Did you know updating your business plan should be a part of your regular business practices? If not, don’t worry — a lot of people skip this step. But it could benefit you to make this effort.
Read on to learn why updating your business plan is so important, how to tackle this task, how often you should make updates, and key things to keep in mind.
Let’s get to it!
Why should you update your business plan?
Outside of updating your business plan as a standard course of doing business (which we’ll discuss in detail shortly), there are a few noteworthy situations that warrant a full business plan overhaul:
You need to raise funds
If you need capital to make tech upgrades, grow your team, or expand operations, you’ll likely need to raise funds. Before you can reach out to new investors, however, your business plan must be up-to-date and reflect your company’s current financial situation, including operating costs, cash flow, business goals, and income projections.
Related: 10 small business funding options
You want to refinance
Similar to potential fundraising moves, refinancing your business loans requires an updated business plan because it outlines operating costs, your company’s challenges, and forecasted revenue. No lender will entertain refinancing or even new loans without an updated business plan and financials.
You want to launch a new product
Big business moves necessitate an updated business plan and launching a new product or service qualifies. A new product means new potential revenue, so updating your business plan to reflect that fresh revenue stream is critical. Be sure to include everything you would’ve when writing your business plan the first time around — like costs, vendors, time frames, target demographic/segmentation, and financial projections.
You want to expand your company
Company expansion can take many forms. Perhaps you’d like to open up a second location in another city. Maybe you want to purchase more warehouse space for your products. Large technological upgrades are considered expansions, too. No matter what type of growth you have in mind for your business, updating your business plan to reflect this intention to grow is a key step before reaching out to investors and potential lenders.
You’ve changed your supply chain
Supply chain issues have become an acute problem since 2020. However, there has always been a need to update business plans to reflect changes in the supply chain and/or a change in the vendors you decide to use. Any time you make changes to your vendor list, put updating your business plan on your schedule.
You have new competitors
If a new major competitor enters your industry, it’s likely to affect how you do business. Whether that means your share of the industry “pie,” so to speak, decreases, or it means a new brand changes the expectations for your industry and you need to now follow suit — a business plan update is in the cards to reflect these changes.
When and how often should you update your business plan?
As you can likely see by now, updating your business plan is an essential part of having a business plan in the first place.
It’s a dynamic document that needs to be updated to meet where your business is at right now.
Though you don’t need to update your business plan to reflect every little change, making regular updates is a solid business practice.
If your company is chugging along with no major changes, giving your business plan the once-over at least once a year should be sufficient for updating financial data and projections. However, if your company undergoes a major shift, you’ll want to update your business model when you expect that change to occur.
How to update your business plan
Now that you have a sense of how often you should update your business plan and why you need to do so in the first place, let’s turn our attention to the real meat of this article: how to update your business plan. Here are six key things to keep in mind when updating this most important document.
1. Make updating your business plan part of your regular review process
One of the biggest obstacles to updating a business plan is scheduling the time to do it. Business owners are busy people, and it’s all too tempting to leave these sorts of tasks until tomorrow. However, you can get around this by simply incorporating a business model review into other processes you already complete.
If your company does quarterly financial reviews, add in a business plan review during this time. You’ll already be taking time away from day-to-day business operations to complete the financial review, so you might as well spend a couple of extra hours updating your business plan.
You could even schedule it for when you do your taxes or prep documents to send to your accountant. Add the business plan update to your to-do list for those days.
2. Include your team in the process
If you have any kind of team for your business, you must include them in this process. They are likely involved with the day-to-day functions of operating your business and can provide key insights into what the future of your company looks like. For example:
- Ask the marketing team for reports on trends they’ve noticed over the past six months or so.
- Ask sales about any demographic shifts they’re noticing in the customer base.
Those who are doing work within your industry daily are going to feel the subtle shifts within the market before anybody else. And they might have insights into what projections look like — things that you might not come up with on your own.
Leveraging your team means getting a more complete picture of what your company has accomplished, how it’s currently positioned, and where it will go from here.
Pro tip: You can manage these tasks directly in Microsoft 365 as well. Sharing documents is a snap and you can collaborate on your business plan in real-time.
3. Note regulatory changes
When updating your business strategy, take some time to research any regulatory changes that have taken place in your industry. New rules, regulations and laws are passed all the time and many can have a direct impact on how you do business.
For instance, payment processors now must report your earnings to the IRS. This change could affect how you report income and change your relationship with contractors. The implementation of sales tax on internet sales made in the state where your business is located is another example from the past that had a profound effect on companies doing business online.
Such changes can impact your financial reporting and/or make your business more competitive, and less competitive, and otherwise change your approach to how you do business.
4. Note vendor/supply chain changes
Another factor to take into consideration when updating your business plan is any vendor or supply chain issues or changes that have occurred since your last plan update. If a vendor suddenly changed their billing system or adjusted their fees, you might need to account for this in your business plan as it could cut into your profit margin projections.
Or, if the supply chain has made it so you need to use multiple vendors to meet your company’s needs without experiencing disruptions, your business plan should make note of this change — and even indicate that supply chain issues are an ongoing problem.
5. Keep broader economics in mind
The overall state of the economy can directly affect your company’s performance. And while economic downturns can leave some industries untouched, it’s rather rare. But even if your company is lucky and hasn’t been affected by broader economic fluctuations as of yet, keep updating your business plan on your radar.
The economy as a whole can impact your vendors, shipping, packing, contractors and other services related to how you do business. It can also affect staffing and the accessibility of talent. So even if your company hasn’t experienced negative effects, acknowledge the general state of the economy in your business plan and include contingency plans should issues arise.
6. Follow demographic changes
We’re currently in the midst of huge demographic changes in the United States and all over the world, which will have a direct impact on how you do business and what the future might bring to your company.
As of 2022, the median income among the middle class is going down, the income of the very wealthy continues to go up, and the median age of workers is going up, too. People are having babies later in life and at lower rates than in the previous generation.
All of these factors can directly impact your revenue potential as well as who your target demographic or ideal customer even is. And this means you need to update your business plan to account for these shifts. Continue to revisit demographic data and projections a couple of times per year to ensure your internal projections still apply and to see if your processes need updating and track your actual results. If so, a business plan update is in order, too.
What to do next
If you haven’t even so much as glanced at your business plan in a bit, now’s the time to dust off the document and give it a once-over. Times are changing — seemingly faster than ever before — so it would behoove you to set aside some time to update your business plan sooner rather than later.
4 tips to find the funding that fits your business
The facts are clear: Startups are finding funding increasingly difficult to secure, and even unicorns appear cornered, with many lacking both capital and a clear exit.
But equity rounds aren’t the only way for a company to raise money — alternative and other non-dilutive financing options are often overlooked. Taking on debt might be the right solution when you’re focused on growth and can see clear ROI from the capital you deploy.
Not all capital providers are equal, so seeking financing isn’t just about securing capital. It’s a matter of finding the right source of funding that matches both your business and your roadmap.
Here are four things you should consider:
Does this match my needs?
It’s easy to take for granted, but securing financing begins with a business plan. Don’t seek funding until you have a clear plan for how you’ll use it. For example, do you need capital to fund growth or for your day-to-day operations? The answer should influence not only the amount of capital you seek, but the type of funding partner you look for as well.
Start with a concrete plan and make sure it aligns with the structure of your financing:
- Match repayment terms to your expected use of the debt.
- Balance working capital needs with growth capital needs.
It’s understandable to hope for a one-and-done financing process that sets the next round far down the line, but that may be costlier than you realize in the long run.
Your term of repayment must be long enough so you can deploy the capital and see the returns. If it’s not, you may end up making loan payments with the principal.
Say, for example, you secure funding to enter a new market. You plan to expand your sales team to support the move and develop the cash flow necessary to pay back the loan. The problem here is, the new hire will take months to ramp up.
If there’s not enough delta between when you start ramping up and when you begin repayments, you’ll be paying back the loan before your new salesperson can bring in revenue to allow you to see ROI on the amount you borrowed.
Another issue to keep in mind: If you’re financing operations instead of growth, working capital requirements may reduce the amount you can deploy.
Let’s say you finance your ad spending and plan to deploy $200,000 over the next four months. But payments on the MCA loan you secured to fund that spending will eat into your revenue, and the loan will be further limited by a minimum cash covenant of $100,000. The result? You secured $200,000 in financing but can only deploy half of it.
With $100,000 of your financing kept in a cash account, only half the loan will be used to drive operations, which means you’re not likely to meet your growth target. What’s worse, as you’re only able to deploy half of the loan, your cost of capital is effectively double what you’d planned for.
Is this the right amount for me at this time?
The second consideration is balancing how much capital you need to act on your near-term goals against what you can reasonably expect to secure. If the funding amount you can get is not enough to move the needle, it might not be worth the effort required.
Build your own brand (and stop reselling!)
I used to think that every “brand” was supported by its own factory and an army of in-house employees. I was wrong. Branding your own product doesn’t mean you need to design and manufacture it yourself.
Of course, most brands partner with factories, freelancers and agencies for extra support. But many others use white label designs straight from a factory. Here’s how it works:
- You find a manufacturer with a product design you like
- Add your brand name on it
- Sell it as your own
Sometimes there’s simply no need to design a product from scratch. There are plenty of well-designed products out there that just need a brand to sell them.
Where can you source white label products?
You can use sites like Alibaba and AliExpress to find pre-designed products ready for your brand name. No need to invest in product development, which can take months (or sometimes years) before a final sample is ready for production.
This Reddit post shows you how to use Alibaba or AliExpress to build your own brand step-by-step with just $1,000, a little imagination and a healthy amount of drive and ambition.
White labeling gives you so much freedom compared to reselling other brands’ products.
It can be the stepping-stone you need to put your brand on the map — even if you do end up reselling in the future or invest in R&D for products down the line.
1. Building your own brand means having control
When you buy stock from other brands to resell on your website, you’re not in control. They are able to dictate things like:
- The price you pay
- Whether you can discount it and for how much
- How you can and can’t market it
When you start your own brand, you have control. If you source directly from a factory, you can afford to drop prices to undercut competitors, while still making large margins. The tough design decisions have already been made, but you still get to make the product yours by customizing its look and adding your branding.
Where the brand goes in the future is up to you — it’s your adventure!
2. It reduces competition
Selling other brands’ products seems like an easy way to get rich. But often, you end up competing against other companies selling the exact same products. It’s not easy.
When starting your own brand, you’re the only one selling the products with your name on them, so you can build your own reputation.
For example, if I sell Beats headphones, I have to compete against all the big names already selling them. Those bigger companies can undercut me because they buy the headphones in bulk, which means they can sell them at a cheaper price.
So without competitive pricing, I could be crowded out of the market altogether. There’s just no way for a one-person company to achieve meaningful success by selling Beats headphones.
That said, if I launch my own brand of headphones called Nick’s Brilliant Headphones, I’ll still be competing against other companies making headphones. However, I’ll be the only person in the world selling Nick’s Brilliant Headphones.
With proper branding, some good reviews and the ability to maintain a good reputation, I could be on my way to the top.
3. It’s a stepping-stone to success
Perhaps you’ve heard of the popular saying, “Mighty oaks grow from little acorns.” The understanding of this quote means that sometimes something grand can stem from a small venture.
It doesn’t matter if you start out selling water bottles you bought on Alibaba, then rebrand them in your living room. After all, Jeff Bezos started Amazon out of his home.
The biggest brands have humble beginnings. There’s no telling how far you’ll take your brand once you get off the ground.
You could be importing en-masse from factories this year, developing your own products the next and building your own factory in five to ten years. As your brand reaches more people, it’ll gain recognition and loyalty. You’ll be able to take the brand wherever you want from there.
Importing products and adding your brand name to them may seem primitive, but it’s the first step to success and ownership over your future.
4. You can become the distributor
Today, you might approach Beats by Dre to resell their products. But instead, imagine if people approached you to sell your product?
You still get a cut of every sale, but you also get the following perks:
- Increased brand exposure
- Added benefit of a new revenue stream
- No burden of selling to customers all by yourself
You can go from begging other brands to let you work with them to the person whose products everyone else wants to stock.
I know several companies whose products are stocked in brick-and-mortar stores — and they all tell me it adds cushy extra income. There are always people who prefer to shop in a store or buy important last minute purchases in-person so they don’t have to wait for delivery.
5. Increase profits by cutting out the middlemen
If you resell products from an existing brand, you pay a wholesale fee to them. This helps cover their margin, plus the cost of the product, but may leave you with a lower profit.
If you start your own brand and sell it online, you only pay the manufacturing costs and any import and shipping fees.
That wholesale fee you would’ve paid another brand is money in your pocket.
You can then afford to undercut other sellers of similar products, while still maintaining a great margin.
It’s time to build your own brand
There are many merits to selling other people’s products. But the advantages speak for themselves when you have:
- Personal drive to start and build your own brand
And with white labeling, it’s easy to get started with a small investment.
Save the time and effort of marketing someone else’s products and promote your own instead. It could be the start to your brand becoming a household name.
Have thoughts on building a brand? Share them in the comments!
How to Start Freelancing (And Get Your FIRST Client!) [Updated May 2022]
The SPI community has been asking about the world of freelancing a lot lately, so I thought I’d share some recent thoughts on freelancing to guide you in how to get started freelancing (and get your first client).
But first, I want to take you back to a post I shared in November 2017:
In that post, I explain that freelancing is one of the two quickest ways to generate online income (the other is affiliate marketing). Freelancing allows you to quickly get paid for a task that can actually help solve problems for people.
And when you’re first starting out, freelancing is the number one way to get started online. It’s not a passive stream of income, which is an important thing to understand. Freelancing is definitely not passive; it’s super active. If you don’t do the work, you’re not going to get paid. But if you are dedicated and put in the effort, freelancing is a great way to get your foot in the door of an industry or niche you’re interested in. It’s, quite simply, a great way to get started in business.
After all, think about this: You just need one client. One client to make a little money. One client to get the ball rolling. One client to make a difference. And then, as you’ll hear me talk more about later in this post, you can take what you learn working with clients, and turn it into something more passive—with tools, or even a team! But first, let’s figure out how to get that first client.
Let’s get started!
What Is Freelancing, and Why There’s Huge Opportunity in Freelancing
I think it’s important first to define what freelancing is. Freelancing is, at its core, offering a skill you have in exchange for payment. If you have a skill a particular client or brand or business needs to help them solve their problems, they will want to hire you to solve it. And you do so with your specialized skill.
The cool part about freelancing is that there are so many different types of freelancers out there, offering up a huge range of skills. Even if you don’t have that skill right this moment, who says you can’t learn it and eventually offer up that skill too?
Here’s just a sampling of some of the types of freelance skills out there:
- Graphic design
- Photo editing
- UI design
- UX design
- Video editing
- Video production
- Voice acting
- Web design
- 2D animation
- 3D animation
- Ajax developer
- Java developer
- API developer
- HTML developer
- WordPress developer
- Administrative support
- Email tech support
- Virtual assistant
- Data entry
- Academic writing
- Copy editing
- Creative writing
- Business analyst
- Advertising consultant
- Google AdWords
- Marketing strategy
- Lead generation
And that’s just a small portion of the types of freelance skills available on the market. That’s a huge benefit when it comes to starting out in freelancing. You probably have a few of those skills already. And even if you don’t, you know that there’s a big opportunity for you to build your base of skills for your future clients.
Another benefit of freelancing is that it empowers you to enter a particular business space, get to know the people in there, and learn the ins and outs of that specific business type or industry. You may be hired for a specific skill, but you (or them or both) soon realize that there are other opportunities that you see, other areas where you can benefit the business.
In SPI Podcast session 460, Jay Clouse joins me to talk through an easy way anyone can get starting freelancing. Listen to it here:
How to Get Your First Client (and Why You Just Need One Client!)
Once you have your own client, the road ahead gets a little easier. Don’t get caught up in thinking you need ten clients out of the gate. You just need an audience of one to start.
To help guide you through what that’s like, I had a chat with Charli Marie of CharliMarieTV.
In the video (embedded below), Charli, a successful freelance designer, shares essential tips for how to get your first freelance client, best practices for working with that client to make sure that it’s a great experience, and advice for making sure you get paid on time.
Once you have your first freelance client, how do you start making more money? In the second video in my freelance series, I continue my conversation with Charli Marie on the topic of:
5 Ways to Make More Money (As a Freelancer & Entrepreneur)
So, you have your first freelance client. Now what? How do you start making your freelance life fruitful? There are many ways you can start making more money as a freelancer and entrepreneur, but we’re going to focus on just five ways for now.
1. Start building a reputation
As Charli says, building up your brand and getting your voice out there allows you to be “known for your craft.” A few great mediums to make yourself known is a blog, YouTube channel, and podcast—all platforms I use to build and grow my brand and reputation. The more you put out there, the more useful and relevant content and information you share with people online, the more you’re going to look like an expert in your particular craft or skill.
2. Have a good process in place
Know your process, and know it well. A good process means that you have an organized system and way to work with your clients from the start, the middle, and the end. If your process is non-existent, it’s just a disorganized mess, the less likely your clients are going to want to continue working with you, and probably won’t recommend you to their friends.
3. Serve the clients you already have
It can be tempting to want to always go after new clients, or to land the next great client. But when you’re too focused on new clients, you’re often forgetting about the clients you are already serving. Focus on your existing clients and the ways you can improve your service to them.
4. Upsell in an authentic way
Upselling can be tricky, and in some cases has a bad reputation. But here’s how Charli does it for her freelance clients: a tier-based approach:
- Tier 1: You do the basic work to meet the client’s stated need
- Tier 2: You meet the basic needs of the client, but also provide additional value
- Tier 3: You have a solution for the stated needs of the client, but then you also offer an additional service based on your review of the client’s situation and your experience
5. Increase your prices
Most freelancers undervalue or underprice themselves when they’re first starting out. It’s an easy thing to do because you’re just doing everything you can to get your foot in the door. But it doesn’t have to be that way—especially if you have your one client. Focus on what you do and your value.
For an extended look at more ways you can make money as a freelancer, check out my video with Charli Marie below!
Now that you’ve started freelancing, what’s next?
Freelancing, THEN WHAT? Career & Biz Options for Freelancers
As a freelancer, you’ve probably felt the pull to do more in your career. It’s totally natural. And so in this final section of this post, I am going to share a few ways you can expand on your freelance career and business. (And don’t forget to watch the video below for the full deep dive into your many options—with Charli Marie and Caleb, my videographer!)
1. Freelancing can transform into a full-time job
In the video, Charli shares how she got her first full-time design job after doing some design work for a company. If you do good work for your clients, and you have a good relationship with them, that’s a potential opportunity if the client is looking for a more long-term, stable solution.
2. Your side hustle can transform into a full hustle
Caleb, my videographer, used to work at Fizzle doing video work. He loved that part of his full-time job so much that he set out doing videography as a side hustle. And that side hustle is now a full-time hustle! In the video below, Caleb shares how he prepared for that transition, and how he masterfully worked his way to a successful videography business owner.
3. If you want to scale, you have to hire people
I know this very well, as I tried to do everything myself for a while before realizing that I needed to bring in a team to free me up to do bigger and brighter things for Smart Passive Income. The same is true for Caleb’s business. He wanted to grow and push the limits, and he realized he couldn’t take that journey alone.
And if you want to hear the story of my very own first—and why I tried really hard to avoid it—then give SPI 474 a listen.
Make sure to check out the full video below for an extended conversation about career and business options for freelancers!
Before I go, make sure to also check out SPI Podcast Session 158 with my guest Brian Casel, who shares how to productize your service-based business—a great lesson for freelancers like yourself.
Brian returned in episode 314 to share how to turn your service-based business into a product, or into something that can be scaled and automated, so check that out, too. (Don’t forget to subscribe to the SPI Podcast!)
And don’t forget to subscribe to my YouTube channel for instant access to my weekly videos!
Again, you can check out the full Freelance Video Series below:
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