How- To- Write-a- Business- Plan

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					          CANADA MORTGAGE AND HOUSING CORPORATION


Writing a Business Plan

                                  A business plan is a contextual            the Financing section; and the
After completing your housing     blueprint—a guide for your project.        Management section.When you write
need and demand study, you                                                   a business plan, stay with this format –
                                  A good business plan demonstrates to
have determined that there’s an                                              those reviewing this document will
                                  funders, lenders and the community who
increasing need for affordable                                               expect to see these critical decision-
                                  you are and details your capabilities:
housing in your community.                                                   making elements. If any crucial section
                                  operations, marketing, management, and
                                                                             is missing, the reviewers may decide to
You have worked hard to gain      financials.Your business plan validates
                                                                             read no further, despite how wonderful
public support for building       that your housing project has been
                                                                             your business idea is.
affordable housing, but how       carefully considered, from conception
are you going to convince         to operation, and is viable.
                                                                             Background: Setting Goals,
the funders and financial         In developing your business plan,          Research and Analysis
institutions that your project    you will
                                                                             When putting together a business
is viable?                          (1)   identify your goals;               plan, the first order of business is to
                                    (2)   provide researched information     examine and identify your goals and
A well-prepared business
                                          and analysis; and                  the relationship of these goals to your
plan will help you to ‘sell’
                                    (3)   assemble the information           proposed housing project.Your business
your concept. When writing                in a logical, easily understood    plan should be centred on these goals,
a business plan, you must                 format.                            providing both scope and meaning to
determine your audience(s).                                                  your affordable housing development(s).
                                  The level of detail you provide will
Is the intention to network       depend in part on the complexity of        A strategic planning session may prove
within the community,             your housing proposal, and on the          useful in identifying the goals and
document to funders your          requirements of those who will use         direction of future projects.
suitability to manage housing,    the plan to make a decision.               The second order of business is to
or convince bank officials that                                              conduct research and analysis for
your project is a good credit     Key Components                             projects that reflect your goals.The
risk? This decision will help     The key sections of a business plan are:   easiest way to go about organizing all
shape your business plan.         the Executive Summary; the Business        your experiences, interviews and
                                  section; the Market Analysis section;      research is to create files for each
            Writing a Business Plan




section of the business plan.These files       Executive Summary                             built-form(s); and whether they are
can be paper-based, computer-based, or                                                       interested in living in the proposed area.
                                               A well-composed executive summary will
set-up using business planning software.                                                     A market analysis also provides an
                                               precisely illustrate your goals and plans,
As you start the research and collection                                                     overview of the housing sector of which
                                               summarizing the key elements of the
phase of planning, fill your files with                                                      you are part, including development and
                                               entire business plan.While appearing
notes and printouts. Begin with an                                                           operational trends, and major players in
                                               first, this section of the business plan is
overview of the housing sector,                                                              the sector, such as governments, non-profit
                                               usually written last.When you have
uncovering industry and association                                                          housing providers, co-ops, and private
                                               thoroughly completed all sections of
reports.Then you can start the financial                                                     developers. It should also include an
                                               the business plan, write the summary,
assessment for the project, working                                                          evaluation of your direct and indirect
                                               highlighting key points and defining
closely with your accountant to develop                                                      competition, with an assessment of
                                               'affordable housing' in the terms you
realistic projections; being overly                                                          competitive advantage and an analysis
                                               are using for your development(s).
optimistic will raise eyebrows with                                                          of how you will overcome any entry
your investors or banker.                                                                    barriers to the chosen market.
                                               Organization and Services
                                               Provide the legal name, physical address,
    Suggested Activities                       and detailed description of the nature          Suggested Activities
    ■   Identify in-house staff, board         of your business.This section should            ■   Complete a Housing Need and
        member, or external consultant         provide a description of your affordable            Demand Survey. (Refer to CMHC’s
        to write your business plan.           housing project.                                    Housing Need and Demand Fact
    ■   Establish a timeline for conducting                                                        Sheet for details.)
        the research and writing of your                                                       ■   Incorporate findings from your
        business plan.                             Suggested Activities                            need and demand assessment
                                                                                                   to demonstrate target market
    ■   Explore your banking institution's         ■   Conduct a strategic planning
                                                                                                   needs and how they are currently
        website for business planning                  session.
                                                                                                   met (or not).
        information.                               ■   Summarize your mission,
                                                                                               ■   Provide details on your target
    ■   Help to identify an approach for               objectives and vision.
                                                                                                   market, including demographics,
        data collection that works best            ■   Produce a history of your                   socio-economic status, and
        for your project.                              organization, including key                 geographic location.
    ■   Ensure both sufficient quantitative            successes.
                                                                                               ■   Describe your place within the
        and qualitative data will be                                                               housing sector, and identify your
        collected.                                                                                 competitive advantage or how
                                               Market Analysis                                     you will work together with other
                                                                                                   housing providers, developers,
                                               A market analysis, including a completed
                                                                                                   and/or governments.
Formatting your Business Plan                  Housing Need and Demand survey,
                                                                                               ■   Identify how you are positioning
                                               examines the primary target market for
The business plan should support                                                                   yourself to enter the affordable
                                               your affordable housing development or
your mission, objectives and vision in                                                             housing market.
                                               service, including geographic location,
order to be successful.The following                                                           ■   Describe how you have the
                                               demographics, and target market service
information presents each section                                                                  ability to meet the housing
                                               needs. It will answer whether your target           and service needs of the target
of the business plan in the order in
                                               group(s) are willing to pay the proposed            market and the number of
which they will appear, with a brief
                                               rents or purchase prices; whether they              people you intend to serve.
explanation to help guide you through
                                               are willing to move into the proposed
the writing process.




2        Canada Mortgage and Housing Corporation
                                                                                                      Writing a Business Plan




Marketing Plan                                                                                 The financial plan provides a description
                                               ■   Establish plans and policies to             of the funding requirements, detailed
A marketing plan provides a detailed               ensure good governance.
                                                                                               financial statements, a financial statement
explanation of your sales and/or rental        ■   Ensure you have hired capable               analysis, and an initial timeline for your
revenue projection, pricing plan,                  management for the construction /
                                                                                               affordable housing development(s). This
proposed advertising and promotional               development phase.
                                                                                               will also detail your start-up budget,
activities, and support services benefits.
                                                                                               replacement reserve budget, cash flow
                                             Property Management Plan                          projection, income statement, and
                                                                                               balance sheet for the development(s).
  Suggested Activities                       The property management plan will
                                             focus on the operations of the building,
  ■   Project how many units you
                                             from building occupancy to the end of its
      will sell and/or rent, and services
                                             anticipated life expectancy. It is a                 Suggested Activities
      to be offered over several years.
                                             description of the development's physical            ■    Refer to CMHC’s Equity,
  ■   Calculate your revenue and
                                             location, facilities and equipment,                       Funding, and Financing Fact
      expenditures, accounting for any
      market trends or variations in         employees required, inventory                             Sheet for capital plan details.
      construction costs, land pricing,      requirements and suppliers, and any                  ■    List and describe any expenses
      and sales.                             other applicable operating details, such as               your project will incur in the
  ■   Explore and describe how               a description of a successful program                     development / construction
      your target market will access         you currently run or other examples of                    phase, including rezoning
      information about your affordable      your success.                                             applications, permits, equipment
      housing units.                                                                                   rental, additional staff, etc.
                                                                                                  ■    Categorize cost of unit
                                               Suggested Activities                                    construction, overhead expenses
Construction / Development                                                                             and capital expenditures.
Management Plan                                ■   Outline the operations of your
                                                   business, including: staff to meet             ■    Estimate costs for the first
Potential funders, lenders and CMHC will           the objectives or a hiring plan to                  year of operation.
assess your management or capacity to              attract employees with the                     ■    Illustrate the ability of your
manage during the construction phase as            required skills for the project,                    project to sustain itself or
well as post-occupancy. The construction /         equipment, office infrastructure,                   grow over a 3 to 5 year period
                                                   cash or other assets.                               by establishing an income
development management plan provides
                                                                                                       statement.
an outline of your legal structure and
development management resources,                                                                 ■    Develop a balance sheet of
                                             Financial Plan
including your internal management                                                                     your sponsoring lenders,
                                             A financial plan contains two sub-                        partners, and any other assets.
team, external resources and human
                                             sections: (1) the Capital Plan—the                        Include any seed capital, fixed
resources needs. Include a description of
                                             equity, funding and financing that will                   asset financing, or working
other new buildings you have been
                                             be required to develop the project; and                   capital for the project.
involved in developing, if applicable.
                                             (2) the Operating Plan—the revenue                   ■    Meet with your accountant
                                             required to operate the building once                     to ensure financial projections
                                                                                                       and assessments for your
  Suggested Activities                       it is operating fully.The Capital Plan
                                                                                                       development(s) are feasible.
                                             will illustrate that the project is feasible
  ■   Ensure financial statements are                                                             ■    Include an annual report,
                                             (you have development funding identified
      available and financial controls                                                                 detailed financial statements,
                                             and/or secured).The Operating Plan
      are in place.                                                                                    and a financial analysis.
                                             will ensure that the project is viable
  ■   Ensure your corporate filings
                                             (the revenue will support the
      are up-to-date.
                                             operating costs and mortgage debt).

                                                                                            Canada Mortgage and Housing Corporation       3
          Writing a Business Plan




Appendices and Exhibits                                                                  Conclusion
                                                  Suggested Activities
Include any additional information                                                       Making a good first impression with
that will help to establish the credibility       ■   Include the need and demand        funders, lenders and the community
of your project idea, such as marketing               statistical summary, preliminary   is important. A well-written business
                                                      waitlist information, support
studies, photographs of your other                                                       plan that opens doors and wins the
                                                      letters, contract or required
developments, and/or contracts or                                                        support and/or money is a plan that
                                                      legal agreements, partnership
other legal agreements pertinent                      agreements (if this is a jointly   has been revised and reviewed.
to the operation of the project.                      sponsored project) and examples    Check your business plan before
                                                      of other programs or services      sending it out. Is it clearly worded?
                                                      that you run successfully.         Is it complete? Have you asked others
                                                                                         for feedback? Have you incorporated
                                                                                         feedback, proofread and edited the
                                                                                         business plan? Business planning may
                                                                                         be time intensive, but by following
                                                                                         these critical steps, you will ensure
                                                                                         your organization, and current initiatives
                                                                                         have a very good chance at funding
                                                                                         and success in future operations.




    Further Resources
    The Enterprise Foundation: A Step-by-Step Guide to Preparing an Effective Business Plan.

    Business Development Bank of Canada: www.bdc.ca

    Business Planning (for Non-Profits or For-Profits), www.managementhelp.org/plan_dec/bus_plan/bus_plan.htm

    ONPHA Development Training and Support Program, Business Plan Checklist, www.onpha.on.ca

    The Enterprise Foundation, Planning a New Business Venture: A Step-by-Step Guide to Preparing an Effective Business Plan.

    Nova Scotia Housing Development Corporation Business Plan 2005-2006
    www.gov.ns.ca/coms/pdf/Business_Plan_2005-2006_NSHDC.pdf

    Housing Connections (City of Toronto) Business Plan 2005-2007
    www.housingconnections.ca/PDF/BusinessPlan/Final%20Business%20Plan.pdf

    Human Resources and Skills Development Canada – Industry Profile List www.hrsdc.gc.ca

    Canada Business www.canadabusiness.ca




4       Canada Mortgage and Housing Corporation

				
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