Re-examining your plan a natural part of a growing business

NEW YORK -- When your company was young and looking for a bank loan, you put together a business plan, the blueprint that detailed for your lenders all the financing and operations of your new enterprise.

Now that your company is well-established, you might want to consider re-examining or even redoing that plan as a way of reviewing all aspects of your business.

"A business owner should always periodically revisit their business plan," said Eric Tyson, co-author of "Small Business for Dummies." "A business plan is sort of a snapshot at a point in time based on hopes and expectations, and that will change with the realities you find in the marketplace."

Tyson said the rapid changes in the economy over the past 18 months make it particularly important for companies to rethink their business plans.

"In some cases, the survival of your business could be at stake," he said. "The companies that are in the strongest position are those who have been religiously doing this. Those that have not been very disciplined and have been living off the fat times for a while end up saying, 'Geez, income's really down. What am I going to do to survive?"'

Even if you've never put together a business plan -- some business owners don't bother unless they're required to submit one while applying for bank or other financing -- you might want to think about going through the process. It might help you get a better handle on your business.

According to Entrepreneur magazine's "Small Business Advisor," a well-developed plan addresses all aspects of a business: marketing strategy, competitive analysis, design and development plans, operations and management and finances.

Marketing strategy means looking at whether there's demand for a product or service and how it will be priced, promoted, sold and distributed.

In a competitive analysis, a business owner looks at current and potential rivals and assesses the relative positions.

Design and development plans are highly detailed explanations of how a product was created and how it will be manufactured. It includes technical information, cost analyses (including raw materials, labor and overhead) and marketing information. Similar information can be put together for a company that provides a service rather than makes a product.

The section called operations and management gives a breakdown of the whole structure of the company, including job descriptions for employees, and the operating expenses and capital requirements.

The section on finances contains such staple documents as an income statement, cash flow statement and the company's balance sheet. That means getting a handle on assets, liabilities, accounts payable and receivable, inventory, taxes -- in short, all the financial aspects of your business.

Many accountants will advise business owners doing a review to pay particular attention to cash flow, including expenses and overhead. Often, when a company is running into problems, it's because no one is really watching money slipping away in dribs and drabs.

Ed Paulson, an entrepreneur and author of "The Complete Idiot's Guide to Starting Your Own Business," also advises business owners to "check to see how close your current reality matches what you thought reality would be when you wrote your plan."

"It gives you an idea of how good your estimates were and can be used as a tool to help you make better estimates in the future," he said.

Paulson also suggests business owners honestly consider whether the long-term goals they set years ago should be adjusted in light of their current situation.

"Don't keep yourself locked in to what you thought would be the truth a year ago or two years ago when you wrote the plan if circumstances have changed," he said.