In 2018, BP decided it no longer wanted to be an “oil giant” – associated with greed and pollution.
Instead, according to its new mission statement, it was dedicated to “reimagining energy for people and our planet. We want to help the world reach net zero and improve people’s lives.”
These weren’t just words.
BP produced a business plan to support its new purpose, including ambitious commitments like a 10-fold increase in low-carbon investment and reducing emissions by 30-35% – all by 2030.
So while its quarterly and annual reports show how BP is performing short-term, it’s working towards a long-term vision.
I wanted to share this example of how a corporate does its planning, because this is the beginning of a new year…
…And that means that lots of companies are hard at work, implementing their exciting new “Business plan for 2022.”
If you put one together, you might be congratulating yourself for getting ahead of the curve…
…And so you should!
An annual plan helps you grow in a focused, purposeful way and too many companies suffer because they don’t have one.
The problem is, while planning ahead for 12 months feels “long-term”, in business terms it’s pretty brief.
Building a solid, thriving business requires looking much further ahead – several years if not a full decade.
You need to map out what your business looks like when it’s “done”. For example…
How big you want it to get…
What kind of role you want your company to play for your customers, staff and in the wider community…
What structures, equipment and people you’ll need in place for a business like that…
How your own lifestyle fits in – and what your exit plan is…
…Because none of those things happen by accident.
It can take years to get the right pieces of the puzzle in place.
And you just can’t do that if you’re only planning year-by-year.
It’s a bit like building a new house.
Your construction company needs to see the full architectural plans before they get started, for the end-product to look right.
It’s no use getting the plans for the kitchen, then seeing the plans for the bathroom, then for the 2nd floor extension…
Your house will end up a confused mess!
Corporates like BP take this for granted. They have long-term plans, providing a comprehensive picture of what their business will accomplish over the next 5-10 years.
And each year, they work out the immediate steps they’re going to take to get there – for example, what their sales and profitability goals are and what their budget looks like for the next 12 months. Plus, which marketing initiatives they need to launch, what their hiring priorities must be and so on.
Similarly, alongside your own plans for 2022, you also need a detailed picture of where you want your business to be in 2025… 2027… And even 2030.
The two work hand-in-hand.
When you work with us on your financial management, we help you plan both long-term and short-term.
You see, you can’t separate business planning from financial planning.
For example, if your ambition is to double in size by 2026, how are you going to finance all the new equipment, a new office, more salaries and marketing campaigns?
Or if you’d like to exit the business by 2027, how are you going to maximise profit to make your company attractive to a buyer?
These are the kinds of things you need to think about now, if you’re serious about growth and serious about building a professionally-run company.
If that’s something you’d like help with, hit ‘reply’ to this email or call us on 01279 647 447.
We help businesses turning over more than £1 million get the financial management that corporates take for granted so you can grow much faster and maximise your profits. And we’d love to help you too.
Warmly,
Garry
