Short-, Medium-, and Long-Term Planning
He who fails to plan is planning to fail.
—Winston Churchill
It is often said that “proper planning prevents poor performance.” This is certainly true in business and is probably true in life as well!
Starting, running, and expanding your own business can be a mixture of exciting, daunting, and challenging. There are numerous areas to think about and manage, some of which may be completely new territory. This is where planning comes in very useful. Not only will this break down what you are trying to achieve, but it will also give vital structure to work to and milestones to measure progress. There is a price for nonexistent or poor planning. This can be wasted time, missed deadline, and wasted effort as well as financial costs, such as losing control of budgets. Having a clear and robust planning process will undoubtedly be a big help and give your business a solid structure to work to.
Business planning will outline all of the strategies and actions you will take to ensure your business is prosperous, survives, and has a sound foundation for future growth and beyond. Good planning will lead to good management of each of the areas of your business.
Every new business needs a business plan. This acts as a blueprint of how you will start and develop your new business, backed up by detailed and high-quality research. A business plan is a vital document in so many ways and isn’t something just to create and then put away and never look at again. As previously mentioned, this is a document that you will refer back to as your business develops and grows. It will certainly be needed if you wish to attract external investment, as any investor will be highly unlikely to invest without (among other things) a solid, well-thought-out, business plan, showing how you see your business progressing and delivering in the future.
Planning is a big part of the ongoing process, from the start-up phase through to day-to-day operations and planning for expansion. This will encompass all of the planning needed to run a successful business as well as scoping out the competition and how your business will fit into the market and industry. The process of reviewing progress should be done at regular intervals in addition to setting new goals as current goals are achieved.
There are three key steps that can be used to help with the general business planning process:
1. Create a plan. This is where the business owner can start, by establishing and recording key details. Being clear and concise is key here, but ultimately it needs to have substance as well. This means you can refer back to it as the business takes shape and you can compare the plan to the actual results that have been delivered as time goes by. This can also be useful to communicate your plan and vision with any of your business’ various stakeholders and employees.
2. Define what success looks like. It is important to be specific when defining success. This would be areas such as sales targets, income, costs, conversions, and page clicks on your website and social media platforms. You also need a plan to review progress, again being honest and specific, where you can track results and make changes where necessary. Either way, whether results are as expected, better than expected, or worse than expected, going through this process makes follow up and any action you need to take, a lot more timely and straightforward.
3. Put the plan into motion. As you deliver your business plan and review and update targets, you will be in a much better position to analyze the deliverables and the work that sits behind the numbers. This in turn means you will be in a better position to work out what is working and what is not working for you, your business, and your team.
This can be a daunting process at any stage of running your own business, but particularly if the business and entrepreneurial world is a completely new concept. So, it can help to break your plan into smaller more manageable stages. Entrepreneurs, at all stages of the business journey, can find this a helpful process by developing plans and then breaking them down into phases. The different time frames of the planning process place particular focus of the time-sensitive aspects of the business plans.
The way this would be broken down by most businesses is planning for the short, medium, and long term. Short-term plans would usually cover areas that could be achieved in a year, medium-term plan would cover areas that can be achieved in several years, and long-term plans would mean five years or more and are usually based on reaching medium-term targets. Doing your planning with this structure means you can focus on short-term plans with the long-term plans very much in mind.
Short-Term Planning
This looks at all features of the business in the present and the short term and sets objectives for improving them, for example, product quality issues or employee training. To address and resolve issues like these, short-term solutions can be put in place and in turn can also be a foundation for longer term solutions.
Short-term plans are geared toward things such as improving cash flow and launching a new product. Whatever the short-term goals are, make sure they serve the long-term plans. So, a new product launch should be consistent with the overall brand and in line with the product range you plan to build over time. Any strategy to improve cash flow should bring in additional revenue, but in such a way that does not detract from your long-term goals (e.g., not improving cash flow at the cost of cutting corners which can affect product quality).
Medium-Term Planning
This tends to be covering a time period of 18 months to 3 to 5 years. This applies more permanent solutions to short-term issues. Medium-term planning is there to introduce and implement procedures that ensure short-term problems don’t reoccur in the future. This area is sometimes overlooked in the planning process, but is important, as it brings together the short-term plans with the depth of long-term plans.
Medium-term plans could include opening a new shop or office or entering a new market. Medium-term planning is a long enough time period to see if you are achieving the optimum results, but it is also short enough to amend or change direction if the initial strategy is not working.
Long-Term Planning
In the long term, which tends to be five years plus, businesses aim to solve problems permanently and achieve their overall objectives. Long-term planning looks at major capital expenses, implementing major policies and procedures, and develops strategies for adapting the business’s position to achieve its long-term objectives. When short- and medium-term planning is successful, long-term planning looks to build on those successes and ensure that progress continues. Long-term plans would have the business mission statement as a guideline. Long-term goals need to be monitored and, in some cases, adjusted accordingly and have periodic benchmarks and milestones so progress can be continually evaluated.
Long-term goals could be to open a certain number of new premises over a set number of years. The difficulty can come with changing or volatile market conditions, making it harder to predict how the market will be over a longer time period. So long-term objectives may need to be less specific and encompassed by a larger vision. So rather than opening a set number of new premises, it could be encompassed by a vision to supply your product to specific regions. Long-term planning has to be taken seriously but may need reviewing and adjusting as the medium-term develops.
Having a clear business plan for the various time scales undoubtedly has many advantages. It gives an overview of the whole business, sets focus and priorities, allows for and encourages accountability, and sets key milestones and metrics. This is a template to refer back to and gives a structure to everything the business is looking to achieve. A worthwhile and valuable exercise that can set your business on the right track from the very beginning and gives the best possible chance to build a solid foundation for longevity and to allow for well-informed, high-quality plans for growth and expansion.
Planning without action is futile, action without planning is fatal.
—Cornelius Fichtner