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Long-range Planning: A Complete Guide To Everything You Need To Know
While most organizations understand the need to plan for the future, many don't take concrete steps to identify where they want their business to go and even fewer have long-range plans. The gap between present realities and long-range strategic planning means many organizations meander along, never really achieving their full potential.
Long-range planning is an effective way of aligning the organization's activities with a strategic plan and helping preempt those situations that could threaten its business model and success.
What Is Long-Range Planning?
Long-range planning can be defined as the processes used to implement an organization's strategic plan. It's about aligning the business' long-term goals and developing action plans in line with the strategic plan.
Depending upon the type of business, the time scale for long-range plans can vary from three years through to one or two decades. This is particularly the case for organizations such as utilities, large-scale high-tech manufacturers, chemical plants and research companies where the time and costs associated with investments is such that plants take years to build and returns are measured over long periods.
Short-term planning deals with the here and now. Medium-term plans address actions intended to permanently resolve short-term issues. Long-range planning is about changing the direction of the organization to meet its long-term goals and insulate it from the upheavals that periodically affect the economy.
The History of Long-Range Planning
During the 1950s and 1960s, the economy was stable and growing. Organizations experienced substantial growth, and planners started using numerical theory to extrapolate growth predictions. However, the landscape changed in the ‘70s, and the economy suffered an upheaval due to the US's inability to maintain the gold standard. Static long-range strategies of the time could not cope with these upheavals, and many but not all businesses abandoned long-term planning for some time.
Subsequently, a number of events caused further economic instability, including the 1973 oil crisis, the 2008 housing bubble and banking crisis, and more recently, the impact of trade wars . Despite this, savvy organizations adopted long-range planning strategies intended to cushion the business from unpredictable upheaval through techniques, such as the SWOT analysis (Strengths, Weaknesses, Opportunities and Threats), and planned accordingly.
The Relationship Between Strategic Planning and the Long-Range Plan
Strategic planning is a structured process, usually carried out by the executive, which determines long-term organizational goals. During this process, executives analyze the organization's current business and determine though various processes a strategic view of what they believe the organization should become.
The final strategic plan will usually consist of a number of statements and goals of what the organization should focus on, how they believe it should look, what markets they should be in and anticipated financial performance.
None of those goals are directly actionable, and this is where the long-range plan comes in, as it contains the steps and actions needed to achieve strategic plan goals.
Avoiding Confusion Between Long-Range, Tactical, Operation and Short-Term Planning
There are many different planning terms in use, and a degree of confusion is almost inevitable. Depending on the author, specific terms mean different things, and, in many instances, definitions are used interchangeably.
In this blog, the long-range planning definition refers to those longer-term actions necessary to implement long-range strategic planning. These actions usually have a time horizon of more than three years. The focus of tactical planning is the short-term or, at most, the medium-term. Plans are funded by the current budget and intended to help the organization achieve its short- and medium-term goals, which will also include immediate actions intended to align the organization with its strategic plan. In this context, tactical planning and operation planning have much in common.
Characteristics of Long-Range Planning
If not already stated in the strategic plan, a long-range plan should start with a statement of the organization's mission and vision. The mission statement defines the reason the business exists, such as to become a leading manufacturer of high-quality consumer goods. The vision statement is more specific in that it defines time horizons, anticipated sales volumes, profitability and other specific measurable targets.
A key purpose of the long-range plan is to avoid random, non-specific growth and focus the organization’s skills toward those areas where it excels, such as making high-quality consumer goods. It's this process that often guides an organization to sell off non-core activities that distract from the overall goal of the organization. So, typically, the long-range plan will focus on identifying the organization's key strengths and what it's good at with specific plans to grow the business in that direction.
Techniques for Focusing Long-Range Thinking
Most companies are good at short-term planning and often have excellent strategic plans but fail in the implementation. According to an article in the Harvard Business Review on long-term success , it's because they don't adequately focus on how to bring those new ideas and technologies onboard. Here are four techniques that help focus long-range thinking.
Forecasting
Long-range planning activities and goals need to be specific. Actions should be deliberate and focused, not rough cut or vague. At the same time, they need to recognize the realties and vagaries of business life. The environment will change and plans should not be immutable, but amended as and when necessary.
Handle uncertainty and unexpected change
The planning process should take into account risk and structural uncertainties. There are certain events that are simply unknowable, until they happen. To the extent that's it possible, plans should be flexible and robust enough to handle risk. Take small bites and don't expose your organization to unnecessary risk. Use sophisticated analytics to determine the most appropriate business decisions to achieve your strategic goals.
Understand whether specific goals and targets are realistic
Set targets that are feasible and realistic. Don't be tempted to follow your gut by making grandiose plans which can never succeed. Test all decisions using decision support software, such as prescriptive analytics, that allows you to model how your business works.
Optimize long-range planning practices
It's important to think holistically, ensure you have adequate decision support software and have integrated your long-range planning with your budgeting process to avoid conflict and unrealistic goals.
Examples of Long-Range Planning
While many businesses are wary of long-range planning, others embrace it. Ferrari went from being a joke in Formula 1 to becoming its undisputed leader through implementing a bold and ambitious long-range plan. Companies such as BASF, VW and Nestle adopted 10-year and longer strategies and outperformed many of their industrial peers. Others used sophisticated optimization techniques to determine future plant investment strategies, while a large UK water utility, Yorkshire Water Services, used prescriptive analytics to develop a long-term risk model.
Long-Range Planning: Bridging the Gap Between the Present and the Future
Long-range planning is key to bridging the gap between where your organization is and where you want it to go. Starting with strategic planning, it's an effective technique for designing and implementing effective plans to take the organization down the road to the future.
While many companies are hesitant about long-range planning, thanks to ongoing economic disruption, others have discovered that a systematic approach supported by sophisticated analytics works. This allows them to understand and balance risk, and identify the best decisions to take them toward their strategic goals.
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Strategic Planning
The art of formulating business strategies, implementing them, and evaluating their impact based on organizational objectives
What is Strategic Planning?
Strategic planning is the art of creating specific business strategies, implementing them, and evaluating the results of executing the plan, in regard to a company’s overall long-term goals or desires. It is a concept that focuses on integrating various departments (such as accounting and finance, marketing, and human resources) within a company to accomplish its strategic goals. The term strategic planning is essentially synonymous with strategic management.
The concept of strategic planning originally became popular in the 1950s and 1960s, and enjoyed favor in the corporate world up until the 1980s, when it somewhat fell out of favor. However, enthusiasm for strategic business planning was revived in the 1990s and strategic planning remains relevant in modern business.
CFI’s Course on Corporate & Business Strategy is an elective course for the FMVA Program.
Strategic Planning Process
The strategic planning process requires considerable thought and planning on the part of a company’s upper-level management. Before settling on a plan of action and then determining how to strategically implement it, executives may consider many possible options. In the end, a company’s management will, hopefully, settle on a strategy that is most likely to produce positive results (usually defined as improving the company’s bottom line) and that can be executed in a cost-efficient manner with a high likelihood of success, while avoiding undue financial risk.
The development and execution of strategic planning are typically viewed as consisting of being performed in three critical steps:
1. Strategy Formulation
In the process of formulating a strategy, a company will first assess its current situation by performing an internal and external audit. The purpose of this is to help identify the organization’s strengths and weaknesses, as well as opportunities and threats ( SWOT Analysis ). As a result of the analysis, managers decide on which plans or markets they should focus on or abandon, how to best allocate the company’s resources, and whether to take actions such as expanding operations through a joint venture or merger.
Business strategies have long-term effects on organizational success. Only upper management executives are usually authorized to assign the resources necessary for their implementation.
2. Strategy Implementation
After a strategy is formulated, the company needs to establish specific targets or goals related to putting the strategy into action, and allocate resources for the strategy’s execution. The success of the implementation stage is often determined by how good a job upper management does in regard to clearly communicating the chosen strategy throughout the company and getting all of its employees to “buy into” the desire to put the strategy into action.
Effective strategy implementation involves developing a solid structure, or framework, for implementing the strategy, maximizing the utilization of relevant resources, and redirecting marketing efforts in line with the strategy’s goals and objectives.
3. Strategy Evaluation
Any savvy business person knows that success today does not guarantee success tomorrow. As such, it is important for managers to evaluate the performance of a chosen strategy after the implementation phase.
Strategy evaluation involves three crucial activities: reviewing the internal and external factors affecting the implementation of the strategy, measuring performance, and taking corrective steps to make the strategy more effective. For example, after implementing a strategy to improve customer service, a company may discover that it needs to adopt a new customer relationship management (CRM) software program in order to attain the desired improvements in customer relations.
All three steps in strategic planning occur within three hierarchical levels: upper management, middle management, and operational levels. Thus, it is imperative to foster communication and interaction among employees and managers at all levels, so as to help the firm to operate as a more functional and effective team.
Benefits of Strategic Planning
The volatility of the business environment causes many firms to adopt reactive strategies rather than proactive ones. However, reactive strategies are typically only viable for the short-term, even though they may require spending a significant amount of resources and time to execute. Strategic planning helps firms prepare proactively and address issues with a more long-term view. They enable a company to initiate influence instead of just responding to situations.
Among the primary benefits derived from strategic planning are the following:
1. Helps formulate better strategies using a logical, systematic approach
This is often the most important benefit. Some studies show that the strategic planning process itself makes a significant contribution to improving a company’s overall performance, regardless of the success of a specific strategy.
2. Enhanced communication between employers and employees
Communication is crucial to the success of the strategic planning process. It is initiated through participation and dialogue among the managers and employees, which shows their commitment to achieving organizational goals.
Strategic planning also helps managers and employees show commitment to the organization’s goals. This is because they know what the company is doing and the reasons behind it. Strategic planning makes organizational goals and objectives real, and employees can more readily understand the relationship between their performance, the company’s success, and compensation. As a result, both employees and managers tend to become more innovative and creative, which fosters further growth of the company.
3. Empowers individuals working in the organization
The increased dialogue and communication across all stages of the process strengthens employees’ sense of effectiveness and importance in the company’s overall success. For this reason, it is important for companies to decentralize the strategic planning process by involving lower-level managers and employees throughout the organization. A good example is that of the Walt Disney Co., which dissolved its separate strategic planning department, in favor of assigning the planning roles to individual Disney business divisions.
An increasing number of companies use strategic planning to formulate and implement effective decisions. While planning requires a significant amount of time, effort, and money, a well-thought-out strategic plan efficiently fosters company growth, goal achievement, and employee satisfaction.
Additional Resources
Thank you for reading CFI’s guide to Strategic Planning. To keep learning and advancing your career, the additional CFI resources below will be useful:
- Broad Factors Analysis
- Scalability
- Systems Thinking
- See all management & strategy resources
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11 Tips for Creating a Long-Term Strategic Plan
Strategic planning is a management tool that guides your business to better performance and long-term success.
Working with a plan will focus your efforts, unify your team in a single direction, and help guide you through tough business decisions. A strategic plan requires you to define your goals, and in defining them, enables you to achieve them—a huge competitive advantage.
In this article, we’ll discuss 11 essentials for creating a thorough and effective strategic plan. Each tip is a critical stepping stone in leading your business toward your goals.
1. Define your company vision
You should be able to define your company vision in 100 words. Develop this statement and make it publically available to both employees and customers.
This statement should answer the key questions that drive your business: Where is your company headed? What do you want your company to be? If you don’t know the answer to these questions off the top of your head, then you have some thinking to do! If you have the answers in your head, but not on paper—get writing.
If you have them written down, congrats! You’ve completed the first and most critical step in creating a long-term strategic plan.
2. Define your personal vision
While your personal vision is just as important to your strategic plan, it does not need to be shared with your team and customers.
Your personal vision should incorporate what you want your business to bring to your life—whether that’s enormous growth, early retirement, or simply more time to spend with family and friends.
Aligning your personal vision with your company vision is key to achieving your personal and professional goals. Just as with your company vision, have your personal vision written down in a 100-word statement. Know that statement inside and out and keep it at the forefront of your decision making.
3. Know your business
Conduct a SWOT (strengths, weaknesses, opportunities, and threats) analysis. By knowing where your business is now, you can make more informed predictions for how it can grow.
Questions such as “Why is this business important?” and “What does this business do best?” are a great place to start. A SWOT analysis can also help you plan for making improvements.
Questions such as “What needs improvement?” and “What more could the business be doing?” can help guide your strategic plan in a way that closes gaps and opens up opportunities.
For more on completing a SWOT analysis, see our SWOT analysis guide.
4. Establish short-term goals
Short-term goals should include everything you (realistically) want to achieve over the next 36 months.
Goals should be “S.M.A.R.T.” (specific, measurable, actionable, reasonable, and timely).
An example of S.M.A.R.T. goals include “building out a new product or service within the next year” or “increasing net profit by 2 percent in ten months.” If you’ve already conducted a SWOT analysis, you should have an idea of what your business can reasonably achieve over a specified period of time.
5. Outline strategies
Strategies are the steps you’ll take to meet your short-term goals. If the short term goal is “build out a new product or service,” the strategies might be:
- Researching competitor offerings
- Getting in touch with vendors and suppliers
- Formulating a development plan
- Outlining a marketing and sales plan for the new offering
6. Create an action plan
An action plan is an essential part of the business planning and strategy development process. The best analysis, in-depth market research, and creative strategizing are pointless unless they lead to action.
An action plan needs to be a working document; it must be easy to change and update. But, must also be specific about what you’re doing, when you will do it, who will be accountable, what resources will be needed, and how that action will be measured.
Action plans put a process to your strategies. Using the previous example, an action plan might be: “CMO develops competitor research packet for new offerings by 9/1. Review packet with the executive team by 9/15.”
When The Alternative Board, Bradford West Director Andrew Hartley was responsible for designing and delivering a three year, $10m environmental business support program, a full and detailed action plan was required for funding.
“That action plan allowed me to 1.) manage and measure the evolving program, 2.) ensure resources and staff were where they needed to be, and 3.) track whether the design of the program was working and delivering the level of results we were contracted to deliver,” says Hartley.
“Even I was surprised about how helpful that action plan was,” he says. “I cannot image approaching any significant project or business without one.”
7. Foster strategic communication
To align your team, you must communicate strategically. Results-driven communication focuses conversations and cuts out excessive meetings. Every communication should be rooted in a specific goal.
Include the how, where, when, and most importantly why every time you deliver instructions, feedback, updates, and so on.
8. Review and modify regularly
Check in regularly to make sure you’re progressing toward your goals. A weekly review of your goals, strategies, and action plans can help you see if you need to make any modifications.
Schedule time in your calendar for this. Weekly check-ins allow you to reassess your plan in light of any progress, setbacks, or changes.
9. Hold yourself accountable
Having a business coach or mentor is great for this. If you have a hard time sticking to your plans, you’ll have an equally hard time meeting your goals.
According to The Alternative Board’s September 2015 Business Pulse Survey, the number one reason business owners choose to work with mentors is accountability.
“Having a close—but not too close—space for advice and accountability is really valuable,” says TAB Member Scott Lininger, CEO of Bitsbox. “Someone who is too close to your business (such as board members) often have a perspective that’s too similar to your own. Over time, your coach comes to know your team, your product, and your business, and they help you work through all kinds of challenges in a way that’s unique.”
“All too often I find that leaders accept underperformance against their strategic plan too easily,” adds Hartley. “A coach can rekindle the resolve and ambition of the leader, resulting in a recovery of lost margins, sales, or output.”
According to Hartley, a coach can build accountability by questioning what’s working, making sure everything’s on track, pointing out areas of underperformance, and asking what corrective action needs to be pursued.
10. Be adaptable
Remember: You can’t plan for everything. Just as challenges will arrive, so too will opportunities, and you must be ready at a moment’s notice to amend your plan. Weekly reviews will help enormously with this.
“A strategic plan will likely need to be changed very soon after approval because nobody can accurately predict anything but the very near term future,” says Jim Morris, owner and President of The Alternative Board, Tennessee Valley. “You stay adaptable by monitoring the plan every day. The wise leader will be constantly looking for opportunities to exceed the strategic plan by being opportunistic, creative, and by exploiting weaknesses in the competitive market.”
By doing this, Morris was able to exceed forecast results of every strategic plan he ever approved. “The times when I needed to be flexible were when we met strategic plan goals ahead of time and had to rewrite the plan to keep it current and relevant.”
It’s important to be adaptable because nothing stays the same. “It’s more important to be agile and take advantage of opportunities that weren’t foreseen and make adjustments,” says Morris. “This and a continuous improvement mindset is the best way to exceed plan goals.”
11. Create a strategic planning team
As a business owner, you should never feel like you have to do everything alone.
A strategic planning team can help with every phase of the process, from creating a company vision to adapting your strategy week-to-week. Compose your team of key management staff and employees—some visionaries and some executors.
If you think you’re “too busy” for start strategic planning, then you need strategic planning more than you know. Having a focused plan allows you to focus your energies, so you’re working on your business, rather than in it. As a business owner, it is your responsibility to steer the ship, not put out day-to-day fires.
Yes, creating a strategic plan is challenging, and it’s certainly time-consuming, but it will make all the difference in achieving your long term goals. You’ll avoid making bad decisions and expending more effort than you need.
Try these 11 tips to get started, and then be flexible in your ongoing approach. You’ll be amazed at how much more streamlined your business processes will become when you are working with a long-term strategic plan.
Jodie Shaw is The Alternative Board (TAB)’s Chief Marketing Officer. She brings over 20 years of B2B marketing and 10 years in franchising to the role. Prior to to her work with TAB, Jodie served as the CEO and Global Chief Marketing Officer of an international business coaching franchise, serving more than 50 countries.
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Short-Term, Medium-Term & Long-Term Planning in Business
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Aggregate Planning Concepts
Issues to discuss at safety committee meetings, the difference between operations & strategic human resources.
- Primary Responsibilities of a Human Resource Manager
- What Is the Meaning of Organizational Strategy?
Business owners develop plans to reach their overall goals, and they usually find it useful to separate planning into phases. This allows you to track immediate improvements while evaluating progress toward eventual goals and targets. The different time frames of the planning process place the focus on time-sensitive aspects of the company's structure and environment. You can differentiate planning based on the time frames of the inputs and expected outcomes.
Strategic Planning Characteristics
Many businesses develop strategic planning within a short-term, medium-term and long-term framework. Short-term usually involves processes that show results within a year. Companies aim medium-term plans at results that take several years to achieve. Long-term plans include the overall goals of the company set four or five years in the future and usually are based on reaching the medium-term targets. Planning in this way helps you complete short-term tasks while keeping longer-term goals in mind.
Short-Term Planning
Short-term planning looks at the characteristics of the company in the present and develops strategies for improving them. Examples are the skills of the employees and their attitudes. The condition of production equipment or product quality problems are also short-term concerns.
To address these issues, you put in place short-term solutions to address problems. Employee training courses, equipment servicing and quality fixes are short-term solutions. These solutions set the stage for addressing problems more comprehensively in the longer term.
Medium-Term Planning
Medium-term planning applies more permanent solutions to short-term problems. If training courses for employees solved problems in the short term, companies schedule training programs for the medium term. If there are quality issues, the medium-term response is to revise and strengthen the company's quality control program.
Where a short-term response to equipment failure is to repair the machine, a medium-term solution is to arrange for a service contract. Medium-term planning implements policies and procedures to ensure that short-term problems don't recur.
Long-Term Planning
In the long term, companies want to solve problems permanently and to reach their overall targets. Long-term planning reacts to the competitive situation of the company in its social, economic and political environment and develops strategies for adapting and influencing its position to achieve long-term goals. It examines major capital expenditures such as purchasing equipment and facilities, and implements policies and procedures that shape the company's profile to match top management's ideas.
When short-term and medium-term planning is successful, long-term planning builds on those achievements to preserve accomplishments and ensure continued progress.
- Small Business: Business planning: Short, medium and long-term objectives
- Info Entrepreneurs: Strategic Planning
- Board Effect: The Difference Between Short-Term and Long-Term Goal Planning
Bert Markgraf is a freelance writer with a strong science and engineering background. He started writing technical papers while working as an engineer in the 1980s. More recently, after starting his own business in IT, he helped organize an online community for which he wrote and edited articles as managing editor, business and economics. He holds a Bachelor of Science degree from McGill University.
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What Is a Business Plan? Definition and Planning Essentials Explained
Posted february 21, 2022 by kody wirth.
What is a business plan? It’s the roadmap for your business. The outline of your goals, objectives, and the steps you’ll take to get there. It describes the structure of your organization, how it operates, as well as the financial expectations and actual performance.
A business plan can help you explore ideas, successfully start a business, manage operations, and pursue growth. In short, a business plan is a lot of different things. It’s more than just a stack of paper and can be one of your most effective tools as a business owner.
Let’s explore the basics of business planning, the structure of a traditional plan, your planning options, and how you can use your plan to succeed.
What is a business plan?
A business plan is a document that explains how your business operates. It summarizes your business structure, objectives, milestones, and financial performance. Again, it’s a guide that helps you, and anyone else, better understand how your business will succeed.
Why do you need a business plan?
The primary purpose of a business plan is to help you understand the direction of your business and the steps it will take to get there. Having a solid business plan can help you grow up to 30% faster and according to our own 2021 Small Business research working on a business plan increases confidence regarding business health—even in the midst of a crisis.
These benefits are directly connected to how writing a business plan makes you more informed and better prepares you for entrepreneurship. It helps you reduce risk and avoid pursuing potentially poor ideas. You’ll also be able to more easily uncover your business’s potential. By regularly returning to your plan you can understand what parts of your strategy are working and those that are not.
That just scratches the surface for why having a plan is valuable. Check out our full write-up for fifteen more reasons why you need a business plan .
What can you do with your plan?
So what can you do with a business plan once you’ve created it? It can be all too easy to write a plan and just let it be. Here are just a few ways you can leverage your plan to benefit your business.
Test an idea
Writing a plan isn’t just for those that are ready to start a business. It’s just as valuable for those that have an idea and want to determine if it’s actually possible or not. By writing a plan to explore the validity of an idea, you are working through the process of understanding what it would take to be successful.
The market and competitive research alone can tell you a lot about your idea. Is the marketplace too crowded? Is the solution you have in mind not really needed? Add in the exploration of milestones, potential expenses, and the sales needed to attain profitability and you can paint a pretty clear picture of the potential of your business.
Document your strategy and goals
For those starting or managing a business understanding where you’re going and how you’re going to get there are vital. Writing your plan helps you do that. It ensures that you are considering all aspects of your business, know what milestones you need to hit, and can effectively make adjustments if that doesn’t happen.
With a plan in place, you’ll have an idea of where you want your business to go as well as how you’ve performed in the past. This alone better prepares you to take on challenges, review what you’ve done before, and make the right adjustments.
Pursue funding
Even if you do not intend to pursue funding right away, having a business plan will prepare you for it. It will ensure that you have all of the information necessary to submit a loan application and pitch to investors. So, rather than scrambling to gather documentation and write a cohesive plan once it’s relevant, you can instead keep your plan up-to-date and attempt to attain funding. Just add a use of funds report to your financial plan and you’ll be ready to go.
The benefits of having a plan don’t stop there. You can then use your business plan to help you manage the funding you receive. You’ll not only be able to easily track and forecast how you’ll use your funds but easily report on how it’s been used.
Better manage your business
A solid business plan isn’t meant to be something you do once and forget about. Instead, it should be a useful tool that you can regularly use to analyze performance, make strategic decisions, and anticipate future scenarios. It’s a document that you should regularly update and adjust as you go to better fit the actual state of your business.
Doing so makes it easier to understand what’s working and what’s not. It helps you understand if you’re truly reaching your goals or if you need to make further adjustments. Having your plan in place makes that process quicker, more informative, and leaves you with far more time to actually spend running your business.
What should your business plan include?
The content and structure of your business plan should include anything that will help you use it effectively. That being said, there are some key elements that you should cover and that investors will expect to see.
Executive summary
The executive summary is a simple overview of your business and your overall plan. It should serve as a standalone document that provides enough detail for anyone—including yourself, team members, or investors—to fully understand your business strategy. Make sure to cover the problem you’re solving, a description of your product or service, your target market, organizational structure, a financial summary, and any necessary funding requirements.
This will be the first part of your plan but it’s easiest to write it after you’ve created your full plan.
Products & Services
When describing your products or services, you need to start by outlining the problem you’re solving and why what you offer is valuable. This is where you’ll also address current competition in the market and any competitive advantages your products or services bring to the table. Lastly, be sure to outline the steps or milestones that you’ll need to hit to successfully launch your business. If you’ve already hit some initial milestones, like taking pre-orders or early funding, be sure to include it here to further prove the validity of your business.
Market analysis
A market analysis is a qualitative and quantitative assessment of the current market you’re entering or competing in. It helps you understand the overall state and potential of the industry, who your ideal customers are, the positioning of your competition, and how you intend to position your own business. This helps you better explore the long-term trends of the market, what challenges to expect, and how you will need to initially introduce and even price your products or services.
Check out our full guide for how to conduct a market analysis in just four easy steps .
Marketing & sales
Here you detail how you intend to reach your target market. This includes your sales activities, general pricing plan, and the beginnings of your marketing strategy. If you have any branding elements, sample marketing campaigns, or messaging available—this is the place to add it.
Additionally, it may be wise to include a SWOT analysis that demonstrates your business or specific product/service position. This will showcase how you intend to leverage sales and marketing channels to deal with competitive threats and take advantage of any opportunities.
Check out our full write-up to learn how to create a cohesive marketing strategy for your business.
Organization & management
This section addresses the legal structure of your business, your current team, and any gaps that need to be filled. Depending on your business type and longevity, you’ll also need to include your location, ownership information, and business history. Basically, add any information that helps explain your organizational structure and how you operate. This section is particularly important for pitching to investors but should be included even if attempted funding is not in your immediate future.
Financial projections
Possibly the most important piece of your plan, your financials section is vital for showcasing the viability of your business. It also helps you establish a baseline to measure against and makes it easier to make ongoing strategic decisions as your business grows. This may seem complex on the surface, but it can be far easier than you think.
Focus on building solid forecasts, keep your categories simple, and lean on assumptions. You can always return to this section to add more details and refine your financial statements as you operate.
Here are the statements you should include in your financial plan:
- Sales and revenue projections
- Profit and loss statement
- Cash flow statement
- Balance sheet
The appendix is where you add additional detail, documentation, or extended notes that support the other sections of your plan. Don’t worry about adding this section at first and only add documentation that you think will be beneficial for anyone reading your plan.
Types of business plans explained
While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. So, to get the most out of your plan, it’s best to find a format that suits your needs. Here are a few common business plan types worth considering.
Traditional business plan
The tried-and-true traditional business plan is a formal document meant to be used for external purposes. Typically this is the type of plan you’ll need when applying for funding or pitching to investors. It can also be used when training or hiring employees, working with vendors, or any other situation where the full details of your business must be understood by another individual.
This type of business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix. We recommend only starting with this business plan format if you plan to immediately pursue funding and already have a solid handle on your business information.
Business model canvas
The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea.
The structure ditches a linear structure in favor of a cell-based template. It encourages you to build connections between every element of your business. It’s faster to write out and update, and much easier for you, your team, and anyone else to visualize your business operations. This is really best for those exploring their business idea for the first time, but keep in mind that it can be difficult to actually validate your idea this way as well as adapt it into a full plan.
One-page business plan
The true middle ground between the business model canvas and a traditional business plan is the one-page business plan. This format is a simplified version of the traditional plan that focuses on the core aspects of your business. It basically serves as a beefed-up pitch document and can be finished as quickly as the business model canvas.
By starting with a one-page plan, you give yourself a minimal document to build from. You’ll typically stick with bullet points and single sentences making it much easier to elaborate or expand sections into a longer-form business plan. This plan type is useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business.
Now, the option that we here at LivePlan recommend is the Lean Plan . This is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance.
It holds all of the benefits of the single-page plan, including the potential to complete it in as little as 27-minutes . However, it’s even easier to convert into a full plan thanks to how heavily it’s tied to your financials. The overall goal of Lean Planning isn’t to just produce documents that you use once and shelve. Instead, the Lean Planning process helps you build a healthier company that thrives in times of growth and stable through times of crisis.
It’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.
Try the LivePlan Method for Lean Business Planning
Now that you know the basics of business planning, it’s time to get started. Again we recommend leveraging a Lean Plan for a faster, easier, and far more useful planning process.
To get familiar with the Lean Plan format, you can download our free Lean Plan template . However, if you want to elevate your ability to create and use your lean plan even further, you may want to explore LivePlan.
It features step-by-step guidance that ensures you cover everything necessary while reducing the time spent on formatting and presenting. You’ll also gain access to financial forecasting tools that propel you through the process. Finally, it will transform your plan into a management tool that will help you easily compare your forecasts to your actual results.
Check out how LivePlan streamlines Lean Planning by downloading our Kickstart Your Business ebook .
Posted in Business Plan Writing
Short-Term, Medium-Term & Long-Term Planning in Business
by Devra Gartenstein
Published on 18 Oct 2018
Although short-term, medium-term and long-term planning in businesses address different time frames, they should be cut from the same cloth. The more closely you align your short, medium and long-term goals, the more effectively you will be able to make plans that sync your immediate objectives with your big picture vision.
Short-Term Planning
Short-term planning in business generally focuses on a three-to-six-month time frame, especially in reference to revenue and profitability. Short-term objectives are geared towards short-term needs such as improving cash flow or launching a new product. This short-term perspective is especially useful for satisfying investors who want to see results or improving your company's bottom line so you can secure additional financing for longer-term goals. Whatever your short-term goals, make sure they serve your longer-term vision. Your new product launch should be consistent with your overall brand and with the line of products you're building over time. Your strategies to improve cash flow should bring in additional revenue in ways that don't compromise your values or distract you from your overall mission.
Medium-Term Planning
Medium-term planning is often overlooked in discussions of strategic objectives, but it is important because it brings together the clarity of shorter-term goals with the depth of longer-term planning. A short-term goal may be based on an immediate need and a long-term goal may be so broad that it is difficult to create measurable milestones. But a medium-term goal is close enough for you to project a specific targeted outcome, while also being distant enough to be meaningful for your longer-term vision. Medium-term planning generally covers a period of about three years. It may include plans to open a new store or enter a new market. It is a long enough time frame for you to see if you're achieving real results, yet it's a short enough period for you to pivot and change direction if your initial strategy isn't successful.
Long-Term Planning
Long-term planning is rooted in your company's identity and purpose. It may have elements of specificity such as a goal to open a certain number of new stores over the next ten years. However, it is impossible to predict market conditions and current events over such an extended time frame. Because of this difficulty, even specific long-term plans are mainly concrete ways to express a larger vision such as eventually supplying work shoes to your entire region. Take your long-term planning very seriously, but adjust it over time as your medium-term situation unfolds.
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Long-Term Planning
What is Long-Term Planning ? Everything you need to know about Long-Term Planning: definition , meaning , example and more. In this article, you’ll learn the answers to all of these questions.
What is Long-Term Planning?
Definition : Long-Term Planning is an English term commonly used in the fields of economics / Economics (Term’s Popularity Ratings 6/10)
What does Long-Term Planning mean?
Example - how to use.
Long-Term Planning is an example of a term used in the field of economics (Economics - ). The Termbase team is compiling practical examples in using Long-Term Planning.
Qu'est-ce que la Long-Term Planning?
Définir : Long-Term Planning signifie Planification à long terme. Long-Term Planning est un terme anglais couramment utilisé dans les domaines de l'économie / Economics - .Terme de popularité du terme 6/10
Que es Long-Term Planning?
Definición : Long-Term Planning significa Langzeitplanung. Long-Term Planning es un término en inglés comúnmente utilizado en los campos de la economía / Economics - . Condiciones calificaciones de popularidad 6/10
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What is long range planning? It is simply looking ahead and deciding what you want your business to achieve in the future.
Long range planning definition
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LRP is the process of developing a comprehensive plan to guide an organization’s decision-making throughout its operating cycles. It is concerned with setting goals and outlining strategies for achieving them over extended periods, typically 3-5 years or more.
Long range planning
Strategic planning, how to create a long-range plan for your business, mission and vision statements.
A mission statement declares the organization’s purpose, while a vision statement defines the desired future state. Both should be clear, concise, and inspiring.
Mission statement
Vision statements, strategic planning.
These plans should align with your mission statement and help you achieve your long-term goals. However, you’ll also need to identify potential obstacles that could prevent you from reaching your goals and develop strategies for dealing with them.
Implementing the plans
Tips for implementing your long range plan.
There are a few tips for implementing your long-range plan successfully:
Tools used for doing long range strategic planning
Below are some of the most common tools, including SWOT, business model, and risk assessment.
SWOT analysis
Business model analysis.
The business model analysis is a powerful tool that can help you understand how your business works and generates revenue.
Risk assessment
Risk assessment can help you identify potential risks to your business and the organization’s strategic plan to respond. This can help you avoid or minimize any negative impacts that these risks may have.
Long-range planning in manufacturing
Establish goals and objectives.
Once you have established your long-term goals, it is time to set objectives. Objectives are specific, measurable, attainable, relevant, and time-bound. In other words, they are the steps you will take to achieve your long-term goals.
Analyze the Current Situation
So, when looking over your current situation, it’s essential to consider all of these factors to get a comprehensive picture.
Forecast Future Demand
Once you complete these three steps, you can begin developing strategies and tactics to help you reach your long-term goals.
LRP in the supply chain
What is long-range planning in strategic management, what is general planning.
General planning is creating a plan that will allow an organization to achieve its goals. The plan is created by assessing the organization’s current situation and resources and then developing a strategy for using those resources in the most effective way possible. Once the plan is finalized, it can be implemented and monitored to ensure it remains effective.
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What Is a Financial Plan?
Understanding a financial plan.
- When to Create It
- How to Create It
- Financial Plan FAQs
The Bottom Line
Liz Manning has researched, written, and edited trading, investing, and personal finance content for years, following her time working in institutional sales, commercial banking, retail investing, hedging strategies, futures, and day trading.
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Gordon Scott has been an active investor and technical analyst or 20+ years. He is a Chartered Market Technician (CMT).
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Ariel Courage is an experienced editor, researcher, and former fact-checker. She has performed editing and fact-checking work for several leading finance publications, including The Motley Fool and Passport to Wall Street.
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A financial plan is a document that details a person’s current financial circumstances and their short- and long-term monetary goals. It includes strategies to achieve those goals.
A financial plan can help you to establish and plan for fundamental needs, such as managing life's risks (e.g., those involving health or disability), income and spending, and debt reduction.
It can provide financial guidance so that you're prepared to meet your obligations and objectives. It can also help you track your progress throughout the years toward financial well-being.
Financial planning involves a thorough evaluation of one’s money situation (income, spending, debt, and saving) and expectations for the future. It can be created independently or with the help of a certified financial planner .
Key Takeaways
- A financial plan documents an individual’s short- and long-term financial goals and includes a strategy to achieve them.
- The plan should be comprehensive and highly customized.
- It should reflect an individual’s personal and family financial needs, investment risk tolerance, and plan for saving and investing.
- Planning in finance starts with a calculation of one’s current net worth and cash flow.
- A solid financial plan provides guidance over time and serves as a way to track progress toward your goals.
The Fundamentals of Financial Plans
Whether you’re going it alone or with a financial planner, the first step in creating a financial plan is to understand how important it can be to your financial future. It can provide the guidance that assures your financial success.
Start your planning effort by gathering information from your various financial accounts into a document or spreadsheet.
Then make some basic calculations that establish where you stand financially.
You may complete the following steps as an individual or a couple:
Calculate Net Worth
To calculate your current net worth , subtract the total for your liabilities from the total for your assets. Begin by listing and adding up all of the following:
- Your assets : An asset is property of value that you own. Assets may include a home, a car, cash in the bank, money invested in a 401(k) plan , and other investments accounts.
- Your liabilities : A liability is something you owe. Liabilities may include outstanding bills, credit card debt, student debt, a mortgage, and a car loan.
Determine Cash Flow
Cash flow is the money you take in measured against the money you spend. To create a financial plan, you must know your income as well as how and when your money is spent.
Documenting your personal cash flow will help you determine how much you need every month for necessities, how much is available for saving and investing, and where you can cut back on spending.
One way to get this done is to review your checking account and credit card statements. Collectively, they should provide a fairly complete history of your income and spending in a wide range of spending categories.
For example, document how much you’ve paid during the year for housing expenses like rent or mortgage payments, utilities, and credit card interest.
Other categories include food, household (including clothing), transportation, medical insurance, and non-covered medical expenses. Still others can include your spending on miscellaneous entertainment, dining out, and vacation travel.
Once you add up all these numbers for a year and divide by 12, you’ll know what your monthly cash flow has been (and where you can improve it).
When establishing your cash flow history, don’t overlook cash withdrawals that may have been used on sundries, from take-out, to shampoo, to sodas. ATM withdrawals can also highlight where you might cut unnecessary spending.
Establish Your Goals
A major part of a financial plan is a person’s clearly defined goals. These may include funding a college education for the children, buying a larger home, starting a business, retiring on time, or leaving a legacy.
No one can tell you how to prioritize these goals. However, a professional financial planner should be able to help finalize a detailed savings plan and specific investing that can help you reach them off, one by one.
The main elements of a financial plan include a retirement strategy, a risk management plan, a long-term investment plan, a tax reduction strategy, and an estate plan.
Benefits of a Financial Plan
- A financial plan involves a thorough examination of your income and spending.
- It can improve your understanding of your financial circumstances at all times.
- It establishes important short- and long-term financial goals.
- It clarifies the actions required of you to achieve your various financial goals.
- A financial plan can focus your attention on important immediate steps, such as reducing debt and building your savings for emergencies.
- It enhances the probability that you'll achieve financial milestones and overall financial success (however you define it).
- It can guide your efforts over time and provide a means to monitor your progress.
- It can keep you out of financial trouble and reduce the stress and worry you may have experienced in the past.
Reasons for a Financial Plan
Financial planning is a smart way to keep your financial house in order. It's a money tool for everyone, regardless of age, earnings, net worth, or financial dreams. It offers individuals a way to document their personal goals and corresponding financial goals. It can keep people on track to meet ongoing financial needs and major financial goals.
When to Create a Financial Plan
A financial plan is always an advantage for those who want to make sure that they manage their finances in ways that are best-suited for them. You can create one at any time, whether you've just joined the workforce or have been working for years.
Beyond that, here are some particular instances that call for the creation and use of a financial plan. They can also serve as signals to adjust existing plans.
- A new job that results in added income, new expenses, or new opportunities
- An income change that can affect your ability to pay expenses, pay off debt, or save
- Major life events such as marriage, children, or divorce that can change financial objectives and spending needs
- Health adversities that result in re-directing income and spending away from existing goals
- An income windfall, such as an inheritance or insurance payment, that can affect efforts to reach your financial goals (such as providing more money for investing and debt reduction)
How to Create a Financial Plan
Certain steps are needed to create a financial plan. In addition to calculating your net worth, determining your cash flow, and establishing financial goals, as outlined above, here are additional plan elements/steps to include.
Do It Yourself or Get Professional Help
Decide whether you'll create your financial plan on your own or with the help of a licensed financial planner . While you can certainly build a financial plan, a financial pro can help ensure that your plan covers all the essentials.
Build an Emergency Cash Fund
Based on what your cash flow allows, start setting aside enough money in a liquid account to cover all your expenses for at least 6 months (preferably, for twelve) if you find yourself without income due to unexpected events.
Plan to Reduce Debt and Manage Expenses
If you have debt, the faster and more effectively that you can eliminate it, the better for the growth of your savings, your standard of living, and the achievement of specific financial objectives.
Make it a habit to cut expenses whenever possible so that you can add to your savings. In addition, stay on top of expenses that you know you'll have, such as taxes, so you always meet those obligations on time.
Manage Potential Risks
Your financial well-being can be affected when accidents, health problems, or the death of loved ones strike. Plan to put into place the appropriate insurance coverage that will protect your financial security at such times. This coverage can include home, property , health, auto, disability , personal liability , and life insurance.
Plan to Invest
Take part in a retirement plan at work that automatically deducts contributions from your paycheck. And plan to maximize your tax-advantaged investing with a personal IRA if and when your income allows.
Also, consider how you might allocate any other available income to a taxable investment account that can add to your net worth over time. Your plan for investing should take into account your investment risk tolerance and future income needs.
Include a Tax Strategy
Address the goal of reducing your income taxes with tax deductions, tax credits, tax loss harvesting, and any other opportunities that are legally available to taxpayers.
Consider an Estate Plan
It's important to make arrangements for the benefit and protection of your heirs with an estate plan . The details will depend on your stage in life and whether you're married, have children, or have other legacy goals.
Monitor and Adjust Your Financial Plan
Revisit your plan at least yearly (on your own or with a financial professional) and more often if a change in circumstances affects your financial situation. Keep it working efficiently and effectively by adjusting it as needed.
What Is the Purpose of a Financial Plan?
A financial plan should help you make the best use of your money and achieve long-term financial goals, such as sending your children to college, buying a bigger home, leaving a legacy, or enjoying a comfortable retirement.
How Do I Write a Financial Plan?
You can write a financial plan yourself or enlist the help of a professional financial planner. The first step is to calculate your net worth and identify your spending habits. Once this has been documented, you need to consider longer-term objectives and decide on the ways to achieve them.
What Are the Key Components of a Financial Plan?
Financial plans aren't one-size-fits-all, although the good ones tend to focus on the same things. After calculating your net worth and spending habits, you’ll explore your financial goals and ways to achieve them. Usually, this involves some form of budgeting, saving, and investing each month. To ensure that you live comfortably and financially stress-free for the rest of your life, the areas to focus on include an emergency savings plan, a retirement plan, risk management, a long-term investment strategy, and a tax minimization plan.
A financial plan is an essential planning tool for your financial well-being, now and into the future. It involves setting down the current state of your finances, your various financial goals, and methods that can help you achieve them.
It's never too early or late to create a financial plan. And no matter the amount of money that you have, a financial plan can help you to determine the best way to put it to work so that you can meet your financial needs through all of your life stages.
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The differences between long-term and short-term planning
Last updated on: October 26, 2022
Sometimes, planning is easy – you know exactly where you want to go for lunch and your plan for the future is crystal clear.
But more often than not, planning is difficult – from lack of resources to lack of vision, from not knowing where and how to start to having difficulties with setting effective goals. The future can be unpredictable and planning can be tricky.
Yet, it’s not impossible. In this article, we’ll go over what long-term and short-term planning mean, what is the difference, as well as how to successfully do both. Of course, with examples included.
Table of Contents
What are long-term and short-term planning?
Let’s start by defining what long-term and short-term planning are.
What is short-term planning?
Short-term planning is usually considered to take 12 months or less. Your daily, weekly, monthly, even quarterly and yearly goals – all can be filed under “short-term goals.” They are stepping stones that will help you to reach your big goal(s).
That type of planning requires you to look at the current situation and fix potential issues as soon as possible. Sometimes “as soon as possible” takes a day, sometimes 6 months, depending on the complexity of the issue.
Here are some examples of short-term goals, divided into five categories: career , education, personal development, finances, and marketing.
- Career goals : “Apply for a job”, “Make a website for your business.”
- Academic goals : “Take another marketing course”, “Pass the AP Statistics exam.”
- Personal development goals : “Start going to bed before midnight”, “ Track your time for a month”, “Join a gym.”
- Financial goals : “Pay off the debt”, “Get a raise before the end of the year.”
- Marketing goals : “Increase brand awareness”, “Boost website traffic.”
💡 If you need help with setting short-term goals, these articles can come to the rescue: How to plan your day and stay organized & How to make productivity plan in five easy steps . For easier planning, check out Online planner templates too.
What is long-term planning?
Long-term planning involves goals that take a longer time to reach and require more steps; they usually take a minimum of a year or two to complete. They aim to permanently resolve issues and reach and maintain success over a continued period.
We’ll discuss an exact strategy to set and complete long-term goals later in this article.
Before that, let’s go over a few examples of long-term goals:
- Career goals : “Build a profitable business”, “Turn your passion into a career.”
- Academic goals : “Get a Bachelor’s degree”, “Get a Master’s degree abroad.”
- Personal development goals : “Learn a foreign language”, “Travel on all 7 continents.”
- Financial goals : “Save for retirement”, “Become a millionaire.”
What is medium-term planning?
That’s not all, folks: there’s also medium-term planning . It entails applying more permanent solutions to short-term problems and implementing policies and procedures to make sure that those short-term problems won’t happen again. If a piece of equipment breaks, a short-term solution would be to fix it, while a medium-term solution would be to invest in a service contract.
Another example of medium-term planning is investing in employees’ training programs rather than organizing a workshop from time to time (which is a short-term solution).
Key differences between long-term and short-term planning
The most obvious difference between long-term and short-term planning is the amount of time each one takes; while short-term planning involves processes that take 12 months or less, long-term planning is, as the name suggests, longer – there’s no upper limit to the longevity of a long-term plan.
There’s an anecdote that Ingvar Kamprad, founder of IKEA, told a group of managers that it’s “important to think where we should be in 200 years.” (You don’t have to think that far ahead – a 5-year plan is completely fine.)
Another difference is their complexity: long-term planning is more elaborate, tactical, and involves more steps. As opposed to that, short-term planning is often quite straightforward. Short-term goals usually serve as milestones that get you to your long-term goal.
In business, short-term goals are mostly focused on internal issues, such as customer complaints or inefficient management, while long-term goals cover both external and internal issues. When you’re planning long-term, you need to be aware of external factors, like global trends and changes, political situation, the ways current events may affect the economy, and so on.
The difference between long-term and strategic planning
Another frequently asked question is: Is strategic planning the same as long-term planning? If not, what’s the difference between the two?
Strategic planning consists of statements and goals that determine things such as:
- Where your company should be in the next couple of years and how to get there;
- How to successfully respond to changes in the environment;
- What’s the anticipated financial performance;
- What’s the most effective business strategy.
Strategic plans are not actionable – that’s where long-term planning comes in.
Long-term planning determines concrete processes and actions needed to achieve strategic goals. It also focuses on setting priorities, aligning resources, forecasting, and handling unexpected changes.
In other words, strategic planning determines what and long-term planning determines how .
How to set long-term goals in 5 steps
As setting good long-term goals is the foundation of every other planning you’re going to do, it’s important to get it right. That can often be hard and overwhelming, especially if you’re making plans for the distant future, e.g. 10 years in advance – which is why we made this step-by-step guide.
Step 1: Define your vision
Ask yourself: What is your (or your company’s) vision? What is your purpose? What are your core values? If you’re a company: what problem do you want to solve and how would the world look without that problem?
Ideally, where would you want to be 3, 5, and 10 years from now? What is, right now, stopping you from achieving that? What changes do you need to make? If (or better to say, when ) you manage to achieve your goals, how different would things be, and in what way?
All these questions will help you clarify what do you want to achieve. The next step is – how to get there?
Step 2: Set SMART goals
If you’re sure in the direction you want to take, it’s time to set goals. They should be challenging, yet achievable, and most importantly, they should be SMART.
The examples I’ll provide to explain each letter of this acronym are mostly short-term goals as it’s easier to understand that way, but these criteria can (and should) be applied to any type of goal, including long-term goals.
- Specific : Once I heard someone say that “goals should have their name and last name”, meaning they need to be as particular and well-defined as possible. “I want to find a job” is not a specific goal, while “I want to land a _____ position in ____ field, preferably in ____ type of company in ____ area” has a name, last name, even a middle name.
- Measurable : In order to know if you’re making progress, you need to be able to measure it. That’s why setting goals such as “increase brand awareness” is not very good – how do you know if you accomplished it or not? Instead, try something like “get 5K followers on Instagram and 1K likes on our Facebook page.”
- Attainable : As we mentioned above, the goals you set should be challenging, but possible to achieve. “Earn a million dollars in a week” is measurable and time-bound, but not realistic, at least not for most of us (that being said, if it’s realistic for you, go ahead and set that goal).
- Relevant : Relevant goal is a goal that fits your vision and has importance to you. If you want to be a lawyer, setting a goal of graduating from medical school doesn’t make a lot of sense for your career path.
- Time-bound : Give yourself a specific time frame to complete the goal; if it has multiple steps, impose a deadline for each milestone.
Step 3: Break down your goals into smaller ones
After you set your SMART goals, it’s time to break them down into smaller chunks, that will again be divided into series of actionable steps.
Big goals often consist of a few milestones that you need to reach; each one should become its own short-term or medium-term goal. Think of them as checkpoints in a race or levels in a game – you need to pass them all to get to the finish line and win.
Keep dividing it until your big goal becomes a weekly or daily to-do list. The more complicated the goal is, the more times you’ll have to break it down into smaller parts.
Let’s say you just got into university and your goal is to get your Bachelor’s degree.
- First, you’ll divide it into 3 or 4 goals (depending on how many years it lasts): “finish 1st year”, “finish 2nd year”, and so on.
- To be able to do that, you need to pass your exams, and each of the exams will become its own goal.
- To pass each exam, you usually have to take quizzes, write papers, make presentations, etc; again, each of those pre-requirements becomes a subgoal.
- Then you divide that into concrete steps: doing research, writing the first draft of your paper, editing it…
By making tiny steps like these, you’ll eventually and gradually accomplish your long-term goal.
Step 4: Prioritize
Go through your list of goals and put them in the order of their priority. That will facilitate making short-term goals and organizing your time, energy, and money in the right way. First focus on the goal(s) that will make the most difference and that align with your values the most.
Also, ask yourself: Are there some areas that need immediate assistance? Are any of those goals time-sensitive? What is the likely outcome of (not) making this a priority?
Step 5: Keep updating your list
Goals and priorities may change over time. Because of that, it would be a good idea to occasionally go through your list, make sure it’s up to date and change something if needed.
There are different types of planning: short-term, long-term, and medium-term. Short-term planning focuses on resolving present issues and takes 12 months or less.
Long-term planning is more complex and tactical and takes more time.
Medium-term planning means applying long-term solutions to short-term problems.
What all of them have in common is that all of them require thinking ahead, setting goals effectively, and problem-solving.
✉️ Do you find long-term and short-term planning difficult? What are your long-term and short-term goals? What is, according to you, the best way to plan for the future? Write to us at [email protected] for a chance to be featured in future articles.
Dunja is a content manager passionate about time management and self-improvement. After years of trying out all the productivity techniques she managed to come across, her goal become to share her knowledge and help others to become the best, most successful versions of themselves.
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How to Set Strategic Planning Goals
- 29 Oct 2020
In an ever-changing business world, it’s imperative to have strategic goals and a plan to guide organizational efforts. Yet, crafting strategic goals can be a daunting task. How do you decide which goals are vital to your company? Which ones are actionable and measurable? Which goals to prioritize?
To help you answer these questions, here’s a breakdown of what strategic planning is, what characterizes strategic goals, and how to select organizational goals to pursue.
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What Is Strategic Planning?
Strategic planning is the ongoing organizational process of using available knowledge to document a business's intended direction. This process is used to prioritize efforts, effectively allocate resources, align shareholders and employees, and ensure organizational goals are backed by data and sound reasoning.
Research in the Harvard Business Review cautions against getting locked into your strategic plan and forgetting that strategy involves inherent risk and discomfort. A good strategic plan evolves and shifts as opportunities and threats arise.
“Most people think of strategy as an event, but that’s not the way the world works,” says Harvard Business School Professor Clayton Christensen in the online course Disruptive Strategy . “When we run into unanticipated opportunities and threats, we have to respond. Sometimes we respond successfully; sometimes we don’t. But most strategies develop through this process. More often than not, the strategy that leads to success emerges through a process that’s at work 24/7 in almost every industry."
Related: 5 Tips for Formulating a Successful Strategy
Characteristics of Strategic Goals
To craft a strategic plan for your organization, you first need to determine the goals you’re trying to reach. Strategic goals are an organization’s measurable objectives that are indicative of its long-term vision. Here are four characteristics of strategic goals to keep in mind when setting them for your organization.
1. Purpose-Driven
The starting point for crafting strategic goals is asking yourself what your company’s purpose and values are . What are you striving for, and why is it important to set these objectives? Let the answers to these questions guide the development of your organization’s strategic goals.
“You don’t have to leave your values at the door when you come to work,” says HBS Professor Rebecca Henderson in the online course Sustainable Business Strategy .
Henderson, whose work focuses on reimagining capitalism for a just and sustainable world, also explains that leading with purpose can drive business performance.
“Adopting a purpose will not hurt your performance if you do it authentically and well,” Henderson says in a lecture streamed via Facebook Live . “If you’re able to link your purpose to the strategic vision of the company in a way that really gets people aligned and facing in the right direction, then you have the possibility of outperforming your competitors.”
Related: 5 Examples of Successful Sustainability Initiatives
2. Long-Term and Forward-Focused
While strategic goals are the long-term objectives of your organization, operational goals are the daily milestones that need to be reached to achieve them. When setting strategic goals, think of your company’s values and long-term vision, and ensure you’re not confusing strategic and operational goals.
For instance, your organization’s goal could be to create a new marketing strategy; however, this is an operational goal in service of a long-term vision. The strategic goal, in this case, could be breaking into a new market segment, to which the creation of a new marketing strategy would contribute.
Keep a forward-focused vision to ensure you’re setting challenging objectives that can have a lasting impact on your organization.
3. Actionable
Strong strategic goals are not only long-term and forward-focused—they’re actionable. If there aren’t operational goals that your team can complete to reach the strategic goal, your organization is better off spending time and resources elsewhere.
When formulating strategic goals, think about the operational goals that fall under them. Are they actionable steps your team can take to achieve your organization’s objective? If so, the goal could be a worthwhile endeavor for your business.
4. Measurable
When crafting strategic goals, it’s important to define how progress and success will be measured. For instance, the goal “become a household name” is valid but vague. Consider the intended timeframe to reach this goal and how you’ll operationally define “a household name.” The method of obtaining data must also be taken into account.
An appropriate revision to the original goal could be: “Increase brand recognition by 80 percent among surveyed Americans by 2030.” By setting a more specific goal, you can better equip your organization to reach it and ensure that employees and shareholders have a clear definition of success and how it will be measured.
Related: A Manager’s Guide to Successful Strategy Implementation
Prioritizing Strategic Goals
Once you’ve identified several strategic goals, determine which are worth pursuing. This can be a lengthy process, especially if other decision-makers have differing priorities and opinions.
To set the stage, ensure everyone is aware of the purpose behind each strategic goal. This calls back to Henderson’s point that employees’ alignment on purpose can set your organization up to outperform its competitors.
Calculate Anticipated ROI
Next, calculate the estimated return on investment (ROI) of the operational goals tied to each strategic objective. For example, if the strategic goal is “reach carbon-neutral status by 2030,” you need to break that down into actionable sub-tasks—such as “determine how much CO2 our company produces each year” and “craft a marketing and public relations strategy”—and calculate the expected cost and return for each.
The ROI formula is typically written as:
ROI = (Net Profit / Cost of Investment) x 100
In project management, the formula uses slightly different terms:
ROI = [(Financial Value - Project Cost) / Project Cost] x 100
An estimate can be a valuable piece of information when deciding which goals to pursue. Although not all strategic goals need to yield a high return on investment, it’s in your best interest to calculate each objective's anticipated ROI so you can compare them.
Consider Current Events
Finally, when deciding which strategic goal to prioritize, the importance of the present moment can’t be overlooked. What’s happening in the world that could impact the timeliness of each goal?
For example, the coronavirus (COVID-19) pandemic and the ever-intensifying climate change crisis have impacted many organizations’ strategic goals in 2020. Often, the goals that are timely and pressing are those that earn priority.
Crafting Goals for the Future
As you set and prioritize strategic goals, remember that your strategy should always be evolving. As circumstances and challenges shift, so must your organizational strategy.
If you lead with purpose, a measurable and actionable vision, and an awareness of current events, you can set strategic goals worth striving for.
Do you want to learn more about strategic planning? Explore our online strategy courses and download our free flowchart to determine which is right for you and your goals.
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Compare the Difference Between Similar Terms
Difference Between
Difference Between Short Term Planning and Long Term Planning
June 15, 2011 Posted by Piyu
The key difference between short term planning and long term planning is that short term planning focuses on an immediate period, especially in reference to revenue and profitability , whereas long term planning focuses on achievements for projected future .
In the current business context, business owners plan their businesses in terms of short term, medium term and long term. Short-term planning usually engages in processes that show results within a year. Some organizations use medium-term plans with results that take several years to achieve. Long-term plans, on the other hand, consist of overall goals of the organization established four or five years in the future and usually are based on reaching the medium-term targets.
1. Overview and Key Difference 2. What is Short Term Planning 3. What is Long Term Planning 4. Relationship Between Short Term Planning and Long Term Planning 5. Side by Side Comparison – Short Term Planning vs Long Term Planning in Tabular Form 6. Summary
What is Short Term Planning?
In most business situations, short term planning aims for an immediate period, which is less than a one-year time frame. Short term objectives drive towards short term expectations such as new product development, improving cash flow, etc. The vision of short-term planning is important to satisfy investors who want to see results or improving your company’s bottom line. As a result, the company can secure additional financing for longer-term goals.
However, organizations need to assure that short term planning facilitate long term achievements as well. For instance, the latest product launched should be able to secure the brand name of the company and should be consistent with the overall brand. Likewise, the strategies the company use to enhance cash flow should bring in additional revenue in ways which do not compromise the values of the organization and distract the entire mission.
Short term concerns like machine conditions, product complaints and skills of the employees may include solutions in short term planning. However, the corrective actions will have an impact on long term objectives as well.
What is Long Term Planning?
Long term planning focuses on achieving objectives which are set for the projected future. In most cases, companies want to solve problems permanently and to reach their overall targets.
Some consider the company’s strategic plan as long term planning. Long-term planning evaluates the threats the company may face in terms of social, economic and political situations, both locally and globally. Furthermore, long term planning focus on competitive situations like competitor behaviours, new products and possible changes of suppliers etc. It studies major capital expenditures such as purchasing equipment and facilities, implementing policies and procedures that strengthen the company’s profile to match top management’s ideas.
What is the Relationship Between Short Term Planning and Long Term Planning?
Planning is the most crucial part of a business. Basically, short term planning drives a company to find sustainable solutions, and in certain cases, short term planning will enable the company to handle drastic or unintended changes. However, sustainable solutions taken from short term concerns will lead the organization to achieve long term goals easily. In other words, short term goals are often stepping stones that contribute to achieving a long term goal.
What is the Difference Between Short Term Planning and Long Term Planning?
Short term planning is conducted for immediate or short term concern, and its outcome is expected in less than one year’s time. On the other hand, long term planning drives the company in a strategic direction where the stability of the company and long term goals are evaluated in the projected future. So, this is the key difference between short term planning and long term planning.
Generally, in short term planning, the company focuses on the prevailing situation of the business, especially in terms of internal issues. Some of these may include lack of training, customer complaints, high rejection rates, drastic management changes etc. Thus, the work out a mitigation plan where they can see the actions within a limited time span. However, in long term planning, the company focuses on both external and internal issue that might have an impact on the business. These external issues may involve political situation prevailing in the country, global economic changes etc. Therefore, we can consider this also as a major difference between short term planning and long term planning. Besides, short term goals are very straightforward, but long term goals are complex and much more tactical.
Summary – Short Term Planning vs Long Term Planning
The key difference between short term planning and long term planning is that the short term planning focuses on immediate actions, whereas long term planning focuses on the expected outcome for the projected future. Moreover, short term planning is often a stepping stone that contributes to achieving long term objectives.
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1. “2061633” (CC0) via Pixabay 2. “3295556” (CC0) via Pixabay
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About the Author: Piyu
Piyu holds a Postgraduate degree in Chemistry and an MBA with knowledge and experience in Compliance & Regulatory Affairs, Quality Assurance, Auditing and R&D
May 6, 2021 at 6:30 am
thank you for this info.:-)
May 31, 2021 at 9:36 am
Thanking for this information.
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Long-Term Financial Planning
Beyond the annual budget cycle and multi-year capital plan, governments need to identify long-term financial trends. Long-term financial planning involves projecting revenues, expenses, and key factors that have a financial impact on the organization. Understanding long-term trends and potential risk factors that may impact overall financial sustainability allows the finance officer to proactively address these issues. Going through a long-term financial planning process allows decision makers to focus on long-term objectives, encourages strategic thinking, and promotes overall awareness for financial literacy in an organization. Long-term financial planning creates commitment and motivation to provide a guide for decision-making.
Long-term financial planning relates to strategic planning, developing financial policies, capital improvement planning, and budgeting, but it is inherently different, as shown in the table below. Each process fulfills a different combination of planning purposes. As such, long-term financial planning is most valuable when accompanied by these other planning processes and often communicated together.
GFOA recommends that all governments prepare and maintain a long-term financial plan that projects revenues, expenses, financial position, and external factors for all key funds and government operations at least five years into the future. Governments that utilize debt financing and/or utility rate setting should consider a long-term financial plan greater than five years. The plan should be reviewed on an annual basis and updated as needed or as major assumptions change. Long-term financial planning should be the starting point for capital planning, developing operating budgets, estimating revenue, and other planning processes.
When fully embraced by an organization, long-term financial planning can have many benefits including:
- Creating a long-term outlook into other planning processes like budgeting, capital planning, and revenue forecasting
- Helping to diagnose potential risks and causes of fiscal distress
- Stimulating “big-picture thinking”
- Providing a tool for evaluating long-term compliance with financial policies
- Allowing for pre-emptive action to mitigate forecasted financial distress
- Defining parameters for decision-making
- Communicating long-term financial position to residents and other stakeholders, including rating agencies and bond investors.
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What Is Business Planning?
Why business planning isn't just for startups.
Susan Ward wrote about small businesses for The Balance for 18 years. She has run an IT consulting firm and designed and presented courses on how to promote small businesses.
:max_bytes(150000):strip_icc():format(webp)/SusanWardLaptop2crop1-57aa62eb5f9b58974a12bac9.jpg "long term planning definition business")
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Business planning takes place when the key stakeholders in a business sit down and flesh out all the goals , strategies, and actions that they envision taking to ensure the business’s survival, prosperity, and growth.
Here are some strategies for business planning and the ways it can benefit your business.
Business planning can play out in many different ways. Anytime upper management comes together to plan for the success of a business, it is a form of business planning. Business planning commonly involves collecting ideas in a formal business plan that outlines a summary of the business's current state, as well as the state of the broader market, along with detailed steps the business will take to improve performance in the coming period.
Business plans aren't just about money. The business plan outlines the general planning needed to start and run a successful business, and that includes profits, but it also goes beyond that. A plan should account for everything from scoping out the competition and figuring out how your new business will fit into the industry to assessing employee morale and planning for how to retain talent.
How Does Business Planning Work?
Every new business needs a business plan —a blueprint of how you will develop your new business, backed by research, that demonstrates how the business idea is viable. If your new business idea requires investment capital, you will have a better chance of obtaining debt or equity financing from financial institutions, angel investors , or venture capitalists if you have a solid business plan to back up your ideas.
Businesses should prepare a business plan, even if they don't need to attract investors or secure loans.
Post-Startup Business Planning
The business plan isn’t a set-it-and-forget-it planning exercise. It should be a living document that is updated throughout the life cycle of your business.
Once the business has officially started, business planning will shift to setting and meeting goals and targets. Business planning is most effective when it’s done on a consistent schedule that revisits existing goals and projects throughout the year, perhaps even monthly. In addition to reviewing short-term goals throughout the year, it's also important to establish a clear vision and lay the path for your long-term success.
Daily business planning is an incredibly effective way for individuals to focus on achieving both their own goals and the goals of the organization.
Sales Forecasting
The sales forecast is a key section of the business plan that needs to be constantly tracked and updated. The sales forecast is an estimate of the sales of goods and services your business is likely to achieve over the forecasted period, along with the estimated profit from those sales. The forecast should take into account trends in your industry, the general economy, and the projected needs of your primary customers.
Cash Flow Analysis
Another crucial component of business planning is cash flow analysis. Avoiding extended cash flow shortages is vital for businesses, and many business failures can be blamed on cash flow problems.
Your business may have a large, lucrative order on the books, but if it can't be invoiced until the job is completed, then you may run into cash flow problems. That scenario can get even worse if you have to hire staff, purchase inventory, and make other expenditures in the meantime to complete the project.
Performing regular cash flow projections is an important part of business planning. If managed properly, cash flow shortages can be covered by additional financing or equity investment.
Business Contingency Planning
In addition to business planning for profit and growth, your business should have a contingency plan. Contingency business planning (also known as business continuity planning or disaster planning) is the type of business planning that deals with crises and worst-case scenarios. A business contingency plan helps businesses deal with sudden emergencies, unexpected events, and new information that could disrupt your business.
The goals of a contingency plan are to:
- Provide for the safety and security of yourself, your employees, and your customers in the event of a fire, flood, robbery, data breach, illness, or some other disaster
- Ensure that your business can resume operations after an emergency as quickly as possible
Business Succession Planning
If your business is a family enterprise or you have specific plans for who you want to take over in the event of your retirement or illness, then you should have a plan in place to hand over control of the business . The issues of management, ownership, and taxes can cause a great deal of discord within families unless a succession plan is in place that clearly outlines the process.
Key Takeaways
- Business planning is when key stakeholders review the state of their business and plan for how they will improve the business in the future.
- Business planning isn't a one-off event—it should be an ongoing practice of self-assessment and planning.
- Business planning isn't just about improving sales; it can also address safety during natural disasters or the transfer of power after an owner retires.
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- Balancing Long-Term and Short-Term Financial…
Balancing Long-Term and Short-Term Financial Planning
Businesses concerned only with short-term goals overcome immediate challenges but fail to prevent their recurrence. Alternatively, businesses with only long-term goals may not last long enough to see them reached. Finding an adaptable middle ground between these two attitudes is a balancing act that senior financial analysts, finance managers, investment bankers, and other professionals must perform when making a financial plan.
Professionals capable of finding the balance between optimism and realism are compensated handsomely for their expertise and efforts: financial managers make an average yearly salary of nearly $130,000. As we discuss how to balance long-term and short-term financial planning, a valuable skill in virtually any field, consider where a career in finance could take you. Earning a Master of Business Administration (MBA) with a concentration in finance could lead to your next big career move.
Building Upon Short-Term Goals
Short-term financial planning is about solving immediate problems and developing strategies that will lead to results, usually within one year. Short-term goals should be achievable and adaptable to emerging circumstances. Let’s take a look at several common short-term goals and see how they translate into long-term success.
Reach Revenue Targets
Increasing revenue by the end of the fiscal year is a common goal for financial professionals, but accomplishing this task is not as simple as charging more for products or services, having employees work longer hours, or taking unnecessary risks—especially if you hope to establish sustainable business practices. Incorporating more forward-thinking strategies, such as broadening your audience or recruiting a loyal workforce, can ensure that your immediate fiscal growth continues into the future.
Resolve Cash Flow Issues
Cash flow issues are not automatically resolved when a company turns a profit. Business leaders who fail to account for how cash flows in and out of their company could experience record profits one month and payroll issues the next. Balancing long-term and short-term financial planning means more than just surviving from month to month. A strong financial plan will ensure that there are always enough cash reserves, especially during times of economic uncertainty, by budgeting for expenses accordingly.
Choose the Ideal Business Structure
From mom-and-pop stores to large corporations, every business needs to be properly structured. According to the U.S. Small Business Administration , “[t]he business structure you choose influences everything from day-to-day operations, to taxes, to how much of your personal assets are at risk.” Choosing the ideal structure for a business means saving money in the present and setting a company up for success in the future.
Find Sources of Funding
The axiom “it takes money to make money” will stay with you throughout your career in finance. Whether it’s a loan or investment, finding a reliable source of funding is often necessary to get a venture off the ground. Still, there’s no need to think of this as a necessary evil. Countless business partnerships have been born from these arrangements and are often instrumental in ensuring a company’s long-term success.
Long-Term Financial Planning
Once short-term goals have been established, it’s time to create a five- or ten-year plan that will see your company’s mission realized. Where will your company be in a decade? It’s okay if you don’t have the answer to that question just yet. That’s what long-term financial planning is for.
What is long-term financial planning? According to the Government Finance Officers Association (GFOA), long-term financial planning is “the process of projecting revenues and expenditures over a long-term period, using assumptions about economic conditions, future spending scenarios, and other salient variables.” Although the GFOA deals with government agencies, the principles of their long-term financial planning definition apply to businesses as well. Essentially, financial professionals are meteorologists who forecast budgetary needs instead of the weather.
To plan for these needs effectively, businesses should have SMART long-term financial goals. As outlined in Forbes , SMART stands for: specific, measurable, attainable, relevant, and time-bound. It may be tempting to keep a long-term financial goal broad—remain profitable, for example—but your long-term goals should be as well defined as your short-term goals. If your company has a short-term goal to generate $1,000,000 in net income in one year, you may also want to consider a long-term five-year goal of generating $5,000,000 in net income annually.
To achieve these long-term goals, you’ll need a financial plan that includes the following elements:
- Income statement: a statement used to determine profits and losses in a fiscal quarter or year.
- Cash flow projection: a prediction of how cash is expected to flow in and out of a business.
- Balance sheet: a summary of a business’s assets, liabilities, and equity.
Where do you get the data and information for these elements of a financial plan? By using the same processes established to achieve your short-term goals. When you build upon the lessons learned in a single year, you set the stage for achieving your long-term goals. You’ll still have to balance optimism with realism, but short- and long-term goals should both be part of your overall financial plan.
Planning for the Future
Long-term and short-term financial planning are two sides of the same coin. You can’t plan for the future without considering current needs. Similarly, you can’t plan for a lifelong career in finance without first considering your immediate next steps. Before enrolling at UT Permian Basin, all of the students in our online MBA program with a concentration in finance had to consider this very dilemma, and they all arrived at the same conclusion.
An MBA is a versatile degree with almost limitless potential, and an MBA with a concentration in finance will only make you a more viable candidate for lucrative positions. If you’re looking to establish a career in finance or advance at your current company, our program can help you get there. At The University of Texas Permian Basin, you will:
- Learn to analyze and interpret financial information.
- Explore multiple aspects of investment, economics, and accounting.
- Nurture your business acumen and leadership skills.
Many of our students already have established careers and demanding schedules. Fortunately, our MBA in finance program is 100% online and can be completed in as little as 15 months, which means you can continue working while pursuing your education. If your personal long-term goal is to rise through the ranks and obtain a high-paying paying position in the field of your choice, an MBA with a concentration in finance can help you achieve it.
Learn more about UT Permian Basin’s online MBA program with a concentration in finance .
https://www.forbes.com/sites/forbessanfranciscocouncil/2019/04/03/how-to-create-a-long-term-plan-for-your-small-business/#20fd1dde5b1b
https://www.sba.gov/business-guide/launch-your-business/choose-business-structure
Business Management: 4 Types of Planning
Posted July 7, 2017 | Business
Business planning seems like it would be something that organizations do well, given the near self-evident importance of the concept. Yet, that is not necessarily the case. “In my experience leading dozens of business planning workshops in countries all over the world, I’d say only about 10% to 15% of teams I’ve encountered have an effective business planning process,” according to author and business plan expert Tim Berry in Entrepreneur .
Organizations should develop a better understanding of how to approach business planning. The following sections expand on the topic and the four types of planning.
“Planning is about managing resources and priorities in an organized way,” Berry says. “Management is related to leadership, and it’s related to productivity.”
If companies improve how they plan, managing and leadership will also improve. The following steps can help businesses plan better.
- Devise a Plan : Write important details down and focus on strengths, what matters, what people are most important to you and what you can do for them. This will help you communicate your vision to your employees.
- Define Success: How do you see your business in several years? Define long-term goals and be specific. Establish milestones for certain goals and who will achieve the goals. Look at what drives your business; it may be presentations, conversions, page views or something else. Then establish a review schedule and re-examine your long-term goals as necessary.
- Put It in Motion : Track and analyze numbers to help you manage the work behind the numbers. You’ll be better able to make changes — or to develop new plans — that will help you manage better.
The 4 Types of Plans
Operational planning.
“Operational plans are about how things need to happen ,” motivational leadership speaker Mack Story said at LinkedIn. “Guidelines of how to accomplish the mission are set.”
This type of planning typically describes the day-to-day running of the company. Operational plans are often described as single use plans or ongoing plans. Single use plans are created for events and activities with a single occurrence (such as a single marketing campaign). Ongoing plans include policies for approaching problems, rules for specific regulations and procedures for a step-by-step process for accomplishing particular objectives.
Strategic Planning
“Strategic plans are all about why things need to happen,” Story said. “It’s big picture, long-term thinking. It starts at the highest level with defining a mission and casting a vision.”
Strategic planning includes a high-level overview of the entire business. It’s the foundational basis of the organization and will dictate long-term decisions. The scope of strategic planning can be anywhere from the next two years to the next 10 years. Important components of a strategic plan are vision, mission and values.
Tactical Planning
“Tactical plans are about what is going to happen,” Story said. “Basically at the tactical level, there are many focused, specific, and short-term plans, where the actual work is being done, that support the high-level strategic plans.”
Tactical planning supports strategic planning. It includes tactics that the organization plans to use to achieve what’s outlined in the strategic plan. Often, the scope is less than one year and breaks down the strategic plan into actionable chunks. Tactical planning is different from operational planning in that tactical plans ask specific questions about what needs to happen to accomplish a strategic goal; operational plans ask how the organization will generally do something to accomplish the company’s mission.
Contingency Planning
Contingency plans are made when something unexpected happens or when something needs to be changed. Business experts sometimes refer to these plans as a special type of planning.
Contingency planning can be helpful in circumstances that call for a change. Although managers should anticipate changes when engaged in any of the primary types of planning, contingency planning is essential in moments when changes can’t be foreseen. As the business world becomes more complicated, contingency planning becomes more important to engage in and understand.
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What Is Long-Term Care Planning?
Long-term care includes a number of personal care services that may be required for people who have ongoing health conditions. Setting up a plan for this is important to ensure that you or your loved ones are taken care of if it becomes necessary. It also lets you work the prospective financial costs of them into your financial plan. The plan should also define the types of care you or your loved one might need access to. Working with a financial advisor can help you make sure you’ve got a plan in place to pay for any long-term care you may require.
What Is Long-Term Care?
The phrase “ long-term care ” refers to a wide range of services that are necessary for people who suffer from debilitating health conditions or disabilities. This type of care is totally different from normal healthcare, such as doctor’s visits or medicine. Instead, long-term care covers custodial care, which involves aiding people with bathing, using the bathroom, eating and more.
While most who need this type of help are in their elderly years, long-term care can technically apply to anyone. So if you or a loved one simply isn’t able to care for themselves properly anymore, long-term care could be an option. Younger people who suffer accidents or diseases like multiple sclerosis often need a long-term care plan in place for them.
Planning for Long-Term Care Services
At its core, long-term care planning involves making sure that you or your loved one has their needs fully taken care of when they stop being able to care of themselves. As a result, a practical plan becomes increasingly important as you get older. Although many people are self-sufficient well into their older years, it never hurts to prepare.
The creation of a long-term care plan involves accounting for a spectrum of factors. Perhaps the most obvious is the care itself. Start by examining what kinds of services are available around you and if they can cover you or your family member’s needs.
Once you know the landscape, you’ll be able to make an informed decision as to what you’ll need to save and pay for these services. In many states, you can even have a relative provide care themselves and receive payment for doing so. It also might be a good idea to look at insurance policies that cover long-term care to see if they can help out.
Ways to Pay for Long-Term Care
Saving money is the most obvious way to pay for long-term care services. This is easier said than done, though, as many other costs come into play here. But if you have the extra income to begin putting a savings plan together, this puts all the control in you and your family’s hands.
One of the most common ways of planning for long-term care is through the purchase of asset-based long-term care insurance . These policies cover medical expenses that wouldn’t normally receive coverage through traditional health insurance. This will come in handy under many circumstances, including if you or a loved enters a nursing home. Round-the-clock attention in a nursing home can cost more than $90,000 annually, meaning your savings will disappear pretty quickly.
When it comes to long-term care insurance, coverage benefits typically kick in when the policyholder is unable to do certain daily activities, such as eat independently or bathe themselves. However, different policies cover different ranges of long-term care services. Certain hybrid policies allow you to collect life insurance benefits, should you not need long-term care. Medicare and Medicaid may also help cover certain costs. Unfortunately, the scope of these is weak, and individuals with a higher net worth are not eligible.
If you own a home and find yourself unable to cover the sometimes extreme costs of long-term care, a reverse mortgage could be your savior. You must be at least 62 years old to qualify for this type of loan, along with some other stipulations. But if you’re eligible, it will allow you to cash out on the equity you hold in your home, giving you a way to pay for the services you or your loved one needs.
Other Considerations for Your Long-Term Care Plan
There are several things you’ll need to take into account when it comes to deciding how to plan for long-term care. Insurance is a viable option, but make sure you have enough money to cover emergency expenses as well. You should also be familiar with what kinds of long-term care services the government might cover.
Should you require any of these services, another important factor will be deciding what to do with your home. People usually prefer to stay in their homes and have services come to them for as long as possible. However, moving to a nursing home and making long-term care more accessible will be less expensive. Selling your home can also help pay for any out-of-pocket expenses you may incur.
If you or a loved one becomes disabled and ends up needing long-term care, chances are that the person won’t be able to make proper decisions about their finances, assets and even medical wishes. Therefore, it pays to have a plan in place for their estate as well.
Be sure to discuss finances with your loved ones and dependents. If you haven’t already, you should work with a financial advisor or lawyer to create an advance directive too.
Bottom Line
Long-term care planning may not be the easiest topic to discuss. However, it’s incredibly important that you plan for it before you actually need it. Failing to plan for long-term care can have major financial and health-related consequences. Furthermore, you run the risk of not being able to properly meet certain needs. This could then force you to sell assets or property to cover those costs.
There are a plethora of viable ways to prepare for long-term care. Figure out if long-term care insurance is right for you and determine which government resources can help. While you’re at it, you should also build an advance directive or living will .
Tips to Help You Save for the Future
- Many financial advisors specialize in helping people plan for long-term care needs. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now .
- Do your research when looking into long-term care insurance providers. You can start by checking out SmartAsset’s list of the best long-term care providers .
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Long-range planning can be defined as the processes used to implement an organization's strategic plan. It's about aligning the business' long-term goals and developing action plans in line with the strategic plan. Depending upon the type of business, the time scale for long-range plans can vary from three years through to one or two decades.
Long-term planning displays how your business can be successful over a continued period. The goals set in long-term planning are less likely to be changeable due to the consensus a management team needs when creating them initially. Long-term goals can factor in these concepts to reach success: Sales Brand awareness of your product
Strategic planning helps firms prepare proactively and address issues with a more long-term view. They enable a company to initiate influence instead of just responding to situations. Among the primary benefits derived from strategic planning are the following: 1. Helps formulate better strategies using a logical, systematic approach
Strategic planning is a management tool that guides your business to better performance and long-term success. Working with a plan will focus your efforts, unify your team in a single direction, and help guide you through tough business decisions.
Long-term plans include the overall goals of the company set four or five years in the future and usually are based on reaching the medium-term targets. Planning in this way helps you...
Plans can be long-term, which are meant to account for future changes, or for emergencies whenever anything unexpected arises. There are many benefits to succession planning, including...
It's the roadmap for your business. The outline of your goals, objectives, and the steps you'll take to get there. It describes the structure of your organization, how it operates, as well as the financial expectations and actual performance. A business plan can help you explore ideas, successfully start a business, manage operations, and ...
Long-term planning is rooted in your company's identity and purpose. It may have elements of specificity such as a goal to open a certain number of new stores over the next ten years. However, it is impossible to predict market conditions and current events over such an extended time frame.
Strategic planning is a helpful organizational process that, if executed effectively, can increase the likelihood that a company will successfully meet its goals. Additional benefits of strategic planning include: Building consensus and engagement of all stakeholders. Establishing systems of accountability.
Définir: Long-Term Planning signifie Planification à long terme. Long-Term Planning est un terme anglais couramment utilisé dans les domaines de l'économie / Economics - .Terme de popularité du terme 6/10 Que es Long-Term Planning? Definición: Long-Term Planning significa Langzeitplanung.
Long-range planning, or LRP, is a process that allows companies to set long-term goals and develop strategies to achieve them. That helps businesses stay on track and make sure they reach their goals. LRP is especially important in the supply chain context, where disruptions and unexpected events can ripple effects throughout the entire system.
Financial Plan: A financial plan is a comprehensive evaluation of an investor's current and future financial state by using currently known variables to predict future cash flows , asset values ...
What is long-term planning? Long-term planning involves goals that take a longer time to reach and require more steps; they usually take a minimum of a year or two to complete. They aim to permanently resolve issues and reach and maintain success over a continued period.
4. Measurable. When crafting strategic goals, it's important to define how progress and success will be measured. For instance, the goal "become a household name" is valid but vague. Consider the intended timeframe to reach this goal and how you'll operationally define "a household name.". The method of obtaining data must also be ...
Long term planning focuses on achieving objectives which are set for the projected future. In most cases, companies want to solve problems permanently and to reach their overall targets. Some consider the company's strategic plan as long term planning.
Long-term financial planning relates to strategic planning, developing financial policies, capital improvement planning, and budgeting, but it is inherently different, as shown in the table below. Each process fulfills a different combination of planning purposes. As such, long-term financial planning is most valuable when accompanied by these ...
Business planning is when key stakeholders review the state of their business and plan for how they will improve the business in the future. Business planning isn't a one-off event—it should be an ongoing practice of self-assessment and planning.
According to the Government Finance Officers Association (GFOA), long-term financial planning is "the process of projecting revenues and expenditures over a long-term period, using assumptions about economic conditions, future spending scenarios, and other salient variables.". Although the GFOA deals with government agencies, the principles ...
What is planning? (Meaning and definition) ... Long-term planning involves making plans for the business's long-term future. Businesses usually make long-term plans for five to 15 years in the future. Long-term resource allocation and strategies for technological and market advantage are common considerations for long-term planning.
Strategic planning includes a high-level overview of the entire business. It's the foundational basis of the organization and will dictate long-term decisions. The scope of strategic planning can be anywhere from the next two years to the next 10 years. Important components of a strategic plan are vision, mission and values. Tactical Planning
Long-term care includes a number of personal care services that may be required for people who have ongoing health conditions. Setting up a plan for this is important to ensure that you or your loved ones are taken care of if it becomes necessary. It also lets you work the prospective financial costs of them into your financial plan.
Long-term goals take time to achieve and require patience and adequate planning. Important follow-up steps to establishing long-term goals include prioritizing those goals, and then...
4 common questions about long-term care and how to pay for it. Research continues to support findings that suggest more than 50% of adults aged 65 or older will experience serious long-term care ...