Many entrepreneurs underestimate the power of a good business plan in helping them start and build a profitable business. Most people think of a Business Plan as a document for raising money, and it is! Beyond that, though, are other good reasons for a plan.
I’ve had business planning meetings with individuals who say they want to start a business (especially to leave the corporate world!) but haven’t really thought through the reality of the entrepreneuer’s challenges. Unfortunately, I’ve even met with entrepreneurs that have a going-concern business but didn’t really know if they were making money! They didn’t have a plan for the future beyond continuing to do what they are doing now and may have a vague idea of selling the business someday but no real plan for that. As painful as it is for a person who likes to ACT versus PLAN, I can testify that even a moderate amount of planning and knowledge can be a spark to get a fire going for a business owner to get to the next phase.
My example for this blog is an owner who spent 20 years building a business and now had several good corporate clients, a professional at his level that didn’t want to be an owner and a few employees. He makes a very good living and has very little overhead since he did all of his client estimates, plans and invoices himself every week. With only a few clients and employees, he was able to all of the selling, finance, accounting, operations, purchasing, client service, payroll and marketing himself. (Thank goodness, he didn’t try to do his own taxes!) He had been doing all of this for so long that he found himself bored and thinking of making a change. Over the years he had invested in real estate and other businesses as well. He called me because he wanted to buy another business similar to his own in size and processes. He also had the chance to invest in another different type of business and wanted to look at how they compared.
We started at the beginning and put together a Business Plan. We decided that this would give him a way to think through his business, capture it all on paper and, if he wanted to, would be a good step to getting outside financing if he wanted to.
The plan we put together included:
Executive Summary (2 pages) Written after the Plan is complete
- Statement of Purpose for this plan
- Market Potential
- Competitive Analysis
- Products and Services
- Major Milestones
- Core Competencies
- Marketing Plan
- Operational Plan
- Capitalization and Structure
- Management and Organization
- Financial Plan
- Transition Plan
- Management bios
- Product line profitability
These sections are generally what is included, sometimes less, sometimes more. Ideally, the plan will become more detailed as needed, but it’s best to keep it simple and to the point.
In this case, the book itself was only 8 pages with several exhibits in the Appendix that outlined his company’s plan. We then added a layer for the company he wanted to acquire. The result:
the owner ended up learning a lot about his own company as well as the company he was buying. He did buy that company and tied the two companies together with some process planning. In addition, he diversified some of his assets into a different profitable business in another industry with an owner-operator partner. He “made the time” to work on our bigger picture thinking by adding a part-time bookkeeper who started handling some of his repetitive tasks.
Where are you in your process? If you’d like to discuss your situation, selling or buying a business or preparing your business for sale, please let us know. In the meantime, if you have questions or comments, I can be reached anytime via email: [email protected] or phone at: 224-688-8838. We’re here to help you harvest your potential.
*Check out how many websites for landscaping companies say that the original founder started off with a lawnmower and jumped into business with a couple of clients? Many entrepreneurs would much rather be on the front lines in the business rather than working on the business.