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Part 4 of a 5-Part Series: Testing the Credibility of a Business Plan

When it comes to investment-based immigration, building a credible business plan should be the foremost priority. Of course, each immigration program has its own requirements, and those requirements need to be met, however, we commonly see prospective immigrants presenting business concepts that meet program requirements without much thought as to whether or not they are doing so in a way that is logical and believable. When adjudicators review business plans, they look at everything in context to make sure that all the pieces fit together in a manner that makes business sense.

This series presents some of the most common errors we see and how to avoid them.

Part 4: Credibility and Market Conditions

To date this series has emphasized, among other things, the importance of gaining local market knowledge. Developing direct knowledge of demand and potential customers is of critical importance to presenting a credible business plan. Today’s installment of the series will focus on the importance of understanding the local market at a higher level: this includes understanding broader market conditions such as economic factors.

At the time of publishing of this article, the North American market is in the midst of some changing market conditions that can serve as good examples of how understanding so-called ‘macro’ market conditions can add credibility to a business plan.

Specifically, at this time, the North America is seeing changes in the following market conditions, to name a few:

  • Employment:
    • Condition: The employment market is tight (i.e. low unemployment), driving wages higher and making it more difficult to find and hire quality employees.
    • Impact: If a business is being built on the premise of offering superior quality or service, business owners should include assumptions of the need to spend more money (i.e. higher than the median) on employees and should anticipate longer time periods to find good candidates, or alternatively consider the expense of using a recruiter to help mitigate these difficulties.
  • Stimulus spending:
    • Condition: As the COVID-19 pandemic appears to be on the wane, and with inflation on the rise, governments are easing back on stimulus spending.
    • Impact: While some economists are going so far as to predict a recession, most agree that the withdrawal of government stimulus will likely have an impact on consumer discretionary spending. Businesses that are being launched to sell luxury or discretionary goods or services should consider the development of mitigating strategies to help counter the potential impact of lower spending. Some ideas to consider might include forming marketing or lead generating partnerships, offering a superior product, pricing competitively, etc.
  • Supply chain challenges:
    • Condition: The pandemic has left a lasting impact in the form of supply chains being unable to keep up with demand in many industries, which is in turn leading many North American businesses to face the inability to meet customer demand.
    • Impact: If planning to launch a business in North America, one should consider explaining how the supply chain will be managed, including contingency plans to handle disruptions. In some cases, this market disadvantage can be turned into an advantage if that business is bringing with it a long-established supplier relationship, or if it is itself a supplier of goods that are in shortage in the local market. Additionally, one should also give consideration to how a business will maintain competitiveness in the face of rising prices.
  • Interest rates & inflation:
    • Condition: Interest rates have been on the rise over the last few months, in part due to the tight employment market and the supply chain challenges mentioned above, which have been putting inflationary pressures on the North American economy.
    • Impact: Businesses counting on financing might consider locking in interest rates to mitigate the potential of continued increases to the cost of borrowing. Similarly, business plans can demonstrate increased strength if the business owners can consider looking for ways to reduce the need to borrow funds, such as taking on equity investors or exploring other forms of creative financing.

When considering the development of a business plan for immigration purposes, one should bear in mind that adjudicators are “impressed” by different things than investors or other stakeholders. Certainly, the ability to make a sufficient amount of money, to support the business owner and their family and to justify the investment being made in the business is important, but one does not need to forecast making great riches from their business, unless it is truly expected to happen.

On the other hand, demonstrating a high degree of industry and market knowledge, shining a light on deficiencies and challenges, and presenting well-reasoned mitigating factors can go a long way in demonstrating the credibility that would impress an adjudicator.