| |
|
Moncton Times & Transcript ~ Tax Help Plus ~ Map your route ~ October 24, 2006 - 29 Oct 2006 by TaxHelp
|
When we had the tax business in the old days, we had a process that we went through every year that allowed us to review our results and strategize the future. In anticipation of us coming back to Moncton we’re again undergoing our planning sessions. And I must admit, this project seems to have taken on a life of its own. Anyone who has ever considered being self-employed has had to sit down with a pad and pencil (or napkin depending on how sophisticated they are) and sketch out what they would like to accomplish.
While the undertaking can be in many formats, most commonly the work product ends up being a business plan. You might wonder what’s the point in writing one of these anyway?
I should begin by stating that there are all kinds of reasons people go into business. For some its heredity - they are born into a family that has a going concern. For some its necessity - they find themselves downsized and unemployed. And for some, it’s a hobby that takes off.
No matter what the instance, it's critical that you have a genuine interest and enjoyment in the endeavour if both you and the business are to have staying power. But having enthusiasm is not enough. You need a plan.
Think of a plan as a map. If you were taking a holiday, you'd need to know where you're going. And just as importantly, you would need to know where you are. If someone asked how to get to Florida, it's easy to say due south. However, that's because you know you're north of the sunshine state. South would be wrong though if we were sitting in Vancouver.
A vacation plan tells you where you are, where you want to go and how to get there. It identifies landmarks along the way, to make sure you're on track, and it allows for adjustments in case you hit a detour. A business plan does the same thing.
In some way or another, you'll need to have standard components in your plan. In virtually every plan there is a summary, a vision and a mission statement that speaks to the company direction; an overview that describes the business; a discussion of the services and products that are offered; a competitive market analysis that discusses opportunities both now and into the future; a marketing plan that describes how to hook up with your customers and financial statements.
There are three main reasons to construct a plan.
The first - and most important - reason is that a plan forces you to think about both the big picture and the minute details of your undertaking. Sometimes what appears to be a brilliant idea at three in the morning ends up losing its gloss in the harsh reality of daylight. A plan will help you decide whether you actually will have a viable business. And if you decide to move ahead, the plan will then tell you if you're on track and whether you need to make any adjustments. As they say in the sales business - plan your work and then work your plan.
The second reason is the need to convey your idea in a logical format to those who may be interested. Ever try to borrow money? Sure, it often seems like the only time a lender wants to help you is when you don't need it. However, by having a well-constructed plan, you may find that the business banker is a lot keener to advance you a line of credit. Other stakeholders who may be interested in your document are potential key employees and maybe, one day, an interested buyer for your business.
The last significant reason to have a well-documented plan is for our friends at the Canada Revenue Agency. Many businesses lose money in the first few years. What on the surface could appear to be a sham, may in fact be well-supported by the losses, if there is proof that you have an expectation of profit. A business plan helps give you the luxury of taking a valid tax deduction against other income while you get your enterprise on its feet. When you're about to turn the corner, you don't want to be met by a brick wall.
A plan helps show that you actually know what you're doing. Now if we take out some of the pictures we can get it under fifty pages!
Roger Haineault is with Help 4 Taxes. His column "Tax Help Plus ..." appears each Tuesday. For questions, comments or column suggestions he can be reached by calling 855-HELP (4357) or by emailing roger@help4taxes.ca
|
|
|
|
|
Home | About Us
| Ask a Question | Latest
Tax Column | Form T1013 | Links
| Contact Us |
|
|
 |
