Companies use business plans to help to identify ways that their business can both identify opportunities and to respond to risks in the market. Business plans can be vague or detailed, depending on the preferences of the business owners and can serve as a regular resource to help hone the company’s view of the industry and their place in the market.
When Should a Company Develop a Business Plan?
Many companies will develop a business plan when the company is first formed but not update the plan for the remainder of their existence. It is of course essential to formulate a business plan before your company is started so you can understand what the focus of your business is and how your company will go about attacking the market.
It is a best practice to update your business plan whenever one of the follow events occur:
– There are significant changes in the industry that you operate
– The business environment for your company changes
– Your business undergoes a significant expansion or contraction in business
– Your business has a significant turnover in management or ownership
– Large competitor enters or exits your industry
– A notable or significant technology is introduced into your industry
Most of the aforementioned items are self-explanatory in nature and have a significant and obvious impact on your business. These significant changes will necessitate that your business model will potentially change and that your business plan should be looked at for possible modification to update with the new business realities that your business is facing. This does not mean that there must be a change to your business model and plan, but rather that your business plan should be examined to see if there is need of modification.
Who should be involved in updating the business plan?
Modifying your business plan can a significant endeavor depending on how much you rely on your business plan for your business. It is essential to involve the appropriate people when doing so. Start by having a business owner who will be in charge of the business plan and who will contact the appropriate parties document the requested changes, and have strategic vision for the business plan. In addition, identify someone individually or as a group who will ultimately approve the changes being made to the business plan.
In certain instances it may make sense to bring in a third party consultant to handle the process of developing an updated business plan. When doing so they can help to bring in the best practices common in a business plan, can help to provide an outside view of the company’s failures and successes, and provide their insight in dealing with similar past experiences with similarly sized companies.
Communication is the Key Challenge
Developing a business plan can be challenging and updating that business plan can be just a difficult. Once a business plan is developed this is not the end of the process. In many ways it is close to the start. The company will have to communicate the business plan with the various business stakeholders and review the implementation of the plan to make sure that it is being adhered to and followed or whether changes are needed to either the business plan itself or to the adoption of the business plan. Communication with employees in the company as well as your customers and other stakeholders can go a long way towards the successful implementation of a new business plan.