By AllBusiness Editors In: Remember, writing your business plan is a significant step in making your small business concept a reality.
How to Review a Business Plan by Devra Gartenstein - Updated September 26, Yoiur review of a business plan will vary somewhat depending on your relationship to the business.
If you are a potential investor you will be interested in the financials as well, but you might be more likely to give the company the benefit of the doubt if the business plan does a good job of presenting its vision. Make sure that it presents a balanced picture, and portrays some of the challenges that the business faces rather than only detailing its advantages and its bright hopes for the future.
Pay attention to the tone of the writing: Assess the financial section of the business plan. If the business owner is requesting a specific amount of money, calculate whether this sum will be sufficient to achieve the goals outlined in the business plan, and whether the projections for growing the business and paying off this sum seem realistic and well grounded.
Pay attention to past rate of growth, and the variables that helped to bring about these increases in revenue, such as advertising investments and expansions into new markets.
For example, if you are reviewing a business plan for a restaurant, make sure that it has consistently achieved the industry standard of not spending more than one third of its income on food costs. Research the data in the business plan to independently verify that its claims are sound.
Gather statistics about the particular industry to evaluate whether this company is achieving goals consistent with the overall segment of the econoomy, and whether its economic sphere shows potential for growth.Giving your business plan a good once-over one time a year may not be often enough.
Reviewing your business plan annually is fine under most circumstances, but if your business environment is experiencing choppy conditions, or if you’re facing major threats or opportunities, your plan should be the first place you turn. A business plan is a critical tool - not just during the start-up phase, but for established businesses also.
Reviewing your business plan and updating it regularly gives you a chance to monitor your progress and take corrective action if things aren't going to plan.
Whether one of the previous reasons dictates an update or not, make it a practice to review your business plan at least once a year and plot your activities for the coming year. Do this as part of your annual planning and budgeting process at the end of your fiscal year.
If you previously had your forecast in a full year increment, this time do. What is a business planning cycle, and how often should you review your business plan to update it and set new objectives.
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In the previous two installments, we looked at “4 Sections Every Business Plan Must Have (and Why They’re Important)” and “Why You Need a Business Plan (and the Best Style for You).” This month, we discuss the best times to update your business plan.