From business launch to owner’s exit
My own experience with business plans has led me to the conclusion that became the sub-title of my book, The Complete Do-It-Yourself Guide to Business Plans:
“It’s about the process, not the product.”
Do not make the mistake of focusing on filling in the blanks to create a Business Plan document. The real value for entrepreneurs in preparing a Business Plan is the process of involving your management team in the assessment of the market, study of competition, developing a business strategy and testing the financial consequences of different scenarios and alternative plans.
My first Business Plan was 30-years ago, when I started TTX Computer Products (a simple one page summary and first year budget), followed by a more formal Business Plan when we applied for a line of credit. It helped us get the first $50,000 and the process eventually got us up to loans of $4,800,000. My experience continued with other ventures and dozens of projects for clients in a wide variety of businesses. From start-ups through business expansion plans to successful exit strategies.
The most important lesson?
The value to an entrepreneur or business owner comes from the process, not the document.
Use the business planning process to understand the market, develop a strategic plan and test alternative scenarios. Then continuously review and revise the plan based on ongoing market feedback and actual results.
It’s a continuous process: Like any other road map, it should be consulted regularly. Do we still have the same destination? Are we on the right course? In the best vehicle? With the driver and passengers all in the right positions doing the right things?
What are the essential elements?
The objective is to prepare a document that describes the business opportunity, then defines the strategy, concept and business model to realize that opportunity and the operating plans to succeed as a sustainable long-term business.
The important steps in the process:
- Analyse and understand the market, the opportunity and the competitive landscape.
- Develop a strategy and action plan to realize the business opportunity.
- Test alternative scenarios, strategies, operating plans and the potential financial results.
- Document your final decisions on strategy and operating plans and the expected financial results.
The final Business Plan will have three parts – a description of the plan, the financial projections, and the supporting documents.
Who needs one and when?
A solid Business Plan is not just for start-ups seeking financing. It’s also for existing businesses to launch a new project, a new product, or enter new markets. Every business should have a documented strategic plan with measurable objectives that can be shared with management and employees, business partners and sources of financing. The documented Business Plan is also an important tool for preparing an exit strategy or management transition plan for businesses that are at that stage in their life cycle.
What are the biggest mistakes made in Business Plans?
Entrepreneurs often put too much focus on filling in the blanks of a template without providing solid data and analysis to validate the strategy and the financial forecasts. The plan may be missing the persuasive arguments on how you will succeed based on competitive advantages and your unique knowledge, skills, experience, contacts and resources. Do not neglect the sincere language that will attract believers to your stated mission, vision and values. Prepare to answer the tough questions, especially recognizing and responding to the risks and uncertainties.
The most important recommendations in The Complete Do-It-Yourself Guide to Business Plans?
First, you do not have to “Do-It-Yourself,” but you should know what will make it successful, so that you can provide direction to whoever is helping you prepare a Business Plan. Be prepared to defend the strategy and the numbers in your plan. Remember the objective is to prepare a plan that will generate confidence and enthusiasm in yourself and in others and that will serve as a guide to managing and monitoring performance for a successful long-term sustainable business.
Your Uncle Ralph, Del Chatterson
Read more Learning Entrepreneurship Blogs.
Join our mailing list for more ideas, information and inspiration for entrepreneurs.
Click Here to check out Uncle Ralph’s books, "Don't Do It the Hard Way" and "The Complete Do-It-Yourself Guide to Business Plans" Both are available online or at your favourite bookstore in hard cover, paperback or e-book.