Updating your business plan ensures that the information is up to date and in line with the changing goals of your organization. Here are eight situations where it’s necessary to update your business plan.
It’s been over a year since you updated it
Your business plan is never finished — you should constantly be reviewing and updating it. How often you update it is up to you, but it’s a good idea to schedule regular periods to review and update your plan.
For instance, you could do a minor review quarterly and then conduct a major review at least once per year. This will give you an opportunity to see what’s changed and if there are any outdated items.
You’ve added new products or services
Your company’s products and services are an integral part of your business plan, so when they change, your business plan should change as well. That's because adding new products or services affects your sales projections and how you manage company resources.
[Read more: How to Communicate a Product Discontinuation to Customers]
The competition is changing
Paying attention to what your competitors are doing can help you determine when it’s time to shift your own business strategy. For instance, let’s say a competitor has copied your product or service or is undercutting you on price. You should take the time to evaluate their strategy and decide whether you want to do anything in response.
[Read more: 6 Steps to Market Your Business in a Competitive Market]
The market is changing
Anytime there are changes in the market, you should adjust your business plan accordingly. For instance, businesses that relied on in-store traffic to make sales had to make adjustments during COVID.
Current issues like inflation or fears of a recession could affect a customer’s ability to buy your product or service. Any factors that could negatively affect your revenue warrant reviewing your business plan.
When you started your business, it may have just been you and one or two other employees. If your company has experienced substantial growth since then, it’s time to review your business plan.
You’ve experienced a financial change
It’s a good idea to update your business plan anytime you experience a significant financial change, whether good or bad. For instance, landing a major client is a great problem to have. But serving that client may require more time and resources than your team initially planned for.
Likewise, if a long-term customer cancels a major contract, that will affect your future revenue. Each of these scenarios requires you to revisit your business plan and develop a new strategy.
You’re going through internal changes
Internal changes can require you to update your business plan as well. For instance, let’s say you switch to a new tech platform to make your business more competitive. Or maybe you’ve recently switched vendors to deal with supply chain issues.
Losing a key staff member can also deal a major blow to your business. Perhaps that person had strong relationships with many of your customers, so you need to rethink how your business will operate without them.
[Read more: How to Talk to an Employee About Poor Performance]
Your company has grown substantially
When you started your business, it may have just been you and one or two other employees. If your company has experienced substantial growth since then, it’s time to review your business plan.
And when you update your business plan, it’s a good idea to involve several key employees. Getting buy-in from your employees helps ensure the implementation will be successful.
You’re trying to obtain funding
You'll need to provide a detailed business plan if you’re trying to obtain funding from a bank or investor. When an investor looks at your business plan, they should understand what your company does and your future financial projections.
Your business plan should include:
- An executive summary.
- An explanation of your total available market.
- A description of how you plan to use the funding.
This may sound complicated, but it isn’t if you follow a free business plan template.
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