Steps to developing a five-year business plan.
Review your Mission, Vision and Values. Keep them handy and visible throughout this planning process. Goals should help fulfill the fundamental reason you exist (Mission), should bring you closer to what you want to be known for relative to competitors (Vision), and should align with the company’s core values.
Compete a SWOT Analysis. List the 4-5 Key Company Strengths, Weaknesses, Opportunities and Threats. Keep in mind that Strengths and Weaknesses are internal and about your organization, team and processes; and Opportunities and Threats are external and will be about market conditions, risk factors, competition and other impacts (economical, regulatory, etc.)
Put some additional thoughts on paper about your company’s history and where you are now. Answer these questions:
1. What do I (and team members) love most about our company?
2. What have been our biggest wins in the past? What has generated the most revenue, profitability and positive energy over the years?
3. What have been the most challenging times?
4. What are the best decisions we’ve made?
5. What are the decisions we came to regret most in hindsight?
6. How are we better than our competitors?
7. Where do our competitors best us?
8. Is our primary market growing? How much room is there to grow market share?
9. How is our current financial position? Cash flow, debt, ability to invest in growth?
10. Is our company profitable at or above industry standards?
Consider involving key team members in the SWOT Analysis and in answering these key questions as appropriate. Ask some or all in 1-1s with your key leaders to help create a clear picture.
Goal Identification & Selection
Consider these categories:
– Day-to-day work goals are directed at increasing your company’s everyday effectiveness. They may involve things like order tracking, office management, or customer follow-up.
– Problem-solving goals address specific challenges that confront your business, such as low employee morale or quality of service issues. List the two biggest problems that face your company, and then write goals that can solve them.
– Development goals encourage the acquisition of new skills and expertise, whether for your employees or for yourself.
– Innovation goals help you find new ways to improve the products or services that your company offers, how you market your company, and how you distribute and deliver what your company sells.
– Profitability goals set your sights on where you want your bottom line to be. When all is said and done, profit is the No. 1 goal for profit-making companies.
Revenue growth goals
– Market Penetration. The least risky growth strategy for any business is to simply sell more of its current product to its current customers.
– Market Development. The next rung up the ladder is to devise a way to sell more of your current product to an adjacent market-offering your product or service to customers in another city or state, for example.
– Alternative Channels. This growth strategy involves pursuing customers in a different way such as selling your products online, or creating subscription or SaaS models.
– Product Development. New products to sell to your existing customers
– New Products for New Customers. Sometimes, market conditions dictate that you must create new products for new customers, but this is the riskiest and most expensive strategy as it requires learning a new product and a new market.
Integrated Growth Strategy (M&A)
– Horizontal. Acquiring a competing business or businesses. Employing such a strategy not only adds to your company’s growth, it also eliminates another barrier standing in your way of future growth-namely, a real or potential competitor.
– Backward. A backward integrative growth strategy would involve buying one of your suppliers to better control your supply chain. Doing so could help you to develop new products faster and potentially more cheaply.
– Forward. Acquisitions can also be focused on buying component companies that are part of your distribution chain.
Acquisitions outside your current company to lower risk of dramatic impact to one specific industry or segment.