Why update your business plan every year?

If the business plan is often criticized even during the creation of the company because it often proves to be unrealistic, it remains an extremely useful tool at all stages of the business. You have certainly written it carefully and at the expense of many questions. You have spent a lot of energy, but like many entrepreneurs, you decide not to put it away in a corner of your computer once this phase is over. If it quickly becomes obsolete, with update it can become a reference and a compass. Explanations.

Do not drop the lead wire

Above all, between 20 and 50 pages, it’s an opportunity to lay the groundwork for what your business is, even though it’s likely to evolve over time. The business plan remains the showcase for your future business and describes, among other things: your personal presentation, the legal form, the services envisaged, the target audience, the competitive environment, the material, human, promotional or financial resources available and necessary as well as the forecast figures.

If all numbers are likely to evolve and be refined, the business plan remains an essential tool for keeping your behavior going and moving in a direction that prevents you from spreading yourself in all areas. It presents your entrepreneurial project and your long-term vision and can help you remember the reasons that made your business successful in the early years. It can help you understand the reasons for a change in the business model and analyze them coldly.

Note that you can leave the realization of your business plan to an accountant as well as create it yourself, even though certain decisions will be made according to elements that they do not have. Specific software released by the big names in French accounting is available if you want to make your job easier.

To update your forecast

Due to its complexity, the business plan tends to be set aside by entrepreneurs once their business is started. Nevertheless, it is worth remembering that the tool allows you to track your activity and compare it with your previous forecasts.

Monitoring can take the form of a dashboard with the following controls: implementation of planned resources and actions, compliance with costs, achievement of expected revenue … and to move forward it can help with cash flow, amortization, financing, results … That updating it therefore means refining it because your experience from the field tells you which variables have not been reached and which ones to take into account.

It is clear that the capacity of the business plan in terms of forecasts does not stop at the initial stage of the creation of the project and they remain essential for the company regardless of its lifespan. The tool gives you the opportunity to get a head start and a vision of the future in terms of revenue, balance sheet and income statement. This notion of expectation, for example, allows you to plan adjustments or plan new development opportunities for your activity. Your business plan is therefore a planning and decision-making tool.

It actually allows you to see if your forecasts have been corrected over time, but also to reveal if there are new points that you need to be aware of in the future, and this by integrating the events in the development market. We can mention as an example the arrival of a new competitor, which may have consequences for the company’s turnover or the massive digitalisation of a profession.

Your business plan can always be ready to operate

It is important to update the business plan regularly because it can always be useful for you, especially for your past but also future investors. You may be asked to update your business plan regularly, but can be especially helpful in case of fundraising, or when funding is needed. If your balances can often allow you to cope, this is not always the case, and updating a few years later can be time consuming if you have left it for years. So do not be surprised and remember to look at it regularly.

From a more global point of view, all of your business partners are quite fond of this tool and appreciate you communicating it to them from time to time if they ask you to. Above all, the business plan can allow you, along with your partners, or even yourself, to review the company’s strategy, which may have evolved significantly with feedback from the field. A meeting on this can be an opportunity to discuss certain points again and share his beliefs about the future before getting into a stalemate. For example, your partner may have a vision of the company’s future that has changed and not tell you about it. In the same way, it can be your case.

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