Long Term Planning in Business

Long Term Planning in Business is one of the most challenging tasks faced by the modern business executive. Long Term Planning is usually for a time horizon greater than three years and deals with strategic planning.

The main difficulty with this type of business planning is trying to forecaste what will be happening in the market over extended periods. Some companies merely extrapolate their historical results, play around with the numbers a bit and believe they have produced a long term plan. At the other end of the scale sophisticated forecasting software, scenario planning and PEST analysis is used.

The mistake a lot of companies make is treating the long term plan as a chore that has to be completed periodically but that can then be ignored. A long term plan needs to be a living process and source of reference if it is to be effective. It has to be kept up to date reflecting changes in the PEST analysis and taking into account competitors strategies and tactics as they become known.

The real value of long term planning is not in the plan itself, which will need to be changed, but in the process of planning, thinking ahead and considering the potential impact of outside influences on your business.