When Was The Last Review of Your Business Plan?
Posted by Craig Wagener D.Optom, MBA, PhD
Is your business plan out-of-date? Do you even have a Business Plan? When was the
last time you reviewed it? Can you find a copy of your Business Plan in five minutes
Oftentimes small business owners fail to make a business plan or only do so out of
necessity, they create a plan to satisfy the demands of the Financial Institution
which will loan the capital for a start-up capital or to meet the landlord requirements
prior to signing a Lease.
In these situations, a business owner often relegates the business plan after presenting
it to a third party. A business plan which is not regularly reviewed has lost its
punch and value. A dead business plan harms a business.
You may ask yourself, “Do I need a Business Plan?” The answer is an unequivocal,
Every successful business owner prepares a business plan. A business plan functions
as the roadmap, timeline, and strategy for preparation, operation, mitigation, and
growth. It is the most effective tool known to man for successfully creating and
operating a business. It should be comprised of three major components, namely:
a. It should establish the financial goals of the business.
b. It should determine the marketing goals of the business.
c. It should define the operational goals of the business.
A business plan provides detailed plans and explanations as to how the business owner
will practically achieve goals, additionally, it constructs a timeline for each goal,
noting milestones. Once benchmarks are defined for each of the three components;
the business owner can, on a quarterly basis, assess the progress of the business
against the projected outcomes in each of the categories.
It is imperative that business owners monitor and assess their business progress
regularly. Most unsuccessful businesses fail because they fail to properly manage
operational cash. Assessing financial goals each quarter focuses attention on problem
areas early on allowing for corrective action before problems become unmanageable,
resulting in complete failure. An assessment will reveal the health of the business
in terms of cash flow, sales volume, gross margins, overhead expenses, and purchasing
costs. If the business’s cash flow is low, a quarterly review will prompt the business
owner to find working capital to sustain the business over the long term. Falling
sales volumes, reduced gross margins, increasing overhead expenses or increasing
purchasing costs can be addressed in a timely manner thereby preventing or mitigating
During volatility in the marketplace, banks look at shorter projected times for goals,
e.g. three years as opposed to five to ten-year goals. This especially applies to
financial goals. This should be included in the development of a business plan.
Designing a specific marketing plan is equally important for all businesses. A marketing
plan is a component that identifies the needs and desires of the patrons. Loyal,
repeat customers should be a target goal as well as expanding a current customer
base by winning over new customers. Successful businesses run on a healthy mix of
these customer groups.
Are you running a streamlined business? Can you operate more efficiently? Identifying
operational goals will help you answer these questions. As you monitor this component,
consider the opinions and recommendations of staff and customers, as this information
is invaluable. Tweaking business operations, adjusting policies and procedures, new
training methods can make the difference in the public perception of the company
as well as motivate the employees of the company to provide excellence on the job.
This sense of duty and excellence generates word of mouth referrals, the least expensive
marketing tool a business can possess.
Remember a small business owner should personally prepare his or her own business
plan. Self-preparation ensures that the passion of the entrepreneur, the goals and
the vision are established thoughtfully and clearly.
Relaxation is perfect for reflection and rest but is dangerous if that relaxation
rests on past success. The business world is ever-evolving and changing. Yesterday’s
success in no way guarantees tomorrow’s success! Review the business plan on a quarterly
basis; assess progress and make necessary adjustments. Be willing to completely rewrite
the plan to incorporate additional streams of revenue and other ways of doing business
or seek out new markets.
For sample Business Plans of different types of businesses click on the links below.
Click here to see the Top 10 Business Plan Mistakes: