Change is inevitable.
Change strikes fear in the hearts of many business owners.
Combating change is difficult, but the proper roadmap for business owners can make or break the business during change. This roadmap is known as a business plan. A business plan identifies future objectives and strategies for achieving such objectives. As such, every business should have a business plan. It is for the reason above that SBA lenders, venture capitalist, investors, etc. require a business plan.
A friend of mine, we will call him Kevin, took out an SBA loan to purchase a pizza franchise. According to Kevin’s business plan, Kevin’s brother was going to oversee the day-to-day operations of the location while Kevin played more of a passive role in the business.
After several years of operating, Kevin’s brother decided to quit. This may seem like a small blow to Kevin, but imagine going from a passive role to an active role that requires 40+ additional hours per week. How do you replace this individual? Do you hire internally? How will this impact the franchise location moving forward. There are countless questions that arise when one of your key employees transitions out of the company.
The reality is that no matter how solid a business plan is, sooner or later one’s customers, market and/or employees are going to change, requiring the business plan to change. A business plan should be treated as a dynamic document that is refreshed regularly. Like Kevin, business owners do not carry a crystal ball and rarely know what lies ahead.
To better prepare for a changing landscape, here are four common scenarios and company changes that require business owners to update business plans.
1. Competitive Disruption
- Assess strategy when losing business to a competitor or when a competitor has a given advantage in the market. Take this opportunity to observe competition and identify differences. This could mean adjusting various strategies in order to further differentiate the business. Likewise, if technological advancements disrupt the business model, the business plan may need to be rethought.
2. Financial Difficulties
- Imagine a scenario where costs rise and revenue falls, important customers leave and financial projections do not meet expectations. This scenario is overly dramatic, but if either of these various aspects take place, it is time to reevaluate the business plan and adjust strategy. In order to evaluate the situation, one should request customer feedback. Customer feedback has the potential to point out what specifically needs to change in order to retain customers and increase revenue.
3. Pivoting your Business
- What differentiates businesses from each other can possibly cause a business to pivot product, service offerings or assumptions made prior to launching the business. Whatever the reason is for the pivot, a business plan needs to be updated.
4. Accelerated Growth
- Growth can spell trouble if it happens quicker than anticipated and outside the expected plan for expansion. Trouble can present itself in numerous ways from over utilized manufacturing, lack of capacity to meet demand, cracks in organizational structure and employees to customer service being overwhelmed. Each of these can potentially lead to mistakes, low morale, missed deadlines, overlooked quality controls and much more.
- Growth is a great problem to have, but the business plan needs to be reassessed. An understanding of growth patterns will assist in determining which areas of the business are most affected, leading to changes in operational plans, staffing, capacity and financial projections.
The reality is that no matter how solid a business plan is, sooner or later one’s customers and market are going to change, requiring 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.
I would love to help you update your business plan and identify ways to help your company grow. Please reach out to me at email@example.com.