Believe it or not, a business plan is not a document that you write once and forget about. It requires frequent review to maintain its effectiveness. A business plan is a living document and that means it needs to be updated as your business changes and grows.
Now, when we talk about a business plan review one question that comes up frequently is whether we have to review the whole business plan? Well, the answer is no. You only need to update a few areas that you have new information on.
Now, the next question is, when do you have to update your business plan? Do you have to wait for a year or years? Or are there other conditions that may necessitate a business plan review?
Here are a few factors that may make it necessary to review your business plan;
- Economic Conditions – Changes in economic conditions such as inflation, recession, government policy have an impact on your business. Hence, the need to review your business plans when the economic conditions differ from what you have anticipated in your business plan. How are you reacting to the lower purchases power of your customers, more taxes and increasing business costs? When economic conditions changes, it is time for a business plan review.
- In Reaction to Competition – Your business must have a plan for dealing with competition in your industry whether old or new. Existing competitors may react to your entrance by reducing their prices and changing some of their strategies and new competition may react differently than what you may have outlined in your business plan. So, you would have to rewrite your business plan (especially the competition segment) to outline your new strategy.
- Scaling Your Business – You must agree, that when it is time to take your business to the next phase of growth that was not covered in your existing business plan it is time for a change. Say you raised new capital, or you’re introducing new products or you’re entering new markets, this would mean changes need to be made about your business operations, strategies etc. You must rewrite your business plan to reflect the existing changes and how you plan to operate your business going forward.
The only way to reap the benefits of your business plan is when you update it when necessary. When was the last time you updated your business plan? Has your business changed but your business plan has remained the same.