This article explains when it is recommended to revisit your business plan, as well as suggestions of what to review when revisiting.
You’ve started-up your business and put all the necessary hours, costs, and efforts into creating and setting your business plan. Congratulations, this is a fantastic start to set up your business for a successful future with clear goals, as well as room for growth and development! Woohoo, this must mean you’re done with the business plan and set for a fruitful and well-planned future in business, right? Not quite! While it would be nice if the future went exactly as we planned, that is not the case for most; especially when it comes to the business world with an abundance of external factors constantly presenting themselves. So, instead of leaving those important (not always expected) decisions up to the magic 8 ball, it is essential as a business owner that you revisit your business plan on a regular basis to ensure the plan is meeting the business’s needs, and that your company is on the right track to attain its goals for the future.
You are probably wondering “what is a regular basis?” If you were to ask some business owners, they may say an annual review is what they consider regular enough for reviewing their business plan, while other business owners may consider weekly to be a regular basis. While there are many opinions, most successful businesses review their business plan on a monthly basis for certain aspects, while other matters are included in the annual review. We also can’t forget to plan for the unforeseen, which means your business plan will also need to be revisited when major events occur. Let’s take a look at annual vs. monthly vs. major event business plan updates, as well as what exactly is recommended for business owners to revisit during these periods.
1. The Monthly Update
First it is important to understand what the business plan review process should look like. A business plan review process should include assessing your progress to date, along with an analysis on the best ways to develop and progress your business. It is important to evaluate how your plan has worked to date, as this will give valuable insight on what has worked and hasn’t worked for your business planning process.
A monthly review of your business plan should involve comparing the differences between the planned results you hoped to achieve (objectives), and what you have actually accomplished over the course of the month. Company objectives will vary depending on the structure of the business plan laid out, the type of business, and who created the plan! It is important to understand that financial objectives are not the only objectives that will be included in a comprehensive business plan.
Once you have a clear understanding of what progress has been made, as well as what progress was planned for the month, you are then able to decide what adjustments must be made to your business plan. The final step would then be making the necessary updates to your plan going forward.
2. The Annual Update
It is recommended to do a thorough review and update of your business plan at least once a year. You will need your current plan to be able to review what has and hasn’t worked throughout the year. It is also important that you make sure to take a look at your business plan with fresh eyes for the year ahead. Make sure you don’t get caught-up in all the individual details and forget to see the BIG picture.
Here are 3 major areas of your business plan we recommend reviewing during your annual update:
- Value Proposition: Review your value proposition, also known as your unique selling proposition (USP). Talk to your current customers and potential customers. What are they buying? What problems do your products/services solve? What other solutions can customers choose?
- Market Segmentation: Market segmentation involves dividing or grouping your target market into smaller, more defined categories. Try to come up with new marketing segmentation for a fresh view. For example, if you have a group divided by products they buy, try grouping by income range. Here are 4 main market segmentations:
1. Behavioral segmentation – What benefits do customers want, and how do they use our product? (Purchasing Habits, Spending Habits, Brand Interactions)
2. Demographic segmentation – How do the backgrounds of our customers affect what they buy? (Age, Gender, Income, Location, Family Situation, Annual Income, Education, Ethnicity, Company Size, Industry, Job Function)
3. Geographic segmentation – Where are our customers located, and how can we reach them? What products do they buy based on their locations? (City, Country, Climate, Urban or Rural, Radius around a specific location)
4. Psychographic segmentation – What do our customers think about and value? How do they live their lives? (Personality Traits, Values, Attitudes, Interests, Lifestyles, Beliefs, Motivations, Priorities)
- Larger Potential Market: Look into changing trends and technology for an opportunity to access larger markets. Look into problems that need solutions in larger markets that you could potentially provide your solution to.
3. Major Events
When a major event occurs, it is essential that you update your busines plan to accommodate the changes. A major change may occur internally within the company, or externally within the industry your business is a part of. While major change can sometimes be seen as a crisis, it is important to view them as an opportunity for improvement – especially the improvement of your business plan!
Here are a few examples of major events that would prompt an adjustment to your business plan:
- New location, or a change of your current location
- New owner or added partner
- Financial snags: failing revenue, decline in sales figures, not meeting financial projections, important clients leaving, or important clients joining
- Competitive disruption: technological advancement that disrupts business model
- Applying for financing
- Growing at a fast pace (faster than projected)
Business as Planned
There is a great deal of information in your business plan, and each company may want to be reviewing different items depending on their short and long-term goals. Remember, while it is impossible to see the future, having a plan for the future will have your company better prepared when those unexpected events do happen – and they will, that’s business! Perhaps next time you are in the midst of changes, instead of going with business as usual, ask yourself “Is this business as planned?” If you are answering no to this question, then you have just uncovered a valuable gap to fill in your plan for the future!