Balderson and Mombourquette,

Canadian Entrepreneurship & Small Business Management,

10th Edition

Presentation prepared by:

Peter Mombourquette of
Mount Saint Vincent University
 CHAPTER 4
ORGANIZING A BUSINESS – THE BUSINESS
PLAN

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Learning Objectives
LO1 Describe the advantages and disadvantages of organizing
a business from scratch compared with purchasing a
business or becoming a franchisee.
LO2 Discuss the importance of formulating and following a
business organizational plan.
LO3 List the essential components of a small business plan.

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Getting Started:
Establishing the Business
Advantages of Organizing a Business from Scratch
oOwner can define the business
oObtain desired facilities
oChoose location
oSelect and Train HR
oCreate own IS
oCheaper

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Getting Started:
Establishing the Business
Disadvantages of Organizing a Business from
Scratch
o Business lacks historical information
o Longer to establish contacts and financing
o Start-up Problems
o Greater Risk

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The Small Business Plan
A business plan is a vital tool for entrepreneurs—a
blueprint to be referred to again and again to keep
business growth on course.
A business plan is often required for financing.

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The Small Business Plan
The business plan provides a blueprint for the
business that can help maintain a focus essential to
success.

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“Every entrepreneur needs to start with a business plan, and
like when you’re seeking advice and mentorship, it’s an
ongoing process. You can say, ‘This is a golden plan and
we’re going to be rich in a year,’ but often times when you
hit the market, things are very different than what you
perceived before starting out. It’s then that you have to re-
turn to the drawing board and tweak some things and go
from there.”
- Julian Brass, CEO of Notable

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The Small Business Plan
Writing the Plan
◦ The business plan should be prepared by the
entrepreneur, often in consultation with professionals.

◦ Helpful to create a plan for writing a business plan.

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The Small Business Plan
The Ten Components in a Plan
1. Prepare a table of contents.
2. Prepare a synopsis of the plan in an executive summary
and background statement.
3. Describe the management team.
4. Describe the business objective.
5. Plan the marketing approach.

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The Small Business Plan
The Ten Components in a Plan (cont.)
6. Describe the selection of the location.
7. Determine the physical facilities.
8. Plan the financing.
9. Plan the personnel.
10. Investigate the legal requirements.

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Components of the Plan
1. Prepare a Table of Contents.
◦ Overview of the plan
◦ Quick access to the various parts of the plan

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Components of the Plan
2. Prepare a Synopsis of the Plan in an Executive
Summary and Background Statement.
◦ Completed at the end of the complete plan
◦ History of the project to date
◦ Statement of the intended mission of the venture

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Components of the Plan
3. Describe the Management Team.
◦ Résumé and background of those making the decisions
for the organization

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Components of the Plan
4. Establish Business Objectives.
◦ Business Size
◦ Production Levels
◦ Performance Levels

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Components of the Plan
5. Plan the Marketing Approach.
◦ Have a clear concept of the target market.
◦ Understand the target market’s needs, wants and
purchasing habits.
◦ Answer the following questions: where, when, what,
how much, why?

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Components of the Plan
5. Plan the Marketing Approach (cont.)
◦ Be aware of any uncontrollable factors that might affect
the marketing of the product or service such as:
◦ existing or pending legislation relevant to the business,

◦ state of the economy in the market,

◦ extent and strategies of the competition,

◦ cultural norms of the market,

◦ new technologies that might offset the business.

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Components of the Plan
5. Plan the Marketing Program (cont.)
◦ The product or service
◦ The distribution system
◦ Promotion
◦ Pricing

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Components of the Plan
6. Describe the Selection of the Location.
◦ The Trading Area
◦ The Economic Base

◦ Attitude of the trading area towards new businesses

◦ Competition

◦ Costs

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Components of the Plan
6. Describe the Selection of the Location (cont.)
◦ The Site
◦ Accessibility, site costs, restrictions, site history,
proximity to other businesses, physical characteristics.
◦ The Buy-or-Lease Decision
◦ Cost of the lease, length of the lease, restrictions,

repairs and lease hold improvements, insurance

coverage.
◦ Running the Business from One’s Home

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Components of the Plan
7. Determine the physical facilities.
◦ Insurance types
◦ Loss or damage to the property

◦ Business interruption

◦ Liability and disability

◦ Life insurance

◦ Insurance decisions
◦ What kind to purchase, how much to purchase,

from whom to purchase the insurance

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Components of the Plan
8. Plan the Financing.
◦ Establish capital requirements
◦ Make feasibility projections
◦ Determine the sources of funding
◦ Plan the accounting, and bookkeeping systems
◦ Determine the financial evaluation measures

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Components of the Plan
9. Plan the Personnel.
◦ Administrative structure
◦ Employee recruitment and training
◦ Personnel Policies

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Components of the Plan
10. Investigate the Legal Requirements.
◦ Legal Structure (four styles)
1. Sole Proprietorship
◦ advantages and disadvantages

2. Partnership
◦ Limited, General
◦ advantages and disadvantages

3. Cooperative
◦ one member-one vote vs each share a vote

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Components of the Plan
10. Investigate the Legal Requirements. (cont.)
4. Corporation
◦ advantages and disadvantages of a corporation
◦ steps in incorporation
◦ selection of the business name
◦ development of the share structure, directors,
restrictions on share transfers, etc.
◦ description of the company operations
◦ acquiring the necessary supplies

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Components of the Plan
10. Investigate the legal requirements. (cont.)
5. Joint Ventures
◦ Licenses and Taxes
◦ Federal Government

◦ income tax, goods and services taxes, excise tax

◦ Provincial Government

◦ income tax, licenses, sales tax

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Components of the Plan
5. Joint Ventures (cont.)
◦ Municipal Governments
◦ licenses, property taxes, business taxes
◦ Intellectual Property Protection
◦ patent steps
◦ search and file

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Concept Checks
1. What are the advantages and disadvantages of owning a
small business?
2. What steps are involved in preparing a business plan?
3. What criteria must be evaluated before choosing a
trading area?
4. When is it advantageous to lease instead of owning?

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Concept Checks
5. What information should be investigated before
construction starts and purchasing equipment?
6. Why is insurance purchased? What are some small
business insurance types?
7. What major financial aspects should be planned in
advance of business operation?

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Concept Checks
8. What are four legal structures that an owner can utilize?
9. What are the advantages and disadvantages of
incorporation?
10. What level of government issues business licenses?

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