Manage-Wise

Signs to identify business refreshing

You should always revisit your business plan at least once a year. But if you operate in a rapidly changing industry, you’ll face times when you absolutely have to do an unscheduled review of your strategy and plan. Here are warning signs that your business plan needs attention.

Business goals change abruptly

Even the best business plan requires adjustments as conditions change. But if your company drastically changes course, you need to meet with your management team and look at your business plan from the bottom up. Take time to do a complete review and update your business plan to reflect a rational course change that addresses the problems you’ve identified.

Unable to meet plan milestones

Your business plan sets out a strategy and action plan for meeting your goals and objectives. Deadlines are one of the engines that propel your business forward. What do you do if the company begins to miss deadlines and important projects start to fall behind schedule? Sit down with your staff and figure out why the schedule set for your company isn’t working. Identify the source of the problem, including aspects of your current business plan that may not be realistic. With the help of your team, brainstorm solutions that can get you back on track. If you can’t catch up, revise your planning schedule so that employees don’t become frustrated.

New technology makes a splash

Technological innovation can alter your business landscape—changing what your customers want, how your business operates, and who your competitors are. A shift in technology can make existing products obsolete and create a market for new products or services almost overnight. So when a new technology appears on your business horizon, you need to reassess your business plan. Fast. Sit down with your management team and consider how this new technology should change the way you do business or the customers you serve. Lay out plans for how you can use the new technology to your advantage.

Customers walk away

Customers always keep an eye out for a better product or service or a better deal. Losing a few customers is a part of doing business. But if you start to notice that a lot of your customers are going elsewhere, something’s wrong. Your competitors may be stronger than you think, your effort may be falling short, or the market itself could be changing. Whatever the reasons, the defection of important customers is an alarm signal you can’t afford to ignore. One way to get more information: ask departing customers why they want a change. Talk to your sales force for further insights. After you research and gather tips and information, adjust your business plan.

Competition heats up

You need to know the competition if you want to compete successfully. So if an important new competitor sets up business in your market, you should revisit your competitor analysis and adjust your business plan accordingly. Keep in mind: Competition isn’t necessarily a bad thing. It usually forces you to focus on what you do best and develop ways to do it as efficiently as possible. But to respond effectively to a new competitive threat, you need the right plan in place.

Product demand falls sharply

If you see an unexpected drop in your current sales figures, move quickly to diagnose the problem. There may be a mismatch between the features you offer and the benefits customers want, a problem with quality control, or a breakdown in customer service. Or the competition has moved ahead of you. Don’t panic. Take time to identify the reasons behind the changes in sales and revise the appropriate parts of your business plan—product design, operations, and marketing strategy.

Revenues go down; costs go up

You won’t find a clearer sign that your company is in trouble than when revenues go down or costs go up. But too many business owners ignore the warning signs until it’s too late. Why? Because for most businesses, things don’t usually go wrong overnight. Costs rise slowly; revenues slowly drift downward. By the time the warning bells go off, they don’t have time for a simple fix. You should revisit your business plan—namely the financial plan you have in place—at first signs of a profit squeeze.

Company morale slumps

The morale of the people who work for you is critical to your success. If morale slumps, you may see productivity and quality decline as well. At the first sign of grumbling among your staff, talk to the key people around you and find out exactly what’s wrong. Perhaps your planned goals and objectives are unreasonable, which creates frustration rather than motivation in the company. Or maybe your employees see a mismatch between your stated mission and your plan of action, creating confusion and indirection. Perhaps you don’t have procedures in place to recognize and reward a job well done.

Financial forecasts don’t work

Predicting the financial future of your company is part science and part guesswork. Plenty of situations can come out of the blue to disrupt even the most conservative financial projections. If your projections begin to look a little wobbly, don’t wait until they topple. Sit down with your key staff members to review all the assumptions that went into your original projections, and make detailed list of the things that may change your forecasts. Work up a revised set of financial projections based on the new reality. If necessary, revise your action plan as well.

Too much growth, too fast

You don’t hear anyone complaining if your business is booming. But many business owners don’t realize that companies can grow too fast—and that can spell trouble if they haven’t prepared. Product quality or customer service can suffer, for instance, or manufacturing may not be able to keep up with demand. Some companies even find that their basic organizational structure no longer fits their new size. If you experience similar growing pains, look back at your business plan to identify the parts that need to change in the order to accommodate the good news—and your increasing size.

Excerpt from ‘Business Plans for Dummies’, by Paul Tiffany and Steven D. Peterson. Published by Wiley India (P) Ltd.