Business has in recent years grown more and more about the immediate results and paybacks. According the Harvard Business review, pressures for CEOs to deliver quarterly results has only gone up, with many even caving in to the demands of the market.
Just some years back, we have seen many high profile cases where companies sacrificed their brand and long term strategy to the pressures of short term results. Just April last year, CEO of Facebook, Mark Zuckerberg has was testifying before congress about the company’s alleged disregard for people’s privacy on the matter of user data leaks for short-term profits.
While focusing only on short-term objectives and stock prices has some advantages, it doesn’t actually benefit shareholders. In a research by The McKinsey Global Institute, which looked at the success of corporations, it was discovered that organizations with long-term strategy had earnings that grew 36% faster on average than other companies overall.
A well-structured plan is essential for supporting long-term business growth. It provides direction, clarity, and a roadmap for achieving your business objectives over an extended period.
Here is how a well-structured plan can support long-term business growth:
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Clear Vision and Mission:
A clear vision and mission for your business are established through a plan, which also lays the groundwork for your long-term objectives. It guarantees that everyone in the company is aware of the goals and principles that guide the company.
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Helps with Critical Decision-Making:
The primary importance of a long- term business plan is that they help you make better decisions. Entrepreneurship is often an endless exercise in decision making and crisis management. Sitting down and considering all the ramifications of any given decision is a luxury that small businesses can’t always afford. That’s where a business plan comes in. Creating a robust business plan is a forcing function—you have to sit down and think about major components of your business before you get started, like your marketing strategy and what products you’ll sell. You answer many tough questions before they arise. And thinking deeply about your core strategies can also help you understand how those decisions will impact your broader strategy.
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Irons Out the Kinks:
Putting together a business plan requires entrepreneurs to ask themselves a lot of hard questions and take the time to come up with well-researched and insightful answers. Even if the document itself were to disappear as soon as it’s completed, the practice of writing it helps to articulate your vision in realistic terms and better determine if there are any gaps in your strategy.
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proves the Viability of the Business:
Many businesses are created out of passion, and while passion can be a great motivator, it’s not a great proof point.
Planning out exactly how you’re going to turn that vision into a successful business is perhaps the most important step between concept and reality. Business plans can help you confirm that your grand idea makes sound business sense.
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Sets better objectives and benchmarks:
Without a business plan, objectives often become arbitrary, without much rhyme or reason behind them. Having a business plan can help make those benchmarks more intentional and consequential. They can also help keep you accountable to your long-term vision and strategy, and gain insights into how your strategy is (or isn’t) coming together over time.
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Communicates Objectives and Benchmarks:
Whether you are managing a team of 100 or a team of two, you can’t always be there to make every decision yourself. Think of the business plan like a substitute teacher, ready to answer questions any time there’s an absence. Let your staff know that when in doubt, they can always consult the business plan to understand the next steps in the event that they can’t get an answer from you directly.
Sharing your business plan with team members also helps ensure that all members are aligned with what you’re doing, why, and share the same understanding of long-term objectives.
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Reduces Risk:
Entrepreneurship is a risky business, but that risk becomes significantly more manageable once tested against a well-crafted business plan. Drawing up revenue and expense projections, devising logistics and operational plans, and understanding the market and competitive landscape can all help reduce the risk factor from an inherently precarious way to make a living. Having a business plan allows you to leave less up to chance, make better decisions, and enjoy the clearest possible view of the future of your company.
