If you’re wondering how or why you’d update a business plan you’re in the right place. When you write a business plan you shouldn’t see it as a one-off activity to be ticked off the list and forgotten about. Sure, you need to write one when you start a business, but it’s just as important to keep analysing and assessing the threats and opportunities as your venture grows. Here’s how to update your business plan in simple steps.
Why should you update your business plan?
Updating your business plan is a way to ensure you know what your goals are and how you’ll continue to achieve them. It’s about ensuring your business strategy is in place, fine turned and up to date. By updating your business plan you’re keeping your business healthy and moving in the right direction.
Your initial business plan is the place where you outlined your business vision and goals and road-mapped how you’d achieve them.
Within in it you will have written a financial plan and worked out things like your break even point, analysed your target market and competitors and your unique selling points. You’d have detailed who was going to be involved in your business, what staff you’d need and the initial steps to moving the business forward. You may have included a marketing strategy.
You may have looked at the wider economy and assessed how current trends impacted on you.
All of these things are variable and change over time. If you’ve achieved a lot of the goals you initially set out, what are your new goals? You may be happy not to keep growing, but even if your business strategy is to stay as you are and keep trading at a similar level, you’ll want to think about how to achieve it. What’s does a current SWOT (Strengths, weaknesses, opportunities and threats) analysis look like?
The chances are you’re mentally updating your business plan all the time. You’ll be thinking:
- What new technology do we need?
- What problems do we have and how can we solve them?
- How is that new business setting up in the same industry going to impact us?
Updating your business plan is a way to draw all those thoughts together again. It’s the way to ensure your business plan remains a comprehensive resource to help you evaluate whether you’re meeting your goals and staying true to your vision.
When to update your business plan
Doing this each year around the same date will help you stay competitive and maintain a healthy cash flow.
Whilst an annual review reveals the big picture from every angle, monthly reviews help you focus on what needs to be improved day-to-day. It’s like seeing a doctor once a year and trying to recall changes in your health for that whole time, versus going in for regular check-ups.
You should also update your business plan if something major happens to your business or within your industry, like a change of location or the bankruptcy of your main competitor. Maybe you’ve set up an online shop and need strategies to improve your digital presence. Whilst big events might demand rewriting whole sections of your business plan, you’ll be updating, adapting and expanding specific targets for the most part.
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How to update your business plan
Here are the steps involved in updating your business plan so that it’s ready for the 12 months ahead. Previous versions should be filed rather than overwritten, so that you always have a record of your progress year-on-year.
Get reacquainted with customers
Nobody is more important to your future cash flow and growth than your customers. You might already be having casual conversations about prices, products and competitors across the counter, but there are more effective ways to understand what customers — and their behaviours — are trying to tell you.
Use a feedback tool
Digital receipts can be used to request feedback from customers. This allows you to dive into more focused discussions about your performance and their loyalty away from the public arena of social media or review sites.
Analyse what people are buying
Analyse sales data from your integrated point-of-sale system to see what products or services are performing best and which keep going out of stock. A point-of-sale system that lets you see sales down to the individual level through a customer directory, will help you understand even more so if your core audience are who you thought they were, if their buying habits have changed and so on.
Revisit your purpose
With these insights, you can begin to re-evaluate your business proposition, product offering and pricing strategy. What are your customers are buying most and what problems you’re helping them solve? What they want and how your value proposition responds to that desire are important points to emphasise in your plan.
Review sales performance
Your point-of-sale system can also be used to analyse sales results from past years and compare these with what you projected in your business plan originally. With your average sales performance, month-to-month visualised as a graph, track this line forward along the same path — this is a basic projection for the coming year. Take note of how seasonality or other influences affected sales at different points, and remember to take these into consideration in your projections. What events in 2019 could cause other fluctuations? Once you’ve thought through potential sales opportunities and threats, you can then update your business plan with the numbers.
Speak to your team
Your team are likely to be aware of areas in the business that are in need of extra resource. Perhaps they’ve noticed long queues deterring customers, or a backlog of unanswered customer service emails, indicating the need for a hiring boost or a staff restructure. They will also be able to give you insight into which systems are working, what products people always give positive feedback on and how they feel the business has progressed through the year.
Refresh your budget
Increased cash flow is likely to remain your biggest focus as a small business. What strategies in your last business plan succeeded or failed in delivering this? And how do your 2019 plans affect the size of the budget that you’ll need? Changes like growing your team, opening a new location or launching a new product will all affect how much money you’ll spend and therefore how much you need to have in the bank.
Gauge your competition
Competition can emerge and disappear at any time, so it’s important to redo a competitor analysis in your updated business plan. For any new competitors, consider:
- What benefits they offer that you don’t
- Why people are buying from them
- What pricing strategy they’re using
- Your competitive advantage
For any competitors who are no longer in business, think about:
- Why they’re no longer in the market
- What their customers are now missing
- Whether you’re equipped to fill that gap
- Any other competitors who could easily fill the gap themselves
As you update and expand your original business plan, you might come across decisions or projections that in hindsight seem misguided. Know that this is okay — building a business is an art as well as a science. You know so much more now than you did a year ago, and with your updated business plan underarm, you’re ready to make an even better go of the future