Your business plan is an important document to provide shareholders, investors and lenders. Because of this, you probably spent a great deal of time crafting it during the initial phase of starting your business, but that may be the extent of it. When was the last time you reviewed or updated your business plan?
With finances tight everywhere, now more than ever it’s critical to revisit this key document. Rather than starting fresh, updating three areas can create business plans for today’s economy.
Key Business Plan Area 1: Your Market
Knowing your market is basic advice you probably received early in the formation of your business. Over the last two years, the landscape of the business world changed to cope with the lagging worldwide economy. Across the board, sales and revenues are down from where they were just three years ago, making your fight for market share even more important.
When altering business plans for today’s economy, the first priority is assessing exactly how things are different in your market compared to when you wrote the business plan. If you’ve only been in business for a year, not much may be different, but if you wrote your plan while everyone was still worrying about Y2K, it’s time for a hard look at your industry. Questions to consider include:
- As a whole, how much has the market expanded or contracted in the last five years? In the last 2?
- Did I gain or lose business at a faster rate than the market as a whole?
- What factors contribute to the success or decline of my industry?
Key Business Plan Area 2: Your Demographics
Once you understand the new structure of your market – if you aren’t fortunate enough to be in a recession-resistant field – turn your attention to your business’s demographics. Who’s buying your product or service? Are these the same customers you had in the beginning, or has the client profile shifted?
Until you can answer those questions, you can’t begin to think about the most effective marketing techniques to drive additional business through your doors.
Key Business Plan Area 3: Your Competition
If today’s economy means a smaller pie for you to share with your competitors, your new business plan should demonstrate your knowledge of what the competition’s doing. Even if you maintain your old proportion of market share, 30% of an 8-inch pie is less than 30% of a 10-inch pie. Chances are good that your competitors already understand this and are doing everything in their power to increase their market share by moving in on yours.
Review your key competitors and consider:
- Their pre-recession market share
- Their current market share
- Their similarities to your business, in both practice and product
- Where your demographics overlap
Focus your attention most on those competitors whose client base overlaps yours. There’s little need to include a company in your business plan just because they have the dominant market share if there’s no overlap. For example, when you focus your efforts on military contracts and the industry giant goes after civilian consumers, they are not an immediate threat to your market share. Instead, learn which businesses are fighting for – and winning – the customer base you need to maintain your share of the market.
If your business plan is updated, it can contain the guiding blueprint for reaching your company goals.