A Plan that Works and Evolves With You
Similar to how your personal resume reflects your professional evolution, your business plan should serve as your organization’s resume. It should capture your latest ideas and forecasts, while expressing why your organization will be successful and why it deserves funding.
An updated business plan makes it easy to present your latest expectations to investors at a moment’s notice. Passion is a difficult trait to convey to someone with whom you have limited to no interaction with previously. In our view, your ability to generate an updated plan in relatively short order speaks volumes to your commitment, and the dedication you have in turning your vision into reality.
The frequency with which you update your plan will evolve as your operations grow and mature. A fast-moving start-up, for instance, should have frequent revisions that reflect its rapidly changing nature. Conversely, a more mature organization may only need to revise certain segments of the plan, and do so with less regularity.
While a simple strategy might be to spend a few minutes each month reviewing every component of your business plan, we advocate scheduling a rotation on your calendar. This allows you to hit those elements that are likely to change with more frequency, such as: financials, sales and distribution, operations, and potential risks. Meanwhile, sections that focus on the industry dynamics, competition, product/service solution, and biographies of team members may require less frequent attention. Note: this dissection of business segments is an example. It should be modified to reflect the specific needs and purpose of each individual company.
The one section we recommend you pay attention to regularly is the financial model. It is arguably the lifeblood of your business; it drives much of the underlying concept and impacts the valuation a potential investor may assign to it. For start-ups in particular, we advocate a weekly review of the financial model. This not only serves as a good refresher and helps maintain focus, but it also insures that the latest intelligence is reflected.
After refreshing a particular segment, we STRONGLY advise you to pay close attention to the executive summary to see if it requires modification. Each time you update the financial model, there is a good chance it will alter some of the numbers contained within the summary. Few things speak to a lack of focus like a business plan where the numbers change throughout the report. Potential investors will cringe and struggle trying to figure out which numbers are correct. Note that we highlighted “sloppy financials” as one of the Common Reasons Business Plans Get Rejected.
Whether you keep a separate log, create a calendar, or write in the margin of a hardcopy, we recommend tracking the dates when changes are made. This will not only establish your last update for a particular segment, but will assist you in setting up a rotation that fits your entity’s evolution. Do yourself and your business a favor by keeping your plan current.