- The product or service offering of the company.
- The competition, and their aggressiveness.
- Life expectancy of the product or services of the company.
- Technological changes pending within the business or industry.
- New products and services being contemplated for the future.
- Employee competency and retention.
- Competence of management.
- Challenges facing the company and their plan to deal with those challenges.
- Identification of new equipment, computers, software and other items required to meet the needs of the future.
- The financial capability of the business to acquire the resources needed for the future.
- A host of other things such as taxes, corporate structuring, inventory control, credit policies, accounts receivable management, sales/marketing programs, patents and environmental issues, just to mention a few.
A well-researched and written business plan will identify and address the issues facing the business and reveal its future over the next three to five years.
As part of our preparation to sell a business, our analysts will look at the future of the business and assist the client in the preparation of a business plan. It is not surprising to us, that when the owner sees his future through a business plan, they get excited and re-motivated about the business. They change their thoughts about selling, deferring that decision for a number of years and then go back to work to achieve the brighter future that is often revealed by their business plan.
If business plans are such a good thing, then why do so few businesses have one? The answer is quite simple. So many business owners are locked into the day-to-day routine of operating their businesses that they do not have time to manage the business effectively. A business plan takes a great deal of time, energy and research to complete.
Many of these owners work an average of 68 hours per week and are too tired at the end of the day/week to initiate such a demanding project. This results in procrastinating on doing the work required or worse, a preparing an inadequate document.
A well-researched plan is a roadmap that shows where you are taking the business and increases the confidence from other stakeholders such as your customers, suppliers, creditors and your bank.
Banks do not lend money to a business expected to fail. They want you to succeed and before they advance you any money, they want to know the strengths provided by you, your people and your business plan. They will consider the economic climate and how you would manage the business if the economic climate changes.
We sold a business with sales of $750,000 in 1983. The buyer came to us in 1990 with sales of $3 million and indicated he was ready to sell. Our business plan showed that the future was quite bright, if he changed direction. He returned in 1996, with sales of $7 million and said, “I am now ready to sell my business”. Once again, a new plan was created. It showed that there was new technology available, and again, he decided to keep his business. Last year his sales were $15 million and his profit was $2 million.
A business plan is about the future, and therefore it is a catalyst for change. Many people have made a great deal of money without a business plan, but frankly it takes longer to get there, and the chance of failure is much greater than if they take the time to plan in the first place. The most successful businesses anticipate the future and reflect that anticipation through a business plan. It is well worth the investment.
