You build a business for the long haul, so it is vital to have a long-term plan that extends five years into the future.
Broadly speaking, all business plans can be categorised into short-term, mid-term and long-term.
Short-term plans focus on immediate concerns and opportunities. For example, you may run a clearance sale to reduce excess stock in a given quarter.
Mid-term plans look at solutions to address both short to mid-term challenges. For example, if fraud is an ever-increasing threat to your business, you are likely to establish stringent internal control, invest in staff training and prevention tools as part of the continued efforts to keep your company safe.
Long-term planning for small businesses, on the other hand, looks at the business strategically and your ambitions for the business. The plans can range from what value you want the company to worth after five years, how the business can be diversified, to who is going to take over and run the company in the future.
In this article, our small business accountants in London look at a few long-term plans that can benefit small business owners and their companies.
Business growth planning
Every business exists to make money, but how much you want to grow and how you can achieve the target set largely depend on what long-term plans you have to fuel that growth.
There are several ways to grow a business, including:
- Raise more capital – you borrow money to boost resources, leading to an increase in production or offer more services to your customers.
- Sell online and internationally – the concept here is to grow by selling more products/services to people without the constraint of physical boundaries. For example, you turn your website into a shopfront and run campaign that reaches a large pool of international customers.
- Franchise – you become a franchisor, attracting franchisees to sell your products or services throughout the country or even internationally.
- Innovate – you improve or create a new product or service, or you find a new way of integrating technology to disrupt the market.
- Merger and acquisition – you merge with or acquire another business.
One of the tools that small business owners use to identify growth opportunities is through the use of management accounts, which should be sent by your accountants to you every month. If you’d like help with management accounts, like how you can use the data to your advantage, contact our small business accountants on 020 8108 0090.
Business skills planning
Considering that the business landscape is regularly shaped by global events and new consumer trends are being developed over time, many small business owners know that they can’t afford to stay complacent. Accordingly, they need a strategy to respond, transform, innovate or even to reinvent themselves.
Implementing any strategy that can put your business ahead of the game is likely to require solid business skills planning. This process starts with developing a clear vision of what the business needs to thrive in the future, before identifying the skills that are required to achieve that.
Subsequently, you can choose to develop the new skills or capabilities in house, acquire through new talent or partner with another company which have the skills that you lack.
Long-term debt planning
If you look to grow your business rapidly, chances are you need extra capital from a bank or a group of investors. If it involves a bank loan secured against an asset, it is called debt financing. In this case, it is vital to know to plan and see how your business can generate extra income to pay off the debt.
If it involves investors, they may offer debt financing or equity financing. Equity financing means investors ask for a percentage of ownership in exchange for the money your company requires.
Talk to our small business accountants based in London, Putney and Richmond-upon-Thames if you are considering extra capital. We can help to make sure your company accounts are accurate, something that the bank or investors will look to scrutinise before lending you money.
You may also like to read this article Small Business: How to attract investors in which we share good tips.
Knowing that everyone retires at some point, smart small business owners would kick-start a succession plan once the business has achieved financial stability. This is because a succession plan can help to ensure that the company you’ve taken years to build will continue to operate with minimum disruption should something happen to you.
More importantly, it takes years to prepare and train potential successors – some of them may even choose to leave halfway through the training.
If you have no intention to find a successor, then a good alternative is to sell your business. The best time to sell your business is when the sales and profits are strong – ironically, this is also the period when most small business owners find it hard to let go. Having a plan, however, may help you to detach yourself as it is now your goal is to sell when the time comes.
Other types of long-term planning
Not all long-term goals focus on profitability or exit strategy. Some highly refreshing long-term goals focus on the environment like how to create a workplace that has little or no carbon footprint. It may also focus on the company culture, such as fostering a culture that promotes trust and honesty.
5 long-term planning tips
Long-term planning is undoubtedly beneficial but not every small business owner is ready to embrace it. One of the reasons, we have found from talking to seasoned entrepreneurs, is that some people find the prospect daunting. Also, long-term planning may not work for certain industries who need to adapt very quickly to changing consumer trends.
But if you are keen to give long-term planning a go, you may find the following five tips help the process.
1. Organise into stages
One of the ways to make long-term strategies less daunting is to break them into stages, with each stage having its own mini goal(s) and detailing tasks needed to achieve the said goal(s). Having a timeframe for each task and who should be responsible for it are also vital.
2. Involve everyone when necessary
If the long-term plan is about where the company is heading in five years’ time, then it makes sense to involve every team member. Hear their concerns, discuss any disagreements, use feedback to fine-tune your plan.
3. Acknowledge the unknown
You can plan but you can’t accurately predict the future. Both good and bad things may happen to your business along the way – like nature may throw you a curveball, the rise of the middle class in developing countries may create tremendous opportunities for you, market may swing to a territory that is at odds with your plan at a certain point, to name but a few. This is why it is essential to make use of the scenario planning technique when you are creating long-term plans.
4. Review and fine-tune
A good plan isn’t carved in stone nor sits on the shelf collecting dust. A good plan is regularly reviewed and fine-tuned to make sure that you are adapting. Quite a few small business owners find this part challenging as they juggle with an endless list of tasks daily. The key, of course, is to delegate and engage at the right level.
5. Stay positive
As a leader, you already know that things don’t always go your way. Learning to accept setbacks and focusing on finding solutions will strengthen your leadership skill. So stay positive by keeping your eyes on the ultimate goal.
Small business owners trust Tax Agility
Running a small business takes courage and determination. Successful small business owners also know they need an honest partner like Tax Agility who can work cohesively with them and help to take the business to the next level.
Our services to small businesses in London, Putney and Richmond-upon-Thames include:
Management consultancy is an area often overlooked and must be given airtime here. In essence, it is about helping small business owners like you to unlock business potential based on financial data, accurate budget and forecasts.
At Tax Agility, our small business accountants are also experienced management consultants. We seek to understand your business and your aspirations first. After getting a good grip on your business, we strive to deliver the following three key benefits to your business:
- How you can reign in financial control by having accurate data
- How you can make informed decisions that spur growth
- How the numbers can help you to review, measure and optimise
If the benefits listed above are what you are looking for, then it is time to give our ICAEW Chartered Accountants a call on 020 8108 0090.
Alternatively, you can use the contact us form to get in touch.