Quick Links: Return To Entrepreneur’s Resource Center

How to Create a Long-Range Plan

Digital Library > Building and Inspiring an Organization > Strategic planning “How to Create a Long-Range Plan”

As successful companies grow, they sometimes lose focus, getting sucked away to peripheral markets that seem attractive at that moment. There is a way to maintain — or regain — the power of your core competencies without curbing your growth.

OVERVIEW [top]

In the rush to get to market and begin business, companies often skip over key elements, such as putting their mission statement into print and creating a plan to ensure the business remains on track. As a result, a company may lose its direction even as it continues to be successful in the short term. This Quick-Read presents ways to use the mission statement to create a long-range plan that keeps the company targeting only its most-profitable niches.

In this Quick-Read you will find:

  • How to set goals based on the mission statement.
  • How to establish a long-range plan.

SOLUTION [top]

As successful companies grow, they often follow the profits, taking work in new areas that shift the business away from its core competencies. This can ultimately lead to problems when that new business line begins to fade and the company has lost its central objective. To avoid this trap and keep the company strategically focused, a mission statement and long-range plan derived from that statement must be articulated and put in writing.

A long-range plan is a set of goals (usually five to ten) that outlines the path for the company’s future. When the long-range plan is in place, a strategic plan should be developed to define the objectives and actions necessary to achieve the goals spelled out in the long-range plan.

The Mission and Vision Statements Serve as the Guide

The mission statement and vision statement define the business and its customer base. They serve as the foundation for the company’s approach to the market and keep it on track with adjustments as changes occur. The process of creating these statements begins with self-analysis by the owner to define his or her vision for the company.

When your company activities are aligned with good mission and vision statements, drafting a long-range plan should just take a few meetings over a few weeks, with time spent between meetings incubating ideas and optimizing phrasing. Once it has been created, the plan should be consulted whenever there are major business decisions — and either followed or adjusted.

Set Goals

To identify goals for a long-range plan, answer the following questions:

  1. What do we do best? What is our core competency?
  2. What are our strengths and weaknesses? SWOT analysis (strengths, weaknesses, opportunities and threats) is a widely used element of strategic planning described in greater detail in the companion Quick-Read Solution "Doing a SWOT Analysis for Your Company."
  3. What opportunities and threats should we be considering? What are our competitors’ strengths and weaknesses and how can they be adopted or exploited?
  4. Where do we want our business to be one year from now? Five years? Ten?
  5. Do we have the personnel and resources to go there?
  6. What does our existing and potential customer base want? Are any current or developing niches in our target market not being exploited?

In examining the company’s position, input should be gathered from all sources, especially front-line employees and customers, both of whom intimately know the company’s key strengths and weaknesses.

Be careful to be specific and set goals that truly reflect the company’s mission. Goals may be specific and measurable: to have X% of the Y market by year Z, to have N product lines offered in M markets by year Z. They may be general and immeasurable: to be recognized as the most customer-service-oriented company in the business.

Write the Long-Range Plan

If possible, involve owners, board members, and senior executives in writing the plan. If any of them perceive different goals than the others, this is the best possible time to eliminate the problem and ensure that future efforts will be united. Owners of proprietorships normally do most of the plan preparation with the aid of senior staff members.

The long-range plan should provide guidance for all areas of activity in the company:

  • Approaches to Market — These are specific statements that summarize how the company plans to accomplish its mission. In other words, what is your company’s unique way of reaching the market?
  • Marketing Message and Direction — Is the proper market being reached with the proper message in an appropriate frequency? What is the new message? What direction are you heading with your marketing?
  • Measurable Sales Goals — These should be based on the assessment of existing markets. How much are we selling now, how much do we want to sell in the future? Examples of what can be measured: increased unit volume, increased profits or increased sales leads.
  • Measurable Operational Goals — Set specific goals such as zero invoice errors, zero delivery errors or more production per shift.
  • Measurable Feedback Improvements — Identify ways to improve customer satisfaction and then measure progress. Tracking increases in customer-service ratings obtained via surveys is one possibility.

Implement the Plan

  1. Translate your goals into specific action plans for each department.
  2. Prioritize required resources.
  3. Ensure consistency between departments: Each department plan must be brought together with action plans for other departments to ensure they mesh. For instance, the marketing department’s goal of expanding into new sales territories may require additional equipment (laptops, wireless phones) from administration or additional staffing and training via human resources.
  4. Review annually. The long-range plan should be reviewed at least once a year to be sure it reflects changes in the company’s position and its markets.

REAL-LIFE EXAMPLE [top]

Jeff Brown of J.S. Brown & Co. in Columbus, Ohio, headed a booming remodeling business that grew steadily from its start in 1978 until 1985, when it was doing $400,000 in sales. But Brown realized the growth was untargeted, comprising any construction work offered. This included roofing, siding, major remodelings and even new homebuilding.

In 1986 he wrote his first true mission statement by analyzing what work the company did best, what employees enjoyed doing and where open niches existed. This focused the company on upscale major remodelings. "The net profit is better, we enjoy seeing to the details that homeowners expect at that level and few in our area were doing that type of work very well," he explains. He opened an office and cabinet shop near the section of town where demographics focused this work, and he eliminated all other types of construction to focus marketing efforts in this niche.

Ten years later revenues had more than tripled, from $400,000 in 1986 to $1.5 million in 1996. He fine-tuned the strategic plan to expand on the base he had built, and in 1998 the company did $2.4 million in business — with some of that coming from niches that had been abandoned 10 years earlier. "Once we had our base intact and had a structure written into our strategic plan to approach other types of work, we could return to those areas we’d left and re-establish ourselves by creating new divisions to handle those needs." The new divisions began by serving existing customers, and they are expanding from there. The company now has five divisions: custom remodeling, landscaping, custom millwork, custom interior finishes and new home building.

DO IT [top]

  1. Think about what set the company apart when it opened. Has that changed? Was the change directed or did it simply evolve? Have the changes been strategic for the long-term or did they simply create short-term profit? Do the mission and vision statements reflect present reality?
  2. Look at the company as an outsider or customer, reviewing strengths and weaknesses to find areas of opportunity and improvement.
  3. Ask managers to report how their units contribute to the mission and what goals related to the mission could make them more effective.
  4. Communicate your strategy to all levels of your organization to ensure everyone is operating with the same goals. Link your long-range plan to employee performance and compensation.
  5. Refer to elements of the long-range plan frequently — whenever it can be used to provide guidance. It shows others that you consider the plan important and encourages them to refer to it.

RESOURCES [top]

Books

Developing Business Strategies by David A. Aaker. (Wiley, 1998). Aaker uses lots of jargon, but he identifies and gives examples of hundreds of elements that should be considered in long-range planning.

Strategic Thinking for Smaller Businesses and Divisions by William R. Lasher. (Blackwell Business, 1999). Lasher uses the term "strategic objectives" for long-range goals. The first quarter of Strategic Thinking is a guide to setting the mission statement and developing a long-range plan. The rest is about shorter-term strategic planning.

Internet Sites

"It’s True — Lead, and They Will Follow," by Barry J. Wolfson. Center for Strategic Planning, Inc.

enTarga Business Planning

Course and Direction Newsletter. Center for Simplified Strategic Planning, Inc.

Article Contributors

Writer: Craig A. Shutt

Related Articles...
Making Time for Growing the Business

Digital Library > Building and Inspiring an Organization > Time management “Making Time for Growing the Business” As any company grows, the number of issues an entrepreneur needs to keep track of grows with it. From basic bookkeeping to thorny tax issues, the paper chase seems endless. It can also be hazardous. "Ultimately, if you want business to grow, you

Read More ...
Building and Inspiring an Organization
Read More ...
Pondering: going one-on-one with yourself
Think back to when you launched your business. I doubt whether you dashed out and did it on a whim. You probably considered and reconsidered a million different areas: your product or service, your market, your competition, how to get money and what could go wrong. Some entrepreneurs’ think that this reflective time ends after you’re off and running in
Read More ...
Developing a Mission Statement

A well-constructed mission statement guides your company: focusing each employee’s work, defining your customer image and steering you through tough choices. We’ll show you how to create a compelling, effective mission statement.

Read More ...
Tips for Direct Mail Advertising Success

— provides tips for success in direct mail campaigns.

Read More ...