If you are growing a business with the intention of selling, then you are in the right place.
The first article in this series discussed how to get the foundations right.
Now, we consider how to prepare a growth plan that transforms your business into an asset that’s attractive to investors.
- You might also like: How to write a growth plan like a scale-up business.
The role of a business growth plan
If you are growing a business to sell, investment firms will have strict criteria and will want a good return. But a growth plan is valuable for every business, whether it’s the shareholders’ plan to sell or not.
Why? Because it forces you to work on the business rather than in it. That means you will most likely improve the business simply by following the process. Plus, if the opportunity to sell your business does arise in the future, you’ll be in a much better position to take advantage.
Unfortunately, business growth plans are often concocted when a business is already expanding, and everybody is so busy putting out fires that there’s not a lot of time left for planning. If that’s the case for your business, here’s a template to shortcut the process and help you get started on a growth plan.
Business growth plan template
So what should a business growth plan look like? Below, we’ve isolated the 11 most critical areas for you to use as a template.
Vision, mission, values, purpose
What is your overarching mission and purpose? Why does the business exist? What is it trying to achieve? Is it to provide you or other shareholders with financial independence or early retirement? Or are you driven by a sense of purpose or a cause?
These are the kind of questions we don’t always consider in day-to-day business, but they're critical because your answers will keep you motivated and guide the business sale.
When do you want to sell the business? How much do want to sell it for? You should use your answers to the questions in the previous section to guide your thinking about goals. For example, if the purpose of your business is to allow you to retire at 50, how much money do you need to make that happen and enjoy the life you want to lead?
Market and customer research
What is the size of the market? And what share of it do you currently control? Who is your ideal client? Why are they your ideal client? Do they spend more? Or is the process of doing business with them more productive/enjoyable? What are the pains, fears and desires of your ideal client?
Have you assessed the strengths, weaknesses, opportunities, and threats to your business? You can use a SWOT analysis to concoct plans for tackling weaknesses and threats, for building on your strengths, and for exploiting opportunities.
Strategic growth thrusts
Growth thrusts are areas you can focus on which are likely to contribute to growth over the next two to three years. So what are your growth thrusts? Are there any other markets you can penetrate? How will you accomplish this?
Most businesses organise their activities around personalities rather than accountabilities or responsibilities. This can be a liability in the eyes of an investor. They want to invest in a profitable business, not profitable people. A business that might implode without key personnel is a risky investment.
Fortunately, a business growth plan is the perfect opportunity to address this. But here’s the big question: What will your organisational hierarchy need to look like when the business is ready for sale? Will you need a Chief Operating Officer? Will you need a Vice President of Marketing?
Once you’ve defined the hierarchy, you can work on defining what the person in each position must achieve to meet your growth goals. A business with a clear hierarchy, as well as well-defined positions and responsibilities, is attractive to investors. Simply, it makes the staff in each position easier to replace without affecting profits.
Your marketing strategy should answer the question: “What must our business be in the mind of our customers for them to choose us over everyone else?”
You can then develop a marketing plan for how you will attract prospects, convert them into paying customers and maximise lifetime value. Include a summary of this in your growth plan.
A system is an asset. It allows you to say to an investor: “Here’s how this works.” This is gold dust to an investor who wants to know that they will be able to replicate your success after an acquisition. If you don’t know how to replicate success yourself, how will they?
Based on your SWOT analysis, what specific actions are going to help you reach your goal? How exactly will you meet your goals? Which markets and techniques will you use to grow sales?
Business growth plan outline
A business without measurement isn’t managed; it’s guessed. That’s why great businesses understand, measure and respond to their Key Performance Indicators (KPIs).
By tracking KPIs, you will know exactly how your business is performing and, as a result, can adjust your plan accordingly.
It can also be useful to outline benchmarks in your business growth plan. For instance, once you know what your KPIs are, what do you want them to be 12 months into your growth plan? How about 2 years and 5 years down the line?
Work backward from your target sale date and define your target KPIs at various intervals. Then, schedule reviews at each milestone with key stakeholders so you can track your progress and adapt the plan.
Financial projections aid business growth in many ways. First, you can use a financial model to assess the potential results for each opportunity you consider pursuing. Second, once you determine which opportunities to pursue, your financial projections can bridge the gap between your growth goals and where you are now. For example, you can determine how many new clients you must attract in the next twelve months, the average transaction value and lifetime value of those clients, and the amount you can afford to pay for them.
How often should you review your business growth plan?
You should constantly develop your growth plan, even if only for a few hours a month. It’s also important to review your KPIs once a month, and to make any necessary adjustments to the plan. Bear in mind that it’s perfectly normal to miss a milestone goal. So don’t beat yourself up if you do. You’ll still be moving towards growth more quickly than if you had no strategy in place.
Like homing pigeons, humans have a built-in goal-striving mechanism. A pigeon constantly corrects its course to adapt to environmental challenges. Similarly, the process of following a growth plan, and adjusting it as you gather new intelligence, will put your business in the best possible shape for a profitable sale.
Next article: relationships with customers and suppliers.