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What the WEOC loans team looks for in a business plan

A solid business plan is the basis for any successful enterprise. Outlining the business’ goals and the plan to get there helps entrepreneurs get clear on their ideas, while allowing funders and lenders get on board by demonstrating the viability of the business.

Heather Sadowy, loans manager at Women’s Enterprise Organizations of Canada (WEOC), says a strong business plan can make a big difference for an entrepreneur when applying for funding sources like the WEOC National Loan Program. In her role, Sadowy regularly reviews business plans for the loan program, disbursing loans of up to $50,000 to help women entrepreneurs launch and grow their businesses.

For an applicant to be considered for the loan program, their business plan must be reviewed by one of WEOC’S regional loan fund partners and the business recommended to the WEOC loans team. And while each plan is bound to vary depending on the type of business, there are a few elements our assessments team and advisors look for.

So we asked Sadowy what she looks for in a business plan. Here are some tips she shared on penning your winning plan:

Why is it important to have a good business plan?

HS: There are two main reasons – one is essentially to be sure that you have something to present to people outside of your business, whether that’s a funder, lender or an investor. The other important reason is that it is useful for the business owners themselves. Even if they never share it with anyone else, it helps them see their goals and future plans, and gives them something to refer back to as things change in the business. It keeps them focused on their goals and organizes everything in one place.

What do you look for in a business plan at WEOC?

HS: There are a few main areas we want to be sure are covered:

  1. We want to see that a business owner has covered the big picture of the industry that they’re in and any issues that might be affecting it right now.
  2. We also want to understand the market at the local level, in the city and neighbourhood you’re working in and what the demand looks like there.
  3. That leads into your competitive analysis – who’s doing what you’re doing, and who your direct and indirect competitors are. We want to know what’s your differentiating factor or advantage.
  4. Most plans would also contain a SWOT analysis, which includes assessing your businesses’ strengths, weaknesses, opportunities and threats.
  5. Marketing and communications is also a big piece of the business plan – how you are going to market your business? Is it online? Are you buying advertising? What are you doing to get the word out?
  6. Human resources and staffing: What have you got planned for the staff in your business? Do you need to hire staff and how many? Is it realistic? Sometimes business owners think they’ll do everything themselves to save money, and that they don’t need to hire anybody. It’s great in theory but can often lead to owner burn out. Making sure you have the right people in place, especially in areas that may be weaknesses of yours, is key.
  7. Lastly, and perhaps, most important, a good business plan needs a lot of detailed financial information. We would expect to see a projected cashflow statement as well as projected balance sheets and income statements for the first 1-2 years. The information in your financials should also be explained so the reader understands where your estimates come from. We want to see that your plan is realistic.

How long should a business plan be in length?

HS: It can vary. A lot of people think it needs to be 50 pages, but it certainly doesn’t. You want to be concise but still include all the important information. As long as you cover all these key areas, you don’t need to go into lots of detail. I’ve seen good plans that are fewer than five pages long, and good plans that were 30 pages long.

How you should approach your business plan differently based on the type of business you run – for example, a start-up versus an existing business?

HS: A start-up business should definitely include all the elements noted above, and should be detailed enough that readers who are not in that industry can understand. For an existing business, your plan may be shorter as you can start with a summary of the business and operations up to this point, and then focus on what is coming in the future. For example, if you are moving into a new product line, you should provide detail on this new line, but you don’t need to go into that much detail about your existing products or services. Existing businesses should include actual historical financial statements as well as the projections for the coming years.

What are some common mistakes you see in business plans?

One mistake we see often is not identifying risks, and what they will do to mitigate them. You’ll see some talking about their best-case scenarios but they don’t mention what happens if things don’t go as well as expected. And if they don’t – what will you do if you have to increase revenues or decrease costs. Or try another marketing strategy?

Another mistake we see is business owners taking on too much – people taking on all the pieces of their business without seeking out the right experts who know how to help them and save them money in the long run, particularly when it comes to bookkeeping, accounting and keeping good financial records. Investing in a bookkeeper and an online accounting program may come with some more initial costs but can save you a lot of time to work on the aspects of your business you do best.

What roles can advisors play in creating business plans?

Advisors should think of their work as being an advocate for the business. One analogy I like is to think of the advisor as a lawyer taking their case to a judge. You want to work on behalf of that person so that when a judge looks for all these potential flaws, you have already assessed those ahead of time and are prepared to answer any questions. If the advisor feels like they don’t have enough information or wouldn’t feel comfortable going to the judge with the plan as is, they should work together with the owner to fill in any gaps or address any doubts.