Speaker 1: Long-term planning for business or strategic planning is the hardest type of planning because the time frames over years and a huge amount can change within the business and also externally in the business environment with competitors and even the laws and regulations impacting the business. I'm going to take you through how to approach long-term planning for business, what to consider, what to avoid and how best to approach each stage. And long-term planning for business is not setting strategy nor the longer-term goals for the business. Long-term planning or strategic planning is about choosing the investments, the projects and the activities to bridge the gap between where the business is today and where it wants to get to, i.e. how are we going to make the chosen strategy a reality for the employees, customers and all the other stakeholders in the business. My name is Jess Coles and I've had a 25-year management career in Innocent Drinks, Fosters, EY, Peer Consulting and many other less well-known companies. I've sat on multiple boards devising strategy and I've also spent time in middle and senior management on long-term planning, working out the steps to turn strategy into reality. And if you use this channel, Enhanced.Training provides online business courses to help you improve personal performance and that of your team in business. And if you like this video, please give it a thumbs up and subscribe. So let's get straight into what to consider when undertaking long-term planning. The first step to start your long-term planning for business or your strategic planning is to be very clear about what your future state looks like. To start formulating what the future state of the business will look like, you might start with the purpose or the vision for the business. The vision or purpose should give you a picture of what you want the business to be in say five to ten years time. Your strategy outlines the key goals that you want to achieve for the business to fulfill its purpose or vision. The strategy of the business typically sets out the direction of the business over the next say two to five years. The timeframes depend on the growth rate of your business. The faster you are growing, the shorter the timeframes will probably need to be. The long-term planning for business or strategic planning tackles the how we're going to achieve the strategic goals. When thinking about the future state of your business, you should consider the trends in the marketplace and how you expect these trends to develop and impact your goals over the next two to five years. A PESTEL analysis is a good tool to use. The PESTEL tool will help you cover political, economic, social, technological and legal and environmental trends and market forces that you expect to impact your business. Another useful tool to use is Porter's five forces to understand the competitive forces at work in your industry. The five forces are competitive rivalry, supplier power, buyer power, threat of substitution and threat of new entry. Ask yourself what other external forces or marketplace dynamics are going to impact your business over the next couple of years. Your future state business model should also be reviewed as this may need to be significantly different from your business model today or parts of your business model may need to change to support achieving your strategic goals. Also consider how the financial funding of the business will need to be structured to best support investments and the business operations into the future. If you have a number of different business goals or options to choose, I suggest going through the strategic planning process at a high level for each of the options that you're considering and try and model out the factors discussed in this video. Having a better understanding of the upsides as well as the different risks including ability to implement of each of the options will help you choose the most suitable goals before embarking on a more detailed planning process. Use the tools and tips to create a clear future state for your long planning to help the business reach its goals. The second step in long-term planning for business or strategic planning is to look at your business current state with a critical eye. Really understanding exactly where you are today will help you plan out your next few steps. Don't allow yourself to paint too rosy a picture nor to a pessimistic picture of where the business is today. You are looking for realism and honesty. This will allow you to plan the next steps much more effectively and it will give you a long-term plan a better chance of success. For instance what are your current business capabilities? Is your team able to execute well or does it really struggle to turn plans into reality? The SWOT tool is a well-known and useful tool to look at your business and help define its key strengths and weaknesses. Think about how your business operates, what it does well and what it struggles with. Another really good tool to use is a business model analysis which maps out nine key areas. Customer segments, customer relationships, channels, value propositions, key activities, key resources, key partnerships and the cost structures and revenue streams of your business. You should also think very carefully about the team you have. List out their strengths and the areas in which they're not as strong. Considering your current team is one of the most important bits of analysis to do because people within the business are going to be making the decisions and doing the work to translate your long-term plans into reality. I suggest you also take a look at the key financial drivers of your business. What do you do that creates the profit and cash in the business? As you transition from the current state into the future state keep a close eye on how profit and cash generation change. Make sure you model out the various scenarios or options available within your long-term planning and their impact on the profit and cash of the business. Once you have as clear a picture as you can get of the future state that you want your business to get to and a realistic picture of the business today you can start thinking about planning out moving from your current state into your future state. Long-term planning for business or strategic planning is typically focused on the big steps needed to undertake the changes between the current state and the future state. I'm assuming that your annual planning or your tactical planning will add more detail and break down the big steps into shorter term projects and activities that will support the business taking the bigger steps captured in the long-term planning. So with that in mind the third step in long-term planning for business or strategic planning is to plan out how to bridge the gap between the current state and the future state. Start listing out all the changes that might need to be made and start listing down the options available now or ones that should be available to help you make the changes that you've identified. You know what are the key investments that the business will need to make over the next say one to five years. The investments might be recruiting new teams into the business to add new capabilities or it could be increasing capacity at factories or it could be entering new territories or building new products both physical and digital and so on. When you have a full plan for the investments you plan to make then how are you going to finance these? What change in financial structure is going to be needed if any? Changing the financial structure of a business can be used to offset changing business risk. For instance you might go from partially debt funded to fully equity funded or vice versa. Do you need to change the structure of your business to be better aligned to the future state? How will you go through this process? How will the products and services you offer change or be extended and what steps are needed to make these changes? And how will you provide these products and services? Will this continue in the same way as you're doing today or will this change? And if you change what are the steps that are needed to make this change? Go through all the areas of the business model the current states to the future states and identify what could and should change. As you take these steps keep asking yourself what are the external environment and the competition for instance likely to do in response to your changes? And how can we adjust our plans to maintain our advantages if we need to? Also keep asking yourself do we have the right skills and resources in the business to implement these steps? What would need to be changed or added to make implementation more likely to succeed? Carefully consider how easy or hard it will be to implement the changes. Always think about the sequencing and the dependency of the steps you are considering. You know for instance if step D fails to be implemented does this halt the overall implementation or can you fall back on step D option 2 for example? Ask yourself what needs to happen for step D to fail and each of the other steps you're considering. What are the chances of this happening and can you mitigate these risks either partially or fully? A critical part of any long-term planning for business is to ensure that you capture all the assumptions that you're making when creating your plan. A planning process gives you a sense of control over a lot of shifting elements. In reality you are likely to have little or no control of many of the elements such as you know competitors, regulation, other external market forces. So go through each of your assumptions and scenario plan a variance to the original assumption. Does the plan still work? At what point does the plan fall down? Does undertaking a specific set of steps mean the plan is much less likely to fail than going another route? All these questions are much easier to ask and the scenarios are much easier to check while the plan is still on paper and the pressures are substantially lower compared to being in the middle of an implementation and it's starting to go wrong and you don't have plan B already worked out. I can't stress enough the benefits of getting as many people as sensible to be involved in the planning process and to challenge the assumptions and try and find the holes. If you have enough people in the team assign a couple of them specifically to find the holes in the plan. Also plan out how you're going to flex your plan to unexpected events and areas or trends that you have little or no control over. Again going through the scenarios before having to face the actual events gives you a good head start in working out the best response while under a lot less pressure. Work through the steps needed in as much detail as sensible. The more time that elapses between today and the step you're planning reduce the amount of detail you go into. One certainty is that change will happen and you'll need to adjust your plan as time goes on. The fourth step in long-term planning for business or strategic planning is to successfully implement the long-term plan. The implementation of any long-term planning or strategic planning remains the hardest step and where too many businesses fall down. Firstly the overall plan must be implementable. The business and your people must have the capabilities and capacity to take the steps outlined in the strategic plan or be able to build both before the step is needed. Your long-term planning for business or strategic planning should remain at a higher level than say annual planning covering the broad steps needed. Your annual planning process should provide a more detailed plan of the steps to take on a month-to-month basis to ensure you hit your strategic plans main steps. The leadership and management teams need to keep on top of all the smaller steps to ensure that they're being delivered. Take care of the smaller steps and the bigger steps will largely take care of themselves assuming of course all the small steps are aligned correctly to the bigger steps. We go into how to implement planning steps in our videos on tactical and operational planning. See the info cards and look in the description below for the links. So in summary we have gone through four key steps in creating your long-term planning for business and suggested various tools that you can use to help identify the main steps that you should include in your plan to achieve your strategic goals. Do try to find holes in your plan and stress test each of your steps so you know when your plan is at risk of failure and you have a plan C, D etc ready for each of these scenarios that you've thought about. That said there will always be unexpected events or trends that will emerge from the left field. Build in enough flexibility and reviews of your plan to give yourself the best chance of incorporating these into your plan in time to keep everything on track. Good luck with your strategic planning and do take a look at the courses and resources available to help you at enhance.training. Thanks very much for watching and I look forward to speaking to you again soon.