Ever wonder what large companies do to drive alignment? If you have never worked within a large organization, you might not know how important strategic planning is to align the different organizational functions and leaders. Most Fortune 500 companies go through an annual budgeting and planning process where they map out financial investments, key initiatives, and strategic objectives for the next 3 to 5 years. There is wisdom in this process. The more time you take to determine where your business is going and the key steps you need to take to succeed, the more confidently and quickly you can make day-to-day decisions.
One of the more widely used systems for strategic planning is the balanced scorecard. The balanced scorecard introduced in 1992 by Robert Kaplan and David Norton encourages businesses to identify goals from a financial, internal business process, customer, and learning perspective. By establishing business goals from different perspectives, you can create a well-rounded approach to improving your business. This will help you to not focus too much on one area of your business while neglecting others.
Why having a 5-year plan is essential:
Your business does not have unlimited resources. How you spend your money, time, and resources today will determine your business capabilities and profits tomorrow. Business authors like Jim Collins and Patrick Lencioni have documented the risk of business leaders not allocating sufficient time for planning. The adage, measure twice, cut once is especially true in business. Defining where you want to be in 5 years will increase your likelihood of reaching your goal.
How to build a 5-year plan:
Consider the impact that you want your business to make. What kind of legacy do you want to leave behind? What problems are you trying to solve for your customers? Answering these questions will help you to clarify what milestones you will need to accomplish over the next 5 years to achieve your goals.
Consider what people, resources, systems, and processes you need to reach your goals. Do you have the right team in place? Do you have the right technology? Do you have the right processes in place to support your growth? If not, what steps do you want to take to improve the infrastructure of your business? The organization you have today does not have to be the same as the one you have tomorrow. Being intentional about the changes you want to make will help you build for a better tomorrow.
Set financial targets and define the revenue streams that will help you achieve those targets. How much revenue do you need to generate to reach your goals? What investments will you need to make to create more revenue? One of the hardest things for many business owners is accepting that financial progress is not a straight line. Frequently, you must invest in the short term to make more money in the long term. Being clear on your long-term goals will help you find the clarity necessary to invest in the people and capital you need today to reach your financial goals tomorrow.
Who should you include in this plan?
When you are developing long-term plans, it is prudent to get input from multiple perspectives. As the leader, you are the ultimate decision maker, but talking with your CPA, Business Coach, Lawyer, Mentors, Employees, Vendors, and even Customers can help you to make a more informed decision about the future of your business. The stakes are high; apply rigor to your thinking. You will never be able to anticipate every potential obstacle or future need of your business. Still, by talking to various people, you are more likely to come up with goals and plans that are specific, measurable, actionable, realistic, and time-bound.
What should your plan look like?
That is up to you. Many options will arise if you Google images and ask for a 5-year plan. Pick the one that works best for you. The most important aspect of this is the process, not the visual output. The time you take to think about where you want to be in 5 years, and the conversation you have with others will help you find more clarity in what you want to accomplish. I have posted the typical balance scorecard I build with my clients. If you are interested, you can download the template and use it.
When should you update this plan?
Update your plan annually. Your long-term goals will change based on your short-term successes and learning. Re-evaluating long-term goals each year will help you to stay focused and refine your thinking.
Summary:
Building a 5-year plan is a best practice to help small business owners clarify their goals and lead more confidently. When you set out on a journey, having a clear vision of where you are going can help you prepare appropriately. The time you spend
Defining your financial goals
Identifying your ideal customer and how you will serve them
Designing efficient and effective processes
Crafting people selection, and development strategies
will help you to have a blueprint for achieving your long-term goals.
Thank you for reading this blog
I am a father, husband, executive coach, and former retail executive. My coaching expertise comes from 21 years of leading operation, sales, and marketing teams. I understand what it is like to feel stuck, undervalued, and underappreciated.
I also know what it takes to invest in professional development, climb the corporate ladder, and find fulfillment at work.
Your career path is a scavenger hunt. Each opportunity prepares you for the next. Allow me the opportunity to help you clarify your path and accelerate your professional development.
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