Every company should start with a single document: the business plan. However, once you’ve used this to persuade the bank manager and any investors that you’re a viable business, it often gets put on the shelf, never to be looked at again.
This is a mistake, because updating your business plan is a vital part of keeping your business on track for growth, and ensuring that your company keeps its focus. The business plan defines where you think your company is going, and the routes that it will take to achieve success – keeping under revision means you can focus on these important elements.
And, if your company doesn’t have a business plan, then now is a good time to write one – even an established business, no matter what size, can benefit from the exercise. Business Link has a guide to creating a business plan, and there are samples to help you to start at the Bplans web site.
Why update your business plan?
Most of your time running a business is spent on the small stuff - the endless day-to-day detail that any manager of a small company is inevitably a party to.
But being deeply involved in the detail can mean that you lose sight of the big picture, the high level stuff that defines your business.
How often should you update your business plan? This will depend on the type of business you have, and how fast you are growing, but you should revisit it at least every three months to check that you are meeting the targets you have set yourself, and that nothing is deviating too far from the plan. If there have been changes to your business which affect the goals in your plan, then now is the time to rework it.
In some cases, you may even need to redefine the business that you’re in – as Richard Moross found when starting online print company Moo.com, you may start with a single product idea which turns into several products – none of which were part of the original business plan.
The elements to update
There are four key elements to look at when reviewing your business plan:
Reviewing your achievements
Updating your SWOT analysis
Updating the financial information
Updating action plans
Click on the links above to find out more about each element, and for details on how to revise them.
Implementing the update
If you’re making changes to your business plan, none of them should be simply cosmetic: your business plan should be a tool for making planned changes to your business, and in order to do that, you need to give every point associated actions.
Then, start to plan out when these actions will be implemented, giving each one a priority and – if possible – delegating them to your staff.
Step one of revisiting your business plan must include an honest review of your achievements, and how they have matched up to the goals which you set yourself in your first draft.
You will almost certainly find that you’ve missed some goals, while over-achieving on others. Take a good hard look at goals you have missed. Are they still essential to your business? If not, can you afford to redefine them in terms which are more vital to you?
However, don’t be tempted to rewrite all of your goals in line with things that you’ve already achieved. This is the equivalent of scrapping your daily “to do” list and rewriting it in line with things you’ve already done – it will make you feel good in the short term, but is rather less healthy long-term.
Updating your SWOT analysis
Every business plan should include a SWOT analysis, designed to identify the Strengths, Weaknesses, Opportunities and Threats relating to your company. Updating this will be a key element in revisiting your business plan. In particular, take account of the following:
- Do you have any new competitors?
- Have market conditions changed in a way which represents a threat – or an opportunity?
- Has the growth of your company revealed any potential internal weaknesses, such as a lack of key skills?
Once you have done this analysis, you should use it as a guide for creating action plans which address any weaknesses and seek to take advantage of any new opportunities.
As the owner of the business, you should always have a clear idea of how the finances are going – but updating your business plan is a good opportunity to get a more detailed picture down on paper.
To do this, you will need to work with your accountant to prepare an overview of where you are compared to your original plan. Again, it’s important to be as honest as possible, and not to attempt to skew the plan in favour of the figures.
Revisit your financial forecasts, risks and requirements, and include figures comparing your previous sales and turnover as well as including any outstanding debts. In particular, look at how cashflow has developed: many businesses fail not because of lack of business, but because of poorly-planned cashflow. And, of course, include figures for anticipated profits and losses over the next two to three years.
The final step is to collate all of the action points that have come up in the rest of your analysis, and collate them into a single set of actions. Delegate each of the sets of actions to the appropriate person in your organisation – don’t sit on them until you think the time is right.
Set up meetings with each of the members of your team to fill them in on the outcome of the work you’ve done on the business plan. Take everyone through the changes, so that they’re fully-informed about the state of the business: it will help them to make better decisions if they have an overview of where the business is going.
Back to top