Business planning is important when starting out, and a solid plan can give the business direction. If there are multiple people involved, like two business partners, the plan also ensures that they’re both on the same page. They’re working toward similar goals, and they have an idea of how the company should grow.
But how much planning should you actually do? Some people consider writing a 10-year business plan. This can be helpful because it still gives you a sense of direction, so it’s likely better than not having a plan at all. But it also may not be ideal. There are some reasons to consider shorter business plans.
More flexibility
For one thing, a shorter plan gives you more flexibility, and the company can be fluid and respond to things in real time. Maybe the market changes because more competitors enter the scene or the prices of goods and materials go up. Perhaps the direction of the business changes because you and your business partner have a new idea for how you could be successful. If you rigidly stick to a plan that you wrote years ago, you may lose the ability to take advantage of these new opportunities.
Additionally, you simply have to consider how the business is doing and what makes sense for that situation. Say that you create a 10-year business plan, saying that by the end of that time, you hope that the business will be making $1 million annually. But if you get there in just five years, does that mean the business should grow stagnant because you’ve already accomplished your goal? Having a shorter business plan—such as one that is only focused on the next one to three years—could be beneficial because you can update your goals to reflect what’s really happening at the business.
No matter how you view it, it’s clear that planning in advance is crucial. Be sure you know what legal steps to take, what documents you need and how to create a plan that works for you and your company moving forward.