?

Your own thinking process is solidified through the planning

process.

The planning outline provided in this guide leads you through a series of questions

and issues that you should consider when thinking about your business. Remember

that you are an investor in your own business. You are the first person who must have

confidence in the validity of your business concept.

Your bank or financial institution will need to be convinced of the

viability of your business, or your business expansion.

The business plan is a communications tool to inform and influence the reader towards

some action - providing a loan, extending credit or investing in your business.

Your business plan provides some guideposts in running your

business.

You will set goals and then, once you are in business, you can measure those goals

against the actual performance. Goals should be specific, measurable, achievable,

realistic and time limited - SMART.

2 | Business Planning and Financial Forecasting

What is in a business plan

There seem to be as many kinds of business plans as there are business

planning guides. There are two ways to look at the business plan: by stage of

development, and by target reader. Under the stage of development, there

are generally two ways to divide the planning style: start-up plans and plans for

ongoing businesses. Under the target reader there are also two ways to look at

Graphically, we can look at it this way:

There are of course many variations on the general categories. (For example, a

rapidly growing business requires a slightly different emphasis for both its strategic

and loan / investment plan.) Although there are different plans and different readers,

there are similarities in each of the four plans - including the financial forecast, which

is common to all business plans.