By: Barry Moltz
If you’ve only ever used your business plan to raise money, you may be leaving a powerful leadership and growth tool in the drawer.
A business plan isn’t just something to show bankers or investors. Instead, consider reviewing these documents at least once a year in order to measure your company against your stated goals, learn from the results and shift directions when necessary.
Consider putting these eight sections in every plan, and reviewing them quarterly, or at least annually, to help prove a boon to your business.
This is where you talk about “what we do and why we do it.” It answers the question, “What pain do we solve, and who do we solve it for?”
This is a good section to review on an annual basis to determine whether your mission has stayed the same.
- Is it still relevant to your company, employees and targeted customers?
- Is it something your employees can still rally around and customers still want to buy?
Most companies’ missions evolve over time, which means you may need to update your executive summary.
Market and Competition
Markets change rapidly, and new competition seems to sprout daily. Check what’s changed in the market since your last business plan review, and see how new companies are approaching and solving problems for their customers.
- What’s being done well or poorly to meet the needs of prospective customers in your market niche?
- Is the market expanding or shrinking?
- What changes are happening in adjacent areas that represent new opportunities? Think about how your company’s mission can change to meet those opportunities.
Product or Service
I recommend reviewing this section at least quarterly, so you can be more aware of which products and services are selling and which may need to be abandoned. You can review why your customers are buying (or avoiding) your products, and you should explore other pains in the market where your business can expand (without losing focus).
There are very few companies that can grow from startup to a $100 million company with the same leadership team. Most people are only good at certain growth phases of a business—some are better suited for the startup stage, while others may be more effective once the company has grown to $5 million or $25 million in sales.
The evolution of the skills of the leadership team may contribute to a company’s success. I recommend evaluating the skills of every member of the team (including the founder) on an annual basis to see if their talents are still the best fit for that particular stage of the company. The planning process for the shifting of responsibilities and hiring new people typically takes a lot of time and forethought.
Marketing, Sales and Distribution Plan
Products and services don’t sell themselves. Check the effectiveness of each of these channels. Which marketing efforts have worked in the past quarter?
- What sales and distribution methods have had the best results during this same period?
- What needs to be changed?
- Are there new strategic alliances that can be formed?
Business owners may overlook this area if they don’t understand their company’s financial statements. While these should ideally be reviewed monthly, analyzing them once a quarter can work. It could help to review how this period compared to the same period last year. Also helpful: analyzing this year’s results as compared to your annual budget.
Use of Funds
While this category is typically used for determining how an investment or loan will be used, a good game plan may be deciding annually where your profits are going to be invested. Will you reinvest them for growth or for accumulating cash? What are the major initiatives or “big bets” you’ll be making in the coming year? Determining how much you’ll invest in each area and what the expected return is may help guide your business in the coming year.
Consider creating an end game, whether it’s to sell the company or provide ongoing financial support for you as the business owner. Annually, determine whether this purpose has changed. For example, maybe you’ve shifted your company’s tactics for growth to show a bigger profit. If there’s been a change, you might want to consider updating your plan to reflect that.