By Rieva Lesonsky

Business planning experts always stress that a business plan is a living document-one that you should regularly reassess and change as your business grows. But in the best of times, how many of us actually follow this advice? If you created a plan when you started your business, when was the last time you actually looked at it?

 

Well, now is the time to take that business plan out of the drawer. In today's economy, reassessing your business plan isn't just wise advice-it's an essential step to business survival. Let's take a look at the various elements of your plan and how you may need to update them.

 


The key elements of your business plan are the executive summary, description of your business, market analysis, marketing and sales plan, operations and management plan and financials.

 


Let's begin with the market analysis. Has your target market changed? Most likely, your target customers have less money to spend than they did when you launched your company. Maybe the demographic makeup of the city where your business is located has changed. Perhaps there's a subset of your target market that turned out to be your best customers, and you should shift focus to concentrate more on them. Update your market research and revise your business plan to reflect the new numbers.

 


Part of the market analysis is your competitive analysis. How have your competitors changed since you wrote your plan? Has there been consolidation in the industry? Maybe some former key players have gone out of business, and new challengers have emerged. Identify all your current competitors, including both direct and indirect competitors. Then do a SWOT (strengths, weaknesses, opportunities and threats) analysis. What are their strengths and weaknesses, what opportunities do these present for your company, and what threats do you need to be aware of?

 


Once you've assessed the market, it's time to update your marketing and sales plan. In today's economy, you're most likely looking to cut your marketing and sales costs, while still attracting new business. Are the sales and marketing tactics you've been using still working? Even if they are working, are they the most cost-effective way of getting results?

 


There are many more low- or no-cost means of marketing these days, including social media and online marketing. If you're not already using these methods, try building them into your revised marketing plan. If you can build your brand with free social networking methods, perhaps you can cut back on paid advertising.

 


If you have salespeople, do you need to change their compensation structure? How much could you save by cutting back on salespeople who aren't performing, and rewarding those who are? Would a different approach to the sales force pay off? Think hard about what is (and isn't) working for you. The goal is to do more of what works and less of what doesn't.

 


Next come financials. After you've been in business for a while, you will be able to create far more realistic projections than you could when you first wrote your plan. You'll need to create monthly financial statement projections for the next 12 months, quarterly for the year after that, and annual statements for the next two years. You should also project cash-flow statements-monthly for the next 12 months, then quarterly for the next three years. Finally, project a balance sheet for each of the next three years. Consider working with your accountant to ensure estimates are obtainable and realistic.

 


How have your financial projections changed since your original business plan was written? If your future financials look substantially less rosy than you'd hoped, try to figure out why. What element of your business isn't performing the way you'd expected? Is there one product or service that's consistently a money-loser? Maybe you're making good money, but spending far more on overhead than you anticipated. Pinpoint what the problem is and figure out how to address it.

 


Once you have updated these parts of your plan, it's time to take a look at organization and management. The changes in your market, your marketing and sales strategy, and your financials will dictate these changes. If you're adding an in-house sales force, for instance, you'll need to change your organizational structure to reflect that. If low sales are forcing you to slash expenses, you may need to eliminate some staff and outsource their duties instead.

 


In some cases, reassessing your business plan may lead to a full-scale overhaul of your business model. Perhaps your plan for a chain of retail stores isn't working, and you need to launch an e-commerce site instead. Maybe the business you thought would target teenagers is actually a bigger hit with their moms. In situations like these, you'll need to revise your business description as well.

 


Last, but not least, is the most important part of your business plan-the executive summary. Revise it, incorporating all the changes you've made in your business going forward. The executive summary is the shortest part of your plan, but the first (sometimes only) part potential investors and lenders read, so make sure your new summary captures everything that makes your business unique, exciting and likely to succeed.

 


Now that you've got your business plan updated, don't put it back in the drawer again. Refer to it often, and use it as a tool to guide you on your path to business growth.

 


Rieva Lesonsky is CEO of GrowBiz Media (www.growbizmedia.com), a content and consulting company that helps entrepreneurs start and grow their businesses. Follow her on Twitter at www.Twitter.com/Rieva

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