Business Planning

Volume 3, Issue 1

A PublIcATIon of

www.ReTAIlcouncIl.oRg

Planning for success

by Robert Price

A business plan describes how a business will operate. It also describes the business owner. Those who can write a detailed business plan know who they are, what theyre doing, and what theyre getting into. Those retailers who dont write a business plan set the odds against themselves. In retail, the underdog who has no plan rarely wins.
What is a business plan? Components of a business plan How long should your plan be? Additional components to consider Business plans are living documents

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InsIde

retailersguide

A publication of Retail council of canada

You will want to develop a portrait of what your target customers look like.
A realistic business plan is the root requirement for planning a new business or expanding an existing business. This Retailers guide provides a starting point for new retailers on how to get started and reminds seasoned retailers about the importance of keeping an updated business plan on hand. WHAt is A Business PlAn? At its highest level, a business plan gives an existing business owner or a new entrepreneur a structured view of what business looks like over the long term, says david wilton, director of small business banking at scotiabank. A business plan is the companys core strategy, its recipe card for success, its Plan A and its Plan b. And to make it work, a business plan must be realistic and objective. Many people grapple with how to assess their personal and business resources realistically. some can be overly optimistic in assessing how well the business will fare and how well they can manage the business. At the same time, some may be too pessimistic by failing to see the opportunities and downplaying resources and personal skills. wilton recommends retailers bring in perspectives of other advisers, other business owners, accountants, lawyers and small business bankers. They can help you in being realistic and objective, he says. ComPonents of A Business PlAn There is no one right way to write a business plan. depending on the kind of retail business you operate, youll need to account for different aspects of the business. for example, a retail business that rents dVds will require a plan for purchasing a stores worth of films, while a grocer will need to plan for how to keep produce fresh. As a starting point, Scotiabank provides a five-step process that focuses on aspects that have a great effect on long-term success. 1. Business Description The business description provides an overview of where the business stands and where you want the business to go. Here youll describe your personal goals, your visions and the objectives of your retail enterprise. youll also describe what it is that makes your business unique. 2. the marketplace understanding your customers and your competition is an important aspect of the business plan. In this section, youll document the outlook of the industry, investigating demographics, new technologies, regulatory controls, environmental changes and other things to try and predict the future of the industry and understand how you fit into that future. Youll also need to define your market share. To do this, youll need to identify and describe your competitors strengths and weaknesses so that you can carve away business opportunities that your competitors fail to realize. finally, you need to identify the different types of potential customers for your store. you will want to develop a portrait of what your target customers look like. whats most important to these customers: price, product, service, something else? what do they buy, how often do they buy, how do they buy and where do they buy?

www.retailcouncil.org

Business Planning

How will you promote your products in the marketplace?

3. sales and marketing When youve identified your customers, you can tailor your sales and marketing to reach those people. Your sales process needs to help you create satisfied customers. consider these questions: Where will you sell your product? How do you sell your products? How will you process sales? How will you structure your discounts? What happens to the customer relationship after the sale, and how will you manage returns?

Remember to take time to account for all the details your business will need. Here are some things to think about: Who will work for you? can you do it all yourself, or must you hire people? do know how to hire and train new people? Develop contingency plans. Purchase insurance and prepare for the possibility of new competitors, supply failures, changing customer tastes, employee strikes and regulatory interference.

When you have your sales defined, define your marketing. How will you position your store within the market, how will you price your products to create value, and how will you promote your products in the marketplace? Remember to turn your plan into dollars. Take your ideas for marketing, advertising, branding, merchandising, store design and buying and assign dollar amounts to the costs. Justify your estimates. next, compare your projected sales volume to your expenses. can you break even? Is the profit worth the effort? Do you need a loan to get through the first few years? How much should you borrow? 4. Business operations with retail, retail is detail. It requires pretty detailed planning around customer counts, gross margins, staff hiring, and just about everything else. Its all of those things put together. Any one can kill you if youre not careful, says lyle Kerr, ceo of KerrMillen Inc., a business consulting company.

tAke As muCH time As You neeD, But keeP it sHort How long should it take to write a business plan? That depends. It should take you as long as it takes to research and understand what it takes to develop a successful plan, says david wilton, senior Manager, scotiabank. At its best, the business plan process takes you through a process that evaluates the highs and lows of what may come. scotiabank recommends a 10-page business plan that covers the main aspects of the business without burying the reader in details, but wilton says the length of a plan will vary depending on the complexity of the business. you dont want it so long that the key points get lost, and you dont want it so short that its superficial.

rbcroyalbank.com/retail

A publication of Retail council of canada

What regulations do you need to follow? what about municipal requirements, music licensing from socAn to play music in your store and a vendor permit to sell tobacco? What about a counterfeit currency detection system? Will you pay associations such as retail Council of Canada for cost-saving programs and advocacy? Have you consulted an accountant? Are you paying the correct taxes? A list of these essentials of retailing is available on the web through Retail council of canada at www.retailcouncil.org/toolkit/essentials. Who will supply your business? do you know how to meet them? A good place to start is Retail council of canadas Retailer Resources guide, available online at www.retailcouncil.org/ toolkit/resourcesguide. 5. financials your business plan will remain incomplete until you work your balance sheet into the plan. you must cost out your expenses, project your sales, determine if you need a loan and how much you must borrow and, once you get the business underway, track spending and cash flow. ADDitionAl ComPonents to ConsiDer different business plan guides provide different ideas on how to devise a business plan. canada business services for small businesses, an agency of the federal government, suggests other components of a business plan that retailers will need to consider: mage is important to shoppers. Plan out what kind of i image you want to project. Decide on your customer service policies. How well you deal with customer complaints will contribute to your stores image. evise a plan for controlling your stock. How will you know what D you have on hand, what is on order and what has been sold? nsure you have deadlines for your plan. Make a list of e what needs to be done, what you need to do to get it done and when you need to have it done. Many great ideas have dried up and vanished because they were never executed.

Business PlAns Are living DoCuments A good business plan is a living document, says wilton. writing a business plan is not something you do once. A good business plan forms the basis of managerial review that you review from time to time as you go along. once you have begun operating your business, periodically revisit the plan to assess whats going well and how you need to change your plan so that you can continue to be successful. when your business plan becomes a part of the monitoring process, youll be able to more readily expand your operations and deal with mistakes when they occur. Its hard work, but its not complicated, says Kerr, and it really does key in on whether you know your business or your willingness to do the work to [find out] what drives the business.

ADDitionAl resourCes Starting a convenience store: This resource provides interesting information that can be applied to any retail business. www.cbsc.org/servlet/Contentserver?pa gename=CBsC_fe%2fdisplay&lang=en&cid=1099 483437618&c=guideHowto Interactive business planner: This interactive software helps retailers develop a three-year business plan. www.cbsc.org/ibp/en Start-up checklist, courtesy of Canada Business Services for entrepreneurs: www.cbsc.org/servlet/Conten tserver?pagename=CBsC_fe/display&c=guidefac tsheet&cid=1081945275479&lang=en Retail Council of Canadas Starting a Business resource page: www.retailcouncil.org/bsc Scotiabanks Business Planning Guide: www.scotiabank. com/cda/content/0,1608,CiD10331_liDen,00.html Your local business college will also offer courses on how to set up a business and write a plan.

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To help you take your business to the next level, RBC has a dedicated team of account managers who specialize in financial services for retailers. With up-to-date knowledge of the changing trends and business opportunities in the retail sector, your RBC account manager can help you reach more of todays sophisticated consumers. Whatever retail business youre in, theres an RBC retail specialist ready to help you. rbcroyalbank.com/retail