Evolution or revolution?
A sound business plan is the foundation for a successful enterprise – but it can be difficult for business owners to know how and when to change tack.
The events of the last nine months or so have reminded us that nothing can be taken for granted. Unless your plan was written before the outbreak of the pandemic, it will almost inevitably be based on assumptions and forecasts that are no longer valid. It should also consider how you would react to less severe but more predictable disruption, such as a power outage or water damage.
When assessing their business plan, many entrepreneurs fail to recognise the importance of their own ambitions. For example, if your objective is to build the business quickly and sell it so you can move onto something else, you will need a plan that supports fast growth and a product or service whose value can be easily explained to potential purchasers.
A change for the better
The type of business you are running will determine how often the plan needs to be reviewed or updated. If it is a family-run enterprise your children may be approaching an age where they can become more involved and may have their own ideas for how to move the business forward.
Don’t be afraid to make major changes. Some would see an acceptance that the initial plan was flawed as an admission of failure, but it is nothing of the sort – in fact, it takes courage to admit you are heading in the wrong direction and do something about it.
It would be easy to beat yourself up about the mistakes you have made along the way, but no one is perfect. As long as you have learned from your mistakes you will be better placed to succeed in the future.
The value of a second opinion
Even when you have set out a business plan, there may still be ambitions that you find difficult to explain because they are ‘in your head’. One way of getting these ideas into a format that can be explained in a business plan is to discuss them with a trusted advisor, perhaps your accountant or a business consultant.
Someone outside the business may find it easier to make sense of your thoughts and could even provide valuable feedback on whether they are commercially viable. In fact, it could be a good time to consider if there is someone out there who could act as a ‘critical friend’.
Don’t put planning off
Updating a business plan can seem like a low priority task when there are so many other things that need doing. But it is a valuable exercise, even if all it does is strengthen your confidence that the business is heading in the right direction. There is plenty of research to suggest that companies with a clear, up-to-date business plan tend to be more successful.
The worst time to make changes is when a business is in trouble. Working on the basis that prevention is better than cure, taking action when you are trading successfully will be much less painful for you and your employees.
More businesses fail because of the absence of proper business planning than an inability to grow their revenues. Make the most of the insights derived from a cloud-based accounting solution such as Big Red Cloud and you can look ahead with confidence.