How far ahead should you plan your business activity?

The question of how far in advance you should be planning various aspects of your firm’s operations is a really interesting one right now. The UK business world, for example, has now passed through some five years of Brexit uncertainty – and that particular story is far from over yet – to say nothing of how the coronavirus pandemic has further upended so many firms’ plans.

Is all of this seemingly constant, swirling uncertainty an argument for not really doing much forward planning for your business at all? The short answer is… no.

After all, there will always be unforeseen events – whether within your own life or company, or the wider world – that serve to knock your existing business planning off course. As a result, business plans are almost always “wrong”, in terms of how circumstances actually pan out – but that doesn’t make them any less crucial.

As the GOV.UK website explains, there are many reasons why it is a good idea to plan your business activity. These include the opportunity that it gives you to clarify your business activity, as well as to pick out potential problems before they arise, and measure how your firm is doing.

It should be no great surprise, then, that statistics cited by Harvard Business Review indicate that entrepreneurs who write formal plans are 16% likelier to achieve viability than otherwise identical business owners who don’t bother with such planning.

So, what would be the most suitable planning timeframe for you?

The key term here is probably “for you”, as much does depend on your business’s industry and what works for you – so there will likely be some element of ‘trial and error’ with your business planning over time. Referring back to HBR, it’s no accident that more experienced entrepreneurs also generally have a better success rate, as they have learned to spot what did and didn’t work in their previous business planning.

Some business owners may be the types to plan a whole year in advance, which is an approach that has become more fraught with difficulty in the COVID-19 era. But even before then, many entrepreneurs who depended purely on full-year-ahead planning found themselves feeling overwhelmed by such a long timeframe, or discovered that what was decided in their plan lost relevance as circumstances changed and there was a need to adjust.

But then again, attempting to plan your business on a month-to-month basis risks you ending up with the opposite problem, of feeling like you’ve barely got round to doing much in your plan before the next planning session comes around. If you don’t combine such an approach with some kind of year-forward planning, you might also overlook certain ‘big picture’ considerations for what you want your business to look like in 12 months or more to come.

All of this might lead you to conclude that a more ‘seasonal’ approach to your business planning – effectively putting together a plan every three months – would represent the ‘sweet spot’ that gives you a sense of the broader picture, while also helping to instil focused action.

But even if you do that – or stick to a month-by-month approach – we would strongly urge you to have at least an approximate overview of what you would like to achieve over the year as a whole. This, in turn, will guide you in setting those specific three-month or one-month goals (or whatever interval you do ultimately choose) along the way.

We’re ready and waiting to help with your business planning

Planning your business activities over an extended period of time may be just one component that will help determine its success or failure, but it is a fundamental one. It is also a strength of an entrepreneur to recognise that they will not be able to easily oversee and foresee every aspect of their business’s operations. This is just one reason why many owners of small and growing companies seek out outsourced business financial planning services like those of Practical CFO.

Are you ready to have that conversation about how our consultants and advisors could play a key role in your business’s negotiation of the unpredictable challenges of the year ahead – and beyond? If so, please do not hesitate to enquire now to the Practical CFO team.

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