Business owners tend to go to two extremes when it comes to business plans. Either they throw their business plan in a bottom drawer and largely forget about it once it's served its purpose of impressing bank managers and / or potential investors, or they turn it into a holy text and convince themselves that deviating from it in any way will guarantee instant ruination.
As with most things in life, the sensible approach is avoiding extremes and treading a middle path - not getting so caught up in the day-to-day business of generating sales and turning a profit that you forget about the long-term vision for your business, but not being so rigid about adhering to your plan that you fail to respond to a changeable, fast-moving world. So, when is the appropriate time to make a few adjustments to what you authored in the first flush of entrepreneurial enthusiasm?
1. When you realise reality isn't matching up with your assumptions
Unless you've been blessed with supernatural prescience, you will have under or overestimated your competition, suppliers, staff, margins, profits and cash needs. As soon as it becomes apparent that your predictions aren't matching up with what's actually happening, it's time for a commensurate revision.
2. When the environment you're operating in changes
Maybe a disruptive technology has emerged to shake things up; possibly the economy is suddenly booming or busting. Whatever the nature of the change, trying to carry on with business as usual, as some Australian retailers, for example, have in the face of new competition from overseas shopping websites and a persistently strong Australian dollar, is a shortcut to obsolescence.
3. When it's a natural time of the year to do so
Much like checking the batteries in your smoke alarms when daylight saving time starts and stops, it can be a useful discipline to read over the plan for your business and think about whether it needs adjusting on specific dates, such as January 1 or June 30.
4. When things are going really well
When you're in scrappy start-up mode, you and your staff almost certainly have a very clear idea of what the business is trying to accomplish. If you're lucky enough to be successful, you will probably need to set some more ambitious goals, as well as having an up-to-date business plan to refer to in order to give all those new hires a sense of what the business is all about. Obviously, this falls into the category of good problems to have, but adjusting your business plan to take rapid growth into account is still an issue that needs to be addressed.
Whether you're writing your first business plan or revising your original business plan for the hundredth time, the point of the exercise always remains the same - to state what the raison d'etre and unique selling point of your business is, along with listing the business's goals and a strategy for achieving them. The best business plan is a living document that is appropriately adjusted in light of changing circumstances.
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This article represents the views of the author only and not those of American Express.
Nigel is a freelance journalist and web content provider. Over the past 15 years he has worked for many of Australia's major print media companies and written for a wide range of newspapers, magazines, trade publications and websites. Nigel most enjoys writing about entrepreneurship, popular culture, politics, social trends and small business.