Why You Should Keep Updating Your Business Plan?
When I first started my business, the art of planning wasn’t something I was highly concerned about. It was always about quality control of products, marketing, and a hundred other things but not planning. But, as I gained a foothold in my business venture, it was pretty clear - along with detailed analysis and implementations at the beginning, it is also essential to accommodate the growing needs of the business.
A business plan is a document that will contain details about your analysis, strategies, business goals, etc. However, professional business plans cannot be kept static. Instead, they should be dynamic documents with factors that change periodically. Adapting to these dynamic changes equates with regular business plan updates. This can be a critical factor in raising capital as well as executing the opportunities at hand.
Statistically, 90 percent of start-ups are destined to fail within a few years of their formation. While a lot of these failures might owe to other problems, but a major role is played by a redundant business plan.
Something relevant two years ago might not necessarily be the same today. This is what makes updating business plans critically important for driving long-term growth.
Why Update Regularly?
The first question that arises is why specific updates need to be made in a well-formulated business plan? Is it not possible to have a plan that remains relevant for a longer duration?
Moreover, some might wonder if changing the plan structure halfway could have a negative impact. These are all valid questions that might arise while managing any new business or start-up.
There are several pivotal benefits of iterative updates to a prospective business that helps it grow.
1. Keeping up with the demands of the customer base
The first and most obvious reason is to keep up with the needs of your customers. The focal driving factor of a business is owing to an increase in demand. If you aim at creating what is in demand, a natural consumption process will be initiated.
Many businesses make the blunder of never altering products that – worked once. It is natural to justify – “don’t fix what isn’t broken”. However, in the case of businesses, demands change constantly – whether one likes it or not!
For instance, a brand focussing on selling typewriters and related products might once have had the best sales. The same brand will consequently face typical challenges that any business is prone to.
They might face challenges from a competitor who sells a similar model at a lesser price. This will drastically affect their demand ratio. A constant update in the plan will highlight this issue and measures can be taken to resolve the same.
Over the years, such a typewriter brand might face a lack of demand due to the growth of technology. With more people investing in keyboards and printers, typewriters would be less in demand. At this stage, the brand can update its strategy by expanding to other office products, perhaps even printer ink, to profit from the very cause of their obstacle!
2. Accommodating and expanding market requirements
There are prominent benefits of updating your business with a market expansion strategy. What does this mean?
With ever-increasing products and services in every domain, expanding your product to a new market can help pump up your sales. If yours is a brand making educational videos, you cater to that market.
You can benefit greatly by either creating a test series or making a robust study material bundle available for sale. Introduce new products and services to increase sales in the existing services by expanding across new areas.
This can only be made possible when your business plan is updated constantly to seek such opportunities.
3. Keeping up with the competitors
The competitor’s streak in a business is a cut-throat one! You can come up with the best product and rise to fame – only for a similar design to be introduced by a competitor to snatch your glory.
Even when this might not be intentional, with hundreds of products being made in a genre, it is no surprise that some of them will offer close similarities.
Any business with an ardent desire to thrive needs to keep up with its competitors. Updating the plans and strategies helps to analyze the competition and implement new changes that will make the brand stand apart.
4. Making changing technologies and suppliers inclusive
The same is true for updates on technology and supplies. No one wants to use products or rely on services that use technologies that are outdated – No matter how good the product!
Just like every buyer wants to keep up with the times – with the latest gadgets, styles, and products; businesses need to keep up with these changing trends.
Especially if your product is in the form of software, regular updates need to be a part of the plan by default!
The constant review of where you've been and where you want to be are vital in the deployment of what will ultimately be a successful business venture.
—Peter Strauss, founder, The Strauss Law Firm
What to Update in Your Business Plan?
The next thing to talk about is what exactly is to be updated. Is it the strategy that needs a tweak? Or do the actual technical aspects of the business need to be kept a tab on?
The answer to that is – both. No business prospers solely on any one aspect. The demand of the market and customers are equally important as the inclusion of the latest technologies and strategies that suit your business.
Some constant checks need to be kept on integral aspects.
1. Analyze strengths and weaknesses
Start by analyzing your strengths and weaknesses. Updating your business strategy is like updating your closet – decide what you want to keep, and what to switch, what is working with people, and what isn’t.
Usually, a SWOT analysis is done to understand these aspects. This helps to pinpoint the strengths – weaknesses – opportunities, and threats to your business.
2. Cater to customer queries and satisfaction
Once a thorough analysis has been done, you will have a clear idea of what your customers tend to like and dislike. The next step is to cater to these queries such that all areas can be fine-tuned for complete customer satisfaction.
Discard ideas that are no longer relevant. This might be in the form of packaging of your products or the way it is being marketed — Pitch in some ideas that are more likely to stand out to the customers.
3. Analyze a prospective sales forecast
A sales forecast is a vital tool to make any significant business updates. Updating the sales and financial forecast gives a lot of perspectives to understand what returns are likely to be collected on the investments made.
Sometimes making drastic changes to your plans can backfire during implementation. A gradual process of implementing the updates can help analyze iterations instead of taking the plunge at a go.
4. Incorporate market changes
We have already discussed the importance of market changes. Whether you want to expand across markets or cater to some finer requirements within the concerned market – all these changes can make a significant impact on sales.
The graphs below show the changing trends in the publishing industry.
Images Source - Submittable
The market requirements correspond to some factors which are constantly altered. While other factors might be outdated in decades or years, the market accommodates novel ideas in months. With one new addition that is slightly more convenient, your product or service will be too old within months! Thus, keeping up with the market is of prime importance.
Some Interesting Factors
Before you can draft a business plan, some factors need to be considered. Even though it is advisable to carry out updates along the way, some key factors need to be considered from the get-go!
1. Draft realistic goals
Any plan is made with an ideal “goal” in mind. A lot of rides on how well you draft goals for your business. The factor of realism is a crucial one. A good plan is one that can be followed through – and that is only possible if the goals are realistic in the first place.
Having an unrealistic or ambiguous goal is a fatal flaw for any business to have! Prior to the structuring of any plan of future updates to it, a realistic and clear-cut goal must be established.
2. Demarcate clear cut designations
At some point in the planning process, different aspects of the business need to be designated to different teams or individuals. This demarcation should be kept in mind while the plan is being structured.
After all, what is the use of making a detailed plan when those required to execute it aren’t kept in the loop? In some cases, their input might be significant in dealing with some practical problems that arise. These issues can be nipped at the bud by ensuring transparent communication before and during the planning.
3. Follow up!
Last but not least, a thorough follow-up at every stage is integral! When a business plan is being drafted or updated at any stage, some prompt measures are advisable to follow up with these changes.
This can initiate prompt communication amongst different teams. Regular reviews, course corrections, and adaptations to the updates are instrumental in reaping the benefits of the iterated updates.
Thus, updating business plans is as significant as having a solid plan in the first place. Keeping up with the trends of the times is your best bet to keep your business afloat. A plan is only significant if it is kept relevant to the growing needs of the market. Updating your business plans is of great significance to not just grow but keep being relevant through the years!