This is the fourth part in my series The 5 Biggest Battles for Small Business.? Read Part 1 here.? Read Part 2 here. Read Part 3 here. Read Part 4 here.
Most businesses have no clue as to what they will be doing in 5 years as far as numbers are concerned.
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Most small business owners sigh at the very fact if you ask them would they still be selling the same product or service 5 years down the line? Do they have a plan on how to increase their sales, or how to grow and expand?
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Maybe they want change their market or product, bring in a strategic partner, or even to cash out.
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Business owners can be myopic when it comes to what their true business goals would be 1, 3 or 5 years down the line, rather they simply try to extrapolate their current conditions .
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This would bode well if they are making money. In just as many cases, extrapolate 5 years ahead and they would be in serious debt, if not out-of-business. Small business owners simply do not put much attention &/or effort to strategic planning.
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Long-term business planning is done in recognition of the fact that reaching some of the company?s goals can require an effort undertaken over a number of years, with many steps that must be completed along the way. In contrast, the company?s annual plan is focused on how to allocate the company?s financial and human resources only for the next year. The annual plan has much more detailed financial projections than the long-term plan, which is more of a statement of general strategic direction.
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If you have never attempted this before, the following steps should give you a useful starting point.
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Step 1? ? Define what long-term means for your organization. Industrial technology companies may need to do a long-term plan that spans five to seven years because of the complex development steps involved in bringing new technologies to a marketable stage. For a clothing designer, a three-year look into the future may be as long as is feasible because fashion trends change so quickly. Choose a time frame that represents the time required to take your company to the next level of success.
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Step 2 ? Develop a system for identifying new opportunities. Take a systematic approach to gathering data about trends in your industry or trends in other industries you may want to enter over the long term. Document the process and make it ongoing.
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Step 3 ? Develop your vision. Look five years in the future as though you are visiting your company. What does it look like, how large it has become in terms of generating revenues, how many people now work at the company, how has the scope of its product line has changed and how it has expanded geographically.
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Step 4 ? Draft long-term objectives. Convert your vision into numbers, such as what revenues are projected to be five years from now. A hotel company would have a long-term objective for the number of properties it will own or manage five years down the road. Think of them as strategic pillars for your company?s long-term future.
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Step 5 ? Qualify the long-term opportunities to concentrate on based on your data gathering and your long-term vision. Decide on the new markets you want to explore, and the new products or services you want to develop. These opportunities are your long-term projects. Allocate responsibility for moving each project forward to members of your team.
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Step 6 ? Create action plans for each of the projects. Work out what needs to be accomplished each year, month, week and day on each of the projects over the time horizon of the long-term plan.? Use 90 day goals to keep yourself on track.
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A big part of the work that your accountant should do with you is to help you to identify, quantify, qualify, resource and achieve your longer term business objectives.? We certainly do, and we would love to help you to get out of your business more than what you have put into it.? Give us a call, and start making things happen
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For more information checkout our information articles and our Ebook ? Creating a sharper business.
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