This is the third in a series of blog posts on how to grow your business, covering various topics in order to help you get the most out of your small business. This week, we will be focusing on the importance of planning far ahead.
Why worry about the distant future?
Long-term plans tend to promote the fastest growth. A trap that many small businesses tend to fall into is focusing solely on yearly profit and working to improve that. Focusing on the short-term profits will still promote business growth, but at a much slower rate than if you were actively working towards a long-term objective. Similarly, it can be easy to think your business is failing if your net profit is down from last year, but being able to step back and assess whether you’re still on track for your goal in five years’ time will keep you going through the tough times.
What to aim for
There is no set plan for how fast a business should grow, as each one is different. Therefore, when creating a long-term plan, it should be tailored to your business, setting out goals and realistic times to achieve them. A long-term plan could be as little as two years in the future if you are working in a volatile market such as fashion, or as many as ten if you intend to bring something new into the market.
It’s a good idea to stop once in a while and imagine yourself as a customer approaching your business 5 years later. What will it look like? How big will it be? Once you have an idea of where you want to be, you can start setting out goals in order to reach that target and then begin to get an idea of the time frame needed to make it happen. Make sure that you convert your goals into numbers, such as projected revenue in 5 years’ time, or the minimum number of branches open. Solid targets are easier to work towards than vague concepts, and it allows you to track your progress as well.
While it helps to have numerical targets, some of the most common long-term goals focus on the environment and culture within the company, such as promoting innovation and establishing a culture that thrives on hard work. Others focus on reducing carbon footprint or creating a workplace that your employees can feel more comfortable in. A plan should focus around what you as an entrepreneur want, whatever that may be.
Above all don’t think your plan will stay the same, because the market won’t. It’s vital to adapt and re-evaluate from time to time, to keep your goals relevant and achievable.
As a small business, you cannot afford to waste your staff. When creating a long-term plan, it’s essential to ensure that everyone is in agreement with what you’re aiming for and what needs to be done. If there are disagreements, then discuss them rather than ignoring them; often they will be valid concerns that can add to your plan instead of detracting from it. Be open to suggestions – you have some great minds at your disposal, so use them.
What do common long-term strategies look like?
Long-term strategies are not always as complicated as you might think. A good plan is organised into stages, each with their own tasks. The highest tasks are the original aims; for example, this could be to double the company value within 4 years. Accompanying this are the tasks needed to achieve that goal, such as investing in more warehouse storage. To raise the funds for warehouse storage, you may have to increase your revenue in the short-term by advertising your services. For each task, you should estimate how long you think it should take and when you want to complete it by, converted into numbers that you can set as short-term goals. This way your initial goal changes from seemingly unapproachable to perfectly achievable and gives you a tangible guide to getting there.
These plans tend to look five years or more into the future, so do not be disheartened by the amount that needs to be done to achieve a goal: business growth is slow by nature, and planning around it will inevitably need more time than you think.
Business growth advice from Tax Agility
At Tax Agility, we know what it takes to get a small business off the ground. Our team of specialist London accountants have watched clients take their success ever higher, and been with them every step of the way. If you want advice on how to grow your business, call the business growth specialists Tax Agility at 020 8108 0090 or use our Online Enquiry Form.