Many entrepreneurs buy businesses to sell within a short period, perhaps three years, having achieved improved performance. All business buyers should intend to sell, even if they intend first to pass it on to family members. The short version of this tale is, it is always good to have plans beyond one year.
The Jeopardy answer is “of course.” And the question is? Are there ever exceptions to this. True, some folks start or buy a business for only a short term, one year opportunity for profit, knowing that the business has no life or not one they want beyond the year. I am not talking about them.
For the many who are not splash in the plan entrepreneurs, it is best to plan beyond one year. Some goals take longer than a year to achieve. The business growth is often achieved in steps. Being prepared under demand to transition to new products and services may require planning and ensuring business flexibility as a core strength. By looking out you can adapt now. Within the plan, the owner has the opportunity to identify the right time to sell the business. Remember, in prior discussions we have talked about how having a plan is a good component to hand the prospective buyers.
In different businesses, different terminology is used. Here is one way to look at long range planning using a clothing store as the business:
Mission-Defined: The 20 year intent, purpose, including often the market covered. Example: Retail clothing to meet the changing needs of the people of the tri-county area of Mason, Dixon, and Line.
Vision-Defined: What the mission will look like in perhaps five years. Example: There will be three well-established stores, one in each county, with 30 percent of the market share of men’s, women’s, and children’s clothing. The company from an appeal perspective, the right clothing, helpful and friendly staff, and proper accessibility will be highly valued by the market. Staff will enjoy their work environment, including combined compensation plan, to create a reality of ‘best place to work.’ Financial performance will exceed industry standards for similar operations.
Strategy-Defined: The methods (note the plural here) to be implemented to achieve the mission, often over several years. Example: Open first retail store in Mason county. Follow with stores in each other county.
Goals-Defined: The specific measurable, time specific achievements (note the plural here) to be met, perhaps in a year and redefined in each subsequent year. Example: Have annual sales of $150,000 in the first store by March 31, 2011.
Objectives-Defined: The interim specific measurable, time specific achievements (note the plural here) to meet each goal along the goal timeframe. Example: Identify the store and have the lease signed by January 31, 2010.
Along the way one needs to know the market place and other external environment, how it is changing and how the plan must adapt. You are right, it can take time but without taking the time now, the owner may not have thought through carefully the future and be ready to sell the business in year three.
These various goals and objectives can flow right into the annual plan. One can see from this simple example how the mission sets the course, the vision sets the reality expected, and the various strategies, supported by goals and then objectives can help an owner prepare.
Then follow the process of implementation and correction: Plan, Do, Check. Know there will be change required along the way.
Follow this link to more information and support for the need for long range planning: http://www.business.com/directory/management/strategic_planning/business_development/long-term_planning/
Perhaps you have an example of where it has worked or times when you wish you had implemented such a plan.