Do you even need a business plan to buy an existing business? It's a valid question. It depends mainly on the circumstances of the sale. Is the business in question openly for sale? Is it in financial distress? Are you trying to acquire it to subsume its operations into your own business model? Who will provide the financial compensation required; you, a private investor, a bank loan or LOC? These issues can all bear on whether a business plan is required to have your application. The owner of the business in question and the funding source behind your interest will be the deciding factor in whether you need this presentation document and, in turn, how detailed it should be. If you know you need a business plan, some of the questions worth considering include the following:
What level of detail should the plan show about the business being sold?
What is the market opportunity for this new business over the next 3-5 years?
What industry trends play into keeping this venture going?
How will you market the company more successfully?
Will you retain any portion of the existing management team, and if there are gaps in the executive team, how will you fill them?
Can you reasonably estimate sales and expenses for the coming five years?
If you intend to fold the business into another company or the existing business purchase is simply part of a roll-up strategy, some of these details may not be required, but it depends on the situation. If appropriate, speak with the business owner and your funding source(s) before writing the business plan. It could save you a lot of time and headache to know how to tailor the document from the get-go. Once you have a feel for the parameters, give us a call at 877-453-2011 or 503-226-4400. In the 8,000 business plans that MasterPlans has written for start-up and existing business clients, we've seen our fair share of proposals targeted at the purchase of existing businesses. We can help you know what pitfalls to avoid and which elements to emphasize in your business plan to buy an existing business.
