IS YOUR BUSINESS MODEL OR PLAN STILL RELAVENT?
We live in such a fast changing world today, the business models and plans developed yesterday, may be obsolete tomorrow. It maybe such statements are bit over the top despite there being an element of truth in the statement. At a meeting of entrepreneurs last month for example, this topic was raised during general discussions. A number of members from both established and newly created businesses voiced their concerns about whether their business would still be relevant in the coming years.
Such thinking and voicing of concerns is a valuable exercise and worth completing periodically. However before proceeding in haste with a review of your business, let us take a step back for a moment.
Why create a business model and complete business plans at all if the world is changing pace so rapidly?
The first and foremost reason for developing a business model and plan is the need to identify to prove how you will operate your business to meet the desired objectives. If you cannot articulate and convince yourself of the merits of your business model and plan, how can you explain these concepts to other potential stakeholders? By creating a business model and plan, you have an opportunity to confirm both are in alignment to achieve your objectives.
It is wise to write down and document your business model and plan. This documentation does not need to be at the level which is required if you were applying for finance, or seeking an investor. However, the documentation should be detailed enough to provide a level of analysis by an outsider.
All documentation should be kept for future analysis as it is a valuable resource for future plans.
One reason for keeping this documentation is that we are all prone to keep holding on to some of our pet ideas. It is as though we simply cannot live without them. These ideas may have been identified as being of little value in the past or perhaps times have simply passed by to make these ideas irrelevant. Either way, you do not want to waste time or to corrupt your latest business model or plan because you cannot let them go.
On the other hand, many ideas which may have been considered for previous business models and plans and which were not applicable then, may be of value in the future. As times change, so does the ability to use ideas which could not be used previously.
Here are a few factors for instance, which you may have not considered applicable for previous business models and plans. As circumstances have changed, they are worth considering again.
1 Due diligence is now a key factor in helping your business survive and grow and to avoid the pitfalls of bad debts and trying to repair a damaged reputation.
2 The manner in which social media plays a role in promoting your business and exposing your secrets can not underestimated.
3 If you extend credit, having a properly prepared and constructed Credit Application document is ESSENTIAL. Equally important is to understand the terms and conditions of your own business, in addition to those of other stakeholders.
4 You do need to understand the billing structures of all your customers, especially those of your major corporate customers. No longer can you just send out an invoice and wait for payment. Almost every customer has a different billing structure these days.
Understanding the factors in operating a business today is vastly different from even two or three years ago. This difference is almost beyond the comprehension of some people.
Notwithstanding the pace of change today, identifying your business model and plan, is always a worthwhile exercise. The process of identifying what sort of business you will operate on a daily basis is essential to meet your strategic business objections. In addition, reviewing your business model and plans occasionally is required to keep pace with changes in the current business environment.