Don’t Let Your Business Plan Collect Dust: When (and Why) to Review & Update This Vital Document
Many companies only create a business plan when seeking outside funding. This is unfortunate as there are many advantages to an internal business plan. Utilizing a business plan internally can significantly increase the odds you’ll be successful. However, a business plan that is never updated will quickly become irrelevant.
Your business plan is meant to provide a framework for your company by laying out goals and creating the foundation for the steps you’ll take to reach them. It is the roadmap for how you intend to succeed in the world as you expect it to exist. Unfortunately, one of the only guarantees in business is change. So then, why bother writing a plan, let alone updating it?
Tim Berry, American entrepreneur, business author, and founder of Palo Alto Software, explains it this way: “Business plans are always wrong. That’s because we’re human. Business plans predict the future. We humans suck at predicting the future. Paradox: nonetheless, planning is vital. Planning means starting with the plan and then tracking, reviewing progress, watching plan vs. actual results, and correcting the course without losing sight of the long-term destination.”
You should make it standard practice to review your business plan annually. This will optimally align with the end of your fiscal year when you are likely evaluating the prior year and developing the budget for the following. Beyond that, how often you evaluate your business plan will vary based on the specific circumstances of your business but will often be prompted by specific events.
There are many things outside of your control in business. At the top of that list is the performance of the overall economy. The current pandemic is the perfect example. Even if you are not among the thousands of businesses that were directly and immediately impacted, the pandemic will have a long-lasting ripple effect. When economies are expected to enter a recession or endure other disruptions, it is important to make sure your business is positioned to survive and/or is prepared to adapt as needed.
Legal & Regulatory Changes
In addition to the disruption to the overall economy, many specific industries and types of businesses are only permitted to operate within certain occupancy limits. They also must follow certain types of safety practices like wearing masks and maintaining social distancing. These are examples of regulatory changes. When new laws or regulations take effect that apply to your business, you should review your business plan in order to examine how the changes will impact the way you perform business, either from a cost or operational standpoint.
The actions of competitors will create many of the threats and opportunities your business will face. Any time a major shift occurs, such as main players entering or leaving the market, adjusting prices, or changing their value proposition, you should revisit your business plan to reposition your company accordingly. It’s possible you may make no changes at all but nevertheless, going through the business planning process will help reveal whether or not it will be necessary.
If key employees leave the business, it may be difficult to immediately or directly replace their role, especially in small businesses. In certain instances, it is more advantageous to restructure roles based on the business knowledge and talent of other management and key staff. When losing key employees, it’s an opportune time to evaluate how the business runs overall and see if there are ways to improve.
Preparing for Growth
Even if your business is planning for substantial growth without requiring outside funding, this is still an important time to update your business plan. Growing your business will likely require hiring new employees, expanding your marketing efforts, changing standard operating procedures, and updating financial projections. The best place to document all of these changes and the foundational plans to keep the growth plans on track is within the business plan.
Whether you are creating your business plan for the first time, revising it in lieu of market conditions, or conducting a routine annual review, Joorney’s team of advisors, consultants, and business plan writers can make the process easier and more productive. We can create your plan from scratch, edit/update an existing plan, or dive into detailed market research or financial modeling.