How to prepare a business plan when purchasing a business – Business Journal

The creation of a formal business plan is an often overlooked step in the process of buying a business.
Though the company you want to buy may already be up and running, establishing a well-thought-out plan before the purchase will help you prepare to take over the business.
Building a successful business involves a number of strategic and tactical factors that require heavy planning and realistic expectations. Before you can start the purchase process, you must first write a business plan of your tasks and goals.
Your business plan should assist you in planning the budgetary, marketing, and management tasks required to achieve successful sales and earnings. Put the “big picture” on paper. Seeing your tasks laid out in an organized fashion will position you to anticipate new opportunities and prepare you for any unexpected challenges.
While there are a variety of formats and variations of business plans, you will need to include essential elements for the plan to be effective. A business plan for an established company should have the following:
This section is a formal introduction to the business and should summarize the key points of your business plan, including the range of products and services, target market, and strategies for continued growth. The executive summary is crucial to the seller, so it’s important that you spend time ensuring that it is concise, professional and attention-grabbing.


In the business description, you should provide a thorough review of the business, describing the company’s attributes, its mission statement, and the value proposition. This section should include the company’s corporate structure, business model, SWOT analysis, and a brief discussion of industry trends.


Here, the business plan should present a comprehensive examination of the company’s target market, the competition, and the economics of the industry. Obtain as much information as you can from the current business owner. The current owner should provide you with the number and type of customers, the products and services they are receiving, as well as their relative location and geographic densities.


This section of the plan provides a general description of the company’s products and services, a breakdown of sales information, and future plans to offer new products or services. Additionally, this section should detail the company’s current market strategy, pricing strategy, and advertising and promotion program. The sales & marketing plan should also examine the sales forecast for the near future.


This part of the business plan should provide an overview of the company facilities, including the physical location, surrounding environment, equipment, processes and employees. The plan should list the days and hours of operations and indicate whether any licenses or permits are required to operate the business.


The management plan should provide background information on the existing management, such as the level of involvement of the previous owner, bios on prospective new owners, and an organizational chart depicting management hierarchy. You should also obtain information on advisory members such as attorneys, accountants or business brokers.


In the financial plan, you should perform a comprehensive analysis of the company’s past financial performance before you can make future projections. You should acquire several documents from the previous owner, including three to five years of income statements, balance sheets, tax returns, a complete list of all assets, a copy of the lease agreement as well as other documents. Once all documents are received, you can create a reliable forecast for the company’s financial future and ROI.


This section should explain how aspects of the business will be transitioned from the current owner to the buyer, such as intellectual property, owner experience, and vendor relationships.


This final section outlines the exit strategy of the seller, detailing the timetable and the terms and conditions under which a sale or business succession would be considered.


The appendix should include all supporting documents referenced throughout the plan, including tax returns, personal financial statements, and licenses or other legal documents.
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