Your business plan is an essential document, designed to help you frame your business, market, competition, financials, and purpose.
However, a good business plan needs to be revisited regularly as part of a continuous process of strategic business planning.
As seen in the recent post, Top Business Planning Tools for 2019, Rated and Reviewed, there are ample tools available to help you as you build your business. Here are a few reasons why business planning does not end with your business plan.
Business Plan Is Static
Some critics claim it is time to abandon the traditional approach to creating a business plan. However, the more nuanced approach should be to consider the traditional business plan for what it is – a snapshot of projections, conditions, and financial information captured in a moment of time.
Business plans are unlikely to go away any time soon. They are too much in demand from bankers, venture capitalists, and other financiers.
What is needed instead is to take a different approach.
Focus on Continuous Planning
Continuous planning is an approach that builds on your existing knowledge and insights to make better-informed decisions. At its core, continuous business planning focuses on developing a consistent process for comparing actual results against projected results. These added insights can help you adjust both your day-to-day and long-term planning.
Here are the fundamental components of a continuous planning approach:
- Establish your baseline. Your baseline business plan should include the following:
- Executive summary
- A financial plan that includes projected profits and losses, balance sheet, sales forecasts, and cash flow analysis
- An action plan with scheduled milestones
- Established review schedule
- Hold the review meeting. This is where you should evaluate your numbers, assessing where the actuals compare to the projected financials. What did you assume that did not become truth? What has not happened that should have happened and why did it not occur?
- Make adjustments. Based on the learned insights, determine what you need to adjust your business model, strategy, or products or services.
- Adjust your business plan. Once you have decided what needs to be adjusted, it is time to apply those changes to your business plan. This will again create a snapshot of your business and its underlying fundamentals. It will provide you with the new baseline against which your next review will be based.
Best Practices for Continuous Business Planning
Here are a few steps to take to ensure that your approach to continuous business planning is successful:
- Frequency. You should hold your review sessions at least monthly, especially in the early stages of your company’s growth. Consider holding some of these meetings outside the office for a fresh perspective and fewer distractions.
- Set metrics. Define your key performance indicators (KPIs) early before you are tempted to adjust them higher or lower. You can consider changes to the KPIs over time, but only when there is a broader change in your company’s strategy.
- Be willing to let go. Egos need to be checked at the door. If something in your vision or strategy just is not working based on what the numbers are saying, be ready to change things up.
- Have a strategic partner. Every business needs support to find optimal funding and provide the right services.
Benetrends is a leader in offering unique funding solutions that leverage an entrepreneur’s 401(k) or IRA assets to fund or expand a business. We also offer business services including retirement plan management, and credit card processing. To learn more about how Benetrends can support your business planning, check out our Resource Center.