If you’ve ever taken a business class or pitched a business idea, you’ve probably had to talk about business plans. Projections, customer profiles, key performance indicators, you’ve heard the jargon and struggled your way through envisioning what your business—or maybe just your business idea—will look like in one, two, five years, or even beyond.
The truth is many business owners don’t start their business with a clear documented plan. Whether from sheer enthusiasm or a recognition that the projections in a start-up plan are guesses at best, you may have decided to hit the ground running when you started the business.
Now, a few years later, things are going pretty well. You’ve got a steady roster of clients and trusted employees who keep the business running. It’s time to grow, and now—instead of back at the beginning when you didn’t have hard numbers to work from—is the time to write a business plan.
Why Do I Need a Business Plan?
Business plans can serve a few different purposes depending on what your goal is for your business. You might be:
- Seeking financing
- Taking on new business partners
- Planning for a management buy-out
- Opening a new division
A good business plan tells a compelling story about the direction of your business. If you’re looking for financing, your bank will want to see your business’s trajectory to date and the supporting documentation for your projections into the future. They may even have a standard document for you to complete.
Taking on New Business Partners
If you’re looking to take on new business partners, your business plan will help sell them on how their money will lead to growth and what they can expect in payback. If you’re creating a partnership, your business plan can also help define each partner’s roles and responsibilities and metrics for success.
Planning for a Management Buy-Out
If you’re looking to step back from the business, a detailed plan for your management team is essential for the transition’s success. Whether you want to sell shares to employees and keep a few for yourself or have them buy you out entirely, having a thorough business plan will help chart the path forward and make it clear to everyone involved how the business will win over the medium and long term.
Opening a New Division
Supposing you are creating a business plan to help support a new division can feel a bit nebulous, just like it would have when you were starting the business the first time around. You’ve got better data than you did at the beginning, but until you roll your new offering out, it’s all just assumptions.
The first step in launching a new division is to test the waters. You might have done something similar to this when you first launched your business. While your network may be larger now than it was then, until you actually put a product in a customer’s hands or present your service to a potential customer, you won’t know how they will receive it.
Build a Minimum Viable Product
A minimum viable product (MVP) is a term that gets passed around in tech spaces, but it’s a great starting point regardless of your niche or whether you’re offering a product or service.
Until your MVP is ready, everything else is a guess. Your MVP may feel rough or unfinished, but that’s fine. It’s not your career; it’s a building block. The keyword here is “viable.” As long as it works or delivers on its promise, that’s enough to test the waters.
When you launch an MVP, those people who said they would be first in line are finally going to have come through on their promise. When it’s money and not just words on the table, most of them are going to say “no thank you.” While that’s disappointing, it allows you to listen because most of them will give you a reason as to why they aren’t interested anymore.
From there, whether you hear price objections, or that your product isn’t going to meet their needs, or it’s too similar to something they already have, you can refine your MVP based on real market feedback. That information, which can help you justify a pricing scheme or nail down your points of differentiation, is incredibly valuable to you as a business owner.
Once you’ve got solid data from your MVP, you can finalize your business plan and unleash your new product or division to the world.
Build Your Business Plan With the End in Mind
Business plans look to the future, but they often don’t look far out into the future, to the point at which you no longer own your business. You might make projections on business growth in the medium and long-term, but to plan with the very end in mind may not be something you do until you’re ready to retire.
The thing is, if you build your business to sell—whether that’s to existing employees or a management team, a competitor, or a private equity group—you won’t be in for any rude awakenings when you decide the time is right. If you haven’t planned for your exit, you may find out the business is worth less than you’d hoped—or worse, less than you need to retire comfortably.
In fact, if you plan your business around the idea of selling, even if that’s not something you intend to do for years to come, overall, your business will run better while you do own it. Focusing on the Eight Key Drivers of Company Value in your business planning will not only make your business attractive to an acquirer but also less stressful to operate on a day-to-day business.
Look at Arvid Kahl and Danielle Simpson. In their episode of Built to Sell Radio, Kahl describes how they built their software-as-a-service business, Feedback Panda, to be as automated as possible so that they didn’t have to wade into the weeds every time something went wrong. This approach meant they had the option to sell their business to a private equity group and step away from it entirely, but it also meant operations went more smoothly while it was Kahl and Simpson’s to run.
Who Can Help With My Business Plan?
One of the key questions that drive people to this website is “Who can help me write my business plan?” The challenge is, your business is yours, and a business plan shouldn’t be something you farm out and then stuff in a drawer. Business plan writing isn’t a solitary and lonely endeavor. It requires the operators of the business to be actively involved in the process.
Qualified business advisors can help tease out the places your business is struggling and where the greatest growth potential is. Whether these are coaches, accountants, management consultants, or financial advisors, they know how to look at the trends and ask the questions you need to envision your business’s future.
If you’re looking for that kind of support, the first step is completing the Value Builder questionnaire. This 13-minute survey looks at everything from your financial performance to how dependent your business is on you to keep the lights on and the doors open. From there, we can connect you with a qualified advisor who can help you dive deep into your current state of business and where your greatest growth opportunities are.
If you’re ready to undertake this valuable step in planning your business’s future, start the Value Builder questionnaire now.