Successful Online Selling

How to Adapt and Update Your Business Plan

business plansAccording to studies, 60 percent of businesses in North America will significantly change direction within the first 12 months of starting up.

Unfortunately, it takes a bit of time to write business plans and they are not updated as often as they should be.

Normally, when a business plan is being drafted, there might not be answers to every question. Therefore, many assumptions will instead be made regarding market conditions, financial performance, etc.

Often, by the time the business plan is completed, there have already been changes in the business and updates would need to be made to the business plan.

Despite all these weaknesses, ignoring a business plan to rely on intuition may be ill-advice. In order to be able to explain your business to external people, you have to write down your assumptions and guiding theory in a business plan.

You need to make sure your business plan is adaptable by highlighting the areas that are more prone to risk and uncertainties because they are more likely to change with time. Note that the areas that are considered more risky vary with the industry you’re in. for instance, in the Tech industry, there’s more focus on product development when actually it is market forces that people should be paying close attention to.

You don’t want to spend months planning and building something that will not take off. Therefore, to make your business plan work for your business, make it adaptable and update it regularly according to market forces and as your business goes through changes.

Here’s how to manage the updating process:

If your business has been running for more than a year, then your business plan is due for an update.

The Annual Update

annual updates for businessesIdeally, your plan should be updated at least once a year. Take a fresh look at the old plan.

Look at your relationship with your customers and potential customers. What is your value proposition? Most probably, it needs a review. What products are your customers buying? Are you offering solid solutions? Are there any other solutions you can offer?

Try to create a new market segmentation. If you’ve been looking at your market by product type, try to view by buyer or channel. Come up with a new segmentation.

Consider a larger potential market for the issues that require solutions. Look at connected businesses.

The Monthly Update

Accounting books usually closely every month, therefore accounting and financial analysis is a monthly process. This means that every month, you should review the differences between anticipated (planned) results and actual results for your sales, balance, cash and profits.

You should always maintain three tables in your pro-forma projections: one for the planned results, another one for the actual figures and the last on e for the difference between the two (also called variance).

You can also insert budgetary changes into the column for actual results above that may have an effect in the near future.

Additionally, make regular reviews for deadlines, activities, and results that are not part of the financials. A solid plan should include milestones, tasks and assumptions, which should all be measurable.

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