Business plans should not be documents that are prepared when applying for finance and then forgotten.
Markets change, costs increase, competitors emerge and the objectives of business owners evolve. A plan prepared two or three years ago may bear little resemblance to the business today.
A review should be completed at least annually and whenever there is a significant change. This should not usually involve producing a lengthy document. Start with a few basic questions. What do you want the business to achieve over the next 12 months? What level of sales and profit is required? Are there plans to recruit employees, invest in equipment, enter new markets or borrow money?
Then consider what could prevent those objectives being achieved. Perhaps the business is dependent upon a small number of customers, finding suitable employees is becoming difficult or existing premises are restricting growth.
The financial element is particularly important. Turning plans into budgets and cash-flow forecasts can identify funding requirements before they become urgent. It can also show whether apparently attractive growth plans are likely to generate sufficient profit.
Try to include measurable targets. Rather than simply aiming to "increase sales", decide what level of sales you are targeting and by when.
A business plan should provide direction rather than attempt to predict the future perfectly. Reviewing it regularly encourages business owners to stand back from day-to-day pressures and consider where the business is actually going.
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Published by The NAS News Team
