The Importance of Reassessing Your Business Plan

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Business growth Posted on October 03, 2017

The importance of reassessing your business plan

The importance of reassessing your business plan shouldn't be overlooked. Whether you’re a long-established firm or a start-up, you need to know where your money’s going and have a clear direction for your business.

When you set up a new business you usually produce a plan, but it’s common to forget about it once you’re up and running. Established companies often don’t have one at all. This is the wrong approach.

A business plan is an organic, evolving document that should constantly be changing to reflect the fortunes of your enterprise.

The importance of reassessing your business plan

Adapting to real-life changes

A business plan is put in place to advance a vision of the company going forwards from a fixed point in time. It’s a guidance document for business aspirations, but things can and do change. New staff members may change emphasis for the better, or new innovations may provide directions and opportunities you hadn’t considered before. You can’t reject such things out of hand because they’re not on your plan.

Likewise, things don’t necessarily go well for reasons beyond your control. The economic situation may alter radically and make your previously achievable targets seem far-fetched. When this happens, it’s a foolish business that fails to adjust its expectations.

A company that isn’t agile enough to respond to changing fashions and needs is a company that’s setting itself up for difficulties. It’s not a weakness revising your business plan, it’s just good practice.

Taking stock of your business? Learn how to evaluate your company’s performance.

Staying efficient

Another reason to keep looking at your business plan is changes in efficiency. Most companies consider themselves as efficient as they can be, but in actual fact there’s often some room for improvement. This can be dramatic, and for a small company a massive improvement in efficiency may come about as a consequence of something as trivial as a change in personnel at one point in the production process.

It may be due to a slightly different way of performing a task or the purchase of a more reliable machine. In larger companies, a change in team management may make a dramatic and unforeseen difference. Such events are rarely sought or planned, but they impact on the long-term success of a business. When such a shift happens, you should reflect that through your business plan.

The importance of strategic evaluation

It’s the monitoring of your business’s changing performance that’s critical. You have to be flexible when running a company and adjust to circumstances as they arise. A business plan sets out what you thought you were going to do, but as facts change so should your plan.

Keeping your business plan in written form and reviewing it regularly allows you the means to take stock of your processes. You’ll be able to follow your customer demands and re-evaluate the products in light of changing market conditions.

How to review your business plan

1. Set a regular time interval after which you’ll review your business plan, but don’t be afraid to review it spontaneously in reaction to events as well.

2. Look at how much you’ve achieved over the time that’s lapsed. If it’s more than you’d anticipated, you may want to revise forecasts upwards. If it’s less, you probably want to review your targets down, and reassess the scope of what you’re aiming to achieve.

3. Is there part of your organisation that’s under-performing dramatically and damaging the credibility of the rest? It’s never too early to look at doing something about it.

A good business plan is regularly reassessed, is invaluable for managing cash flow, and for ensuring your day-to-day costs are met.

It also reassures customers and investors that you’re on top of your game, and allows you to supply a snapshot that’s bang up to date if you need to secure a further development loan.

Our experts are here to help you with all aspects of business management. Interested? See our Business Accounts section to see how you could benefit.