Why review the business plan?
Most buyers obsess over historical financials and ignore the forward-looking plan. That is a mistake. The plan tells you where the seller thinks growth will come from, how realistic their assumptions are, and whether the business has been managed proactively or reactively.
If the seller cannot produce a written plan, that is a signal in itself. It may mean the business runs on habit, not strategy — which is fine for a stable cash cow, but dangerous if the industry is changing.
Executive summary & business model
The first page should clearly state what the business does, who it serves, and how it makes money. Look for specificity, not fluff. "We sell premium coffee to urban professionals" is better than "we provide world-class hospitality experiences."
Questions to ask
- Is the revenue model clear? (Product sales, recurring subscriptions, project fees, royalties?)
- Who are the top 3 customer segments and why do they choose this business?
- What is the defendable advantage — location, brand, relationships, IP, speed?
Market analysis & competitive position
A credible plan shows the seller understands the market size, growth rate and competitive landscape. In Australia, you can cross-check industry data using IBISWorld reports, ABS statistics and ATO benchmark data for the business's ANZSIC code.
Watch for plans that claim the business will grow faster than the industry without a clear reason. If the café market in that suburb is growing 2% per year and the plan projects 15% growth, the seller needs a concrete driver: new apartment tower, extended hours, a menu pivot, or a digital ordering system.
Financial projections & assumptions
Projections are where optimism meets reality. A well-built plan will have a sensitivity table showing what happens if revenue drops 10%, 20% or 30%. If the seller only gives you a best-case scenario, build your own worst-case.
Assumptions to verify
- Revenue growth drivers and timing
- Margin assumptions vs historical averages
- Capex requirements (fitout, equipment, tech)
- Working capital needs
Common over-optimism
- No customer churn or attrition built in
- Marketing spend held flat while revenue doubles
- Wages not increasing with headcount
- No allowance for economic downturn
Operations, systems & key staff
The operations section should outline daily workflow, supplier relationships, technology stack and quality control. For a buyer, the critical question is: can this business run without the current owner?
If the plan assumes the owner works 60 hours per week and knows every customer by name, the business is not a system — it is a job. That is fine if the price reflects it, but it is not an investable asset.
Key person dependency checks
- Are there written procedures for core tasks?
- Do key staff have employment agreements and non-competes?
- Is there a documented handover plan for the first 90 days?
- What systems are cloud-based and transferable (POS, accounting, CRM)?
Growth strategy & contingency planning
Every plan should have a growth chapter and a risk chapter. Growth should be specific: "Launch online ordering by month 3, target corporate catering by month 6, introduce loyalty app by month 9." Risk should be honest: "If revenue drops 20%, we cut marketing and renegotiate the lease."
In Australia, also look for references to regulatory risks: lease renewal timing, council zoning changes, liquor licensing conditions, and franchisor policy shifts if applicable.
Red flags in business plans
Revenue projections with no clear customer acquisition channel or marketing budget.
No mention of competition — or dismissal of competitors as 'not a threat'.
Financial projections that show profit margins rising forever without explanation.
Vague language like 'leverage synergies' or 'disrupt the market' with no specifics.
No contingency plan for the first 12 months of ownership.
The plan was written in a week by a consultant the seller hired after listing the business.
Turn the plan into numbers
Run the seller's projections through our analysis tool to see if the asking price makes sense under realistic assumptions.