[The following is a guest post highlighting the importance of planning for the long-term within your business.]
No matter what type of business you run, or how big it is, proper planning is essential. Most businesses start with a plan, which they use to guide them through the first few months and to persuade others (usually the bank) to finance them. However, once you get into the cut and thrust of running a successful business, working what seems like every hour of the day, it is surprisingly easy to forget to update the business plan.
No matter how busy you are, or how uncertain the future seems, long term planning is a vital part of running a business. You might be able to run for a few months, or even the first year, without any formal strategy beyond your initial plan, but successful businesses always have an eye on the future and have plans for dealing with the opportunities that the future will bring.
There are several components to long term planning. You need to continue to make sure that your core business is running as efficiently as possible, and to have strategies in place to monitor aspects such as volume of sales, performance of suppliers, cash flow and customer satisfaction. However, you also need to be aware of the opportunities and threats that are on the horizon.
Whatever business you are in, the external environment is subject to continual change. Your customers may be demanding different products or services, or new competitors may arise to challenge your market share. Changes in technology may mean that you need to change your equipment, or manufacture products in a different way, or in the worst case scenario might render your range of products obsolete in the long term. Remember, though, that any change, however threatening, also brings new opportunities and proper planning helps you to make the most of those opportunities.
You also need to think about the changes that you might want to introduce yourself. Business rarely remains static, and you might want to expand the business, perhaps taking on new staff or premises. Or you might consider expanding your range of products or services, or targeting a new customer group.
A properly constructed plan helps you to bring your vision to reality by making sure that you have covered all the practical details. For instance, you will need to ensure that you review your business insurance as you expand, so that your hard work is not undermined by unforeseen eventualities. You will also need to consider how you will maintain a positive cash flow, and how you will obtain any extra finance necessary. If you are considering a bank loan, or other external finance such as a share offering, your business plan will be put under scrutiny.
If you are taking on staff for the first time, there are other things you need to consider. Tax and employers liability insurance are essential considerations, and you will also have to think about training and development, and constructing reward packages. Including these in your plan will make sure that you are not caught unawares.
In these days of cut-throat competition, business planning is not a luxury that you can do without. It is an essential part of survival, and of long term growth.