Why you need a five-year plan
By Julia Keady
Perhaps one of the most well-known sayings in business is "those who fail to plan are planning to fail". Business statistics would appear to support this idea, with nine out of 10 businesses closing within 10 years. Doing business without a plan is like going sailing without a chart and compass.
A five-year plan seems to be the gold standard. It gives enough 'future focus' to inform decision making, but doesn't lock you into a business plan that cannot change and adapt with the times. Here are some solid reasons for having a five-year plan.
1. Business growth
Business growth requires concerted strategic planning and careful evaluation. Too much too quickly and you can't keep up with the workload - a sure way to see service quality suffer. Too little and you might as well be in a job with no freedom in your future. Knowing how much is enough, and planning the resources that will be needed to get there, ensures you keep an eye on the balance.
2. Transition strategies
As businesses grow, they go through different phases that require different management choices. Many businesses fail, not because they lack growth or profitability, but because their founders don't have the knowledge and skills to properly manage a larger concern. A five-year plan, in collaboration with a good business consultant, can make sure that you are growing your workforce skills and personal abilities to keep up with your sales growth. If you are not planning to 'replace' yourself in the food chain with someone better than you, you're planning for a life of increasing stress and ever-longer hours.
In business, things can change very quickly and plans can be made obsolete almost overnight. However, a business that doesn't have a plan to begin with is running on habits and processes that are ill-defined, which are very hard to change. For a well-planned business, a sudden change in economic conditions or technology is a course correction. For an unplanned business, it's a shipwreck.
Most human beings don't like too much uncertainty. It causes them stress and diminishes their confidence and effectiveness. Knowing where you are headed, having some idea of how you are getting there and having some way to measure your progress means that you can go home at night with peace of mind. You might still have to worry when things aren't going well, but not knowing how things are going means you worry all the time.
Don't become a statistic when a good business plan can set you up for a future of success and freedom. Plan to succeed.