How To Create A 5-Year Plan -- And Follow Through

Even if Joseph Stalin gave 5-year plans a bad name (for those who understand the Soviet history reference), there are actually some very good reasons why you should create one for your business. But, no matter how well-designed, a 5-year plan is no good if it is filed away and forgotten about. Here's how you can create a 5-year plan and follow through.

Why should I have a 5-year plan?

There are, perhaps, three main reasons for drawing up a 5-year plan:

1. It shows your bank or potential investors that you have a clear idea about where your business is heading.
2. A plan will focus your and your team's attention on a goal.
3. A plan inspires confidence in your business.

Plans can be more or less detailed but, when you are creating your plan, it should be more than a simple mission statement. For example, "In five years, we want to be bigger than Microsoft" is not a plan. When you make a 5-year plan, you do so to present the bigger picture in finer detail.

Your plan should therefore include the following information.

A clearly defined target

You should have a clear idea about where you want your business to be in five years. This implies that you have thought about how you are going to achieve your target and that you can achieve your aims. Be realistic.

Interim steps

Break your plan down into intermediate steps (five years, quarterly, weekly, etc.). This allows you to check on your progress and see what needs changing. We suggest five interim milestones.

Within these years, include short-term goals that will help you achieve those annual goals. For instance, if you want to grow your product line to include three new top-performing apparel lines within the year, your short-term goals could be:

• Grow your social media e-commerce by 10,000 followers
• Organize a virtual launch party
• Connect with five influencers to market your product

Seeing these steps may help you pace yourself, judge your progress and show investors that you've thought through your plan.

Financial details

Do you have enough money to carry out your plan? Do you have sources of financing? Will future sales cover the cost of expansion or your goals? You do not want to expose yourself to the danger of taking on too much debt and then not covering it.

What resources will I need?

What extra resources will you need as you move closer to your goal? Will you need more staff, more space, more equipment? Try to envision when you will need extra resources and include them in your interim steps.

How to draw up your plan

Cooperative effort

It's sometimes hard to see the reality of your business as the owner or manager. So making your plan a cooperative effort will bring in fresh points of view. Others may see things that you might have overlooked. The number of people you bring on board will depend on the size of your business.

Be realistic

Set achievable interim goals. You might believe that you can achieve an annual increase in sales revenue of 10%. Do others agree with you? Why not set an annual target of 7%? In other words, it's great to dream but don't set unrealistic targets. If you don't meet them, you and your staff could lose morale.

Following through

Regular review

Meet with your stakeholders and look at what is going well and what needs improving. These reviews should take place regularly, not just once a year. A review will show where you can make improvements and people can suggest how to make them.

Regular meetings

These meetings will be more formal than a review. Look at the interim steps as well as the overall goal. Are you on track or do you need more time? Do you need to switch resources from one area to another?

The next five years

If your plan is going well, start drawing up the next one before the current plan ends.

Conclusion

Even the best-laid plans hit bumps in the road, and just because you wrote your goals for the next five years down on paper doesn't mean they aren't susceptible to disruption. If this happens, don't give up. Simply reroute. Remember, following through doesn't always mean sticking to the original game plan.