Why You Need to Update Your Business Plan

July 10, 2020 by First Federal Bank

Business PlanWhen you drafted your business plan, you outlined your goals and the path you’d take to achieve them. Now that your company is up and running, your business plan might not be an accurate representation of your new goals, the state of the market, or your enterprise’s worth. Your business is a living, breathing entity that is constantly changing. Just as your company evolves, so should your plan.

New goals

Your overarching goal of being a profitable business will never change, but there are many new goals you’ll want to spell out in your business plan. Are you trying to reach a new demographic? Do you want to become a regional, national or global brand? Do you plan to outgrow your physical space, and if so, what is the timeline? With every goal you reach, you should update your business plan to keep it current.

“A well-thought-out business plan helps you to step back and think objectively about the key elements of your business and informs your decision making as you move forward,” explains Allen Gutierrez, Associate Administrator of the Office of Entrepreneurial Development in the U.S. Small Business Administration.

Product line or services expansion

You may have started off small, with one or two products or services, but now that roster has grown. Your business plan should reflect everything your business has to offer. If you are offering a new technology, skill, service or product to your customers, it’s time to update your plan, according to the staff of Entrepreneur Media, Inc.

Investor interest

You need capital to grow and investors will be much more willing to support you when you present them with a business plan. “Having one in place will help investors feel confident that they will see a return on their investment,” according to Gutierrez.

An updated plan is an invaluable tool when you’re applying for a loan, too. “Investors and financiers are always looking at the risk of default, and word of mouth is no substitute for written facts and figures in a properly prepared business plan,” says The Balance writer Susan Ward.

Financial milestones

If your home-based business is now bursting at the seams and moving into a true office space, or your staff of one has multiplied 100-fold, it’s time to update your plan, notes the staff at Entrepreneur. Even if it’s not growing employees but instead exceeding your original financial expectations, your business plan also needs an update, they add.

Every milestone, especially those related to profit or major growth, is worth recording in your business plan. Not only does it force you to take a moment to relish in your hard work and business’ success, it also helps you envision a different future.

Fast-paced industry

A business plan update can be set to follow the fiscal or calendar year, or as a quarterly or even monthly to-do. The Entrepreneur staff recommends updating your plan often if the industry you serve is constantly changing.

Keeping your business plan up to date is important to your current and future success. When it accurately represents your business, it serves as an important tool to you, your staff and potential investors.

Categories: Business Banking, Small Business, Financial Education, Entrepreneurship