If you’re planning to sell your business, creating a detailed and credible business plan is one of the most important steps you can take to support your valuation aspirations. A strong business plan isn’t just a document; it’s a roadmap that explains the value of your business today and its potential for tomorrow. Buyers will analyse it carefully, and the more detail and credibility you provide, the greater their confidence – and the higher the value they’ll place on your business.

Ground Your Plan in Historical Performance

The first rule of building a credible business plan is to make sure your projections and assumptions align with historical performance where possible. If you’re projecting growth in revenue, profit margins, or efficiency, you need to back up those claims with historical data. For example:

• Are revenues expected to grow by 10%? Show how similar growth has been achieved in previous years.
• Are margins projected to improve? Demonstrate where cost efficiencies have already been delivered and outline how future savings will be realized.

Buyers will cross-check your business plan against historical information such as financial statements, management accounts, and operational trends. If they see clear, logical connections between past results and future expectations, their confidence will increase, and they’ll perceive less risk in your business.

Scientifically Verify New Opportunities

If your business is expanding into new markets, launching new products, or entering untapped areas, buyers will want to ensure the opportunity is real and achievable. This is where scientific and independent verification comes into play. For example:

• Market Size and Demand: If your plan projects strong demand in a new market, back it up with independent market research, industry reports, or customer surveys. Buyers tend not to take optimistic projections at face value – they want hard data that proves the market opportunity exists.
• Competitive Analysis: Demonstrate a clear understanding of the competitive landscape in new areas. Who are your competitors? What is your unique advantage? Buyers need to see why your business is positioned to succeed.
• Execution Plan: For new opportunities, a step-by-step execution strategy is essential. Include timelines, milestones, and resource requirements so buyers can see how the plan will become a reality.

By independently verifying new opportunities, you give buyers confidence that the upside potential is achievable, reducing their perception of risk.

Allow for Sensitivity Analysis

Buyers will not just take your business plan as presented – they’ll stress test it. This means they’ll perform sensitivity analysis to understand how changes in key assumptions impact the business. For example:

• What happens if revenues grow slower than expected?
• How do margins hold up if costs increase?
• What’s the impact of delayed entry into a new market?

To prepare for this, it’s important to understand the “moving parts” in your plan – key metrics like revenue growth, costs, margins, and capital expenditure. Consider creating different scenarios – such as a base case, an optimistic case, and a conservative case – to demonstrate you’ve thought through multiple possibilities. Buyers will appreciate this level of detail and the reassurance it brings.

The More Detail, the More Confidence

A detailed business plan gives buyers the information they need to make an informed decision. It minimizes ambiguity, reduces perceived risk, and helps them see the value in your business. By covering areas like growth opportunities, required investments, and return on investment (ROI), you paint a clear picture of your business’s future potential.

Final Thoughts

Your business plan is more than just a document – it’s a critical tool to support your valuation and build buyer confidence. Springboard brings years of experience in crafting business plans that resonate with buyers. We understand precisely what buyers are looking for and collaborate with business owners to create and refine plans ahead of a sale.

By grounding your plan in historical performance, scientifically verifying new opportunities, and allowing for sensitivity analysis, you build a strategy that stands up to scrutiny. The more detail and transparency you provide, the more comfortable buyers will feel – and the more likely they are to recognize and pay the full value of your business.

Investing time in building a credible plan now will pay off when it matters most.