Business Plan Maintenance
A
business plan is not a one-time document, at least it shouldn't be. Most
businesses put together a business plan during their start-up phase to organize,
attract partners and employees, and to try and get a loan or financial
investment. This is a great use of a business plan, however far too often once
the company has started up the plan isn't touched again.
Ultimately, a business plan is about results, about making your business better.
If you don't think doing a business plan will improve your business, then don't
do one. Planning for planning's sake is a waste of time.
Where a plan is most likely to make your business better is by allowing you to:
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Set priorities properly.
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Track plan vs. actual results and make course
corrections.
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Plan and manage the critical numbers that aren't
intuitive: not just profit and loss, but the relationship to cash flow,
balance sheet, and ratios.
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Communicate your plan to others: partners,
employees, lenders, and investors. You may have a great plan in your head,
but as soon as you need to explain it to others, you need to write it down.
Reviewing Your Plan
So how do you maintain your business plan? We have to first establish that
without regular review -- monthly or at least quarterly review of your planned
vs. actual results, with practical analysis of the reasons for variance --
planning is likely to be a waste of time.
Real planning requires regular reviews just as much as navigation requires
knowing where you are as well as where you were and where you wanted to go.
Every real plan needs to be full of specific dates, budgets, forecasts, and
management responsibilities. People involved have to know there will be tracking
and following up on specifics. Then that plan must be reviewed against results,
and those reviews should produce course corrections and fine tuning.
Generally a business hopes for a consistent long-term strategy built on
short-step incremental changes, not major revisions. Consistency is important to
strategy, and the business should avoid the temptation to jump around from one
strategy to another so quickly that no strategy is ever really implemented.
Remember that even a mediocre strategy well and consistently implemented is much
better than a brilliant strategy that wasn't implemented.
However, businesses do come to crossroads demanding major revisions in their
business plan. These are some signs that indicate its time to review your plan:
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Major changes in market situation. Look
especially for changing market factors and changing market behavior.
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Have your underlying business assumptions
changed? As an example, the Internet has changed the business landscape
so enormously that in some industries almost any plan that was developed
without a view of the Internet may need revisions. That may not be true
for a landscape architect or restaurant, but for a travel agent, graphic
artist, or market researcher it's obvious.
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Do you have new competition? Have new
competitors emerged, or existing competitors changed the business
landscape so much that you need to review and revise?
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Has the product or service picture changed?
For example a new technology may have emerged, changing the market
perception of what you sell. There may be new products or services
offering related solutions to the same user needs you satisfy.
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Major changes in internal situation. The
most obvious major changes are changes in ownership, which are frequently
the result of changing partnerships, divorces, deaths, and investment. The
company takes on new partners, or sells out to a larger company. On a more
ominous note, the company suffers significant declines in sales, profits,
and financial health.
Always keep the revision in perspective. While you do want to review and correct
constantly, you don't want to change a strategy unless you are sure it isn't
working or you see real changes in the underlying assumptions that formed the
foundations of strategy.
Maintaining Your Plan
The purpose of maintaining your plan is to use business results to guide your
future decisions. The plan itself has no value if it doesn't help you improve
business. That's regardless of how good or bad, how brilliant the ideas,
writing, or how elaborate the tables and charts. Its value is the decisions it
leads to.
That means, of course, that to make a plan worth the effort of developing it,
you'll want to follow it up. Whether that's every month or every quarter, you
need to track results, analyze the difference between plan and actual results,
and manage. Change things that need to be changed. Compare what you planned to
what happened in reality. Ask yourself the following questions:
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What went wrong, and how can we fix it?
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What went right, and how can we take advantage of
it?
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What changes took place in the competitive
landscape that could be updated in the plan?
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What changes took place affecting our market that
could be updated in the plan?
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What changes took place internally in our
organization that could be updated in the plan?
After you've answered these questions, update your plan accordingly, set new
budgets and milestones, adjust your financials, and repeat the process with
another review of your plan again next month or next quarter. Update your plan
accordingly again, and keep repeating. You'll find that maintaining your
business plan gives you a better grasp on your business, your market, and
everything else that happens with your company.
This Article Provided by Palo Alto Software, Inc.
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