Business plans are not static documents. Rather, they are dynamic documents that change often. Keeping your business plan up-to-date can be a critical factor in both your ability to raise capital and your ability to execute on the opportunity at hand.

There are many parts of a business plan that need periodic updates. Sections that most commonly need to be modified include the milestones, competition, management team and financials sections.

Milestones: What milestones has your business achieved since the last version of the business plan was prepared? Showing investors that your company continues to execute on the opportunity and meet milestones is a key way to gain an investment.

Competition: Particularly in emerging markets, the competitive landscape changes rapidly. It is common for new ventures to enter the market and established companies to extend business lines into it. Updating the competitive section of the business plan is critical to letting management and investors understand the new landscape and adapt accordingly.

Management team: As companies add management team members, it is important to update the plan with their bios. A fuller management team is a positive sign to investors that the company is poised for success.

Financials: Business plan financials often have a plethora of assumptions such as customer penetration rates, prices, margins, etc. As a company begins to execute on its opportunity, it is able to replace the assumptions with real figures. Making these substitutions in the financial model is critical in understanding the cash flow needs of the venture. Misunderstanding financial needs is a key reason why some companies fail.

Strong management teams know the importance of their business plan and update their plans constantly to make sure their focus and action plan is always crystal clear. Likewise, they recognize the importance of sharing their updated plans with investors and management team members to keep everyone in synch.