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Statistics indicate that nearly half of all businesses fail within the first four years of operation. While some falter due to mismanagement of finances, competition drives out the rest.
A long-range plan can help you avoid these pitfalls and position your business for the long haul. Also known as the strategic plan, the long-range plan helps you establish new goals and objectives or revise existing ones. It’s a good idea to involve as many key people as possible in your goal setting.
“Long-range planning is extremely important because goals are benchmarks,” says Edward Tobiasson, executive director of the Newark Minority Business Development Center. “Some entrepreneurs have difficulty setting goals because they ask, `How can I predict what’s going to happen tomorrow?”‘ he says. “But when you are sizing up your potential market and what you hope to achieve, you have to quantify your goals.”
To put together your long-range plan, you must first assess the present state of your business. Are you operating in the black or red? Determine what impact external factors (such as shifts in industry trends and inflation) will have on your bottom line.
You can project the future growth of your business by researching financial and historical data about your industry. The Internet, local chambers of commerce and other business associations, and business publications from your local library are great sources of information about your field.
After gathering your information, prepare a written analysis of your findings. A good way to clarify and unify your goals is to solicit input from key employees in various functions (marketing and sales representatives, customer service, human resources, advertising, etc.) during brainstorming sessions.
If you don’t have a pool of workers from which to draw ideas, consult with trusted colleagues in your field.
To get the most out of these sessions, hold the meeting in a distraction-free environment, perhaps off-site at a hotel or resort. Prepare an agenda for the meeting, appoint a facilitator to oversee the discussions and have an employee record the minutes. Matters that can be discussed and agreed upon in these sessions include the strengths and weaknesses of your company and how each will impact such things as revenues, keeping pace with the competition, productivity and customer service.
A crucial part of a long-range plan involves your mission as an operation. Although mentioned in the Executive Summary (see “Putting Your Business Into Perspective,” Enterprise, October 1997), you should restate in detail the purpose of your organization in the long-range plan. Your plan should also include a detailed description of your goals or key results areas. Most companies have eight to 15 areas where they seek to achieve success and growth.
List them individually, and indicate the strategic objectives for each. For example, if your primary goal is to increase revenues, you should list this as No. 1. Below, indicate how you plan to achieve this goal (i.e., expand sales to existing customers, open new branches market new products, etc.). All your goals should be measurable and quantifiable (e.g., to increase revenues by an average