The COVID-19 global pandemic reminded us of how quickly the marketplace can change. There's no question that small businesses of all types are being forced to examine how they do business and what changes they need to make in a time when there are more questions than answers.
Many have pulled out their business plans and begun what's an essential but often overlooked process—updating them.
Entrepreneurs create business plans as part of the startup process while existing businesses often write them when changing direction or strategy. Writing one helps them uncover concept weaknesses, market misperceptions, or other specifics that might cause a shift in how the business is positioned or built.
Here's what you need to know about refreshing your business plans during both good and bad times for your company.
Why Should You Update Your Business Plan?
Today, in the midst of the coronavirus crisis, most businesses need to update their plans because of dramatic changes.
"The current economic uncertainty is reason enough to update your business plan right now," says Simon Saval, co-founder of Jupiter, a CBD oil brand. "Employment, purchasing behaviors, and discretionary incomes are changing rapidly right now and for some time to come."
These are also update triggers during more normal periods. "Your previous business plan is outdated according to the new market trends, your client tastes have changed, or new competitors have come in with better products or services," says Rajandeep Kaur, business development manager at online tutor site Teacheron.com.
Perhaps you've reached your plan's goals or discovered that original presumptions were wrong, or you're introducing a new product. They're all reasons to revisit the plan.
How Often Should You Update Your Business Plan?
Established businesses in mature categories will need to update less frequently than startups working in rapidly changing industries.
"Startup businesses should review their plans on a quarterly basis, placing heavy emphasis on customer feedback and retention. General business plan updates for more established businesses could include a close look at your cost per customer acquisition and return on investment, as well as areas that may be growing in costs too quickly and may not be sustainable in the long-term," says Laura Spawn, co-founder of Virtual Vocations, an online job board for remote positions.
Typically, though, how often you should update yours depends on the situation. "There is no hard and fast rule for this. You should update your business plan according to industry changes," says Kaur.
What Should Your Business Plan Focus on?
As with why and when you should update your business plan, what to focus on might vary according to the situation. Some might need a more thorough update than others, especially those using their business plan as a working document.
According to Marc Prosser, CEO of ChoosingTherapy, a site that connects people with therapists, businesses should start with past and present financials. "What are the key metrics? Why and how, and will those numbers change in the future? The best business plans are always based on assumptions that are grounded in historical reality," he says.
Zeroing in on your marketing strategy is essential, notes one entrepreneur. "There are few problems that sales can't solve, so this is a key area to get right," says Ella McKendrick, founder of Nutribuddy.com, which sells vegan meal replacement shakes.
At Lee Jackson Air Conditioning, the owner pays attention to short term goals and how the previous quarter's performance might impact them. If the company performs better than expected, they'll assess why and how they can apply what they learn to the future.
"Focus on the effect that the last quarter has had on the business and find the cause. If it's bad, cut it out and if it's good, adapt around it," says Lee Jackson.
Keep in mind that changes to your business plan during a crisis of any type will require you to update it again once things begin to return to normal.