What can be more anxiety-inducing than a day in the dentist chair? For many business owners, managers, and sales, operations, marketing, IT and finance leaders, it’s the thought of completing a business plan.
Fortunately, there are ways to overcome this stress and write a comprehensive, well-thought-out document that will entice any lender, investor, executive, or prospective partner.
For starters, a business plan does not have to be an epic the length of War and Peace. In many cases – especially if your business consists of one operating entity – a business plan can be compiled in 20 pages or fewer. For organic growth, what’s important is that it covers the following key business plan components:
Financial and operations. This component addresses how you will operate and generate revenue. In line with this, these core aspects should be addressed:
- How the business will execute for its clients
- Any required investments
- Strategies to maximize cash flow (e.g., timely receivable collection, inventory management)
- Key metrics for assessing the income statement, balance sheet, and cash flow
Key drivers of growth and profitability. After clarifying how the business will run, a second issue is how the business will grow. A business plan should cover:
- How the business will address scalability, including overcoming any barriers or growth plateaus
- Future investments needed in personnel or systems
- How the business will go to market in the future (e.g., expanded offerings, additional areas of expertise)
Industry outlook and trends. In covering the plan for growth, it is important to factor in how the external environment can and will impact the business. The plan should cover:
- A competitive and SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis
- Financial analysis that includes assessing ongoing capital needs and factors in borrowing, such as sources and interest rates
Sales & Marketing. The plan should address how you’re going to identify your business and connect with your clients. This part of the plan should cover:
- Your company’s value proposition and story (e.g., vision, mission, strategy)
- How the business will go to market today and in the future
- Target markets and client base (i.e., your wheelhouse)
- A review of existing marketing initiatives, if any
- Campaigns that can be executed around specific events or activities
- Potential partnerships, including vendor-funded or vendor-sponsored activities
- Traditional marketing initiatives, such as trade shows, print advertising, collateral, and print advertising
- Digital marketing initiatives, such as website, social media, and email
Exit strategy. Finally, a business is never too old or too young to start thinking about an exit strategy. The business plan should detail long-term plans, including selling, merging, going public, or recapitalizing with a liquidity event.
With 20 years of experience as a senior leader, CFO, CEO, and consultant, I have reviewed hundreds of business plans and witnessed first-hand the anxiety they can bring out in the most seasoned executives. The pressure can be fear of discovering the unknown, fear of accountability, disdain for tedious work – or all of the above. But following this outline of key business plan components for organic growth can get you writing more, and stressing less.
Stay tuned for key business plan components for inorganic growth – coming soon.
Steve Pomeroy is the founder of Big Change Advisors, an M&A consulting firm in Los Angeles focusing on middle market companies in the IT services space. Since 1992, Big Change leaders have completed over 36 transactions including M&A, Capital Sourcing, and Public Offerings representing over $800 million in total transaction value. Big Change Advisors donates a percentage of all fees to help serve the homeless through the Los Angeles Mission. To request a free consultant, contact us.