The Industry Word

[#1]

Is it time to revise your business plan? Join the club. Most well-managed businesses revise their plans often. They realize that what really optimizes the business is not just a one-time throw-away business plan, but a business planning process that involves regular review and revision. The planning becomes like steering, which means management. and metrics. And accountability. It’s about managing change.
 
With that in mind, I’ve developed this list of 10 signs that you need to revise your business plan.
 
1. Declining cash balance .
 
Don’t ever let your cash balance start slipping without waking up to its causes. Are customers delaying payments? If that’s true, then why? Are they unhappy with what you’re giving them? Just hard times overall?
 
Then you go back to the drawing board, review your plan, and develop appropriate revisions. Do you change policies, products, services, delivery? Plan it. Is it a larger phenomenon you can’t control? Then plan the steps to adjust your balance sheet, find financing, cut costs, or whatever.
 
2. Falling short of goals.  
 
Go back to your plan and review your goals. Are they the right goals? If not, go back to your plan and revise. Maybe they were too optimistic, maybe just not directed at the right targets. Review the goals and then change the plan with specifics, metrics and responsibilities and such, to achieve them.  Either the plan was off, or the goals were off, or the performance was off. Change the plan.
 
3.  Changed assumptions.  
 
You thought the new product was going to rock the world, but the world remains unrocked. You thought recovery would come sooner. You thought the product would launch sooner. You thought the social media strategy would generate more leads. And there are positive changed assumptions too. People want more of the new product, development is costing less.
 
Now go back and review your plan. What do the changed assumptions mean in terms of specific and concrete business activities? What do you revise up, and what down? What has to be done sooner, or cheaper? How does your planning respond to the changed assumptions?
 
4.  “What? We have a business plan?”  
 
Does everybody in the main management positions know the important elements of your business plan? Are the priorities clear? Are the main steps to be taken, and the more important metrics, known? Are they being reviewed? Is the plan something all the key people are aware of? Do they all know what’s in it?  And you, in your single-person business, do you have your priorities straight, and know the metrics, and are you following up correctly?
 
If not, then you need to revise your planning process.
 
5.   Time has passed .
 
If it’s more than a month or so since you reviewed your plan, then you need to change your planning process. A business plan does you no good unless you keep it alive and reviewed and you use it to manage change and steer your business. And don’t kid yourself: you aren’t optimizing your business if you don’t manage a plan. You have the plan, you watch results, and you revise it. Operating without a plan is like driving a car without a steering wheel. Yes, you change it constantly; but you’re still steering.
 
And five more reasons...
 
In my title I promised 10 signs, so here are the rest ... these need less explanation.  
 
6.  New opportunities
7.  New problems
8. New people
9.  Declining sales
10. Losing customers.

About the author:

Tim Berry is founder and president of Palo Alto Software and bplans.com*. He is the author of books and software on business planning including Business Plan Pro and The Plan As You Go Business Plan. He has a Stanford MBA degree. He blogs at timberry.bplans.com.

*Not a government website.