Chapter 2 -
When to write a business plan

There’s no conventional wisdom on when you need a business plan or when you need to rewrite one. Certainly a major expansion, new line of business, acquisition of a competitor or some other business change that requires significant new capital should prompt you to review your business plan and probably to modify or rewrite it. If, for example, your largest shipper comes to you tomorrow and says he needs you to double the capacity you provide it within six months, you have an urgent need for a business plan.

If you don’t have a business plan at all, that’s certainly a strong hint that you need to write one — even if it merely summarizes what you are doing rather than what you plan to do. You never know when opportunity will knock, and you don’t want to tell a prospective lender or customer that you don’t have a business plan.

You probably have the business plan you prepared when you either acquired your fleet, built a new terminal or started expanding from one or two trucks to a dozen or so. If you are a second- or third-generation owner, it’s quite possible that you aren’t even the author of your company’s business plan. That alone should tell you that you need a new business plan. A business plan drafted according to someone else’s goals and strategies is just as bad as none at all.

Suppose you prepared a business plan several years ago. Is it time to rewrite it? There is no universal answer. Some experts recommend a five-year business plan; others suggest three years. Some companies prepare them annually. Lenders may even ask that you prepare a business plan at a particular interval.

For trucking companies, basing your business plan writing on a size threshold may be more appropriate than on time elapsed. A retail outlet for consumer goods, for example, must reassess its marketing plans constantly to stay on top of changes in consumer tastes, buying patterns, and openings and closings of competitors. But your market may not change so rapidly, and your business may be stable from one year to the next.

It may be useful, therefore, to set an arbitrary “trigger” for rethinking your business plan. It could be a number of drivers or power units or an annual revenue level. The idea is to pick a threshold below which you are comfortable that your current management team can control the operation smoothly and that your financial health isn’t threatened. Beyond that number, however, you would be nervous and uncertain. If you are your company’s lone executive, you might want to set the trigger at the size at which you would need to hire managers and delegate authority.

Numerous events could trigger the need to review your plan. Anything that could change your operation — loss of a major customer, opportunity to land a major new customer, failure of or the chance to buy out a competitor, opportunity to branch into warehousing or logistics — should cause you to stop and think. And if you anticipate the need for capital, you’ll definitely need to update your plan.
If this sounds like a lot of work, relax. In most cases, you are just tweaking your plan to reflect the impact of a change or opportunity on your personnel needs, finances and standing in the marketplace.

In Summary
There’s no standard time frame that your business plan should cover. If a period of time seems too irrelevant, consider selecting a fleet size or payroll number to trigger your review. And expect to revise your plan anytime you need help from your banker.