Starting Your Business
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Why you need to update your business plan regularly
Many business owners treat their business plan mainly as a fundraising tool – something you show to potential investors when you need capital for start-up or growth.
The rest of the time, the plan sits on the shelf gathering dust while you get lost in the day-to-day of running your business. In fact, studies show that 1 in 4 UK small businesses don’t use a business plan at all.
At XLN, we encourage our small business customers to think differently. Your business plan shouldn’t just be something you spin to others. It should be something you can use to guide you when you feel trapped in the daily grind.
The beginning of the year is a great time to rethink your business plan, or run over your ideas to make sure you start the year focussed on your business priorities.
Stay up-to-date; stay inspired.
You aren’t going to feel inspired by a plan you last updated a year ago, and investors and lenders will also want to see an up-to-date plan with current figures.
An up-to-date plan can help you attract new employees, new prospects and new clients, and it can help suppliers understand your business needs. Perhaps most importantly, it can also help you understand and manage your own company better.
When you should consider updating your business plan:
- At the start of a new period. You might choose the beginning of the year, or the beginning of the tax year. You might choose to update your plan quarterly, or even monthly. Either way, you should treat the exercise as a motivational one, rather than purely administrative.
- You’re looking for additional funding. You’ll need fresh figures, and also a fresh, optimistic outlook on the business. Sometimes, you have to re-convince yourself that your business is worth your time before you can convince others it’s worth their money.
- You’re about to roll out a new shop, product, service or brand. Your plan should reflect anything that’s changed in the business. If a plan is too out-of-date, it can end up constricting your business rather than providing a route to growth.
What you should consider updating your plan with:
- Your business concept. Your big idea may have changed as you’ve experienced life in the business. It’s a chance to review what you’ve learned about your industry, how effective your business structure is, how desired your products or services are, and where you can improve.
- Your marketing plan. As you run your business, you should be getting a better idea of who your customers are and what their concerns are. If not, you need to figure out how you’re going to work that out! The especially motivated may also want to have a look at competitors and what you can learn from them.
- Your finances. Here’s where you work out how much money you’re making, how much you’re spending. Train yourself to look for holes in your budget; places you can reduce costs, and places you can spend more to grow faster.