Small businesses account for 98% of all business in Canada and they provide 30% of the country's GDP and account for millions of all jobs. Approximately 130,000 new businesses start up every year.
Small business is the economic engine of Canada, but it is also a vulnerable sector. Business failure statistics show that about 96% of small businesses (1-99 employees) survive for one full year, 85% survive for three years and 70% survive for five years (Key Small Business Statistics - January 2009, Industry Canada). Micro-enterprises (businesses with 1 to 4 employees) have a slightly lower business failure rate than other small businesses. After five years in business, 70.4% of micro-enterprises survived compared with 66.9% of other small businesses.
This failure rate can be attributed to numerous factors, but the primary source of the problem is poor planning at the start. Too many potential or existing business owners do not recognize the complexity of running a business; they may not know their market, the industry or even the incredible depth of detail required to plan for every single cost required to open and operate a business.
It has been our experience that once potential business owners begin to identify how much they need to know, they either hire someone with experience in the industry to help them, or they recognize that they do not have the knowledge or resources to make a go of their business idea. Sometimes it becomes painfully obvious that clients simply cannot bring in the revenues needed to survive, or that they will not get funding because their financial projections show poor returns or lack of business knowledge.
A business plan assists people to really look at the validity of their ideas and the applicability of their knowledge, experience and interests can avert potential bankruptcies or encourage people to continue developing their innovative ideas and make a difference in their communities. It allows people who plan to start a new business, or who want to expand one, a better chance of success because they will be well informed about every aspect of running the businesses.
The second benefit is related to quality of life. Once a potential business owner has clearly identified the validity of starting a business they can implement their plan and begin the hard, yet satisfying work of owning a business. Surveys by banks and social agencies clearly show that 29% of Canadians believe owning their own business improves their quality of life; this is especially true for home-based business operated by women. Running a small business from the home allows women with young children to balance the family/work demands while earning a living.
By helping new businesses get off to a solid start, or existing business to strategically expand expansions, Business Plans Canada aims to provide a service that supports major life decisions through intelligent planning processes.