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Run » finance, 8 signs it's time to update your business plan.

You should update your business plan more frequently than you might think. Here are eight signs it’s time to update your business plan.

Updating your business plan ensures that the information is up to date and in line with the changing goals of your organization. Here are eight situations where it’s necessary to update your business plan .

It’s been over a year since you updated it

Your business plan is never finished — you should constantly be reviewing and updating it. How often you update it is up to you, but it’s a good idea to schedule regular periods to review and update your plan.

For instance, you could do a minor review quarterly and then conduct a major review at least once per year. This will give you an opportunity to see what’s changed and if there are any outdated items.

You’ve added new products or services

Your company’s products and services are an integral part of your business plan, so when they change, your business plan should change as well. That's because adding new products or services affects your sales projections and how you manage company resources.

[Read more: How to Communicate a Product Discontinuation to Customers ]

The competition is changing

Paying attention to what your competitors are doing can help you determine when it’s time to shift your own business strategy. For instance, let’s say a competitor has copied your product or service or is undercutting you on price. You should take the time to evaluate their strategy and decide whether you want to do anything in response.

[Read more: 6 Steps to Market Your Business in a Competitive Market ]

The market is changing

Anytime there are changes in the market, you should adjust your business plan accordingly. For instance, businesses that relied on in-store traffic to make sales had to make adjustments during COVID.

Current issues like inflation or fears of a recession could affect a customer’s ability to buy your product or service. Any factors that could negatively affect your revenue warrant reviewing your business plan.

When you started your business, it may have just been you and one or two other employees. If your company has experienced substantial growth since then, it’s time to review your business plan.

You’ve experienced a financial change

It’s a good idea to update your business plan anytime you experience a significant financial change, whether good or bad. For instance, landing a major client is a great problem to have. But serving that client may require more time and resources than your team initially planned for.

Likewise, if a long-term customer cancels a major contract, that will affect your future revenue. Each of these scenarios requires you to revisit your business plan and develop a new strategy.

You’re going through internal changes

Internal changes can require you to update your business plan as well. For instance, let’s say you switch to a new tech platform to make your business more competitive. Or maybe you’ve recently switched vendors to deal with supply chain issues.

Losing a key staff member can also deal a major blow to your business. Perhaps that person had strong relationships with many of your customers, so you need to rethink how your business will operate without them.

[Read more: How to Talk to an Employee About Poor Performance ]

Your company has grown substantially

And when you update your business plan, it’s a good idea to involve several key employees. Getting buy-in from your employees helps ensure the implementation will be successful.

You’re trying to obtain funding

You'll need to provide a detailed business plan if you’re trying to obtain funding from a bank or investor. When an investor looks at your business plan, they should understand what your company does and your future financial projections.

Your business plan should include:

• An executive summary.
• An explanation of your total available market.
• A description of how you plan to use the funding.

This may sound complicated, but it isn’t if you follow a free business plan template .

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

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Why your next transformation should be ‘all in’

Business transformation programs have long focused on productivity improvement—taking a “better, faster, cheaper” approach to how the company works. And for good reason: disciplined efforts can boost productivity as well as accountability, transparency, execution, and the pace of decision making. When it comes to delivering fast results to the bottom line, it’s a proven recipe that works.

The problem is, it’s no longer enough. Digitization, advanced technologies, and other forms of tech-enabled disruption are upending industry after industry, pressuring incumbent companies not only to scratch out stronger financial returns but also to remake who and what they are as organizations.

It’s entirely possible for organizations to ramp up their bottom-line performance even as they secure game-changing portfolio wins that redefine what a company is and does.

Doing the first is hard enough. Tackling the second—changing what your company is and does—requires understanding where the value is shifting in your industry (and in others), spotting opportunities in the inflection points, and taking purposeful actions to seize them. The prospect of doing both jobs at once is sobering.

How realistic is it to think your company can pull it off? The good news is that our research demonstrates it’s entirely possible for organizations to ramp up their bottom-line performance even as they secure game-changing portfolio wins that redefine what a company is and does. What’s more, “all-in” transformations that focus on the organization’s performance and portfolio appear to load the dice in favor of transformational results. By developing these two complementary sets of muscles, companies can aspire to flex them in a coordinated way, using performance improvements to carry them to the next set of portfolio moves, which in turn creates momentum propelling the company to the next level.

Life on the power curve

If you want to see where you’re going, it’s best to start with a point of reference. Our choice, the power curve of economic profit, came out of a multiyear research effort that sought to establish empirical benchmarks for what really makes for success in strategy. To create Exhibit 1, we plotted the economic profit (the total profit after subtracting the cost of capital) earned by the world’s 2,393 largest nonfinancial companies from 2010 to 2014. The result shows a power curve that is extremely steep at both ends and flat in the middle. The average company in the middle three quintiles earned less than $50 million in economic profit. Meanwhile, those in the top quintile earned 30 times more than the average firm in our sample, capturing nearly 90 percent of all the economic profit created, or an average of $1.4 billion annually.

Although there is an enormous gulf between the middle firms and the top-quintile firms, companies can and do move up. Eight percent, or one in 12 companies, managed this feat across the decade we examined (from a starting position in 2000–04, to an ending position of 2010–14). As described in Strategy Beyond the Hockey Stick (Wiley, 2018), the specific odds of a company succeeding are largely explained by its endowment (for example, its size and debt capacity), its trends (a declining or improving industry), and the application of five big moves .

While all of these factors matter, the five moves play the biggest role in determining whether or not a company successfully climbed the power curve. They are also the ingredients of a truly transformational transformation program, so let’s look at them next.

Big moves in the transformation tool kit

To place the five big moves in the context of transformation, we divided them into two categories. The first covers “performance-related” moves. These include substantial changes that lead to better margins and potential new fit-for-purpose business models.

Productivity improvements are a management favorite in the performance genre, but to qualify as a big move, the relative improvement versus your sector must outpace 70 percent of firms over a decade.

Differentiation improvement is the other performance-related move, covering innovation in products, services, and business models. Similarly, for this move to really transform the business, we said that your company’s gross margin improvement must put it in the top 30 percent of its industry’s improvement—or, to put another way, you must deliver 25 percent more improvement than your industry median.

The second category covers three “portfolio-related” moves. The first is active resource reallocation, which we define as the company shifting more than 60 percent of its capital spending across its businesses or markets over ten years. Such firms create 50 percent more value than counterparts that shift resources at a slower clip. 1 See Chris Bradley, Martin Hirt, and Sven Smit, Strategy Beyond the Hockey Stick: People, Probabilities, and Big Moves to Beat the Odds , New York, NY: Wiley, 2018. Meanwhile, a big move in programmatic M&A —the type of deal making that produces more reliable performance boosts than any other—requires the company to execute at least one deal per year, cumulatively amounting to more than 30 percent of a company’s market capitalization over ten years, and with no single deal being more than 30 percent of its market capitalization. Finally, for capital programs to qualify as a big move, the ratio of capital expenditure (capex) to sales must exceed 1.7 times the industry median for at least a decade.

Making big moves tends to reduce the risk profile and adds more upside than downside. The way we explain this to senior executives is that when you’re parked on the side of a volcano, staying put is your riskiest move.

While the five moves are by definition big relative to competitors, this does not mean they are brash or reckless. In fact, making big moves tends to reduce the risk profile and adds more upside than downside (although how much of each depends in part on your industry’s trends, as we will see). The way we explain this to senior executives is that when you’re parked on the side of a volcano, staying put is your riskiest move. Moreover, the five moves are cumulatively big and are most effective when combined in carefully considered ways. The successful big movers rarely lurch; they are far more likely to move consistently and steadily, with a constancy of purpose, over a long period of time.

Combining moves to transform

As shown in Strategy Beyond the Hockey Stick , for companies in the middle ranks of the power curve, making one or two of the five big moves increases a company’s odds of rising into the top quintile from 8 percent to 17 percent; making three big moves boosts these odds to nearly 50 percent. In our latest research, we sought to become more granular about the relationship between different categories of moves, by segmenting 1,435 companies that started in the middle three quintiles of the power curve into four transformation “stories” (Exhibit 2). Those relationships are interesting in their own right, and we also hope they will help leaders raise their sights in a nuanced way. Resetting aspirations often represents a critical need. It’s quite rare for companies to make more than a single big move; about 80 percent of our sample made exactly one move, or none at all.

The largest group, representing 47 percent of the companies we studied, didn’t make any of the five big moves. This doesn’t mean they didn’t make plans or moves—only that their moves weren’t big enough to reach our bar for transformational results. The members of this “static” group had the lowest odds of reaching the top quintile of the power curve, at 4 percent.

Performance only

Twenty-six percent of the companies made at least one big, performance-oriented move, but no portfolio moves. As a result, they nearly doubled their odds of rising to the top quintile of the power curve.

Portfolio only

Meanwhile, 15 percent of the companies we studied made a major move that reshaped their portfolio, but they didn’t make big moves in productivity or differentiation. At 11 percent, they had an even better chance than the performance-only group of vaulting to the top quintile. For example, Tele2, a Sweden-based telecom, used a strong programmatic-M&A strategy, featuring 16 acquisitions during the period we studied (2000 to 2012), to gradually expand to new markets while using the infrastructure from its acquisitions to strengthen its product offering.

Transformations that go ‘all in’ by addressing both a company’s performance and its portfolio yield the highest odds.

The 12 percent of companies in our sample that made at least one big move in both categories were rewarded with the highest odds of climbing the power curve, at 22 percent. Consider the case of Sun Pharmaceutical, an India-based manufacturer of generic drugs, which made clear differentiation improvements and executed a strong capital program over the period we studied. This allowed the company to seize upon the industry trend of increased local and global demand for generic medicines. In 2007, the company divested its research arm to focus fully on generics. This resulted in an aggressive expansion of the company’s production capacity (with a capital-expenditure ratio twice as high as the industry median at that time) and a strong focus on higher-margin generics (its gross margin doubled between 2000 and 2014).

The implication of these transformation stories is clear: approaches that go all in by addressing both a company’s performance and its portfolio yield the highest odds of lasting improvement. Over the course of a decade, companies that followed this path nearly tripled their likelihood of reaching the top quintile of the power curve relative to the average company in the middle three tiers. 2 Our analysis thus far has assumed that companies started in one of the three middle quintiles of the power curve—a good company earning close to its cost of capital. Keen readers may therefore ask, “What about companies starting in the bottom quintile?” We checked the numbers: in this case, performance-only, portfolio-only, and all-in programs offer similar, much higher odds than static programs (where the moves taken were small relative to competitors). Still, given more big moves, the all-in programs had the edge.

Play to your industry context

Life would be simpler if our story ended here. However, you’re not operating in a competitive vacuum. As we described earlier, other forces influence your odds of success in significant ways—in particular, how your industry is performing. To map this effect, we divided our sample of companies according to whether or not their industry improved its average economic profit over the decade we studied. We knew from our previous research that companies facing competitive headwinds would face longer odds of success than those with tailwinds, but what we now saw was the extent to which the impact of different combinations of moves affected the odds for each group.

Running against the wind

Among the companies in the power curve’s middle three quintiles, fully 60 percent compete in industries where the average economic profit is declining. Life is tough with a headwind, and these companies must run hard just to stand still. Just how hard becomes clear when we look at their net odds of success. We calculated this by netting their chances of moving to the top quintile against their chances of falling to the bottom quintile.

The net odds say it all: companies in declining industries have a 4 percent chance of moving up the power curve, but an 18 percent chance of moving down.

The net odds say it all: companies in declining industries have a 4 percent chance of moving up the power curve, but an 18 percent chance of moving down (meaning their net odds are negative 14 percent). If you’re in this group, how you employ the five big moves says a lot about how you’re likely to fare (Exhibit 3). Among our findings:

• Standing still is a terrible idea. The odds associated with a static approach are grim, equating to a 2 percent chance of reaching the top of the power curve and a 16 percent chance of slipping to the bottom. Nonetheless, just over half the companies in declining industries followed this path.
• Good performance alone won’t cut it. Surprisingly, perhaps, we found that performance-only moves also equate to negative net odds. True, the downside risk is lower with this approach than if you make no big moves at all—but not by much. This finding flies against the conventional wisdom that the best response in a declining industry is corporate belt tightening.
• You can’t spend your way out of trouble. Companies taking a capex-only approach added far more downside than upside. Why? Big capital expenditures are an amplifier, pushing you faster in a good direction if the underlying investment is smart, and faster in a bad direction if it’s not. Given the added drag of an industry headwind, a capex-only approach to transformation is like stepping on the accelerator in heavy traffic: you won’t get far and may well crash. 3 Warren Buffett’s famous (and colorful) warning to Berkshire Hathaway shareholders also comes to mind: “The projections will be dazzling and the advocates sincere, but, in the end, major additional investment in a terrible industry usually is about as rewarding as struggling in quicksand.”
• All in is your best chance. Companies that combined big performance moves with big portfolio moves (including capital expenditures, when not the only portfolio move employed) saw a big lift in their odds. Life is still challenging for these companies—their net odds are dead even—yet this is superior to the negative odds of the other situations. Ultimately, a bit more than one in five companies in this category were able to move to the top quintile.

Riding on the wind

The other 40 percent of the companies in the middle three quintiles have it much better, having been gifted a positive economic trend. For these organizations, the chances of success are enhanced: 15 percent, on average, rise to the top of the power curve, and just 8 percent fall to the bottom. For this group, too, the application of the big moves affected the outcome (Exhibit 4). Among the implications:

• Don’t waste your gifts. A static approach is still a bad idea. While the odds of moving up the power curve were 9 percent for companies in this situation, the odds of moving down were 7 percent. You can do better.
• Press your performance advantage. In an improving industry, the returns to performance improvement are amplified massively. This runs contrary to the very human tendency of equating performance transformations with turnaround cases. If you are lucky enough to enjoy an industry tailwind, a performance-only transformation raises your upside odds to 15 percent and lowers your downside chances to just 2 percent. When in the fast lane, step on the gas.
• Don’t spend big without better performance. Far from being oil and water, growth and productivity improvement are well paired. Nonetheless, be wary of big capital-expenditure programs that don’t improve the overall cost and gross-margin economics of the business. Your net odds of success are much worse in this scenario than if you made no big moves at all. Combining a big capital-expenditure move with a big performance move, however, gives you net odds that are more than seven times better than standing pat.
• All in wins again. Indeed, the all-in approach to transformation wins out. Depending on their particular combination of portfolio and performance moves, organizations in this category saw their chances of entering the top quintile reach a whopping 39 percent, versus a 6 percent chance of slipping down.

The takeaway from all this is that two big rules stand out as commonly and powerfully true whatever your context: first, get moving, don’t be static; second, go all in if you can—it’s always the best outcome (and also the rarest).

Getting to all in

In our experience, the companies that are most successful at transforming themselves sequence their moves so that the rapid lift of performance improvement provides oxygen and confidence for big moves in M&A, capital investment, and resource reallocation. And when the right portfolio moves aren’t immediately available or aren’t clear, the improved performance helps buy a company time until the strategy can catch up.

To illustrate this point, consider the anecdote about Apple that UCLA business professor Richard Rumelt describes in his book, Good Strategy/Bad Strategy (Crown Publishing, 2011). It was the late 1990s; Steve Jobs had returned to Apple and cleaned house through productivity-improving cutbacks and a radically simplified product line. Apple was much stronger, yet it remained a niche player in its industry. When Rumelt asked Jobs how he planned to address this fact, “[Jobs] just smiled and said, ‘I am going to wait for the next big thing.’ ”

While no one can guarantee that your “next big thing” will be an iPod-size breakthrough, there’s nothing stopping you from laying the groundwork for a successful all-in transformation. To see how prepared you are for such an undertaking, ask yourself—and your team—the following six questions. We hope they provoke productive and, dare we suggest, transformative discussion among your team.

Where is the value flowing, and what can we do about it?

Achieving success with big, portfolio-related moves requires understanding where the value flows in your business and why. The structural attractiveness of markets, and your position in them, can and does change over time. Ignore this and you might be shifting deck chairs on the Titanic . Meanwhile, to put this thinking into action, you must also view the company as an ever-changing portfolio. This represents a sea change for managers who are used to plodding, once-a-year strategy sessions that are more focused on “getting to yes” and on protecting turf than on debating real alternatives.

For more about how to transform the dynamics in your strategy room, see “ Eight shifts that will take your strategy into high gear .”

Do we put our money where our strategy is?

About one-third of US companies reallocate no more than 1 percent of their resources from year to year. Whether through bias, office politics, or plain old inertia, they simply roll this year’s plan into next year. It should, by now, go without saying that this is a terrible starting position from which to expect transformative change. Companies can escape the cycle by creating target portfolios, adopting decision rules, and creating simple processes to break free of inertia.

For more, see “ How to put your money where your strategy is .”

Are we ready for cannibalism?

Increasingly, incumbent organizations are getting to the pointy end of disruption, where they must accelerate the transition from legacy business models to new ones and even allow potentially cannibalizing businesses to flourish. Sometimes this requires a very deliberate two-speed approach where legacy assets are managed for cash while new businesses are nurtured for growth.

For more on embracing such a mind-set, see the Harvard Business Review article “ The best companies aren’t afraid to replace their most profitable products ,” on hbr.org.

Are we aiming high enough?

Bold aspirations matter hugely in business transformation , but people tend to be far more comfortable when they “underpromise and overdeliver.” The upshot, in our experience, can be setting initial targets (for example, in securing performance-related improvements) that are two or even three times lower than they could be over time.

For more on how to set strong aspirations and, more importantly, how to evolve them, see “The numbers behind successful transformations,” forthcoming on McKinsey.com, and “ Transformation with a capital T .”

Will our company take this seriously?

Embracing transformative change requires commitment, and gaining commitment requires a compelling change story that everyone in the company can embrace. Philips recognized this in 2011 when it launched its “Accelerate!” program. Along with productivity improvements and portfolio changes (including a big pivot from electronics to health tech), the company shaped its change story around improving three billion lives annually by 2030, as part of a broader goal of “mak[ing] the world healthier and more sustainable through innovation.”

For more about what works—and what doesn’t—in creating a change story, see “ The irrational side of change management .”

Are you up to the leadership challenge?

Leading a successful transformation requires a lot more than just picking the right moves and seeing them through. Among your other priorities: build momentum, engage your workforce, and make the change personal for yourself and your company. All of this means developing new leadership skills and ways of working, while embracing a level of commitment as a leader that may be unprecedented for you.

For more on addressing these challenges, see “ The wisdom of transformations: How successful CEOs think about change .”

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Chris Bradley is a senior partner in McKinsey’s Sydney office, Marc de Jong is a partner in the Amsterdam office, and Wesley Walden is a senior partner in the Melbourne office.

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What Is a Business Plan?

Understanding business plans, how to write a business plan, common elements of a business plan, the bottom line, business plan: what it is, what's included, and how to write one.

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

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A business plan is a document that outlines a company's goals and the strategies to achieve them. It's valuable for both startups and established companies. For startups, a well-crafted business plan is crucial for attracting potential lenders and investors. Established businesses use business plans to stay on track and aligned with their growth objectives. This article will explain the key components of an effective business plan and guidance on how to write one.

Key Takeaways

• A business plan is a document detailing a company's business activities and strategies for achieving its goals.
• Startup companies use business plans to launch their venture and to attract outside investors.
• For established companies, a business plan helps keep the executive team focused on short- and long-term objectives.
• There's no single required format for a business plan, but certain key elements are essential for most companies.

Investopedia / Ryan Oakley

Any new business should have a business plan in place before beginning operations. Banks and venture capital firms often want to see a business plan before considering making a loan or providing capital to new businesses.

Even if a company doesn't need additional funding, having a business plan helps it stay focused on its goals. Research from the University of Oregon shows that businesses with a plan are significantly more likely to secure funding than those without one. Moreover, companies with a business plan grow 30% faster than those that don't plan. According to a Harvard Business Review article, entrepreneurs who write formal plans are 16% more likely to achieve viability than those who don't.

A business plan should ideally be reviewed and updated periodically to reflect achieved goals or changes in direction. An established business moving in a new direction might even create an entirely new plan.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. It allows for careful consideration of ideas before significant investment, highlights potential obstacles to success, and provides a tool for seeking objective feedback from trusted outsiders. A business plan may also help ensure that a company’s executive team remains aligned on strategic action items and priorities.

While business plans vary widely, even among competitors in the same industry, they often share basic elements detailed below.

A well-crafted business plan is essential for attracting investors and guiding a company's strategic growth. It should address market needs and investor requirements and provide clear financial projections.

While there are any number of templates that you can use to write a business plan, it's best to try to avoid producing a generic-looking one. Let your plan reflect the unique personality of your business.

Many business plans use some combination of the sections below, with varying levels of detail, depending on the company.

The length of a business plan can vary greatly from business to business. Regardless, gathering the basic information into a 15- to 25-page document is best. Any additional crucial elements, such as patent applications, can be referenced in the main document and included as appendices.

Common elements in many business plans include:

• Executive summary : This section introduces the company and includes its mission statement along with relevant information about the company's leadership, employees, operations, and locations.
• Products and services : Describe the products and services the company offers or plans to introduce. Include details on pricing, product lifespan, and unique consumer benefits. Mention production and manufacturing processes, relevant patents , proprietary technology , and research and development (R&D) information.
• Market analysis : Explain the current state of the industry and the competition. Detail where the company fits in, the types of customers it plans to target, and how it plans to capture market share from competitors.
• Marketing strategy : Outline the company's plans to attract and retain customers, including anticipated advertising and marketing campaigns. Describe the distribution channels that will be used to deliver products or services to consumers.
• Financial plans and projections : Established businesses should include financial statements, balance sheets, and other relevant financial information. New businesses should provide financial targets and estimates for the first few years. This section may also include any funding requests.

Investors want to see a clear exit strategy, expected returns, and a timeline for cashing out. It's likely a good idea to provide five-year profitability forecasts and realistic financial estimates.

2 Types of Business Plans

Business plans can vary in format, often categorized into traditional and lean startup plans. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

• Traditional business plans : These are detailed and lengthy, requiring more effort to create but offering comprehensive information that can be persuasive to potential investors.
• Lean startup business plans : These are concise, sometimes just one page, and focus on key elements. While they save time, companies should be ready to provide additional details if requested by investors or lenders.

Why Do Business Plans Fail?

A business plan isn't a surefire recipe for success. The plan may have been unrealistic in its assumptions and projections. Markets and the economy might change in ways that couldn't have been foreseen. A competitor might introduce a revolutionary new product or service. All this calls for building flexibility into your plan, so you can pivot to a new course if needed.

How Often Should a Business Plan Be Updated?

How frequently a business plan needs to be revised will depend on its nature. Updating your business plan is crucial due to changes in external factors (market trends, competition, and regulations) and internal developments (like employee growth and new products). While a well-established business might want to review its plan once a year and make changes if necessary, a new or fast-growing business in a fiercely competitive market might want to revise it more often, such as quarterly.

What Does a Lean Startup Business Plan Include?

The lean startup business plan is ideal for quickly explaining a business, especially for new companies that don't have much information yet. Key sections may include a value proposition , major activities and advantages, resources (staff, intellectual property, and capital), partnerships, customer segments, and revenue sources.

A well-crafted business plan is crucial for any company, whether it's a startup looking for investment or an established business wanting to stay on course. It outlines goals and strategies, boosting a company's chances of securing funding and achieving growth.

As your business and the market change, update your business plan regularly. This keeps it relevant and aligned with your current goals and conditions. Think of your business plan as a living document that evolves with your company, not something carved in stone.

University of Oregon Department of Economics. " Evaluation of the Effectiveness of Business Planning Using Palo Alto's Business Plan Pro ." Eason Ding & Tim Hursey.

Bplans. " Do You Need a Business Plan? Scientific Research Says Yes ."

Harvard Business Review. " Research: Writing a Business Plan Makes Your Startup More Likely to Succeed ."

Harvard Business Review. " How to Write a Winning Business Plan ."

U.S. Small Business Administration. " Write Your Business Plan ."

SCORE. " When and Why Should You Review Your Business Plan? "

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How to Update your Business Plan?

Business Plan Template

• June 3, 2024

Finally, after a lot of effort, you wrote a business plan. But the journey doesn’t end here!

A business plan is a living document—you need to work on it continuously to keep it relevant and up-to-date according to the market situations.

Your plan should evolve along with your business. This ensures it remains a valuable tool for decision-making. Regular updates can help you adapt to new opportunities, overcome challenges, and maintain a clear path toward your goals.

Let’s explore the hows, whens, and whats of updating a business plan .

Why should you keep updating your business plan?

The first question that arises is why a business plan update is necessary. Is it not possible to have a plan that remains relevant for a longer duration?

Moreover, some might wonder if updating a detailed business plan halfway could have a negative impact. All of these questions may cross your mind when managing a small business.

There are several benefits of updating a business plan, some of them are:

1. Keeping up with the demands of the customer base

The first and most obvious reason is to keep up with the needs of your customers. A business’s one of the key drivers is an increased demand. When you create what people want, it naturally leads to more consumption.

Many businesses make the blunder of never altering products that worked once. However, in the case of businesses, demands change constantly – whether one likes it or not!

For instance, Blackberry phones were considered the go-to phones for professionals in one era, and now they are just nostalgia. So, going with the trends and changing your plan accordingly becomes necessary to stay significant in the industry.

2. Accommodating and expanding market requirements

There are prominent benefits of updating your business with a market expansion strategy. What does this mean?

With ever-increasing products and services in every domain, expanding your product to a new market can help you increase your sales.

For example, a company serving coffee beans to the urban market could expand its reach by offering instant coffee to consumers who don’t have specialized equipment for coffee beans.

3. Keeping up with the competitors

To succeed, businesses need to keep up with their competitors. It means updating your plans and strategies after analyzing your competitors to make your brand stand out.

It includes updating your marketing strategies, pricing models, product offerings, and more to stay relevant for your customers.

4. Tracking your progress

Updating your plan allows you to compare your projections with actual results. It helps you to understand in which areas you are performing well and which needs better performance. It’s like checking the map to make sure your small business is still heading in the right direction.  

How to update your business plan?

The next thing to talk about is what exactly is to update. Is it the strategy that needs a change? Or do the actual technical aspects of the business need to be updated? The answer to that is – both. Some constant checks need to be kept on integral aspects. Let’s move ahead and see the steps for updating a business plan:

1. Review the mission and vision statement

The mission and vision statement of the plan defines the purpose, values, and long-term goals of the business. Therefore, it is necessary to review and update them first.

Check if are they still pertinent to your long-term goals. Think about any changes in your business world or new ideas that might make you need to update these statements to keep them current and motivating.

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2. Conduct industry and market analysis

Research about recent trends & developments going on in the industry. Also, check for any regulatory shifts or changes in consumer behavior.

If there are any changes, then update the sections to reflect current trends and insights that might affect your business strategy.

For instance, let’s say you are running a tech startup. And in your market research, you explored current trends like AI and eco-friendly tech. After knowing the current trends, you might make any changes in your business strategy.

3. Reassess your business strategies

Based on the market and industry analysis, revisit your strategies and determine if all the strategies & business objectives are still up-to-date with the analysis.

Revise your strategy according to the current situation and make sure that your goals are achievable through the new strategies.

For example, you are running a bakery business, and after market analysis, you got to know people are preferring more gluten-free items. So, now you reassess your strategy and include more dishes on your menu that are gluten-free.

4. Update your financial projections

See your current financial situation and match it with financial plan projections to know the difference. Now, update your forecasts (cash flow, profit & loss, & balance sheet statements) to reflect your current financial situation and performance.

Adjust the new forecasts in a way that reflects new assumptions, strategies, and initiatives that have emerged from your reassessment.

At last, review the overall business plan thoroughly and make necessary changes where needed in the whole business plan. This way you should make your planning process continuous and smooth.

When to update your business plan?

For a successful business, you need to update your plan yearly or whenever there are any internal or external changes. Some of the situations when you need to alter your plan are:

• It’s been a year since you last reviewed your business plan
• You’re adding any new products or services
• Your direct competitors are changing
• There is a change in the market demand
• If there is any financial change
• For internal changes (supply chain issues, management change, etc)
• If you are applying for funding

Thus, for any significant changes, you need to update your plan and accommodate it as per the current situation.

Update and transform your plan with AI

So, without a doubt, keeping a business plan up-to-date is necessary for your business. But, doing it regularly need a lot more effort.

An AI business plan creator —Upmetrics provides you with AI features that save time. Its AI assistant can automatically write and improve sections of your business plan, and answer all your business-related queries.

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Frequently Asked Questions

Do i need to rewrite my entire business plan when i update it.

No, you don’t have to rewrite your whole plan when you update it. If the changes are small, you can update the parts that need changing. But if the changes affect important parts like your market research or financial plans, then rewrite those sections. Anyway, it’s always a good idea to review your whole plan.

What tools and resources can help me update my business plan?

Updating your plan becomes easy with the help of business planning software like Upmetrics , where you can collaborate in real-time, use AI assistance, and get a step-by-step guide through the entire planning process.

Should business plans be updated annually?

Yes, business plans should be updated annually or when the time feels right. For example, you need to update your business plan when you start using a new tech platform, machinery, or other raw materials. Even an annual review of the plan might lead to minor updates.

Which aspects of a business plan should be updated?

When updating a business plan, key aspects to revise include the executive summary, company description, and market analysis.

Additionally, update the organization and management structure, product or service offerings, financial sections, and marketing strategies based on current performance data.

About the Author

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

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Adapt Your Business to the New Reality

• Michael G. Jacobides
• Martin Reeves

Even in severe economic downturns and recessions, some companies are able to gain advantage. In the past four downturns, 14% of large companies increased both their sales growth rate and their EBIT margin.

A shock like the Covid-19 pandemic can produce lasting changes in customer behavior. To survive and thrive in a crisis, begin by examining how people are spending their time and money. Challenge traditional ideas and use data to actively seek out anomalies and surprises.

Next, adjust your business model to reflect behavioral changes, considering what the new trends might mean for how you create and deliver value, whom you need to partner with, and who your customers should be.

Finally, put your money where your analysis takes you and be prepared to make more-aggressive, dynamic investments.

Start by understanding how habits have changed.

Idea in Brief

The challenge.

Even in severe economic downturns and recessions, some companies are able to gain advantage. In the past four downturns, 14% of companies increased both their sales growth rate and their EBIT margin.

The Winners

A shock like the Covid-19 pandemic can produce lasting changes in behavior, and those firms quickly spot the changes, adjust their business models to reflect them, and are not afraid to make investments.

The Approach

Examine the changes in the ways that people spend their time and money and the effects on the businesses involved. Then look at what the changes might mean for how you create and deliver value, who you need to partner with, and who your customers should be. Finally, be ready to put your money where your analysis takes you.

It will be quite some time before we understand the full impact of the Covid-19 pandemic. But the history of such shocks tells us two things. First, even in severe economic downturns and recessions, some companies are able to gain advantage. Among large firms doing business during the past four downturns, 14% increased both sales growth rate and EBIT margin.

• Michael G. Jacobides is the Sir Donald Gordon Chair of Entrepreneurship & Innovation and a professor of strategy at London Business School. He is the author of In the Ecosystem Economy, What’s your Strategy? (HBR, September–October 2019).
• Martin Reeves is the chairman of Boston Consulting Group’s BCG Henderson Institute. He is a coauthor, with Jack Fuller, of The Imagination Machine (Harvard Business Review Press, 2021) and a coauthor, with Bob Goodson, of Like: The Button That Changed the World (Harvard Business Review Press, April 2025).

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How to update your business plan.

Small business owners who treat their business plan as if it’s set in stone set themselves up for unnecessary challenges in the future. Now more than ever, small businesses need to be flexible and responsive to changing conditions.

The best  business plans  are living documents. They’re updated and adjusted constantly as a business grows. Change is necessary as initial plans get course-corrected and external factors like market pressure, investor demands, and economic swings impose themselves.

Treating the business plan as a growing, changing document lets you maintain order in the midst of entrepreneurial chaos. Businesses that leave themselves room to adjust their business plans can better respond to opportunities and challenges alike.

Why Does Your Business Plan Need Adjustment?

A business plan that never changes will eventually become obsolete. Once this happens, it will affect your business in one of two ways: Either the plan will be abandoned and the business will proceed without one, or the plan will hold your business back by keeping your teams stuck in outdated processes in which they’re chasing inefficient or impossible goals.

“The best types of business plans are dynamic,” online entrepreneur  Dale Cudmore  writes at Digital.com. They’re clear, concise, and easily updated as the plan begins to generate results.

Certain events may indicate it’s time to update your business plan. Those events include:

Identifying a new source of business

A new competitor, responding to changing market conditions, complying with new legal or regulatory requirements, ensuring that your actual results match your plan’s expectations, the adjustments you should make every 6–12 months.

Any change or anything you learn about your market or your customer is technically a moment in which the business plan could be updated. But you don’t want to get bogged down in constantly managing business plan adjustments. Instead, schedule regular updates throughout the year.

For example, you could schedule an annual update where you take a look at the big picture. Those updates could include:

• Reviewing your value proposition with new input from customers.
• Reconsidering your market positioning.
• Seeking out information on business and economic trends to spot new problems your organization can solve for customers.

A narrower semi-annual or mid-year adjustment, then, could be a moment in which you review the tactics you’re using to pursue those big-picture objectives, says  Bill Conerly , an economist and member of the Oregon Governor’s Council of Economic Advisors.

Conerly recommends a structured, scheduled approach to business plan updates, as this tends to call attention to the changes that will make the most difference for your business’s growth.

The Adjustments You Should Make Every Month or Every Quarter

A quarterly or monthly review could allow for more granular considerations of your company’s finances. Here, the adjustment would focus on how each month’s financial data matches your forecasts.

Eric Goldschien , an editor and writer at Fundera, says it’s probably time to update your business plan when you notice you’re missing financial goals month after month. That update would focus on aligning your overall strategy with the realities of doing business in your market.

Losing money also calls for an update in order to reduce operating costs or other expenses, Goldschien writes. Acquiring new people or investing in new technology, likewise, calls for a reconsideration of the expectations laid out in your business plan.

Tie Each Update to Your Goals for Continued Growth

Any change you make to your business plan should be framed in accordance with whatever business objectives you want to achieve.

Jordan Shneir  at Camino Financial recommends taking a holistic view of the business when setting growth goals. Don’t just look at financials; also look at your marketing plan, your sources of funding, and your operations to see where an adjustment could create a path to business growth.

For example, imagine you’re opening a second storefront in another city. This might mean it’s time to look at supplier relationships. Perhaps one vendor relationship is strong because your businesses are in the same neighborhood. Would that supply chain extend as cleanly when you scale outward from the neighborhood?

This kind of specificity—describing how vendor relationships connect to larger business goals—makes for a stronger business plan going forward. A good business plan contains sufficient details to explain the how of your business’s operations as well as the what and why.

Engaging Your Team in the Business Plan Update

The responsibility of an update belongs to the business’s leadership. However, the business plan “should be reviewed by all stakeholders to ensure everyone agrees on the direction the company is taking,” says  Yvonne Petterson , a business consultant at Ground Floor Partners.

Consider setting goals for each member of the team when it comes to business plan execution and adjustments, as well.

David Henzel  of LTVPlus describes his business’s planning process as creating both a “long list” of tasks to accomplish over the next year and a “shortlist” of tasks to accomplish by the next business plan review session. “This helps us stay organized and break our larger goals into smaller, manageable tasks,” says Henzel.

As the business grows, goal-setting can help leadership keep teams on track without requiring every employee to be involved in business plan adjustments. Clear goals can help everyone in the business understand where, why, and how the business is aiming at a certain achievement.

To summarize on updating your business plan:

• Stay alert to changes that could affect your plan’s efficacy.
• Review the plan at regular intervals to stay on track.
• Tie business plan updates to concrete business goals.
• Generate buy-in at every level of your business.

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The importance of a business plan

Business plans are like road maps: it’s possible to travel without one, but that will only increase the odds of getting lost along the way.

Owners with a business plan see growth 30% faster than those without one, and 71% of the fast-growing companies have business plans . Before we get into the thick of it, let’s define and go over what a business plan actually is.

What is a business plan?

A business plan is a 15-20 page document that outlines how you will achieve your business objectives and includes information about your product, marketing strategies, and finances. You should create one when you’re starting a new business and keep updating it as your business grows.

Rather than putting yourself in a position where you may have to stop and ask for directions or even circle back and start over, small business owners often use business plans to help guide them. That’s because they help them see the bigger picture, plan ahead, make important decisions, and improve the overall likelihood of success. ‍

Why is a business plan important?

A well-written business plan is an important tool because it gives entrepreneurs and small business owners, as well as their employees, the ability to lay out their goals and track their progress as their business begins to grow. Business planning should be the first thing done when starting a new business. Business plans are also important for attracting investors so they can determine if your business is on the right path and worth putting money into.

Business plans typically include detailed information that can help improve your business’s chances of success, like:

• A market analysis : gathering information about factors and conditions that affect your industry
• Competitive analysis : evaluating the strengths and weaknesses of your competitors
• Customer segmentation : divide your customers into different groups based on specific characteristics to improve your marketing
• Marketing: using your research to advertise your business
• Logistics and operations plans : planning and executing the most efficient production process
• Cash flow projection : being prepared for how much money is going into and out of your business
• An overall path to long-term growth

What is the purpose of a business plan?

A business plan is like a map for small business owners, showing them where to go and how to get there. Its main purposes are to help you avoid risks, keep everyone on the same page, plan finances, check if your business idea is good, make operations smoother, and adapt to changes. It's a way for small business owners to plan, communicate, and stay on track toward their goals.

10 reasons why you need a business plan

I know what you’re thinking: “Do I really need a business plan? It sounds like a lot of work, plus I heard they’re outdated and I like figuring things out as I go...”.

The answer is: yes, you really do need a business plan! As entrepreneur Kevin J. Donaldson said, “Going into business without a business plan is like going on a mountain trek without a map or GPS support—you’ll eventually get lost and starve! Though it may sound tedious and time-consuming, business plans are critical to starting your business and setting yourself up for success.

To outline the importance of business plans and make the process sound less daunting, here are 10 reasons why you need one for your small business.

1. To help you with critical decisions

The primary importance of a business plan is that they help you make better decisions. Entrepreneurship is often an endless exercise in decision making and crisis management. Sitting down and considering all the ramifications of any given decision is a luxury that small businesses can’t always afford. That’s where a business plan comes in.

Building a business plan allows you to determine the answer to some of the most critical business decisions ahead of time.

Creating a robust business plan is a forcing function—you have to sit down and think about major components of your business before you get started, like your marketing strategy and what products you’ll sell. You answer many tough questions before they arise. And thinking deeply about your core strategies can also help you understand how those decisions will impact your broader strategy.

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2. To iron out the kinks

Putting together a business plan requires entrepreneurs to ask themselves a lot of hard questions and take the time to come up with well-researched and insightful answers. Even if the document itself were to disappear as soon as it’s completed, the practice of writing it helps to articulate your vision in realistic terms and better determine if there are any gaps in your strategy.

3. To avoid the big mistakes

Only about half of small businesses are still around to celebrate their fifth birthday . While there are many reasons why small businesses fail, many of the most common are purposefully addressed in business plans.

According to data from CB Insights , some of the most common reasons businesses fail include:

• No market need : No one wants what you’re selling.
• Lack of capital : Cash flow issues or businesses simply run out of money.
• Inadequate team : This underscores the importance of hiring the right people to help you run your business.
• Stiff competition : It’s tough to generate a steady profit when you have a lot of competitors in your space.
• Pricing : Some entrepreneurs price their products or services too high or too low—both scenarios can be a recipe for disaster.

The exercise of creating a business plan can help you avoid these major mistakes. Whether it’s cash flow forecasts or a product-market fit analysis , every piece of a business plan can help spot some of those potentially critical mistakes before they arise. For example, don’t be afraid to scrap an idea you really loved if it turns out there’s no market need. Be honest with yourself!

Get a jumpstart on your business plan by creating your own cash flow projection .

4. To prove the viability of the business

Many businesses are created out of passion, and while passion can be a great motivator, it’s not a great proof point.

Planning out exactly how you’re going to turn that vision into a successful business is perhaps the most important step between concept and reality. Business plans can help you confirm that your grand idea makes sound business sense.

A critical component of your business plan is the market research section. Market research can offer deep insight into your customers, your competitors, and your chosen industry. Not only can it enlighten entrepreneurs who are starting up a new business, but it can also better inform existing businesses on activities like marketing, advertising, and releasing new products or services.

Want to prove there’s a market gap? Here’s how you can get started with market research.

5. To set better objectives and benchmarks

Without a business plan, objectives often become arbitrary, without much rhyme or reason behind them. Having a business plan can help make those benchmarks more intentional and consequential. They can also help keep you accountable to your long-term vision and strategy, and gain insights into how your strategy is (or isn’t) coming together over time.

6. To communicate objectives and benchmarks

Whether you’re managing a team of 100 or a team of two, you can’t always be there to make every decision yourself. Think of the business plan like a substitute teacher, ready to answer questions any time there’s an absence. Let your staff know that when in doubt, they can always consult the business plan to understand the next steps in the event that they can’t get an answer from you directly.

Sharing your business plan with team members also helps ensure that all members are aligned with what you’re doing, why, and share the same understanding of long-term objectives.

7. To provide a guide for service providers

Small businesses typically employ contractors , freelancers, and other professionals to help them with tasks like accounting , marketing, legal assistance, and as consultants. Having a business plan in place allows you to easily share relevant sections with those you rely on to support the organization, while ensuring everyone is on the same page.

8. To secure financing

Did you know you’re 2.5x more likely to get funded if you have a business plan?If you’re planning on pitching to venture capitalists, borrowing from a bank, or are considering selling your company in the future, you’re likely going to need a business plan. After all, anyone that’s interested in putting money into your company is going to want to know it’s in good hands and that it’s viable in the long run. Business plans are the most effective ways of proving that and are typically a requirement for anyone seeking outside financing.

Learn what you need to get a small business loan.

9. To better understand the broader landscape

No business is an island, and while you might have a strong handle on everything happening under your own roof, it’s equally important to understand the market terrain as well. Writing a business plan can go a long way in helping you better understand your competition and the market you’re operating in more broadly, illuminate consumer trends and preferences, potential disruptions and other insights that aren’t always plainly visible.

10. To reduce risk

Entrepreneurship is a risky business, but that risk becomes significantly more manageable once tested against a well-crafted business plan. Drawing up revenue and expense projections, devising logistics and operational plans, and understanding the market and competitive landscape can all help reduce the risk factor from an inherently precarious way to make a living. Having a business plan allows you to leave less up to chance, make better decisions, and enjoy the clearest possible view of the future of your company.

Business plan FAQs

How does having a business plan help small business owners make better decisions.

Having a business plan supports small business owners in making smarter decisions by providing a structured framework to assess all parts of their businesses. It helps you foresee potential challenges, identify opportunities, and set clear objectives. Business plans help you make decisions across the board, including market strategies, financial management, resource allocation, and growth planning.

What industry-specific issues can business plans help tackle?

Business plans can address industry-specific challenges like regulatory compliance, technological advancements, market trends, and competitive landscape. For instance, in highly regulated industries like healthcare or finance, a comprehensive business plan can outline compliance measures and risk management strategies.

How can small business owners use their business plans to pitch investors or apply for loans?

In addition to attracting investors and securing financing, small business owners can leverage their business plans during pitches or loan applications by focusing on key elements that resonate with potential stakeholders. This includes highlighting market analysis, competitive advantages, revenue projections, and scalability plans. Presenting a well-researched and data-driven business plan demonstrates credibility and makes investors or lenders feel confident about your business’s potential health and growth.

Understanding the importance of a business plan

Now that you have a solid grasp on the “why” behind business plans, you can confidently move forward with creating your own.

Remember that a business plan will grow and evolve along with your business, so it’s an important part of your whole journey—not just the beginning.

Related Posts

Now that you’ve read up on the purpose of a business plan, check out our guide to help you get started.

The information and tips shared on this blog are meant to be used as learning and personal development tools as you launch, run and grow your business. While a good place to start, these articles should not take the place of personalized advice from professionals. As our lawyers would say: “All content on Wave’s blog is intended for informational purposes only. It should not be considered legal or financial advice.” Additionally, Wave is the legal copyright holder of all materials on the blog, and others cannot re-use or publish it without our written consent.

14 Reasons Why You Need a Business Plan

10 min. read

Updated May 10, 2024

There’s no question that starting and running a business is hard work. But it’s also incredibly rewarding. And, one of the most important things you can do to increase your chances of success is to have a business plan.

A business plan is a foundational document that is essential for any company, no matter the size or age. From attracting potential investors to keeping your business on track—a business plan helps you achieve important milestones and grow in the right direction.

A business plan isn’t just a document you put together once when starting your business. It’s a living, breathing guide for existing businesses – one that business owners should revisit and update regularly.

Unfortunately, writing a business plan is often a daunting task for potential entrepreneurs. So, do you really need a business plan? Is it really worth the investment of time and resources? Can’t you just wing it and skip the whole planning process?

Good questions. Here’s every reason why you need a business plan.

• 1. Business planning is proven to help you grow 30 percent faster

Writing a business plan isn’t about producing a document that accurately predicts the future of your company. The  process  of writing your plan is what’s important. Writing your plan and reviewing it regularly gives you a better window into what you need to do to achieve your goals and succeed. 

You don’t have to just take our word for it. Studies have  proven that companies that plan  and review their results regularly grow 30 percent faster. Beyond faster growth, research also shows that companies that plan actually perform better. They’re less likely to become one of those woeful failure statistics, or experience  cash flow crises  that threaten to close them down. 

• 2. Planning is a necessary part of the fundraising process

One of the top reasons to have a business plan is to make it easier to raise money for your business. Without a business plan, it’s difficult to know how much money you need to raise, how you will spend the money once you raise it, and what your budget should be.

Investors want to know that you have a solid plan in place – that your business is headed in the right direction and that there is long-term potential in your venture. 

A business plan shows that your business is serious and that there are clearly defined steps on how it aims to become successful. It also demonstrates that you have the necessary competence to make that vision a reality. 

Investors, partners, and creditors will want to see detailed financial forecasts for your business that shows how you plan to grow and how you plan on spending their money. 

• 3. Having a business plan minimizes your risk

When you’re just starting out, there’s so much you don’t know—about your customers, your competition, and even about operations. 

As a business owner, you signed up for some of that uncertainty when you started your business, but there’s a lot you can  do to reduce your risk . Creating and reviewing your business plan regularly is a great way to uncover your weak spots—the flaws, gaps, and assumptions you’ve made—and develop contingency plans. 

Your business plan will also help you define budgets and revenue goals. And, if you’re not meeting your goals, you can quickly adjust spending plans and create more realistic budgets to keep your business healthy.

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• 4. Crafts a roadmap to achieve important milestones

A business plan is like a roadmap for your business. It helps you set, track and reach business milestones. 

For your plan to function in this way, your business plan should first outline your company’s short- and long-term goals. You can then fill in the specific steps necessary to reach those goals. This ensures that you measure your progress (or lack thereof) and make necessary adjustments along the way to stay on track while avoiding costly detours.

In fact, one of the top reasons why new businesses fail is due to bad business planning. Combine this with inflexibility and you have a recipe for disaster.

And planning is not just for startups. Established businesses benefit greatly from revisiting their business plan. It keeps them on track, even when the global market rapidly shifts as we’ve seen in recent years.

• 5. A plan helps you figure out if your idea can become a business

To turn your idea into reality, you need to accurately assess the feasibility of your business idea.

You need to verify:

• If there is a market for your product or service
• Who your target audience is
• How you will gain an edge over the current competition
• If your business can run profitably

A business plan forces you to take a step back and look at your business objectively, which makes it far easier to make tough decisions down the road. Additionally, a business plan helps you to identify risks and opportunities early on, providing you with the necessary time to come up with strategies to address them properly.

Finally, a business plan helps you work through the nuts and bolts of how your business will work financially and if it can become sustainable over time.

6. You’ll make big spending decisions with confidence

As your business grows, you’ll have to figure out when to hire new employees, when to expand to a new location, or whether you can afford a major purchase. 

These are always major spending decisions, and if you’re regularly reviewing the forecasts you mapped out in your business plan, you’re going to have better information to use to make your decisions.

7. You’re more likely to catch critical cash flow challenges early

The other side of those major spending decisions is understanding and monitoring your business’s cash flow. Your  cash flow statement  is one of the three key financial statements you’ll put together for your business plan. (The other two are your  balance sheet  and your  income statement  (P&L). 

Reviewing your cash flow statement regularly as part of your regular business plan review will help you see potential cash flow challenges earlier so you can take action to avoid a cash crisis where you can’t pay your bills. 

• 8. Position your brand against the competition

Competitors are one of the factors that you need to take into account when starting a business. Luckily, competitive research is an integral part of writing a business plan. It encourages you to ask questions like:

• What is your competition doing well? What are they doing poorly?
• What can you do to set yourself apart?
• What can you learn from them?
• How can you make your business stand out?
• What key business areas can you outcompete?
• How can you identify your target market?

Finding answers to these questions helps you solidify a strategic market position and identify ways to differentiate yourself. It also proves to potential investors that you’ve done your homework and understand how to compete. 

• 9. Determines financial needs and revenue models

A vital part of starting a business is understanding what your expenses will be and how you will generate revenue to cover those expenses. Creating a business plan helps you do just that while also defining ongoing financial needs to keep in mind. 

Without a business model, it’s difficult to know whether your business idea will generate revenue. By detailing how you plan to make money, you can effectively assess the viability and scalability of your business. 

Understanding this early on can help you avoid unnecessary risks and start with the confidence that your business is set up to succeed.

• 10. Helps you think through your marketing strategy

A business plan is a great way to document your marketing plan. This will ensure that all of your marketing activities are aligned with your overall goals. After all, a business can’t grow without customers and you’ll need a strategy for acquiring those customers. 

Your business plan should include information about your target market, your marketing strategy, and your marketing budget. Detail things like how you plan to attract and retain customers, acquire new leads, how the digital marketing funnel will work, etc. 

Having a documented marketing plan will help you to automate business operations, stay on track and ensure that you’re making the most of your marketing dollars.

• 11. Clarifies your vision and ensures everyone is on the same page

In order to create a successful business, you need a clear vision and a plan for how you’re going to achieve it. This is all detailed with your mission statement, which defines the purpose of your business, and your personnel plan, which outlines the roles and responsibilities of current and future employees. Together, they establish the long-term vision you have in mind and who will need to be involved to get there. 

Additionally, your business plan is a great tool for getting your team in sync. Through consistent plan reviews, you can easily get everyone in your company on the same page and direct your workforce toward tasks that truly move the needle.

• 12. Future-proof your business

A business plan helps you to evaluate your current situation and make realistic projections for the future.

This is an essential step in growing your business, and it’s one that’s often overlooked. When you have a business plan in place, it’s easier to identify opportunities and make informed decisions based on data.

Therefore, it requires you to outline goals, strategies, and tactics to help the organization stay focused on what’s important.

By regularly revisiting your business plan, especially when the global market changes, you’ll be better equipped to handle whatever challenges come your way, and pivot faster.

You’ll also be in a better position to seize opportunities as they arise.

Further Reading: 5 fundamental principles of business planning

• 13. Tracks your progress and measures success

An often overlooked purpose of a business plan is as a tool to define success metrics. A key part of writing your plan involves pulling together a viable financial plan. This includes financial statements such as your profit and loss, cash flow, balance sheet, and sales forecast.

By housing these financial metrics within your business plan, you suddenly have an easy way to relate your strategy to actual performance. You can track progress, measure results, and follow up on how the company is progressing. Without a plan, it’s almost impossible to gauge whether you’re on track or not.  

Additionally, by evaluating your successes and failures, you learn what works and what doesn’t and you can make necessary changes to your plan. In short, having a business plan gives you a framework for measuring your success. It also helps with building up a “lessons learned” knowledge database to avoid costly mistakes in the future.

• 14. Your business plan is an asset if you ever want to sell

Down the road, you might decide that you want to sell your business or position yourself for acquisition. Having a solid business plan is going to help you make the case for a higher valuation. Your business is likely to be worth more to a buyer if it’s easy for them to understand your business model, your target market, and your overall potential to grow and scale. 

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• Writing your business plan

By taking the time to create a business plan, you ensure that your business is heading in the right direction and that you have a roadmap to get there. We hope that this post has shown you just how important and valuable a business plan can be. While it may still seem daunting, the benefits far outweigh the time investment and learning curve for writing one. 

Luckily, you can write a plan in as little as 30 minutes. And there are plenty of excellent planning tools and business plan templates out there if you’re looking for more step-by-step guidance. Whatever it takes, write your plan and you’ll quickly see how useful it can be.

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

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• 6. You’ll make big spending decisions with confidence
• 7. You’re more likely to catch critical cash flow challenges early

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How and When to Change Your Business Plan

CEO, Quez Media Marketing & Build. Brand. Blast.

Your business plan should set a consistent course for your company, but it needs to change over time .

Most entrepreneurs will tell you that their business plans are the blueprints for their company, or are the Bible of the business they're trying to build. It's good to have this mentality, and I don't advise trying to build a business without a plan; however, there's a critical misconception that leads to disaster more often than it reasonably should.

Too many entrepreneurs use their original business plan as an unbreakable, binding document, when in reality, it should be flexible, and ever-changing.

Why Adaptability Is Important

Adaptability is important for your business because the original circumstances in which you wrote your business plan will never be the same. You'll have more information, new competitors, different target demographics, and maybe even different goals. Keeping your business model the same in these ever-changing circumstances is a good way to cause your company to crumble.

How to Update

Don't try to rewrite your entire business plan from scratch unless you're making a hard shift; instead, stick to gradual, relatively small changes. Focus on one section at a time, and make sure your changes reflect your new goals whenever possible.

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When to Update

There's no hard rule for when to update your business plan, but it's something you should be doing at least once a year (for established businesses) and more often for less established businesses. Any time your business encounters a major shift, consider addressing your business plan.

You don't have to change your business plan to be successful, but it certainly helps you preserve your direction and accommodate the unexpected shifts that are sure to develop.

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The Four Principles Of Change Management

Updated: Aug 7, 2022, 10:18pm

No company or organization can operate the same way forever. Whether you’re a rapidly growing startup with agility baked into your DNA or a decades-old corporation responding to market shifts, you need to adjust to progress and improve. How well you can do that depends on how your organization approaches the process of change management.

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What Is Change Management?

Change management is a structured process for planning and implementing new ways of operating within an organization.

Many academic disciplines have studied and developed theories about the best ways to approach change in an organization. Central to theories across disciplines is the goal of making change happen—i.e., moving an organization forward—with the full support and cooperation of everyone who’s affected by it.

Change management models recognize change can’t happen within one position or department without affecting the entire organization. Theorists developed the models to approach change in ways that acknowledge its effects across an organization, prepare everyone for those effects and get everyone on board for the transition.

Several change management models exist, and your organization can choose which makes the most sense for you. One of the most prominent thought leaders in the field is John Kotter, a professor at Harvard Business School and founder of the management consulting firm Kotter International.

Kotter’s model for change management involves four key principles and eight steps.

4 Principles of Change Management

Kotter’s four change principles include:

• Select few + diverse many
• Have to + want to
• Head + heart
• Management + leadership

Select Few + Diverse Many

Who drives change in your organization? Do decisions and directives tend to come from the same small group of managers or leaders? These are known as the “select few”—and there’s a danger to this approach to change.

Everyone within an organization is affected by change. It’s the “diverse many”—the broader group of people that makes up your company—who have to adjust their processes and activities day to day to accommodate change.

When the directives come from a select few, you skip the step of understanding what everyone else needs to effectively implement change. You also miss out on an opportunity to get them on board, so they’re eager to welcome change when it comes.

Get representatives from across your organization involved at every stage of a change process—from identifying challenges and planning improvements to implementation and reflection.

Have To + Want To

Getting the diverse many involved is your first step to moving change from something they feel they have to do to something they want to do.

A workforce filled with people who feel like they have to implement changes or initiatives is a recipe for complacency. One filled with folks who want to make change is a formula for action.

When the people in your organization are involved in identifying challenges and recommending improvements, they’ll understand the reasoning behind changed processes and new initiatives. They’ll be invested in improvement. They’ll be eager to take the steps needed to implement—and sustain—change that moves your organization forward.

Head + Heart

You must drive decisions and directives for change from both:

• The head: appeals to logic, data and reason
• The heart: appeals to how people feel and what they desire

Putting hard data behind organizational decisions is smart, but implementing change requires more. It also requires employees who are inspired by what the change will mean for their day-to-day work and the organization’s ability to fulfill its mission.

This means digging a little deeper when you communicate change to your employees.

You can’t just share what the change is and how you’ll implement it. You also have to explain the why behind it, the ways it’ll move the needle for the company, your customers or clients, your employees, and the mission they come into work every day to achieve.

Management + Leadership

Navigating change in an organization requires both management and leadership.

That is, you need both the technical skills to manage projects, make a plan and oversee deliverables; and the emotional skills to communicate a vision, inspire action and empathize with concerns.

Any business leader has certainly heard an earful about the differences between managing and leading — but we’re not saying one or the other is better here. To make effective change in an organization, you need the combined strengths of both management and leadership.

Kotter’s 8 Steps to Change Management

Kotter’s eight-step process for leading change within an organization includes:

• Create a sense of urgency. Rather than simply presenting a change that’s going to happen, present an opportunity that helps the team see the need for change and want to make it happen.
• Build a guiding coalition. This group of early adopters from among the diverse many will help communicate needs and initiatives to guide change.
• Form a strategic vision and initiatives. Draw a picture of what life will look like after the change. Help everyone see—and long for—the direction you’re headed, rather than focusing myopically on the steps in front of them right now.
• Enlist volunteers. You’ll need massive buy-in across the organization to effectively implement change. Use your coalition to keep up the momentum on the sense of urgency and continue to communicate the vision.
• Enable action by removing barriers. Learn where employees face challenges to implementing a change because of structural issues like silos, poor communication or inefficient processes, and break them down to facilitate progress.
• Generate short-term wins. Keep up the momentum and motivation by recognizing early successes on the path to change. Continue to recognize and celebrate small wins to keep everyone energized and aware of your progress.
• Sustain acceleration. Lean into change harder after the first few small wins. Use those successes as a springboard to move forward further and faster.
• Institute change. Celebrate the results of successful change. How do changed processes or initiatives contribute to the organization’s overall success? How do they continue to help employees contribute to the mission they care about?

Bottom Line

Creating change within the organization can make people balk, but ensuring that all parties understand why a change is necessary, how it benefits them and the organization as a whole and allowing them to give input on how to implement said changes leads teams to feel invested in the process.

Building a clear vision and celebrating the small wins along the way will make sure that no one is left wondering what’s happening, and encourage them to take the next step forward. Before long you’ll be achieving your goals as a team—use that as an opportunity to get feedback on the process overall so that the next time flows even more smoothly.

Frequently Asked Questions

What are good change management skills.

To effectively drive and lead change in an organization, you need a combination of leadership, management and strategic strengths. You should be strong in both communication and listening, as well as strategic thinking and analysis.

What is change management risk?

Change management risk refers to factors that could derail an initiative or make it fail to achieve its purpose. Part of change management is identifying these risks and creating a plan to mitigate them.

Why is change management difficult?

Implementing change in an organization is hard because of inertia. The easiest way to operate seems to be the way we’ve always operated. Effectively implementing change means stopping and redirecting that force across dozens, hundreds or thousands of employees.

Is a change management strategy necessary to implement?

To achieve the best success with a planned change, it’s best to have a change management plan in place beforehand. It allows the operation’s leaders to create and work with change within the parameters of certain guidelines, concepts, approaches and language.

Is risk management part of change management?

Yes. Creating a plan for change in an organization involves a risk assessment to determine what effects the change will have, as well as the level of risk regarding whether you’ll face resistance to change.

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6 Reasons to Update Your Business Plan Revise your business plan so it grows with your company and your goals.

By Nina Zipkin May 13, 2015

Business plans are living documents. Make sure that they evolve with your company and reflect the business you're running by revising when your company meets these six milestones.

You want to refinance or fundraise. Investors and lenders want to know about your current challenges and have the most up-to-date look at the costs and opportunities you're forecasting. Read more: Update Your Business Plan to Renew Your Drive and Focus

You launch a new product or service. A new revenue stream will impact how you manage your resources – and can impact profitability. Let partners and investors in on your vision to get their buy-in and help with execution. Read more: How and Why Business Plans Have Changed

You expand into new markets. How you allocate your time and resources will change dramatically as you expand into different cities and countries. An updated plan can help you set realistic goals and communicate those to you team.

Your competitors have changed. Half the battle of running a successful business is staying aware of what the others in your industry are doing. If your major competitor pivots or there is an up and coming venture that enters the field, include that in your plan Read more: Updating Your Business Plan

You change suppliers or technologies. Changing your supply chain could help you cut costs or even position your company as more environmentally friendly. Furthermore, a shift to a new tech platform could give your company an important competitive advantage that investors will want to know about. Read more: 8 Reasons to Update Your Business Plan Right Now

Your customer changes. If your target customer has shifted, you might need to meet a different set of wants and need. If so, you'll need to explain in your business plan how you'll find your new core market and retain it. Read more: A Better Business Plan Can Lead to New Customers

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Nina Zipkin is a staff writer at Entrepreneur.com. She frequently covers leadership, media, tech, startups, culture and workplace trends.

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5 Critical Steps in the Change Management Process

• 19 Mar 2020

Businesses must constantly evolve and adapt to meet a variety of challenges—from changes in technology, to the rise of new competitors, to a shift in laws, regulations, or underlying economic trends. Failure to do so could lead to stagnation or, worse, failure.

Approximately 50 percent of all organizational change initiatives are unsuccessful, highlighting why knowing how to plan for, coordinate, and carry out change is a valuable skill for managers and business leaders alike.

Have you been tasked with managing a significant change initiative for your organization? Would you like to demonstrate that you’re capable of spearheading such an initiative the next time one arises? Here’s an overview of what change management is, the key steps in the process, and actions you can take to develop your managerial skills and become more effective in your role.

Access your free e-book today.

What is Change Management?

Organizational change refers broadly to the actions a business takes to change or adjust a significant component of its organization. This may include company culture, internal processes, underlying technology or infrastructure, corporate hierarchy, or another critical aspect.

Organizational change can be either adaptive or transformational:

• Adaptive changes are small, gradual, iterative changes that an organization undertakes to evolve its products, processes, workflows, and strategies over time. Hiring a new team member to address increased demand or implementing a new work-from-home policy to attract more qualified job applicants are both examples of adaptive changes.
• Transformational changes are larger in scale and scope and often signify a dramatic and, occasionally sudden, departure from the status quo. Launching a new product or business division, or deciding to expand internationally, are examples of transformational change.

Change management is the process of guiding organizational change to fruition, from the earliest stages of conception and preparation, through implementation and, finally, to resolution.

As a leader, it’s essential to understand the change management process to ensure your entire organization can navigate transitions smoothly. Doing so can determine the potential impact of any organizational changes and prepare your teams accordingly. When your team is prepared, you can ensure everyone is on the same page, create a safe environment, and engage the entire team toward a common goal.

Change processes have a set of starting conditions (point A) and a functional endpoint (point B). The process in between is dynamic and unfolds in stages. Here’s a summary of the key steps in the change management process.

Check out our video on the change management process below, and subscribe to our YouTube channel for more explainer content!

5 Steps in the Change Management Process

1. prepare the organization for change.

For an organization to successfully pursue and implement change, it must be prepared both logistically and culturally. Before delving into logistics, cultural preparation must first take place to achieve the best business outcome.

In the preparation phase, the manager is focused on helping employees recognize and understand the need for change. They raise awareness of the various challenges or problems facing the organization that are acting as forces of change and generating dissatisfaction with the status quo. Gaining this initial buy-in from employees who will help implement the change can remove friction and resistance later on.

2. Craft a Vision and Plan for Change

Once the organization is ready to embrace change, managers must develop a thorough, realistic, and strategic plan for bringing it about.

The plan should detail:

• Strategic goals: What goals does this change help the organization work toward?
• Key performance indicators: How will success be measured? What metrics need to be moved? What’s the baseline for how things currently stand?
• Project stakeholders and team: Who will oversee the task of implementing change? Who needs to sign off at each critical stage? Who will be responsible for implementation?
• Project scope: What discrete steps and actions will the project include? What falls outside of the project scope?

While it’s important to have a structured approach, the plan should also account for any unknowns or roadblocks that could arise during the implementation process and would require agility and flexibility to overcome.

3. Implement the Changes

After the plan has been created, all that remains is to follow the steps outlined within it to implement the required change. Whether that involves changes to the company’s structure, strategy, systems, processes, employee behaviors, or other aspects will depend on the specifics of the initiative.

During the implementation process, change managers must be focused on empowering their employees to take the necessary steps to achieve the goals of the initiative and celebrate any short-term wins. They should also do their best to anticipate roadblocks and prevent, remove, or mitigate them once identified. Repeated communication of the organization’s vision is critical throughout the implementation process to remind team members why change is being pursued.

4. Embed Changes Within Company Culture and Practices

Once the change initiative has been completed, change managers must prevent a reversion to the prior state or status quo. This is particularly important for organizational change related to business processes such as workflows, culture, and strategy formulation. Without an adequate plan, employees may backslide into the “old way” of doing things, particularly during the transitory period.

By embedding changes within the company’s culture and practices, it becomes more difficult for backsliding to occur. New organizational structures, controls, and reward systems should all be considered as tools to help change stick.

5. Review Progress and Analyze Results

Just because a change initiative is complete doesn’t mean it was successful. Conducting analysis and review, or a “project post mortem,” can help business leaders understand whether a change initiative was a success, failure, or mixed result. It can also offer valuable insights and lessons that can be leveraged in future change efforts.

Ask yourself questions like: Were project goals met? If yes, can this success be replicated elsewhere? If not, what went wrong?

The Key to Successful Change for Managers

While no two change initiatives are the same, they typically follow a similar process. To effectively manage change, managers and business leaders must thoroughly understand the steps involved.

Some other tips for managing organizational change include asking yourself questions like:

• Do you understand the forces making change necessary? Without this understanding, it can be difficult to effectively address the underlying causes that have necessitated change, hampering your ability to succeed.
• Do you have a plan? Without a detailed plan and defined strategy, it can be difficult to usher a change initiative through to completion.
• How will you communicate? Successful change management requires effective communication with both your team members and key stakeholders. Designing a communication strategy that acknowledges this reality is critical.
• Have you identified potential roadblocks? While it’s impossible to predict everything that might potentially go wrong with a project, taking the time to anticipate potential barriers and devise mitigation strategies before you get started is generally a good idea.

How to Lead Change Management Successfully

If you’ve been asked to lead a change initiative within your organization, or you’d like to position yourself to oversee such projects in the future, it’s critical to begin laying the groundwork for success by developing the skills that can equip you to do the job.

Completing an online management course can be an effective way of developing those skills and lead to several other benefits . When evaluating your options for training, seek a program that aligns with your personal and professional goals; for example, one that emphasizes organizational change.

Do you want to become a more effective leader and manager? Explore Leadership Principles , Management Essentials , and Organizational Leadership —three of our online leadership and management courses —to learn how you can take charge of your professional development and accelerate your career. Not sure which course is the right fit? Download our free flowchart .

This post was updated on August 8, 2023. It was originally published on March 19, 2020.

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15 Reasons Why You Need a Business Plan in 2024

Posted august 5, 2024 by noah parsons.

Imagine you’re going on a road trip. You know your final destination, but you haven’t figured out how to get there. 

While it might be fun to start driving and figure things out as you go, your trip will likely take longer than expected and end up costing more. But, if you take the time to look at a map and chart the best way to get to your destination—you’ll arrive on time and on budget. 

Planning for your business isn’t much different, which is why a business plan is so important to your continued success.

What is the purpose of a business plan? 

The primary purpose of a business plan is to help you figure out where you want to go with your business and how you will get there. Writing a business plan helps you set your direction and determine a winning strategy. A solid business plan will set your business up for success and help you build an unbeatable company.

If you start off without a plan, you may go down some interesting detours, but you’re unlikely to grow quickly or stick to your budget.

15 reasons why you need a business plan

“Creating a road map for my business is all well and good, but do I really need a business plan? I’d rather just get started.”

If you’re still thinking like this and decide to skip writing a business plan, you’re making a big mistake and setting yourself up to fail. Even if your business survives, without a plan, you’ll miss valuable growth opportunities and never truly be in control.

Still not convinced? Here are the critical reasons why a business plan is important for small businesses. 

1. You’re more likely to start

Documenting your business idea makes it more official. It takes rough ideas and turns them into the making of a real business. 

According to a study by the Harvard Business Review , entrepreneurs who write formal plans are 16% more likely to achieve viability than those who don’t.

Even if it’s just notes about your potential business, writing things down will make you more likely to proceed with your business. Without a plan, you can’t prove to yourself, partners, mentors, or investors that you’re serious about starting.

2. Reduce potential risks

Writing a business plan takes some of the risk out of starting a business. It helps you think through every facet of your business to determine if it can truly be viable. 

• Does your solution fit the market? Are your startup or operational costs manageable?
• Will your proposed business model actually generate sales?
• What sort of milestones would you need to hit to achieve profitability?

Your business plan can answer these startup questions .

For those already running a business, writing a plan can help you better manage ongoing risk. 

• Should you bring on a new employee?
• What does cash flow look like for your next month, quarter, or even year?
• Will you meet your milestones or do you need to change your focus?

Keep your plan up to date, review it regularly and you can easily answer these growth questions and mitigate risk.

3. Test a new business idea and prove it’s viable

When you have a new business idea, it helps to spend time thinking through all the details. 

A business plan will help you think about your:

• Target market
• How much money you’ll need to launch
• How your idea will actually work before you spend any real money

A business plan will also help you easily share your idea with other people to get input and feedback before you get started. 

There’s no need to create a detailed business plan either. 

Instead, I recommend using a one-page business plan to quickly test your ideas and determine if you have a viable business. 

4. Understand your market and build a marketing plan

No matter how good your idea is, you have to figure out who your ideal customers are and how you will get the word out to them. 

That’s where a marketing plan comes in. It can be an indispensable tool to figure out how you get your first customers as well as your thousandth customer. It can start as a simple bulleted list of potential marketing channels that expands in detail as you need it.

5. Build a better budget and a financial forecast

Without a business plan, it’s impossible to know how much money it will cost to start and run a business. You don’t just need money for your initial purchases; you need enough cash in the bank to maintain your cash runway and keep your business afloat while you get fully up and running.

When you plan, you’ll need to create your expense budget , set sales goals, and identify how much cash is needed to keep your doors open, purchase inventory, and more. 

The beauty of incorporating forecasts into your business plan is that you don’t need exact numbers to start. You can work with general assumptions and compare against competitive benchmarks to set a baseline for your business. 

As you operate and collect financial data, you can revisit your business plan and update your forecasts to generate a more accurate picture of your business’s future.

6. Attract investors and get funding

Sharing your business idea with investors requires a business plan. 

Investors may never actually ask for your full business plan, but they will certainly ask you questions that you’ll only be able to answer if you’ve taken the time to write a plan. 

At the very least, they’ll want to see your financial forecasts, so you should be prepared for this. If you pitch your business to investors, having a business plan makes it much easier to translate the right information into a pitch deck. 

In short, you’ll have all of the right information ready and available to show why your business is worth investing in.

7. Plan for different scenarios

Things rarely actually go to plan. The world is always changing, customer tastes change, and new competitors arrive. 

Having a plan allows you to experiment with different scenarios to see how changes to your business will impact your forecasts, budgets, profitability, and cash flow.

Without a business plan, you’ll be reacting blindly with no way to track if your decisions are making a real impact.

8. Attract employees

Especially if you’re a young startup company, attracting employees can be hard. Without a proven track record, why should someone take a risk to work for you? 

Having a business plan can help solve that problem. Your plan can help prospective employees understand your business strategy and growth plans so that they can feel confident joining your team. It’s also incredibly useful in determining when and if it’s feasible for you to hire more employees . 

9. Get your team on the same page

A great business strategy can only be successful if your team understands it. By documenting your strategy with a business plan, you can easily get everyone on the same page and working towards the same goals. 

It’s even better if you regularly review your plan with members of your team. Have everyone revisit your core strategy, analyze it, and explore how it impacts individual and team goals .

10. Manage your business better 

A business plan is all about setting goals for your company — both financial goals and milestones you hope to accomplish. 

When you use your business plan to manage your business, you’ll see which parts of your strategy are working and which aren’t. 

For example, you may have invested in new marketing efforts to sell one of your products, but that strategy just isn’t working out. With a business plan in hand, you’ll be able to see what’s going to plan and where you need to adjust your strategy, pivoting to new opportunities that will drive profitability.

Regular business plan reviews , ideally monthly, will help you build a strong, resilient business.

11. Effectively navigate a crisis

Having a business plan not only helps you create a roadmap for your business but also helps you navigate unforeseen events. Large-scale economic downturns, supply shortages, payment delays, cash flow problems, and any number of other issues are bound to pop up. But by leveraging your business plan, you can be prepared to face each crisis head-on.

A plan helps you assess your current situation, determine how the crisis will alter your plan, and explore what it will take to recover. 

With a little planning, you can even prepare your business for future downturns with this same process. Having the right plan and processes in place will make crisis planning easier and, ideally, recession-proof your business .

12. You’ll be ready to sell

You might decide to sell your business or position yourself for acquisition down the road. Having a solid business plan helps make the case for a higher valuation. 

Your business is likely worth more to a buyer if it’s easy for them to understand your business model, your target market, and your overall potential to grow and scale. 

Remember, if you were buying a business , you’d likely want to see their business plan and any previous documentation. So, the more organized and professional your plan is, the easier it will be for a buyer to say yes.

13. It’s easier than you think

You may be procrastinating in writing a business plan because it sounds like a lot of work. The truth is that planning is much less complicated than you think. 

Start small by writing a simple business plan you can complete in about half an hour. With the emergence of AI business plan generators , getting stuck with a blank page is a thing of the past. Just be sure that you don’t just let AI write your plan for you and keep yourself involved in the planning process.

From there, refine your plan until your idea is solid. At that point, you can invest more time in a more detailed business plan. Just start with the basics and expand from there.

14. You’ll sleep better at night

When you have a plan for your business, you have peace of mind. You know that you’ve invested the time to figure out a business model that works, and you’ve considered different financial scenarios so you can handle the unexpected. 

Plus, you have a management tool to run your business better than your competitors. 

15. Research shows that business plans work

A Journal of Management Studies study found that businesses that take the time to plan grow 30% faster than those that don’t. 

Our own 2021 small business research study found that 58% of small business owners who have or are working on a plan feel confident in their business, even amidst a crisis. 

A study in Small Business Economics found that entrepreneurs who write business plans for their ideas are 152% more likely to actually start their businesses.

There’s plenty of additional research linking business planning with success, so it’s a proven fact that you won’t waste time when you write your plan.

Why is a business plan important? Because it sets you up for success

There are plenty of reasons to write a business plan, but they all relate to one thing—increasing the likelihood of success for you and your business. 

Taking the time to plan is an investment in yourself and your business that will pay dividends, whether you’re starting a new business or taking your existing business to the next level. 

If you’ve been putting off writing a business plan, now is the time to do it. Start by downloading one of the many free business plan templates out there, or for additional guidance, invest in an online business plan builder .

No matter what business planning tool you choose, just deciding to write a business plan will set you up to build, run, and grow your business. So, don’t wait—start planning today.

What is a business plan?

A business plan is a structured document that outlines the goals, strategies, target market, and financial forecasts of a business. It serves as a roadmap for the business, detailing the steps necessary to achieve success.

Why is planning necessary?

Business planning is essential because it helps businesses set clear goals, allocate resources efficiently, identify potential challenges, and develop strategies to overcome them. It also provides a framework for decision-making and helps attract investors by demonstrating the viability of the business.

What happens if a business doesn’t plan?

Without planning, a business may lack direction and clarity, leading to inefficient use of resources, missed opportunities, and an inability to respond effectively to market changes. This can result in financial difficulties, operational challenges, and ultimately, business failure.

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Expert Guide to Writing an Effective Change Management Plan

By Diana Ramos | December 22, 2016 (updated July 24, 2023)

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The one thing a business can almost certainly expect is change. A lot of it. Most organizational change happens for one of two reasons: unexpected circumstances or intentional actions implemented to facilitate organizational growth or progress. Whether the change is due to a market influence, a reduction in budget, resource constraints, or expansion, it’s a safe bet that organizational change will affect your business on a fairly regular basis. 

Change management has evolved from simply something that happens in organizations to an entire discipline. This comprehensive guide provides information on how creating a change management plan can help your organization prepare and handle forecasted and unforeseen changes. We’ll also provide direction on writing effective change management plans for managing organizational change, along with best practices and tips from experts in the field. 

Understanding the Change Management Process

Many change management theories, models, and frameworks have been developed based on research and experience. One of these theories is Kotter’s 8-step Change Management Process. World-renowned change expert, John Kotter, outlined this 8-step process for change: create urgency, form a powerful coalition, create a vision for change, communicate the vision, remove obstacles, create short term wins, build on the change, and anchor the change into corporate culture. 

These models or frameworks act as a guide to managing change both personally and within an organization. Most of these models include a supporting process or sequence of steps to move a change from initiation to completion. Within the sequence of steps, there is typically a ‘Planning’ stage where teams create a change management plan to help manage the project tasks and activities. 

Addam Marcotte, Vice President of Organization Development for FMG Leading says, “The one constant in life is change. This is especially true in the business environment with eternally changing conditions. As the world becomes more interconnected, interdependent, and complex, seemingly trivial variables can have profound impact on global markets. Studies have shown that agile organizations, those that can adapt to change rapidly, are more likely to succeed — therefore having competency in organizational change can no longer be a reactionary one-time solution, but is a vital element of organizational strategy. Organizational Change Management is a systematic approach to leading large scale change, from process and org structure to culture and human capital.”

What is a Change Management Plan and Why Do You Need One?

A change management plan helps manage the change process, and also ensures control in budget, schedule, scope, communication, and resources. The change management plan will minimize the impact a change can have on the business, employees, customers, and other important stakeholders.

Marcotte believes that, “Effective organizations are able to handle varying degrees of complex change and quickly pivot and navigate the changing landscape. Deep emergent change can be extremely disruptive and unsettling, whereas intentional incremental change may feel like minor efficiency improvements and largely go unnoticed. All forms and degrees of organizational change need someone leading the journey and continually communicating with employees. It is important to have a comprehensive and integrated change management plan to help clearly articulate organizational strategy, helping people understand ‘why’ the change is critical and what the future state will look and feel like.”

According to Amy Kauffman , Founder of Strategic Moxie, “You need a change management plan because strategy and processes are always perfect in their conception, but as time goes on these elements of business become living, breathing, and changing entities. Change management plans help you remain agile, adapt to challenges along the way, monitor success metrics, and track milestones.”

How to Write a Change Management Plan

There are several steps involved in writing a change management plan. You can get started by using a change management template. We’ve outlined them here and provided some best practices recommended by experts in the field:

1. Demonstrate the reasons for the change.

Kevin Lonergan of PMIS Consulting Limited explains that, “One should never assume that people know why change is needed. Even the blindingly obvious is never obvious to all. Make sure that the reasons for the change effort are clearly defined.” When your stakeholders have a clear understanding of why the change is needed and how it will improve business or the way they work, they are more likely to support rather than resist the change.

2. Determine the scope. The next step in writing the change management plan is determining who the change will affect. Also determine what the change will impact, including policies, processes, job roles, and organizational structure.

3. Identify stakeholders and the change management team. Marcotte explains that the “best practices in change management often include a task force or team who ‘owns’ the organizational change and is empowered to execute it. The composition of this team is extremely important and it must be led by a credible leader.” The change management team interacts with stakeholders, addresses concerns, and oversees a smooth change transition. Roles within the team require clear definition, including outlining each member’s responsibilities. A Change Advisory Board (CAB) may also be established to oversee changes, offering change approvals and guidance. 

4. Clarify the expected benefits. These benefits should be clearly delineated so that everyone involved understands the advantages of proceeding with the change. 

5. Milestones as well as costs must also be clearly outlined. Marcotte explains the importance of clear milestones: “Research shows 70% of changes fail because people believe that results relative to the effort aren’t worth it, or aren’t working. Establishing well-communicated and achievable milestones are vital to the success of any change plan. These milestones become symbols to employees that the plan is working, progress is happening, the direction is still right, and the effort is worth it.”

6. Create a change management communication plan.

Susanne Powelson , Vice President of Lovell Communications, Inc., explains the value and importance of clear, consistent communications as part of the change management plan. “The right strategic communications can help maintain employee focus and foster trust – even in the most uncertain times. Build trust among your employees by being visible and accessible. Strive to set a positive tone for the organization and resist the urge to let problems or shortfalls dominate all of your communications. Instead, focus on helping employees across the organization understand the benefits of the change. Create opportunities for employees to ask questions and let them know what information you can share, what information you can’t share and when they can expect further updates,” she says.

‌ Download Stakeholder Communication Plan - Microsoft Word

There are three basic elements to communications in the context of change management. 

• Identify the stakeholders and those impacted by the change. 
• Next, schedule regular face to face interactions and email communications to keep stakeholders updated on progress. 
• Finally, communications should be consistent, thorough, and regular. Communications should also clearly explain the change, define the reasons for change, present the benefits of the change, and always include change owner’s contact information.

Below you will find a sample of how Bob Kermanshahi, Head of Strategy at Siemens Real Estate for the Americas, (part of Siemens, a conglomerate with $20 billion in annual revenues from the Americas,) manages business transformation utilizing a formal change management plan. 

Siemens Case Study

Change Management Processes and Systems

Change management processes and systems pave the way for successful change management. It is essential to be able to submit a change request, track, schedule, and manage that request through delivery. Along the way, you must also monitor roadblocks, milestones, and resistance. A change management system will allow a single storage location for all data association with organizational changes, standardization of procedures, analysis of trends and activity, and easy access from anywhere at any time. 

Look for a system that offers the following functionality:

• Configurable change request forms
• Change approvals
• Change monitoring
• Updating change
• Change assignment to individuals, teams, and/or Change Advisory or Change Control Board
• Ability to classify as a change and reclassify as a defect if necessary
• Schedule of changes (Forward Schedule of Change)
• Configurable change management processes
• Role assignment
• Change log for historical tracking
• Budgeting and cost controls
• Ability to break work down into tasks

Resistance Management Plan

How you manage resistance is a critical element when managing change. After identifying the stakeholders, a project manager should examine how they will each be affected by the change. According to Lonergan, “It’s not only important to identify stakeholders, but also predict how they will respond to the change. Often stakeholders will respond by resisting change, so creating a resistance management plan is important.”

Currently, there is an extremely busy industry focused on creating and studying change management models, frameworks, processes, plans, and tools - not to mention professional trainings and certifications that span industry verticals. Since change is a necessary element of organizational growth, this industry will continue to prosper.   

Planning for Change in Healthcare Organizations

Planning for change in an organization is a necessary, yet often challenging aspect of business planning. In healthcare-oriented businesses in particular, change management is even more essential, as there are many more variables to keep in mind, like patient confidentiality, secure data storage, credentialing processes, and more.

Change management plans help to determine how changes will affect an organization, the scope of the change, and how change will be communicated to the rest of the organization. In healthcare organizations, this process needs to be transparent, quick, and updated regularly to maintain optimal patient care, while keeping providers and insurance companies on the same page. To plan for change in your healthcare business and ensure your organization remains efficient while keeping all information and data protected, you need a powerful, real-time, and secure tool.  

Smartsheet is a work execution platform that enables healthcare companies to improve work efficiency, scale repetitive processes, and securely store and share protected health information. Streamline documentation, improve communication of changes both internally and externally, and modify healthcare processes for the better, while also maintaining top-level data security compliant with HIPAA’s regulatory requirements. Track the progress of changes in individual processes with all-up reports and centralized dashboards.

Interested in learning more about how Smartsheet can help you maximize your efforts? Discover  Smartsheet for Healthcare .

Smartsheet: The Ultimate Tool for Creating a Change Management Plan

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The Smartsheet platform makes it easy to plan, capture, manage, and report on work from anywhere, helping your team be more effective and get more done. Report on key metrics and get real-time visibility into work as it happens with roll-up reports, dashboards, and automated workflows built to keep your team connected and informed. 

When teams have clarity into the work getting done, there’s no telling how much more they can accomplish in the same amount of time.  Try Smartsheet for free, today.

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How to Know When to Change Your Business Plan

Sometimes you need to stick to your business plan to make it work. Even a mediocre strategy consistently executed over time is better than a series of brilliant strategies that keep going off in different directions. Strategy often takes time.

On the other hand, there is no virtue in sticking to a plan, just for having stuck to a plan. We live with constant change.

Which brings me to the dilemma that many business owners face:

Do I stick to my plan, or change it? If I change it, then is my plan vs. actual (reality) valid? Doesn't it take consistent execution to make strategy work?

To which I'll add;

“It is better to take many small steps in the right direction than to make a great leap forward only to stumble backward.” – Chinese proverb

I've been dealing with this dilemma for years, as a business owner, entrepreneur, and consultant. I want to suggest some guidelines to help you decide whether to change the plan midstream, or not.

A Good Planning Process

It starts with having a plan that includes priorities, milestones, and expected results. Also, you have to track results and compare them to what you had planned or expected to see. And also, as you developed those expectations, you should have included assumptions.

Ideally you have that process going on already. Without it, there's no plan to change, and you are managing reactively. If you don't have a process of planning in place, start it immediately in order that you have a better planning process later on.

The best time to plant a tree is 20 years ago. The second best time is today. – African proverb

Stay the Course or Revise the Plan?

Take some time each month to review your plan and its results. Once you have the process established, it doesn't take more than an hour or two to get team members together.

Start that monthly meeting with a good hard look at your underlying assumptions. Identify the key assumptions and whether or not they've changed. When assumptions have changed, there is no virtue whatsoever in sticking to the plan you built on top of them. Revise your plan, automatically, when key assumptions have changed.

Then look at the differences between what you planned and what actually happened. Identify key differences between the plan and actual results. Some will be better than planned, and some worse.

For each key difference you discover, and all of them combined, use your best judgment and common sense to determine whether the differences were caused by false expectations or unexpected good or bad execution. Also, consider external and internal factors that may have influenced the results.

Maybe your expectations were too conservative, or too optimistic. In that case, you revise your plan. Use your common sense. Were you wrong about the whole thing, or just about timing? Has something else happened, like market problems or disruptive technology, or competition, to change your basic assumptions?

Maybe you discover you and your team have executed better than expected, or results were better than expected. Hooray. Stick to the plan. It's working.

And maybe you discover that your execution was wrong, poor, or flawed. If any of those reasons are the case, work on executing better and change the plan.

Do not revise your plan glibly. Remember that some of the best strategies take longer to implement. Remember also that you're living with it every day; it is naturally going to seem old to you, and boring, long before the target audience gets it.

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Why people are souring on one of the country's hottest housing markets

• Residents say it's becoming a lot harder to enjoy living in Florida.
• Among the pandemic's hottest markets, the Sunshine State is increasingly expensive, hot, and crowded.
• Housing activity is slowing, with inventory climbing 42% from levels last year, per Redfin.

Cindy, a 50-year-old small-business owner who's lived in Florida for most of her life, says she and her husband are starting to sour on life in the Sunshine state. The summers are extremely hot and muggy , prices have climbed, and the crowds have gotten worse, she said. Cindy noted that the commute from her suburban area to downtown Tampa has more than doubled over the past few years.

Now, with most of their adult children out of the house, she and her husband are seriously considering packing their bags and moving out of state. More than likely, they'll be gone within the next 10 years, she said, adding that her business was one of the last remaining things that kept her tied to the area.

"It's funny. I know most people retire to Florida, but we're hoping to retire away from Florida," she told Business Insider.

Cindy's experience isn't actually all that unique.  Florida was one of the epicenters  of the pandemic's great migration, but while crowds of people are trying to settle into places like Orlando, Tampa, and Jacksonville, many Floridians want to dump their homes and get out.

The exodus is mainly being driven by higher housing costs, a higher cost of living, and souring attitudes toward the influx of people who moved to Florida in recent years. Those factors combined are making daily life in the state way more difficult, current and former Florida residents said.

While 730,000 people moved to Florida during 2021 and 2022, nearly half a million people left, according to US Census data.

The state, meanwhile, just lost its status as the most moved-to region this year, according to an analysis conducted by the Florida-based moving service PODS. South Florida, in particular, ranked among the regions people were most keen to move out of, the report said.

Waning enthusiasm for the state is evident in housing activity, which has fallen from its pandemic highs. The number of homes for sale in Florida has soared 42% compared to levels last year, according to Redfin .

Many people looking to sell add that they're looking to leave the county, or possibly move out of state, according to Rafael Corrales, a Redfin agent based in Miami.

Buyers are also getting cold feet. In Orlando, Jacksonville, and Tampa — three metros that boomed during the pandemic — 21% of home purchase agreements fell through in June, Redfin data shows.

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"They're just being a little more cautious now," Corrales said, pointing to affordability concerns. "There's issues that were normally acceptable for a buyer, they're no longer acceptable anymore because it's money and it's a lot of money."

Kevin, a 36-year-old software engineer, is among the sellers who recently left. He and his wife traded their life in St. Pete, Florida to move to Seattle about a year ago. They have no regrets, and never plan on moving back to the state, he told BI.

"If you would have called me five years ago, I would have vastly different answers to this," Kevin said. "The cost of living hadn't gone up and just the past five, six years, it's gotten crazy down there. I used to love Florida five years ago. I never imagined leaving Florida, but things have changed."

Temperature change

Attitudes appear to be different than even just a few years ago, when pandemic transplants altered the state's reputation as more than just America's biggest retirement destination.

Bill McBride notes that booms and busts are part of the housing cycle, and the housing forecaster thinks some areas of Florida could see an exodus of people in the coming decade.

While people were likely attracted to Florida for its balmy weather and cheaper housing relative to expensive cities like New York, homeowners in the state are feeling exhausted by extreme weather, which is pushing up the cost of homeowners insurance and homeowner association fees, McBride told BI.

More than three quarters of homeowners in Florida said their home insurance premiums have risen in the past year, according to a Redfin survey. Property insurance costs in the state are rising at the fastest pace in 20 years, according to Capital Economics.

According to Cindy, her home insurance costs around $8,000 a year. That's actually better than the state average, with the typical household paying over $10,000 for home insurance in 2023, according to data from Insurify .

"It's insane. It's craziness how much more we're paying for homeowners' insurance, and I think that's pretty common across the whole state right now. Everyone is having issues with that," she said.

The cost of living has also risen, in part due to rising housing costs and more people living in the city. Consumer prices in the Miami, Fort Lauderdale, and West Palm Beach areas of Florida are up around 30% since February 2020, according to the Bureau of Labor Statistics. Prices in Tampa, St. Petersburg, and Clearwater areas, meanwhile, are up 25% since the pandemic .

Home prices have accounted for a big portion of that increase. The median home in Florida now costs $409,700, up by about 55% from the median house price recorded in February 2023, Redfin data shows.

"I think one of the main draws of Florida has always been that it's cheaper," Darryl Fairweather, the chief economist of Redfin, said, pointing to the wave of newcomers who flooded in from high-cost areas, like New York and Washington DC.

"Eventually the affordability just becomes so bad that people can't put up with it anymore."

The hoards of people who moved to Florida during the pandemic are part of the problem, Kevin and Cindy said, describing a more tense political climate and increased violence in some areas.

Florida saw an increase in most types of offenses in 2023 compared to the prior year. Simple assaults shot up 66% compared to 2021, while aggravated assaults jumped 65%, according to data from the Florida Department of Law Enforcement .

"So it was probably 2020 that I was like, yeah, time to go get out of here," Kevin said.

Florida will probably still be attractive to some older people, who are flush with cash and are not as concerned by the increasing frequency of extreme weather events, McBride and Fairweather say.

But for the most part, McBride expects people to begin turning away from and also leaving the Sunshine State. Some communities near Florida's coastline could become "ghost towns" in as soon as 50 years, he speculated, as climate change will make them uninhabitable.

The state probably won't be considered a retirement haven by the time millennials exit the workforce, Fairweather added.

"Will it still attract people? I think so," McBride said. "[But] I wouldn't live there."

Watch: Florida is underwater, and more storms are coming

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Will Electing Judges Make Mexico’s Courts Better, or More Political?

A sweeping change would have thousands of judges, from local courtrooms all the way up to the Supreme Court, elected instead of appointed.

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By Emiliano Rodríguez Mega and James Wagner

Reporting from Mexico City

A landmark shift unfolded in Mexico on Thursday as a majority of its 32 states approved an overhaul of the country’s judicial system. In a monumental change, thousands of judges would be elected instead of appointed, from local courtrooms to the Supreme Court.

The measure could produce one of the most far-reaching judicial overhauls of any major democracy and has already provoked deep division in Mexico.

Nevertheless, the legislation’s passage into law was practically a foregone conclusion by Thursday as President Andrés Manuel López Obrador announced his intent to publish the bill on Sunday, on the eve of Mexico’s Independence Day.

“It is a very important reform,” Mr. López Obrador, whose six-year tenure ends at the end of the month, said during his daily news conference. “It’s reaffirming that in Mexico there is an authentic democracy where the people elect their representatives.”

The departing president and his Morena party have championed remaking the court system as a way to curtail graft, influence-peddling and nepotism and to give Mexicans a greater voice. Mr. López Obrador’s successor, Claudia Sheinbaum, will take office on Oct. 1 and has fully backed the plan.

But court workers, judges, legal scholars and opposition leaders argue that it would inadequately address issues such as corruption and instead bolster Mr. López Obrador’s political movement.

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Iconic firm Campbell Soup set to drop soup from name

Top executives at the 155-year old Campbell Soup Company plan to change the iconic firm's name to The Campbell's Company.

Chief executive Mark Clouse said the move aims to better reflect Campbell's growing product line, which currently also includes sauces, snacks and beverages.

Investors are set to vote on the name change at the company's annual meeting in November.

While canned soup remains a key part of the Campbell's business, the company has sought to adapt to a changing market by acquiring other businesses such as Rao’s sauces maker, Sovos Brands.

“We will always love soup, and we’ll never take our eye off of this critical business,” Mr Clouse said during the company's investor day. “But today, we’re so much more than soup.”

In addition to its most famous line of products, Campbell's portfolio includes other offerings such as Goldfish crackers, Cape Cod crisps, V8 beverages, Prego sauces.

Mr Clouse said Campbell will only need its soup sales to remain stable for the company to meet its financial targets.

Other executives noted, however, that soup sales are set to benefit from an aging population in the US, as older people are more likely to eat soup.

Campbell was the first company to sell canned soup more than a century ago.

The product served as inspiration for one of American artist Andy Warhol's most iconic pop art works.

The company estimates its net sales will rise between 9% and 11% in its 2025 fiscal year.

Campbell's leaders expect its Goldfish crackers to be a key driver of growth and to ultimately become its largest brand by 2027.