05 Mar The Importance of Updating Your Business Plan
A business plan is a formal document that guides you through each stage of starting and managing your business. However, some business owners make the mistake of creating a business plan and then never looking at it again. But it is vital to treat it like a living document. Updating your business plan regularly can help provide greater clarity on the different aspects of your business and lead it to further growth.
Business Plans: What They Are and Why They Change
If you don’t already have a business plan in place, you may be falling behind. Business plans serve as a roadmap for everyone involved in a company. This includes employees, investors, and the founders. Even within a smaller business, it can be difficult to keep everyone aligned with the group’s primary goals and their methods used to achieve them. A business plan serves as a reference when this confusion arises.
You also need to establish a plan for how to use it and when to update it. The first version of a business plan will serve as a valuable internal tool. Your business plan should plot a course for the first months of the firm’s life. Like most plans, though, things don’t always turn out the way they’re supposed to. Employees come and go, competitors shift their strategy, and unexpected roadblocks arise. To succeed, a business needs to constantly adapt to these inevitable changes. That means its official business plan must be routinely revised.
Updating Your Business Plan
According to Ernst and Young advisor Jeffrey Tannenbaum, you should be updating your business plan at least once per year. This gives business owners and their teams a chance to evaluate their performance in accordance with their prior year’s goals. Based on your evaluation you can make necessary changes and take advantage of new growth opportunities. That often requires tapping into small business financing to bolster working capital and move forward with new projects.
However, as Tannenbaum and others often warn, this shouldn’t be the only time in a year when business leaders strategize and set objectives. Many companies set monthly and quarterly target goals for revenue, expenses, and other key performance indicators. They also benefit from setting firm deadlines for their goals and constantly monitoring and analyzing their progress. If things start slipping, strategic changes need to be made as soon as possible instead of waiting for the next planning session. Again, a short-term business loan can be the perfect tool to launch new projects without sacrificing daily operations.
Managing Change and Uncertainty
As you continue utilizing and updating your business plan, you might grow frustrated with the process. What’s the point of having a business plan at all if it’s constantly changing, and assumptions rarely prove to be correct?
Tim Berry, a guest writer at Entrepreneur.com, explains this conundrum in brief.
“You have to realize your business plan is wrong,” Berry wrote. “All business plans are wrong. Plans are about the future – and nobody gets the future right very often, so keep the plan fresh and watch closely as reality moves forward.”
Berry’s point is that the content of a business plan isn’t as important as how it’s used in structuring and managing your business and how it’s revised. In the process of updating your business plan, you should examine why certain past projected assumptions were incorrect and adjust future projections accordingly. An updated plan should account for what your business has learned to create a better picture of where it needs to improve.
Managing a business boils down to managing uncertainty. Whether it’s an unexpected opportunity, immediate need for employee growth or an unplanned financial cost, a partnership with a dependable small business lender like QuickBridge helps fill in the gaps. Get in touch today and learn how we are making small business loans better and helping small business owners find certainty in even the most uncertain situations.