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Updating your business plan

Many owner-managers seldom get around to updating their business plan unless they need to borrow money. Some people produce a business plan when they start up, only to leave the document locked away in a drawer or cupboard somewhere, long forgotten and never used. However, if you want to maximise your chances of success, you should be working with and updating your business plan regularly.

A living business plan

You should view your business plan as a living document, a tool you use to run your business more effectively. Without having a regularly updated business plan, which accurately describes your business, its market, goals, development strategy and cashflow predictions, you risk drifting from one week to the next, never knowing where you’re heading.

Your business probably won’t grow as quickly as it could or in the way it should. In short, you won’t be in control of your destiny. And because a business plan can help you recognise and avoid problems long before they become serious, ultimately you risk failure.

A business plan might not contain all of the answers – but it should at least ask all of the questions. The document should serve as a detailed roadmap for the next year or so, something that will stop you making bad decisions – and hopefully enable you to make some wise ones. 

Key business plan contents

Business plans include an executive summary, which appears at the beginning of the document and condenses key facts. If it lacks credibility, people won’t read on.

A business plan should also describe your business’ history, its competences, key products/services, goals, market and management. The document must also clearly explain your objectives and business-development strategy (how you plan to achieve your goals).

No matter how good your words or the story you tell, as any experienced adviser or entrepreneur will tell you, a business plan’s most important aspect is its financial information. If your figures don’t stack up, the plan, you and your business will lack credibility.

Forecasts should include cashflow predictions for the next 12 months or more. Monthly sales forecasts and costs need detailing, to prove there’s sufficient working capital (or that you realise you’ll need to arrange additional finance).

All assumptions should be explained, with worst- and best-case scenarios considered. List any risks and explain your methods for dealing with ‘unexpected’ problems (a SWOT analysis is ideal for this).

Get the most out of your business plan

Things change in business – which is why you must update your business plan regularly if you’re to maximise its value.

Financial data is most likely to change, as real sales and costs become apparent. Inputting actual figures into your business plan enables you to adjust your forecasts and run your business on a much better informed basis.

Looking at your business plan regularly also allows you to remind yourself of your goals and to judge how well your business is performing. Then you can make changes intended to improve your chances of success.

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