How Often Should you Revisit your Small Business Plan?
While there are many things that differ from industry to industry, and even from business to business, there are a few things that remain constant for every business owner. One of these is the need for a formal business plan. A business plan is required for everything from applying for a loan from a bank to recruiting business partners and top level employees, so it pays to have one that is both up to date and up to industry standards at all times. This isn’t a one time thing either. As your business grows and the markets you are in change, you are going to need to reflect this in your business plan with edits, additions and omissions. Something as simple as one key piece of information that is either wrong or outdated can make your business plan look bad no matter how clean the rest of it is, so keeping this document tuned up and ready to be looked at is a wise strategic move.
But how frequently should a business plan be edited? Small business owners are pressed for time as it is, and don’t need to add extra burdens to their plates that are not necessary. For many, this means that their business plan is near the bottom of their to do list and never gets edited at all. Instead of letting your business plan fall to the wayside, you should think strategically and create a schedule for updating it that makes sense. What should factor in to how often you edit your plan are a couple of important details.
- How fast does your industry change? If every day there is a new thing to deal with, that means that predictions made in your business plan are going to become obsolete within a matter of weeks. If this is the case, then a monthly or bi-monthly revisiting of your business plan is a good idea. The ten or so minutes you spend editing minor changes an save you hours if you wait for a long time and your business is performing in an environment that has changed massively since when you began it.
- Have you implemented any strategic changes or rolled out new products? If your business model and your industry are both relatively static, then you might consider updating your plan only once or twice a year to reflect the changes that you have implemented in that period. Sales information for new offerings and predictions of sales should be adjusted as well as the numbers involved in paying your overhead. New products will usually bring along new costs with them.
What changes should reflect on a business plan? It can be hard to know what exactly should be updated on a business plan, but in general, anything that has the potential to influence the strategy or cash flows related to your business should be documented. Any change that has the potential to effect your predicted revenues, whether for better or for worse, should also be put down on paper. Some business owners will neglect to document major changes in management with the rationale that as long as business processes don’t change then there is no need to write that kind of thing down. In reality, this reflects a major change in the fundamental structure of the business itself, and therefore business owners should try to ensure that they document more as opposed to less.
Keep your old business plans on file. As your business plans are edited to reflect changing conditions, they are useful to go back over from time to time to see how accurate your predictions really were. If you find there is a disconnect between what you are projecting for your business and the reality reflected by your edits, then that should be taken seriously as well.
Photo Credit to tec_estromberg on Flickr