If yours is like most businesses, you have a business plan and like most business plans, it’s wrong. In all probability, it was out of date the minute you hit “Save” or the ink dried. That’s because a plan is about the future and few get the future right the first time. The truth is, markets and technology are not stagnant. So too, your business plan must be a living, breathing document. It must change as the business changes. That means you need to review it on a regular basis and understand the most likely strategies for growth.
So whether it’s time to brush off or brush up your business plan, here are some things to consider:
What’s in a Plan?
The business planning process is crucial. It causes you to think creatively about your business yet stay on track. In her blog “The Two-Page Business Plan That Can Help You Scale Your Business,” Gini Dietrich, Chief Executive Officer, Arment Dietrich, Inc. suggests a simple two-page plan containing the following content:
- Core values
- Core focus – including purpose, mission, and niche
- The 10-year target
- Marketing strategy – including target market, three differentiators, and process
- The three-year picture, including revenue and profit goals, measurables, and a picture of what success looks like
To measure short-term goals against the long-range plan, she also regularly updates:
- Revenue and profit goal, measurables and goals for the year
- Quarterly “big goals”
- Any issues or challenges that will prevent them from reaching their goals
TIP: The Internet is overflowing with recommendations and templates for business plans. If you currently don’t have a plan or are looking for some best practices, here are a few resources:
- Entrepreneur’s Business Plans: A Step-by-Step Guide
- Tech evangelist, Guy Kawasaki’s PowerPoint Pitch
- Infographic: 10 Keys to a Successful Business Plan
- Top 10 Business Plan Templates You Can Download Free
How Often to Update?
You’ve probably heard the adage “the one constant in business is change.” That should be reason enough to be sure you’re looking at your plan regularly. Many business owners only touch their business plan when seeking investment funds at start-up time. That’s a mistake because a business plan isn’t intended for one-time use. A good plan should set the course of a business over its lifespan. Just as ship’s course can change with the tide, the churning market will impact your plan. What does it look like a year from now? Five years from now? Ten years from now?
There’s more than one correct answer when it comes to determining when you should re-evaluate your plan. What’s right for you depends upon your business, your market, your customers, and any other number of factors. Here are some recommendations for how frequently you should refresh it:
- Annually – At a minimum, plan for a major review at least once a year. Much can happen over a 12-month period, so set aside time for a thorough assessment. Year-end is the perfect time to look at the long-range goals you set and check your short-term objectives against that vision. Determine whether the plan aligns with your business’s current trajectory.
- Every 6 months – Evaluate product information (what’s selling, what isn’t), your customer base (who’s buying, who’s avoiding), and the competition (what are they doing well, who the new players are) every six months. If you take the time to make the updates now, your year-end review can serve a more visionary purpose.
- Every quarter – Review your financials, market and industry statistics, and other details for accuracy. Compare the current period’s performance over the same period last year. Contrast results with forecast and analyze any shortfall or unexpected gains.
- When Something Changes – Your business, your customers, your competitors, and many other factors can affect your plan of record. When change happens, immediately revisit your plan. Consider actions you need to take in light of that development.
- When You Reach a Milestone – Maybe you’ve crossed a revenue threshold, met a target customer metric or launched a new product. When you achieve goals like that, revisit your plan. Consider whether achieving that milestone impacts your short-term or long-range goals.
What to Update
There are no hard and fast rules for this, but a good place to start is with your original assumptions. Have the assumptions on which your strategy was based proved incorrect? You can start with your “old” plan and revise, but make sure you take a fresh approach. Business can be personal, so take special care to distance yourself and be truly objective. Don’t let the current plan box in your thinking.
Tim Berry, contributing business coach at Entrepreneur, suggests the following steps for managing the planning process:
- Talk to your customers and potential customers
Review your value proposition. What are your customers buying? What problems do you solve? What other solutions can they choose?
- Try to come up with a new market segmentation
Segmentation is the grouping or divisions you see in the market. For example, if you normally view your market by type of product, look at it by channel or buyer. If you divide by region, divide by size of buyer company. Think up a new segmentation to give you a fresh view.
- Look at the larger potential market for the problems that need solutions
Look at contiguous businesses. Look at changing trends and technologies.
With periodic reviews of your business and the industry and the right change management, you’ll be able to keep your business running according to plan—whether that plan is to stay the course or continue to grow.