Increase Business Value With a Powerful Business Plan
A comprehensive business plan can play an integral role in increasing business value. A written plan that is updated on a regular basis demonstrates to a potential buyer that the business has been run in a professional, thoughtful and purposeful way. This increases the buyer’s confidence by reducing perceived risk making it more likely they will pay the owner’s asking price.
A business plan can play an even more significant role when business value is based predominately on discounted future earnings. This is where the seller and buyer will agree on future projected earnings for a five to ten year period and negotiate a price based on a desired return on investment. A plan with realistic forecasts and a detailed action plan will make the projected earnings more tangible thus increasing the buyer’s confidence.
Just as a blueprint is needed to build a home a business plan is a blue print for success. It becomes the guiding light for the daily actions of management and staff. It details Strategic Focus, Market Analysis, Organizational and Personnel Needs, Financial Considerations such as Forecasts and Budgets and a Detailed Action Plan with predetermined Milestones.
The following is an outline of the key components of a comprehensive business plan.
Strategic Focus & Goals
This is where you “sketch” your business. It is imperative that you and your staff fully understand why you are in business, your values and where you want your business to be in 5 years.
Marketing Plan
A Marketing Plan should not be confused with a Marketing Strategy. A Marketing Plan provides a “big picture” view of the overall direction on the markets served whereas a Marketing Strategy provides detailed action plans on how a company will promote and create opportunities for its product in the short to mid terms.
In this step we identify and describe the market and clients we intend to serve. Some research needs to be done to determine size of the market, the need or desire for your product and how your company will be positioned against your competition.
Organizational Structure
This section deals primarily with the “back end“ or operational side of your business. If this were a blueprint of a home you would be detailing the floor plan, size of rooms and general theme for decorating. In a business it should detail the departments, management structure and other support mechanism that are needed to achieve your goals.
Financial Considerations
This step requires a lot of research, forecasting and in some cases making an educated guess. It’s number crunching time. Assign numbers to the descriptions and planning provided in the first three steps of your Business Plan.
This section should include sales forecasts, expense budgets, cash flow analysis and of course a prediction of your profits. Provide spreadsheets, charts and graphs with explanations to back up your numbers.
Action Plan
You’ve written a great plan and have all your numbers complied and accounted for. Now what? The key to a successful plan of any type is implementation and execution.
Developing an action plan is a relatively simple process but requires attention to detail. Here are some simple steps to follow:
- Review you plan very carefully and do a “take off” (itemize) of all the actions that will be required to execute each part of the plan.
- List the items in the order by their need and time sensitively to be accomplished. Be sure to include each step if an item requires more than one step.
- Assign realistic deadlines for each
- Use a Timeline, Gantt Chart or Calendar as a tool to track and maintain progress.
It’s a challenge but be disciplined and stay on track. Keep evaluating, adjusting and “keep your eye on the ball” at all times.
Every business should have a comprehensive business plan whether you are considering selling your business or just want to improve overall performance. Studies have shown that a written business plan can double your chance of success.
If you are not sure how to get started email tony@empoweredbusiness.ca insert “Business Plan” in the subject and you will be sent a detailed instructional report called “5 Steps to a Powerful Business Plan”.
