YOUR 5 YEAR BUSINESS PLAN
Business plans are a funny old thing. They can be long or short, used to pitch for investment or to secure a loan from the bank. Everyone has a different opinion on their importance and will give different reasons to support their argument. We’ve discussed previously why you might need a business plan in the first place, what we’d like to cover today is why it’s important to have a long-range plan in place and what steps you can take to get it done.
What exactly do we mean by a long-range business plan?
Most business plans tend to be great when it comes to vision, values and short-term strategy. However when it comes to long-term strategy and goals they can get a little airy-fairy with talk about ‘growth’ and ‘market domination’ without any real metrics around what this might look like. Further, they tend to be missing on the all important exit plans for the owner leaving the reader thinking “and then what happens?”
A good long-range business plan should, as the blog title suggests, stretch out to 5 years (unless of course you plan on exiting earlier than that!). In our experience 5 years is a good length of time because it feels distant enough that you could achieve quite a lot with your business, but not so far away that you lose interest in the goals.
This long-range plan doesn’t need to be long and detailed, but it does need to consider where you want the business and yourself personally (as the owner) to be in the coming years. Define what success looks like to you and get others involved to hold yourself accountable. A goal written down and hidden away in a drawer isn’t one that’s going to be achieved in a hurry.
Why bother? Seems like a hassle.
There are a few really good reasons for getting your long-range plans for the business in writing and these include:
- The process is a real eye-opener. Even if you don’t end up writing anything down, or agreeing on point one with your business partner, the simple process of sitting down to run through where you’re taking this business can be really interesting. It can shine a light on underlying issues with co-owners as well as bigger picture issues with the business itself. Approach the process with an open mind and you should get a lot out of it.
- Articulating what success looks like for your venture – surely you didn’t start the business with the goal of ‘plodding along’? Write it down so you know when you’ve achieved what you set out to achieve. If you’re successful you’ll likely keep pushing the goals higher and bigger, and that’s great, but without committing to it first you won’t know what it is you’re aiming for.
- Knowing how you’ll get out. Running a business is an amazing experience, but it’s also stressful and can be all-encompassing. You’re going to want to get out at some point and you’ll want that to be on your terms so it pays to be prepared for the exit. Too often business owners have to sell for less than they could have received because of something outside of their control like an illness, dispute with a partner, marriage breakdown, random offer, etc.
Okay, sounds great. What do I do?
A great long-range plan doesn’t need to be lengthy, but it does need to:
- Be well thought out
- Have buy-in from key stakeholders (e.g. management team, the owners)
- Be written down
- Articulate clearly what the long-term goals are (where do you want to be at 3 years? At 5 years?)
- Describe the broad strategies you’ll employ to achieve those goals
- Decide on when/how you’ll exit the business
On that last point, even if you don’t want to exit or think you’ll ever want to exit, do yourself a favour and plan for it anyway. As discussed above, often businesses are sold not because the owner wants to, but because they have to. For this reason it makes sense to have your business sale-ready at all times (or be aiming for it) so that if something comes up and you’ve got to sell, you’re not short-changed.
Finally, it’s a great idea to have someone external to the business involved to help keep you accountable to your long-term business goals and plans. This could be a business coach or an advisory board or it might just be a close friend or associate that you know will keep you honest. Whomever you choose, get them involved in the process and book them in for future meetings over the coming years. Having someone to answer to really does help achieve great things when it comes to your business.
If you’ve got issues in your business you don’t seem to be able to get on top of, why not get in touch? Not only do we provide a full suite of bookkeeping and tax services here at Generate, but we’re also able to help with business coaching, strategy workshops, business plans and much more. You name the problem and I’m sure we can help.