Updating Your Business Plan
Should you continuously update your business plan? The answer to this is absolutely yes! Too often entrepreneurs think that a business is a one-and-done deal, but it’s something that should be consistently revisited and updated.
How often should a business plan be updated?
The complete business plan should be revisited and updated at least once a year according to Entrepeneur.com. We would recommend revisiting and updating the plan on a more frequent basis. For example, financial updates can be done on a quarterly basis, while specific sections such as market analysis can be revisited every six months. Luckily, once a business plan has been created, rarely is a complete overhaul needed.
When updating a business plan, it is important to remember that the plan should also reflect the current situation and be relevant within the current business landscape. If something major has happened, it is important to make necessary updates to the business plan to accommodate any changes or shifts. Some common updates that may trigger a plan update include:
Competitor has copied your service and/or product
Competitor has lowered prices, offered additional services/products, etc
The landing of a big client and/or partner or losing of a big client and/or partner
Regulations/laws have changed that may impact the service/product
The business is ready to scale
The economy landscape has changed
Why is it important to keep a business plan updated?
We have written about the importance of business plans in a previous article. In brief, business planning sets up your business strategy, objectives and the necessary steps to move the business forward. It needs to evolve as your business evolves. For example, your business plan should reflect the latest goals that your company hopes to accomplish - these goals are most likely very different than the first ones that were created.
This point most likely rings loud in most, if not all, entrepreneurs minds these past years. With the pandemic of 2020, adjustments to business goals and plans were necessary, and businesses that were unable to pivot and adapt had serious trouble succeeding. Even as the economy opens back up, updates to business plans are essential (see this article for some interesting tips on creating a post-covid business plan).
Updating the business plan helps entrepreneurs reassess the current state of the market, identify new competitors, and align all partners, co-founders, and investors, which ensures that everyone is 'rowing in the same direction'. As we like to say here at iota; a good business plan is never finished! Entrepreneurs should be revisiting it consistently.
What parts should be getting updated?
When done well, high level components will not change often or at all, these include your Vision, Mission and Values, the fundamentals of your direction and culture. Only in rare circumstances would these change, such as a complete change in direction, product offering or significant growth. Examples of other areas that may be impacted are as follows:
Goals - These would typically only be updated for large changes, such as a new board of directors/councillors, amalgamations or download of additional responsibilities from higher authorities.
Objectives - Objectives may require updating based on the above, but also legislation changes, changes in executive management, changes in organizational structure or changes in services offerings.
Strategies - A good strategy is linked to many objectives and aside from the performance measures and projects changes below, they are typically merged or removed completely, or changed due to incidents.
Performance measures - Ideally (for trend data) these are not updated, but they are, normally due to legislative changes, new business rules or because they were not quality measures to begin with.
Projects - These change the most, as there is typically a floating line, which can be impacted by project overruns. They also change due to a lack of prioritization, including risk analysis and customer need.
Getting help updating your business plan
It can help getting third-parties to keep your business plan updated. Most entrepreneurs don’t have time to research if laws and regulations have changed and how these changes may impact their business. Moreover, a complete competitor analysis can take a founder's valuable time. Finding a third party to review your business plan and make necessary updates can ensure that your time is focused on your business's day-to-day.
Iota Consultants has extensive experience helping companies with the business planning process. Feel free to contact us today.
When was the last time you updated your business plan?