How to Update Your Business Plan
Small business owners who treat their business plan as if it’s set in stone set themselves up for unnecessary challenges in the future. Now more than ever, small businesses need to be flexible and responsive to changing conditions.
The best business plans are living documents. They’re updated and adjusted constantly as a business grows. Change is necessary as initial plans get course-corrected and external factors like market pressure, investor demands, and economic swings impose themselves.
Treating the business plan as a growing, changing document lets you maintain order in the midst of entrepreneurial chaos. Businesses that leave themselves room to adjust their business plans can better respond to opportunities and challenges alike.
Why Does Your Business Plan Need Adjustment?
A business plan that never changes will eventually become obsolete. Once this happens, it will affect your business in one of two ways: Either the plan will be abandoned and the business will proceed without one, or the plan will hold your business back by keeping your teams stuck in outdated processes in which they’re chasing inefficient or impossible goals.
“The best types of business plans are dynamic,” online entrepreneur Dale Cudmore writes at Digital.com. They’re clear, concise, and easily updated as the plan begins to generate results.
Certain events may indicate it’s time to update your business plan. Those events include:
Identifying a new source of business
A new competitor
Responding to changing market conditions
Complying with new legal or regulatory requirements
Ensuring that your actual results match your plan’s expectations
The Adjustments You Should Make Every 6–12 Months
Any change or anything you learn about your market or your customer is technically a moment in which the business plan could be updated. But you don’t want to get bogged down in constantly managing business plan adjustments. Instead, schedule regular updates throughout the year.
For example, you could schedule an annual update where you take a look at the big picture. Those updates could include:
- Reviewing your value proposition with new input from customers.
- Reconsidering your market positioning.
- Seeking out information on business and economic trends to spot new problems your organization can solve for customers.
A narrower semi-annual or mid-year adjustment, then, could be a moment in which you review the tactics you’re using to pursue those big-picture objectives, says Bill Conerly, an economist and member of the Oregon Governor’s Council of Economic Advisors.
Conerly recommends a structured, scheduled approach to business plan updates, as this tends to call attention to the changes that will make the most difference for your business’s growth.
The Adjustments You Should Make Every Month or Every Quarter
A quarterly or monthly review could allow for more granular considerations of your company’s finances. Here, the adjustment would focus on how each month’s financial data matches your forecasts.
Eric Goldschien, an editor and writer at Fundera, says it’s probably time to update your business plan when you notice you’re missing financial goals month after month. That update would focus on aligning your overall strategy with the realities of doing business in your market.
Losing money also calls for an update in order to reduce operating costs or other expenses, Goldschien writes. Acquiring new people or investing in new technology, likewise, calls for a reconsideration of the expectations laid out in your business plan.
Tie Each Update to Your Goals for Continued Growth
Any change you make to your business plan should be framed in accordance with whatever business objectives you want to achieve.
Jordan Shneir at Camino Financial recommends taking a holistic view of the business when setting growth goals. Don’t just look at financials; also look at your marketing plan, your sources of funding, and your operations to see where an adjustment could create a path to business growth.
For example, imagine you’re opening a second storefront in another city. This might mean it’s time to look at supplier relationships. Perhaps one vendor relationship is strong because your businesses are in the same neighborhood. Would that supply chain extend as cleanly when you scale outward from the neighborhood?
This kind of specificity—describing how vendor relationships connect to larger business goals—makes for a stronger business plan going forward. A good business plan contains sufficient details to explain the how of your business’s operations as well as the what and why.
Engaging Your Team in the Business Plan Update
The responsibility of an update belongs to the business’s leadership. However, the business plan “should be reviewed by all stakeholders to ensure everyone agrees on the direction the company is taking,” says Yvonne Petterson, a business consultant at Ground Floor Partners.
Consider setting goals for each member of the team when it comes to business plan execution and adjustments, as well.
David Henzel of LTVPlus describes his business’s planning process as creating both a “long list” of tasks to accomplish over the next year and a “shortlist” of tasks to accomplish by the next business plan review session. “This helps us stay organized and break our larger goals into smaller, manageable tasks,” says Henzel.
As the business grows, goal-setting can help leadership keep teams on track without requiring every employee to be involved in business plan adjustments. Clear goals can help everyone in the business understand where, why, and how the business is aiming at a certain achievement.
To summarize on updating your business plan:
- Stay alert to changes that could affect your plan’s efficacy.
- Review the plan at regular intervals to stay on track.
- Tie business plan updates to concrete business goals.
- Generate buy-in at every level of your business.
Article
Complete Guide: Setting Up Your Business Finances for the First Time
Article
The Complete Guide to Channel Sales
Article
How to Attract Customers to Your Small Business
Guide
The Beginner’s Guide to Starting a Small Business
Article
6 Business Metrics That Matter For SMBs
Article
Small Businesses Need Accountants and Bookkeepers to Succeed
