I don’t know exactly what results you’re looking for, but if you’re preparing a business plan at all (or thinking of preparing one) I know for sure you’re looking to get a result you don’t have now…otherwise you wouldn’t need a business plan.
The results people are looking for can be anywhere between getting their boss, or someone at head office, off their back all the way through to someone wanting to sell their business for mega-millions who wants to convince a potential acquirer their business is worth the asking price.
Perhaps you’re thinking of starting your own business or buying a business from someone else.
It might be that you’ve got some business challenges and need to think again about your cost base and cash flow.
Or it might be that you’ve got a great opportunity just around the corner, but need to gear up your business, your staff and your operations to deliver on that and want a plan in place so you know how that’s going to deliver the results expect (and, perhaps more importantly, signpost when things might be about to go off-kilter).
You might be looking for funding from a bank or external investor. You might be bringing a partner on board. You might want a plan you can use to rally your team around you and push through to ever-greater success.
Whichever of those those reasons resonates with you, there are two elements everybody needs from their business plan.
Two results everyone wants from a business plan
Every successful business plan needs to do two things:
- Firstly, you want a robust plan so you and everyone else involved knows exactly what’s going on in your business and why. How all the moving parts come together, and where the critical success factors are.
- Second, you need to persuade someone about something that really matters. You need their investment, or their partnership, or their emotional buy-in to the glittering future they’ll have if they buy your business from you.
Most business plans at least attempt to do the first, but often fail because department heads complete their sections without necessarily appreciating the consequences of their decisions elsewhere in the business.
For a business plan that gets results, this isn’t a great strategy because the implications of, say, buying cheaper leads but getting lower conversion rates as a consequence, haven’t been fully recognised, financially or commercially. You need an end-to-end, company-wide approach to business planning if you want reliable results.
However, very few business plans do the second at all. Mostly, a finished “business plan” is just a jumble of spreadsheets which anyone reviewing the plan has to mostly make sense of by themselves.
I’ve always found this a little odd.
If the difference between selling your business for millions or selling it for thousands is as simple as giving a potential acquirer a highly-persuasive business plan, rather than a so-so one that looks like it was written by a robot with a copy of Microsoft Excel, personally I’d want to send them a highly-persuasive one.
Same principle applies if I’m looking for bank finance or external investment, trying to form a new partnership or land a key hire, motivate my workforce or build a launchpad for future growth.
When the chips are down and the stakes are high, what really matters is how well you can persuade someone else to see the world as you do.
The business plan you need when it really matters
If you want someone to believe in your business plan – whether that’s a bank, an investor, a potential acquirer, your head office, your employees, or even just your own board – you can’t just show them a set of numbers and expect them to jump on board.
That’s like throwing a fishing line into the water without a hook, but still expecting to catch fish for dinner.
You see, you persuade a bank, an investor, your head office, your employees, your board, and anyone else you need to persuade to believe in you and your business, with the words in your business plan, not the numbers.
The numbers only summarise the impact of an argument you should have already won with your words. And if you haven’t won that argument in someone’s mind before they look at your numbers, the numbers alone are unlikely to persuade them.
Here’s why. Imagine someone you never met before asks you to invest in their business. They claim it’s an attractive investment because sales will grow by 20% a year for the next three years.
Would your first response be, “Let me check your numbers. Show me how you calculated 20% of last year’s sales revenues.”
I doubt it. You, me, and every bank and serious investor in the land knows Microsoft Excel can handle that calculation with no trouble whatsoever.
That’s why most people’s first response is something along the lines of, “Tell me more about the industry you’re in, the customers you serve, and how your business operates.”
What they’re really saying is “convince me with your words first, then I’ll take a look at your numbers”.
That’s what everyone who reads your business plan is thinking, whether or not they ask you about it.’
The numbers matter…but they’re not everything
After a 25+ year career as a CFO, CEO, Chairman and Non-Executive Director, I’ve prepared, reviewed, presented and approved more business plans than most.
As a CFO, I understand why the numbers have to be solid. But nobody follows a spreadsheet into battle. They follow a bold vision. And insightful idea. A determination to make a difference in the world.
That’s why numbers are important, but they aren’t everything.
You only convince your team, your bank, and your investors by getting them to buy into your words.
Sadly, that’s where many business plans veer off-course.
There’s either a shortage of words, full stop – the “plan” is just a never-ending array of spreadsheets.
Or the words aren’t persuasive enough – they merely explain how the numbers are calculated with all the persuasive power of someone reading a telephone directory.
The much-documented struggle so many people experience when trying to secure finance or business investment, bring on a senior hire, or sell their business for the best possible price, is rarely because their numbers don’t add up.
Its because banks, investors, key hires, potential acquirers or future business partners weren’t persuaded by the words they read before they even looked at the numbers.
When success depends on your business plan
To be straight with you, most micro-businesses, most of the time, can get by without a business plan. If they don’t need funds to grow, are happy ticking over much as they are today from one year to the next, and generate the cash flow they need to keep a roof over their heads, nothing is likely to fall over without one.
So, if that’s you, congratulations! A good business plan can help you manage your business better, pick up opportunities you’re missing at the moment, and put more money on your bottom line, so I’d always recommend one. But if you’re happy as you are, then I’m very pleased for you.
However, there are some key “moments of truth” where the lack of a business plan – or a business plan that isn’t persuasive enough to get the results you want, to be more specific – is the difference between success and failure. They include:
- Starting a business – if you need external finance, a business plan is essential. But even if you’re self-funding, starting any business is a risk. A good business plan highlights where the risks and opportunities are, and how to get where you want to go faster than if you just get started, cross your fingers, and hope for the best.
- Scaling your business – if it’s time for rapid growth, you may well need external funding to invest in new equipment or more staff. A persuasive business plan will unlock the people, the investment, and the funding to enable you to take that big step up, alongside giving you a solid framework to assess progress and make sure you reach your goals.
- Selling your business – you might wonder why you need a business plan when you’re selling a business, but this is your opportunity to make a strong case for an acquirer to pay top dollar. How persuasive the words are in your business plan will directly determine whether you get top dollar for your business or not.
(This is often why sellers of businesses think buyers are “lowballing” them. Often, they’re not, but because the words in the business plan weren’t persuasive enough, buyers’ offers are based only on the bits of your business they believe and understand, which tends to be a lot less than its full value.)
At those key moments in your business journey, a persuasive business plan makes all the difference.
It’s the difference between getting the funding you need, or coming away empty-handed.
The difference between transforming your business over the next few years, or stagnating pretty much where you are today.
The difference between selling your business for the best possible price, or having to settle for the “least worst” offer you get from people who don’t really understand the full value in your business.
That’s how important a highly persuasive business plan can be.
What to do next
If you have big business goals, and can see how a highly-persuasive business plan can make all the difference to getting the results you want, why not start by downloading our valuable free “fill-in-the-blanks” Business Plan Jump Start Template.
This shows you the elements you need to include in your business plan and gives you a structure that you can follow to prepare a highly-persuasive, evidence-backed business plan that will give you the best opportunity of getting the results you want.
Download your free “fill-in-the-blanks” Business Plan Jump Start Template today. Just click the button below.
Business cost reduction and profit improvement specialist.
Experienced CFO, CEO, and Chairman.