Creating a Business Plan

It Starts with an Idea

All good businesses start with an original concept or idea, but sometimes your original idea doesn't turn out the way that you imagined. The idea may need some slight adjustment or even a major overhaul. Remember, the marketplace changes constantly and to be successful in business you must always keep coming up with new ideas.

Look Before You Leap

Before you take your idea to the next stage of development, it's crucial to analyze it from all possible angles to make sure you've thought of all possible scenarios. There's a lot of information and research available to you on market trends and other issues. A failed business can cost you a lot of time and money; it pays to do your diligence. 

Preparing a Plan

The final step before launching into action is to create a thorough business plan. This plan should be a summary of what you want to achieve with your business.

A well-written business plan can be very helpful to you on many levels. Firstly, it allows you to accurately determine the amount of money you'll need to start your venture and when you'll need it by. It will also help you to set short and long-term goals. These goals can be invaluable while getting started, and can also act as a reference guide to see if your business is on track as time passes.

Another advantage of a solid business plan is that it makes it easier for potential investors or lenders to see that you are organized and have thought things through completely. This demonstrates that you have good business management skills and are therefore a much safer bet with their money.

Lastly, and perhaps most importantly, a business plan allows you to identify your market, your customers and your competition. It can help you gain a competitive advantage and determine what strategies will drive you to succeed.

Capital Needs

Financing Your New Business

Every business needs capital to get started and to continue operating. Described below are the four basic types of financing you should be aware of.

Venture capital (Equity or Shareholders' Loans) Equity is money paid in exchange for partial ownership of the company. There is no obligation to repay Equity, the investor has bought a share in the profits. A shareholder loan is money loaned to the business by a shareholder. Both equity and shareholder loans create leverage which is the ability of the business to attract other loans and investment.

Capital asset financing (Term Loans) Term loans are used to purchase fixed assets required by the company, such as office equipment, vehicles, etc. A percentage of the value of the assets purchased then acts as security against the loan until it is repaid.

Operating loans are used to cover wages, rentals, inventory costs and other expenses in advance of collecting revenues to pay them. The lender will use a percentage of your accounts receivable as security against an operating loan. Operating loans are essentially a series of pre-approved, monthly 'term loans' that save you from having to constantly negotiate new loan terms.

Bridge capital financing is a form of loan intended to 'bridge the gap' between the due date of a payable and the date a specific receivable is anticipated. The receivable itself is the security for the loan. Bridge financing is typically reserved for low-risk situations.

Loan Privilege

Lenders invest in a business based on, among other factors, your financing plan. If you were to use a term loan to cover wages or inventory costs, you would violate the integrity of your plan. Investors could lose confidence in you, making it difficult to get further financial support and cause stress on your business.

Let Us Help You

At Bow Valley Credit Union, we believe that your business is our business, and we'd like to help you succeed however we can.

Other Resources

There are many resources available to someone starting a business. Whether big or small, there's plenty of free information at your fingertips.

The internet is an invaluable resource to anyone in business. You can find out about consumer trends and get up to date market analyses, which will help to plan your business and assess your market. It can also help you learn how to obtain funding for your project from the government or private resources.

Another great advantage to using the internet to start your business is that many of the legal registrations and applications are available online. Filing forms electronically can save you time.

One thing to be careful of when researching online is that you focus your search on the right region and get the information that's relevant to you. The internet is international, so what applies in one province or country, may not apply in another.

Government agencies have information packages available to help you as well. Contact them and they can forward you the materials that you require. Bow Valley Credit Union can also assist you with various aspects of your new adventure and put plans in place to help you reach your financial goals.

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