A well-written business plan has its purpose. It can open doors, help secure startup financing, and lay the groundwork for a successful enterprise.

But as business challenges evolve, a young company’s focus should also change. If all goes well, companies should actually outgrow their initial business plans. When it’s time to seek additional funding for growth, it’s time to create a growth plan.

Some companies mistakenly believe that their original business plans can simply be refashioned and reshaped into growth plans. In reality, they are two completely different documents. 

Growth vs. startup: plan accordingly

An initial business plan, or startup plan, is mostly about creative speculation. It contains industry observations and perceptions and makes educated market assumptions and projections. It also identifies a general customer group and targets a particular segment.

Over time, a company moves from exploring ways to get off the ground, to running a business with consistency and purpose. Organizations develop better understandings of market trends, as well as the demographics of their industries. That information, experience, and operational success should become the foundation for a truly focused growth plan.

A sound growth plan replaces startup speculations with concrete facts and hard evidence. Information about the competitive environment is no longer supported by guesswork, but confirmed by real-world experience and backed up by hard data. Market assumptions become valid observations. 

The plan should reflect the lessons and industry insights that a business has gained since its inception. By and large, a growth plan must demonstrate the company’s better business practices, reveal its improvements, highlight productivity measures, and clearly define how success will be sustained to the next level. It should offer specific information on expansion plans or product rollouts, and include particular emphasis on operational details.

Facts, figures, and finances provide assurance

Details and data are what matter in a growth plan. After all, a growing business has something a startup doesn’t have -- a track record. A financial history and real operating results give a growth plan far more credibility than any startup plan could possibly generate.

With this in mind, financial projections should now be based on actual performance. A growth plan must explain how the market, and the business, is poised to grow, and summarizes strategies for sales, marketing, and operations. It should detail ways in which the new capital will be spent on helping the business grow.

When seeking additional funding or pursuing investors, a growing business should ideally be able to show steadily increasing revenue. Of course, most small businesses experience a few bumps along the way. This isn’t necessarily detrimental, as long as a rebound from any loss is clearly evident and supported by results.

Finally, a growth plan must address risk. Here, historical data can once again provide a young business with a definite advantage. By establishing a credible track record, a company can demonstrate its risk management abilities and confirm its value as a prudent investment.