Revisiting Your Business Plan
By Jeff Wright, Senior Vice President, Hennessey Capital
Every business, no matter what size, should have a business plan to be used by management as a tool to guide the company in achieving its corporate goals. It should describe the company’s strength, weaknesses, opportunities and threats and be accompanied by supporting assumptions. Over time, however, internal and external factors influence operating results. The business plan must be flexible enough to be and revised often to meet ever changing market conditions.
Do you have new competition? Are existing competitors doing anything differently that requires you to revisit how you do business? What are the needs of your existing or potential customers? Is sales volume increasing or decreasing due to economic or industry conditions? By reviewing these factors, management can implement changes to address the need to add personnel, buy equipment, improve technology, expand or move to a new facility, and finance the expected growth or cut personnel or overhead expenses, reduce inventory levels, sell idle equipment. It may require negotiating price increases with customers or finding alternative suppliers to maintain margins necessary to operate profitably. An action plan must be in place to address revenue and expense concerns.
Many struggling companies react too slowly to their changing environment. Reviewing actual operating results versus planned performance provides management valuable feedback. Unfavorable variances must be reviewed and changes implemented. Ask yourself what occurred, what are you going to do, and how are you going to do it will help get the company back on track? It is important be share the information with top management and involve trusted advisors, i.e. CPA or business consultant? The changes must be clearly defined so that everybody in the organization knows their responsibilities to make the plan a reality.
The business plan is a living document which should be continuously revised as market conditions and behavior change. It should include revised goals that take the company to the next level of growth and measured against expected results.
