Updating Your Small Business Plan
A solid, focused, well-written business plan is about more than simply securing funding when you’re first starting a business. With the right small business plan, you have a map of the future. You have in-depth directions on how to get your business from where it is today to where you want it to be.
Yet, as any small business owner can tell you, things change. The market might experience some upheaval, and so you adjust your business strategy on the fly. After a couple of years, your small business plan might be rather irrelevant to what you’re actually doing on a day-to-day basis.
To take advantage of the benefits a small business plan offers, you need to make some updates. Here are some factors to keep in mind as you go through that process:
•You should review your small business plan at least quarterly. For your business plan to be meaningful, it has to provide a clear direction for your business. If you’re not following your business plan, you may not be on the road to success. Likewise, major changes can happen in a relatively short period of time. By reviewing your business plan each quarter, you can see whether you need to make some tweaks or changes – either to the business plan or to your business’ operations.
•You should revise your small business plan at least once a year. Even the best business plans rarely wind up executed exactly as written. Your business needs to be agile, and sometimes that means making an adjustment (or several). Plan an annual business plan review process that involves you, your suppliers, your customers, your employees, and your financial and tax advisors.
•Regularly review your value proposition. Think about what products or services it is that you offer that customers are buying, and which are most profitable. Identify what problems you’re solving, and what other solutions there are on the market for that problem.
•Identify new market segments. Look at all of your product or service offerings in terms of the buyer or channel. Are there related market segments you could be reaching, or are there different ways of looking at your market segmentation that could be helpful? Consider for a moment other solutions you could offer to your primary markets, or consider new markets where your business could reach out.
•Identify new problems that need to have solutions. Spend some time looking at businesses in your area or niche. Discover what trends are taking place, and what technologies are being put to use. This will help you either expand your offerings, or better focus your offerings where they can meet the most needs.
•Look at your actual progress. A small business plan has projections for profitability and sales, but it’s rare that a business hits those head on. Most businesses either fall short or wildly exceed those projections. Create a table that shows you your projected results, your actual performance, and the variance between them. That will help you create a more accurate projection going forward.
•Make changes when you have dramatic events. If your suppliers raise their rates by 30%, your business plan becomes immediately outdated. Every time there’s a major event that affects your business like this, pull out your business plan. Plug the new data into the plan (along with actual data you’ve gathered from your sales and such so far this year) and create a new projection.
•Don’t forget to review small business plan activities that aren’t financial. A good business plan will have all sorts of tasks and milestones, not all of which can be reflected with financial data. Measure the results from these activities and goals, as well as financial projections.
•Be certain before you make a change. Any number of things can and should trigger a change to your business plan. However, before you make major revisions, make sure it’s a change that is both necessary and that you can live with in the long term. A short-term problem shouldn’t impact your long-term business plan significantly.
It can feel very chaotic when you update your small business plan on a regular basis. Paradoxically, keeping your small business plan regularly updated actually helps to bring order to what is otherwise a chaotic business. Your business plan is integral to the long-term success of your business, and an important part of your overall strategy. Know when to make changes, and then make changes that will better reflect your business realities and that will carry you forward into the future.
A tax professional can help you revise your small business plan.
[IMAGE CREDIT: Some rights reserved by Yodel Anecdotal]
