LRP Journal

Helping You With Your Business Plan

Long Range Planning In Business: Long-Term Business Planning Explained

A long-term business plan provides a vision for the future, but it should also offer a strategy for how to get there. A long-term plan can also be used as a yardstick against which progress can be measured. Long-term business plans are commonly designed to prepare the business for the next three to five years, but some companies use longer-term plans. It has been known for businesses to put together a fifty or hundred year plan, although these are less common and they have to be very flexible in order to cope with the difficulties of predicting the future at such a long range.

It is the impossibility of knowing what is going to happen in the future that makes long range business planning difficult, but this is also what makes a long-term business plan so useful. A long-term business plan should be flexible enough to cope with an unpredictable future. The extent to which the probabilities and possibilities of the future are taken into account when designing a long-term business plan can vary. Some businesses simply extrapolate their expectations for the future from their past performance, while others use sophisticated statistics and forecasting software to predict the changes that may occur.

The creation of a long-term business plan is in some ways similar to the design of a short-term plan. It is first necessary to understand how the business currently stands. The strengths and weaknesses of the business must be understood, as well as the opportunities and threats that are posed in both the short-term and the long-term. This is known as a SWOT analysis. Next, the long-term goals of the business are defined. It is usual to begin with some fairly vague goals, and then to gradually develop them into more specific ones. Eventually, each goal will be supported by a number of objectives or actions that will need to be completed. These objectives will be specific, achievable and measurable goals. As well as forming a path through which the desired goals can be achieved, they also offer a means through which progress can be measured by keeping track of how many of these objectives have been completed.

A good long-term plan should also take into account any predictions or forecasts that can be made about the future. The plan should provide guidance for how to react to various scenarios, including the worst-case scenario. Businesses and managers are often capable of coping with short-term, predictable risks. It is in preparing for the possibilities that are harder to predict that a long-term business plan can be most helpful. Planning how to react to different situations is the best way to be able to react quickly and decisively, whatever happens in the future. Anyone who is in business today will be all too aware that the world can change rapidly, and with very little warning.

A long-term business plan needs to be flexible. It also needs to be updated whenever there is an important change, and not just at the end of the period that the plan covers. There is no point sticking to a five-year plan for the whole five year period if a major new competitor arrives on the market after two years. A successful long-term plan will be a changeable, dynamic thing that affects how the business works and which can be updated when necessary.

The process of creating a long-term plan can be more important than the plan itself, which may need to be changed and rewritten. Simply taking the time to think about the future and to set goals and objectives can be very helpful for a business. It also ensures that a business is ready, whatever may happen in the future.

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