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10 Reasons to Update Your Business Plan - Why, When & How

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Overwhelming PlanIf you're wondering when to update your business plan, here are ten indicators it may be time:

  1. Someone wrote "Update Me" in the dust on your current business plan.
  2. You vaguely remember creating your business plan about the same time you bought your first fax machine.
  3. When asked if they've ever seen your company's business plan, your employees laugh and reply, "Business plan? This company has a business plan? I don't believe it!"
  4. You ask eight different employees to identify the top three projects the company is working on and you get eight different answers.
  5. Projects and project budgets drift and are regularly "cannibalized" by new projects.
  6. There are regular turf battles across departments on whose project is more important.
  7. Your company no longer does what your mission statement says you do.
  8. Your current company vision is similar to: As a premier company, we will provide exceptional services so that we may exceed our customers' expectations.
  9. The economy has changed. Regulations have changed. There are new competitors and new business models challenging your products and services.
  10. Another year has passed.

You probably need to update your plan, right? However, before you dust off your old one, stop and ask yourself a very basic but important question:

"What do I need this plan to do for my company?"

"Do I need an updated plan to share with my bank or an investor to support my request for credit or capital? Do I need an updated plan to reshape the focus and direction of the company given changes in our industry, the economy, or other factors? Do I need an updated plan for my team to use as our roadmap over the next few years? Or, do I need to update my plan because it's covered in dust!"

Whatever your reason for realizing an update is in order: Great! However, you need to be clear and honest with yourself and your team going into the planning process. Whatever the reason: financing, strategic, or business operations, if you want your business plan to actually be of use to you, it needs to become one of your primary management tools that you consider every day - and I do mean every day. It's not doing you or your company any good if it's sitting on the bookshelf. An effective plan takes time, dedicated thought, and coordinated planning to develop. Updating your plan doesn't have to be painful. However, it needs to be purposeful and then it becomes incredibly useful. I'll share why and when to update your business plans in this article, and in a future blog we'll talk about how to update it and manage it.

So why do you create or update a business plan? As suggested above, first determine what purpose the plan will serve. If it is a financing request, its intended purpose is to clarify financial need and payback terms. You then need to include relevant, clearly outlined financial projections of capital need, revenues, cash flow, expenditures, etc., over the period in play. A good Certified Public Accountant can help identify and prepare the appropriate financial statements, schedules, payback projections, and charts to bolster your case. However, remember, the reviewers are going to need to be "sold" on you and your team's management capabilities, business/market strategies, and overall projected "Business Plan" to ensure the success and payback you're projecting. You're asking a bank or investor to "be sold" on your capabilities to do what you say you can within a specified time period. You need to consider and address all of the possible "But what if," scenarios they may ask. Remember, they're trying to protect their investment. If they believe your plan, you may get the money. If they don't, you won't.10 Reasons to Update Your Business Plan

A strategic plan and a business operations plan are more internally targeted as the audience is more often the board, management team, and employees. Stakeholders and others also review the plan, but a strategic or business operations plan outlines organizational direction and major projects to move the organization forward. With these types of plan, you're not focused on "selling" your qualifications to anyone. The purpose of a strategic plan is to clarify where your organization needs to be three or more years into the future to ensure its viability and success - i.e., your company's big goal; its vision, and then broadly, how you will get there. A business operations plan then details the goals that need to be accomplished to move your organization toward its vision.

Given the rapid changes in technology, the economy, regulations, etc., my clients are now limiting their strategic plans to roughly 3-5 years out; business operational plans typically focus on the next 1-2 years so they can adjust to environmental conditions as needed. Business Operations plans serve as a roadmap for management on what needs to happen and when to ensure there is a well-orchestrated coordination among all departments and projects to move the organization forward. When created effectively, strategic and business operations plans become critical management project planning and tracking tools that are referenced regularly.

Now you know when and why you would update your business plans. In a future blog, we'll talk about how to update and manage your plans.

Copyright MMX Liz Weber, CMC, CSP - Weber Business Services, LLC.

(As printed in the PA Business Woman Magazine MMX)

Liz Weber CMCLiz Weber, CMC CSP

Liz Weber coaches, consults, and trains leadership teams. She specializes in strategic and succession planning, and leadership development.

Liz is one of fewer than 100 people in the U.S. to hold both the Certified Management Consultant (CMC) and Certified Speaking Professional (CSP) designations.

Contact Liz’s office at +1.717.597.8890 for more info on how Liz can help you, or click here to have Liz’s office contact you.


Copyright © Weber Business Services, LLC All rights reserved.


 


11 thoughts on “10 Reasons to Update Your Business Plan - Why, When & How”

  1. Jones says:

    You truly know your stuff. Truly wish I've read this sooner! I feel so ignorant haha.

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      Thanks for the comment! I'm glad you found the information helpful. It's never too late to learn!

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Posted by Liz Weber CMC on March 23, 2010 in Strategic Planning and tagged , , , , ,