Business Plan, a Roadmap through Change
Change is inevitable.
Change strikes fear in the hearts of many business owners.
Combating change is difficult. The proper roadmap for business owners can make or break the company during change. This roadmap is a business plan. A business plan identifies future objectives and strategies for achieving such objectives. As such, every company should have a business plan. Because of this, SBA lenders, venture capitalists, investors, etc. require one. To represent this idea, I’d like to share a story.
Business Plan- A Dynamic Document
A friend of mine, we will call him Kevin, took out an SBA loan to buy a pizza franchise. According to Kevin’s business plan, his brother would oversee the day-to-day operations. Kevin, however, would play a more passive role. After several years of operating, Kevin’s brother decided to quit. At first glance, this is only an inconvenience. But, imagine going from a passive role to an active role that requires 40+ hours per week.
How do you replace this individual? Do you internally hire? How will this impact the franchise location moving forward? These are some questions that arise when a key employee transitions out of the company. No matter how solid a business plan is, a business owner’s customers, market, and/or employees are going to eventually change. A result of that is needing your roadmap to change. A business plan is a dynamic document that needs regular refreshment. Like Kevin, business owners do not carry a crystal ball and rarely know what lies ahead.
As a business owner, you need to prepare for a changing landscape. Here are four common company changes that require business owners to update business plans. Peak Business Valuation, business appraiser, helps individuals who are buying, selling, or growing their business. For any questions, schedule a free consultation with Peak Business Valuation, business appraiser.
1. Competitive Disruption
First, assess your strategy for two different scenarios. The first is losing business to a competitor. The second is when a competitor has a given advantage in the market. Take this opportunity to observe the competition and identify differences. This could mean adjusting various strategies to further differentiate the business. Another hiccup comes if technological advancements disrupt the business model. In that case, the business plan may need to be rethought.
2. Financial Difficulties
Second, imagine a scenario where costs rise and revenue falls. Or, where important customers leave and financial projections do not meet expectations. These scenarios are overly dramatic, but they pose an interesting thought. If either of these takes place, it is time to reevaluate the business plan and adjust the strategy. To assess the situation, one should request customer feedback. Customer feedback can point out specific things that need change to retain customers and increase revenue.
3. Pivoting your Business
Third, what differentiates businesses can cause them to pivot product, service offerings, or assumptions made prior to launching. Whatever the reason for the pivot, an updated business plan should be in order.
4. Accelerated Growth
Fourth, growth can spell trouble if it happens quickly and outside the expected plan for expansion. Trouble can present itself in numerous ways. Some of these ways include over-utilized manufacturing, lack of capacity to meet demand, cracks in organizational structure, and customer service employees getting overwhelmed. Each problem can lead to mistakes, low morale, missed deadlines and overlooked quality controls. Growth is a great problem to have. But, the business plan should adapt to the growth. An understanding of growth patterns will help determine which areas are most affected. It will also lead to changes in operational plans, staffing, capacity, and financial projections.
In conclusion, no matter how solid a business plan is, one’s customers and the market will eventually change. This requires the business plan to change. Be agile! As Stephen Hawking once said, “intelligence is the ability to adapt to change”. Being agile is all about adapting to change.
We would love to help you update your business plan and identify ways to help your company grow. A business valuation is an excellent tool for growth. Schedule a free consultation with Peak Business Valuation, business appraiser, below!
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