This might sound strange for some i.e. some people might not even know that business plans can be reviewed. Well, they can and ought to be reviewed from time to time. Typically, small businesses or businesses that are starting out should review their business plans, at the very least, once in 12 months. Established businesses will have to review their businesses after much shorter periods e.g. every 3 months. We live in a fast-paced world which is why the need for updating a business plan often becomes inevitable. Now you know why reviewing a business plan is necessary. Let us now get into more detail by looking at how the review process is done. Additionally, we will highlight other related important details along the way.
Why Is It Important To Review Business Plans?
This is premised on a number of reasons borne out of the fast-paced world we live in. There are certain variables that rapidly change nowadays. For example, consumer buying habits are ever-changing. New technological innovations are ever-emerging all the time. Regulatory frameworks are also ever-changing due to a number of factors, some of them political. More and more players are entering the business domain. This sprouting of new competitors over time will most definitely lead to the need for a business plan to be reviewed. There is, of course, goals and objectives laid out in various parts of a business plan e.g. financial and marketing goals. All these things necessitate business plan reviews.
Approaches In Business Plan Reviews
There are approaches that can be adopted in reviewing business plans. One of them is doing it yourself i.e. as an individual or a team (essentially a business reviewing its own business plan). This is most recommended because as a business you intimately understand the setup of your business. Alternatively, some outsource from business consultants or experts who specialize in doing business plan reviews for businesses. It really depends though; outsourcing might bring in expertise that can be superior to what a business would have. There is also the cost factor – outsourcing might be costly. In the end, you must strike a balance that ensures business plan reviews are done both comprehensively and cost-effectively.
Come Up With A Business Plan Review Schedule
According to startupbizglobal.com, the first step is to devise a business plan review schedule. We have already hinted at the variable nature of when a business plan should be reviewed. Broadly, reviews can be in the short, medium, and long term. There is a question that most people might have though. How do I know when exactly to review my business plan? Well, there is a way that you can use to answer that. In a properly drafted business plan, there will definitely be time-bound milestones or goals. The deadlines of such metrics can serve as a guide as to when you should do a review. Be strategic in scheduling your reviews so that the business plan is always up to date. The scheduled reviews do not, however, do away with continuous reviews that can be done at any time. Schedule reviews that require consultative engagements amongst several individuals, departments, and or even stakeholders (even shareholders if any).
Establish A Monitoring And Evaluation Framework
The process of reviewing a business plan entails monitoring and evaluation. In order to make it easy to do these business plan reviews, it would be wise to come up with a monitoring and evaluation framework. This will guide one in how they can review their business plan from time to time. Such a framework aids one in both tracking progress and making assessments. These assessments will ultimately form the basis for evidence-based decision-making.
The first and foremost step in doing this is defining goals and objectives. The good thing is that these are elements already laid out in the business plan. The next step will be to identify and define indicators (you could call these key performance indicators or key result areas). A simple example of an indicator is 1000 signed up customers by the end of the first quarter. If a business plan was properly done those indicators will already be contained in it. When you have ascertained what the indicators are you have to determine what will be done to collect data. Not only will you determine data collection approaches but you also have to define after how long that data should be collected. Once this is in place you then move to the next step.
Establish who will be responsible for collecting data for the different data sets. This will streamline everything so that there is accountability. This is then followed by developing a plan on how collected data will be analyzed and the reporting structure. In going through all these steps make sure everything is informed by the business plan. Like we highlighted earlier if a business plan was comprehensively drafted it should be easy to establish this monitoring and evaluation framework.
Key Areas You Must Pay Close Attention To
The most obvious place to look at first is the business or company description. Seldom does this remain the same over time so changes will be inevitable? It might hold true in the short term but in about a year or so there might be changes to be made. The market analysis is the other area that must be periodically revisited. Market dynamics rapidly change for instance, trends can change or new competitors can enter the market. Along with market analysis is competitive analysis too – that is another area that requires close review. The financials also need close attention because of their importance to a business. Surveys have repeatedly shown that the biggest reason why most businesses fail is cash flow problems. This usually happens because the early signs go undetected due to a lack of regular business plan review.
These are some of the things to bear in mind in reviewing your business plan. It might seem overwhelming at first glance but it is imperative. Interestingly, it is the first step that seems uphill; once you start and regularize it you will find it to be the most natural thing to do.