Why It’s Never Too Early to Have a Long Term Plan
“The best way to predict the future is to create it!” Peter Drucker’s perspective is applicable whether you are making plans for life or for business. Through a series of short- and long-term goals, you will create a framework that leads to success.
Having a long term plan, 3-5 years at a time, is a sound approach to keeping you and your team focused, assemble common sense and measurable objectives and basis to establish an accountability process for achieving these plans. But, before you run off and start planning, let’s answer a couple of foundational question.
A Proactive Approach
First, begin with “why” your business should exist. What is your “vision” for the future? Are you looking to build a long-term value-add asset, or simply providing yourself with a means to earn a living? Realize early on that your business has lasting value and therefore marketable value only when it can become self-sustaining. This vision statement also gives your employees a focus and reason for doing what they do, when they understand WHY you are in business.
Next, develop a simple mission statement. How are you going to achieve your vision and what is important to you. Think about a few simple questions, such as:
- What does your company do for its customers? And why should they care?
- What does your company do for its employees? And why should they be engaged?
- What do you want from your business?
Armed with a purpose and what you want to achieve will make the long term planning process all the easier. Paint a picture in your mind of what a successful future looks like, then develop your long term goals or objectives.
Classifying Long-Term Initiatives
The majority of long-term goals can be classified into four groups:
- Social Goals – Giving back to the community through charitable or volunteer organizations, developing community awareness of your firm and how it fits.
- Service Goals – Customer service, responsiveness, retention, fiduciary, and other.
- Profit Goals – Profitability targets, timeframe for achievement, absolute (meaning fixed dollars) and relative (margins).
- Growth Goals – How and when you will grow your company? When will you need to cultivate financing, key employees and markets?
Once the objectives have been set, you will need to develop strategies, priorities and activities with target dates and investment requirements to implement your plan. This plan is only the beginning of the process, as a forward-thinker you will frequently revisit these goals and plans to be sure they reflect what you have learned about your customers’ needs, market conditions and your financial capabilities.
If there is anything definite about plans, it’s that they will need to change, adapt to an ever changing world. And if you are a privately held business you need to incorporate your long-term business plans with long-term life plans. As you achieve increasing levels of financial independence, draw closer to retirement, or simply look to achieve other things in life, you may find yourself pondering different scenarios:
- How will I ever harvest the value of my business so I can pursue my other life interests?
- How can I step back from the day-to-day grind of running my business, but still benefit from its financial success?
- What will happen to my family if suddenly I am not here to run my business?
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These are all very significant questions and the answers are part of your long-term goals. Succession planning is an essential part of readying your business for the future. Without it, you place everything you have worked to build and your family at risk.
Leaving A Legacy
Succession planning should start at the outset. Is your desire to build a family business? How about a sustainable one, managed by “professional” managers, or maybe one that develops a new product or market segment that can be sold to a larger organization. Whatever the objective, you will need to embed in your planning a process to attract, recruit and develop employees or family members to fill key roles within the organization. This is generally done in five steps:
- Identify critical positions – What are the key functions essential to your company’s success? What roles are essential to maintaining and growing the business?
- Determine competencies – What knowledge, skills, training or capabilities are required to fill these positions?
- Develop succession strategies – Infuse your vision from the start, identify key high performance players and test them with challenging assignments and positions.
- Document and implement a plan – Develop your human capital plan, set your expectations for your key players, including target dates, roles, and responsibilities. Mentor your key players and provide continuous feedback.
- Evaluate effectiveness – Be brutally honest with yourself, adjust your roster until you have the right team.
It is impossible to anticipate or control all things. However, being prepared with a succession plan for all key positions puts your company in a more effective position as it experiences growth, looks to promote key players or absorb the their loss, Consider it another form of insurance that will give you added peace of mind knowing your family and your employees will be looked after as your business continues to flourish. In Elton Trueblood’s view, “It takes a noble man to plant a seed for a tree that will someday give shade to those he may never meet.”