We’ve talked recently about how to put together your business plan when first starting out as the owner of a company. But what if you’ve been a company owner for some time, or for over a year, how often should you update your business plan and how do you go about it successfully?
Your business plan should never be an after-thought, it was important to you once and should remain so to help you fulfill your potential.
Locked Away for Special Occasions
Most people never look at their business plan after first drawing it up. It’ll be locked away in the safe or in that drawer you’ve filled with many other ‘important’ documents that you’ve only ever looked at once.
The only time a business plan will be removed from the pile of never looked at documents is when a loan is required and you have to show your business plan to guarantee your vision and a return, but isn’t this a little bit short-sighted?
Maximise the Potential of Your Business
Updating your business plan on a regular basis is a great way to maximise your business potential. A living and breathing document, which you have written as a plan for your business, will provide you with the guidelines with which to evolve and grow as a company. At the very beginnings of your company you’ll have sat down and put your heart and soul into this business plan. It sets out your major goals and the main themes of development strategy and cashflow predictions. If you don’t think to use this on a regular basis you risk aimlessly drifting through your business life, unable to navigate through uncharted territory as you’re not sure where you are in relation to your initial goals, and which direction you should head in to reach your original goals.
Another reason you should keep your business plan updated and in sight at all times is that it will set out potential pitfalls and risks you have recognised from the outset. Keep this updated and you will, over time, begin to avoid more and more of these problems as you continuously learn from your mistakes and update the document that is guiding your future.
Contents of an Updated Business Plan
As mentioned in the previous ‘The Benefits of a Well Thought Out Business Plan’ article, there are a few key things that need to be mentioned within a business plan. This should include an executive summary, which can be found at the very beginning and nicely condenses all the key facts to be found within the longer document. This executive summary should sparkle and portray your business as an exciting one to be attached to.
When updating your business plan you can add the history of your business, where you’ve come from and where you plan to be, backing up your growth with cold, hard facts. Your words are obviously important in spelling out your journey so far and the prospective and desired journey in front of you but the most important section of a business plan, which must be updated accurately and regularly, is the financial information. Your figures have to make sense otherwise your planning and/or attempts to secure financial investment will fall apart. Ensure research is thorough to include accurate cashflow predictions for the upcoming 12 months, sales forecasts and a details costs analysis broken down into easily digestible parts. You should also put together a list of best case as well as worst-case scenarios, showing that you understand all the risks at play as well the potential to succeed. A successful business owner is one who isn’t blinkered to all outcomes.
Of course, a business plan isn’t a guarantee of success, but it can go a long way to keeping your focus clear for your company and providing a detailed map for the future. Keep it updated on a regular basis, adding key features and lessons learned as you move through the first few months and years of your company. Add key statistical and financial analysis that is important and move with the times. Your short- term aspirations, goals and cashflow may change semi-regularly, but your long-term ambitions will remain in the same ballpark. By maintaining an up to date business plan you’ll go a long way to reaching those goals.