The Importance of Reevaluating Your Business Plan
Business planning is not something done once and then forgotten. It must be something that is reassessed on a continual basis. Does that mean that a company should be reevaluating their model every quarter? Probably not. A company, however, should do full business reviews on a fairly regular basis, typically at least once or twice a year.
Why is this important?
No matter how closely a company tries to stick to their original plan and goals, business is fluid. It changes with each new hire and each new market change. And the latter is definitely a constant concern. Consumer demands, needs and dislikes never stay the same. So the selling point of a particular product or service may become obsolete in as little as a few months if a better, more capable product or service comes available.
Not responding to market needs is a sure way to cause the business to fail. So how does one go about assessing their business to ensure future growth?
Look at the Past and Plan for the Future
The first item to consider when reassessing the business model is to look at the current business plan. Review the plan with a discerning eye, and determine what still makes sense and what needs to be changed. Is the market still the same? Have the climate or competition drastically changed since the plan was written? Are the resources and revenue forecasts still on track? These will provide a baseline on which a company can build.
Review Financial Forecasts
The business plan might have been created when expected profits were higher than current projections. Look at profits versus costs. Is the company spending more on overhead than it should be? Are there areas that could be cut to make the business run more efficiently without losing productivity? Are there any unnecessary expenses that could be reduced or eliminated? Is there a particular product/service that is a financial drain on the company? Address any issues that aren't benefitting the company.
Many companies think that they're highly efficient. Most actually are not. It's hard to assess one's own efficiency so this may be a good time to bring in a consultant. This person can give an honest assessment of everything from employee productivity levels to manufacturing error rates.
No one should be discouraged by a low efficiency rate – especially if the business is making a good profit. This means that by improving efficiency the business can make even more money.
Look at Resources
If a major part of the plan was adding new products or services, verify that the needed resources are actually available. The current business model may have relied on quickly scaling up product/service offerings, but that may not be feasible if current resources are already stretched and new resources cannot be feasibly brought on.
See if current cash flows can even support the extra commitment needed for additional offerings. If not, then either additional resources need to be sought or the plan changed and new offerings postponed.
Don't Skimp on Marketing
Typically, the first area of the business that's cut is marketing. Yet, marketing brings in new leads, and new leads bring new business. If the current model emphasizes sales over marketing, then it may need to be reevaluated. Sales people compensation structures can be tweaked to allow for higher marketing budgets.
Reviewing what is going right and wrong with company will help determine what's needed to ensure continued growth. That may be more management or sales people or additional products. It may even mean cutting something that seemed like a big-win for the company, but was actually a money loser. Update the business plan with these new insights, and use it as a guide for business growth.