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What Is a Business Plan?

Understanding business plans, how to write a business plan, common elements of a business plan, how often should a business plan be updated, the bottom line, business plan: what it is, what's included, and how to write one.

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

A business plan is a document that details a company's goals and how it intends to achieve them. Business plans can be of benefit to both startups and well-established companies. For startups, a business plan can be essential for winning over potential lenders and investors. Established businesses can find one useful for staying on track and not losing sight of their goals. This article explains what an effective business plan needs to include and how to write one.

Key Takeaways

• A business plan is a document describing a company's business activities and how it plans to achieve its goals.
• Startup companies use business plans to get off the ground and attract outside investors.
• For established companies, a business plan can help keep the executive team focused on and working toward the company's short- and long-term objectives.
• There is no single format that a business plan must follow, but there are certain key elements that most companies will want to include.

Investopedia / Ryan Oakley

Any new business should have a business plan in place prior to beginning operations. In fact, banks and venture capital firms often want to see a business plan before they'll consider making a loan or providing capital to new businesses.

Even if a business isn't looking to raise additional money, a business plan can help it focus on its goals. A 2017 Harvard Business Review article reported that, "Entrepreneurs who write formal plans are 16% more likely to achieve viability than the otherwise identical nonplanning entrepreneurs."

Ideally, a business plan should be reviewed and updated periodically to reflect any goals that have been achieved or that may have changed. An established business that has decided to move in a new direction might create an entirely new business plan for itself.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. These include being able to think through ideas before investing too much money in them and highlighting any potential obstacles to success. A company might also share its business plan with trusted outsiders to get their objective feedback. In addition, a business plan can help keep a company's executive team on the same page about strategic action items and priorities.

Business plans, even among competitors in the same industry, are rarely identical. However, they often have some of the same basic elements, as we describe below.

While it's a good idea to provide as much detail as necessary, it's also important that a business plan be concise enough to hold a reader's attention to the end.

While there are any number of templates that you can use to write a business plan, it's best to try to avoid producing a generic-looking one. Let your plan reflect the unique personality of your business.

Many business plans use some combination of the sections below, with varying levels of detail, depending on the company.

The length of a business plan can vary greatly from business to business. Regardless, it's best to fit the basic information into a 15- to 25-page document. Other crucial elements that take up a lot of space—such as applications for patents—can be referenced in the main document and attached as appendices.

These are some of the most common elements in many business plans:

• Executive summary: This section introduces the company and includes its mission statement along with relevant information about the company's leadership, employees, operations, and locations.
• Products and services: Here, the company should describe the products and services it offers or plans to introduce. That might include details on pricing, product lifespan, and unique benefits to the consumer. Other factors that could go into this section include production and manufacturing processes, any relevant patents the company may have, as well as proprietary technology . Information about research and development (R&D) can also be included here.
• Market analysis: A company needs to have a good handle on the current state of its industry and the existing competition. This section should explain where the company fits in, what types of customers it plans to target, and how easy or difficult it may be to take market share from incumbents.
• Marketing strategy: This section can describe how the company plans to attract and keep customers, including any anticipated advertising and marketing campaigns. It should also describe the distribution channel or channels it will use to get its products or services to consumers.
• Financial plans and projections: Established businesses can include financial statements, balance sheets, and other relevant financial information. New businesses can provide financial targets and estimates for the first few years. Your plan might also include any funding requests you're making.

The best business plans aren't generic ones created from easily accessed templates. A company should aim to entice readers with a plan that demonstrates its uniqueness and potential for success.

2 Types of Business Plans

Business plans can take many forms, but they are sometimes divided into two basic categories: traditional and lean startup. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

• Traditional business plans : These plans tend to be much longer than lean startup plans and contain considerably more detail. As a result they require more work on the part of the business, but they can also be more persuasive (and reassuring) to potential investors.
• Lean startup business plans : These use an abbreviated structure that highlights key elements. These business plans are short—as short as one page—and provide only the most basic detail. If a company wants to use this kind of plan, it should be prepared to provide more detail if an investor or a lender requests it.

Why Do Business Plans Fail?

A business plan is not a surefire recipe for success. The plan may have been unrealistic in its assumptions and projections to begin with. Markets and the overall economy might change in ways that couldn't have been foreseen. A competitor might introduce a revolutionary new product or service. All of this calls for building some flexibility into your plan, so you can pivot to a new course if needed.

How frequently a business plan needs to be revised will depend on the nature of the business. A well-established business might want to review its plan once a year and make changes if necessary. A new or fast-growing business in a fiercely competitive market might want to revise it more often, such as quarterly.

What Does a Lean Startup Business Plan Include?

The lean startup business plan is an option when a company prefers to give a quick explanation of its business. For example, a brand-new company may feel that it doesn't have a lot of information to provide yet.

Sections can include: a value proposition ; the company's major activities and advantages; resources such as staff, intellectual property, and capital; a list of partnerships; customer segments; and revenue sources.

A business plan can be useful to companies of all kinds. But as a company grows and the world around it changes, so too should its business plan. So don't think of your business plan as carved in granite but as a living document designed to evolve with your business.

Harvard Business Review. " Research: Writing a Business Plan Makes Your Startup More Likely to Succeed ."

U.S. Small Business Administration. " Write Your Business Plan ."

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Step-by-Step Guide to Writing a Simple Business Plan

By Joe Weller | October 11, 2021

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A business plan is the cornerstone of any successful company, regardless of size or industry. This step-by-step guide provides information on writing a business plan for organizations at any stage, complete with free templates and expert advice. 

Included on this page, you’ll find a step-by-step guide to writing a business plan and a chart to identify which type of business plan you should write . Plus, find information on how a business plan can help grow a business and expert tips on writing one .

What Is a Business Plan?

A business plan is a document that communicates a company’s goals and ambitions, along with the timeline, finances, and methods needed to achieve them. Additionally, it may include a mission statement and details about the specific products or services offered.

A business plan can highlight varying time periods, depending on the stage of your company and its goals. That said, a typical business plan will include the following benchmarks:

• Product goals and deadlines for each month
• Monthly financials for the first two years
• Profit and loss statements for the first three to five years
• Balance sheet projections for the first three to five years

Startups, entrepreneurs, and small businesses all create business plans to use as a guide as their new company progresses. Larger organizations may also create (and update) a business plan to keep high-level goals, financials, and timelines in check.

While you certainly need to have a formalized outline of your business’s goals and finances, creating a business plan can also help you determine a company’s viability, its profitability (including when it will first turn a profit), and how much money you will need from investors. In turn, a business plan has functional value as well: Not only does outlining goals help keep you accountable on a timeline, it can also attract investors in and of itself and, therefore, act as an effective strategy for growth.

For more information, visit our comprehensive guide to writing a strategic plan or download free strategic plan templates . This page focuses on for-profit business plans, but you can read our article with nonprofit business plan templates .

Business Plan Steps

The specific information in your business plan will vary, depending on the needs and goals of your venture, but a typical plan includes the following ordered elements:

• Executive summary
• Description of business
• Market analysis
• Competitive analysis
• Description of organizational management
• Description of product or services
• Marketing plan
• Sales strategy
• Funding details (or request for funding)
• Financial projections

If your plan is particularly long or complicated, consider adding a table of contents or an appendix for reference. For an in-depth description of each step listed above, read “ How to Write a Business Plan Step by Step ” below.

Broadly speaking, your audience includes anyone with a vested interest in your organization. They can include potential and existing investors, as well as customers, internal team members, suppliers, and vendors.

Do I Need a Simple or Detailed Plan?

Your business’s stage and intended audience dictates the level of detail your plan needs. Corporations require a thorough business plan — up to 100 pages. Small businesses or startups should have a concise plan focusing on financials and strategy.

How to Choose the Right Plan for Your Business

In order to identify which type of business plan you need to create, ask: “What do we want the plan to do?” Identify function first, and form will follow.

Use the chart below as a guide for what type of business plan to create:

Is the Order of Your Business Plan Important?

There is no set order for a business plan, with the exception of the executive summary, which should always come first. Beyond that, simply ensure that you organize the plan in a way that makes sense and flows naturally.

The Difference Between Traditional and Lean Business Plans

A traditional business plan follows the standard structure — because these plans encourage detail, they tend to require more work upfront and can run dozens of pages. A Lean business plan is less common and focuses on summarizing critical points for each section. These plans take much less work and typically run one page in length.

In general, you should use a traditional model for a legacy company, a large company, or any business that does not adhere to Lean (or another Agile method ). Use Lean if you expect the company to pivot quickly or if you already employ a Lean strategy with other business operations. Additionally, a Lean business plan can suffice if the document is for internal use only. Stick to a traditional version for investors, as they may be more sensitive to sudden changes or a high degree of built-in flexibility in the plan.

How to Write a Business Plan Step by Step

Writing a strong business plan requires research and attention to detail for each section. Below, you’ll find a 10-step guide to researching and defining each element in the plan.

Step 1: Executive Summary

The executive summary will always be the first section of your business plan. The goal is to answer the following questions:

• What is the vision and mission of the company?
• What are the company’s short- and long-term goals?

See our  roundup of executive summary examples and templates for samples. Read our executive summary guide to learn more about writing one.

Step 2: Description of Business

The goal of this section is to define the realm, scope, and intent of your venture. To do so, answer the following questions as clearly and concisely as possible:

• What business are we in?
• What does our business do?

Step 3: Market Analysis

In this section, provide evidence that you have surveyed and understand the current marketplace, and that your product or service satisfies a niche in the market. To do so, answer these questions:

• Who is our customer? 
• What does that customer value?

Step 4: Competitive Analysis

In many cases, a business plan proposes not a brand-new (or even market-disrupting) venture, but a more competitive version — whether via features, pricing, integrations, etc. — than what is currently available. In this section, answer the following questions to show that your product or service stands to outpace competitors:

• Who is the competition? 
• What do they do best? 
• What is our unique value proposition?

Step 5: Description of Organizational Management

In this section, write an overview of the team members and other key personnel who are integral to success. List roles and responsibilities, and if possible, note the hierarchy or team structure.

Step 6: Description of Products or Services

In this section, clearly define your product or service, as well as all the effort and resources that go into producing it. The strength of your product largely defines the success of your business, so it’s imperative that you take time to test and refine the product before launching into marketing, sales, or funding details.

Questions to answer in this section are as follows:

• What is the product or service?
• How do we produce it, and what resources are necessary for production?

Step 7: Marketing Plan

In this section, define the marketing strategy for your product or service. This doesn’t need to be as fleshed out as a full marketing plan , but it should answer basic questions, such as the following:

• Who is the target market (if different from existing customer base)?
• What channels will you use to reach your target market?
• What resources does your marketing strategy require, and do you have access to them?
• If possible, do you have a rough estimate of timeline and budget?
• How will you measure success?

Step 8: Sales Plan

Write an overview of the sales strategy, including the priorities of each cycle, steps to achieve these goals, and metrics for success. For the purposes of a business plan, this section does not need to be a comprehensive, in-depth sales plan , but can simply outline the high-level objectives and strategies of your sales efforts. 

Start by answering the following questions:

• What is the sales strategy?
• What are the tools and tactics you will use to achieve your goals?
• What are the potential obstacles, and how will you overcome them?
• What is the timeline for sales and turning a profit?
• What are the metrics of success?

Step 9: Funding Details (or Request for Funding)

This section is one of the most critical parts of your business plan, particularly if you are sharing it with investors. You do not need to provide a full financial plan, but you should be able to answer the following questions:

• How much capital do you currently have? How much capital do you need?
• How will you grow the team (onboarding, team structure, training and development)?
• What are your physical needs and constraints (space, equipment, etc.)?

Step 10: Financial Projections

Apart from the fundraising analysis, investors like to see thought-out financial projections for the future. As discussed earlier, depending on the scope and stage of your business, this could be anywhere from one to five years. 

While these projections won’t be exact — and will need to be somewhat flexible — you should be able to gauge the following:

• How and when will the company first generate a profit?
• How will the company maintain profit thereafter?

Business Plan Template

Download Business Plan Template

Microsoft Excel | Smartsheet

This basic business plan template has space for all the traditional elements: an executive summary, product or service details, target audience, marketing and sales strategies, etc. In the finances sections, input your baseline numbers, and the template will automatically calculate projections for sales forecasting, financial statements, and more.

For templates tailored to more specific needs, visit this business plan template roundup or download a fill-in-the-blank business plan template to make things easy. 

If you are looking for a particular template by file type, visit our pages dedicated exclusively to Microsoft Excel , Microsoft Word , and Adobe PDF business plan templates.

How to Write a Simple Business Plan

A simple business plan is a streamlined, lightweight version of the large, traditional model. As opposed to a one-page business plan , which communicates high-level information for quick overviews (such as a stakeholder presentation), a simple business plan can exceed one page.

Below are the steps for creating a generic simple business plan, which are reflected in the template below .

• Write the Executive Summary This section is the same as in the traditional business plan — simply offer an overview of what’s in the business plan, the prospect or core offering, and the short- and long-term goals of the company. 
• Add a Company Overview Document the larger company mission and vision. 
• Provide the Problem and Solution In straightforward terms, define the problem you are attempting to solve with your product or service and how your company will attempt to do it. Think of this section as the gap in the market you are attempting to close.
• Identify the Target Market Who is your company (and its products or services) attempting to reach? If possible, briefly define your buyer personas .
• Write About the Competition In this section, demonstrate your knowledge of the market by listing the current competitors and outlining your competitive advantage.
• Describe Your Product or Service Offerings Get down to brass tacks and define your product or service. What exactly are you selling?
• Outline Your Marketing Tactics Without getting into too much detail, describe your planned marketing initiatives.
• Add a Timeline and the Metrics You Will Use to Measure Success Offer a rough timeline, including milestones and key performance indicators (KPIs) that you will use to measure your progress.
• Include Your Financial Forecasts Write an overview of your financial plan that demonstrates you have done your research and adequate modeling. You can also list key assumptions that go into this forecasting. 
• Identify Your Financing Needs This section is where you will make your funding request. Based on everything in the business plan, list your proposed sources of funding, as well as how you will use it.

Simple Business Plan Template

Download Simple Business Plan Template

Microsoft Excel |  Microsoft Word | Adobe PDF  | Smartsheet

Use this simple business plan template to outline each aspect of your organization, including information about financing and opportunities to seek out further funding. This template is completely customizable to fit the needs of any business, whether it’s a startup or large company.

Read our article offering free simple business plan templates or free 30-60-90-day business plan templates to find more tailored options. You can also explore our collection of one page business templates . 

How to Write a Business Plan for a Lean Startup

A Lean startup business plan is a more Agile approach to a traditional version. The plan focuses more on activities, processes, and relationships (and maintains flexibility in all aspects), rather than on concrete deliverables and timelines.

While there is some overlap between a traditional and a Lean business plan, you can write a Lean plan by following the steps below:

• Add Your Value Proposition Take a streamlined approach to describing your product or service. What is the unique value your startup aims to deliver to customers? Make sure the team is aligned on the core offering and that you can state it in clear, simple language.
• List Your Key Partners List any other businesses you will work with to realize your vision, including external vendors, suppliers, and partners. This section demonstrates that you have thoughtfully considered the resources you can provide internally, identified areas for external assistance, and conducted research to find alternatives.
• Note the Key Activities Describe the key activities of your business, including sourcing, production, marketing, distribution channels, and customer relationships.
• Include Your Key Resources List the critical resources — including personnel, equipment, space, and intellectual property — that will enable you to deliver your unique value.
• Identify Your Customer Relationships and Channels In this section, document how you will reach and build relationships with customers. Provide a high-level map of the customer experience from start to finish, including the spaces in which you will interact with the customer (online, retail, etc.). 
• Detail Your Marketing Channels Describe the marketing methods and communication platforms you will use to identify and nurture your relationships with customers. These could be email, advertising, social media, etc.
• Explain the Cost Structure This section is especially necessary in the early stages of a business. Will you prioritize maximizing value or keeping costs low? List the foundational startup costs and how you will move toward profit over time.
• Share Your Revenue Streams Over time, how will the company make money? Include both the direct product or service purchase, as well as secondary sources of revenue, such as subscriptions, selling advertising space, fundraising, etc.

Lean Business Plan Template for Startups

Download Lean Business Plan Template for Startups

Microsoft Word | Adobe PDF

Startup leaders can use this Lean business plan template to relay the most critical information from a traditional plan. You’ll find all the sections listed above, including spaces for industry and product overviews, cost structure and sources of revenue, and key metrics, and a timeline. The template is completely customizable, so you can edit it to suit the objectives of your Lean startups.

See our wide variety of  startup business plan templates for more options.

How to Write a Business Plan for a Loan

A business plan for a loan, often called a loan proposal , includes many of the same aspects of a traditional business plan, as well as additional financial documents, such as a credit history, a loan request, and a loan repayment plan.

In addition, you may be asked to include personal and business financial statements, a form of collateral, and equity investment information.

Download free financial templates to support your business plan.

Tips for Writing a Business Plan

Outside of including all the key details in your business plan, you have several options to elevate the document for the highest chance of winning funding and other resources. Follow these tips from experts:.

• Keep It Simple: Avner Brodsky , the Co-Founder and CEO of Lezgo Limited, an online marketing company, uses the acronym KISS (keep it short and simple) as a variation on this idea. “The business plan is not a college thesis,” he says. “Just focus on providing the essential information.”
• Do Adequate Research: Michael Dean, the Co-Founder of Pool Research , encourages business leaders to “invest time in research, both internal and external (market, finance, legal etc.). Avoid being overly ambitious or presumptive. Instead, keep everything objective, balanced, and accurate.” Your plan needs to stand on its own, and you must have the data to back up any claims or forecasting you make. As Brodsky explains, “Your business needs to be grounded on the realities of the market in your chosen location. Get the most recent data from authoritative sources so that the figures are vetted by experts and are reliable.”
• Set Clear Goals: Make sure your plan includes clear, time-based goals. “Short-term goals are key to momentum growth and are especially important to identify for new businesses,” advises Dean.
• Know (and Address) Your Weaknesses: “This awareness sets you up to overcome your weak points much quicker than waiting for them to arise,” shares Dean. Brodsky recommends performing a full SWOT analysis to identify your weaknesses, too. “Your business will fare better with self-knowledge, which will help you better define the mission of your business, as well as the strategies you will choose to achieve your objectives,” he adds.
• Seek Peer or Mentor Review: “Ask for feedback on your drafts and for areas to improve,” advises Brodsky. “When your mind is filled with dreams for your business, sometimes it is an outsider who can tell you what you’re missing and will save your business from being a product of whimsy.”

Outside of these more practical tips, the language you use is also important and may make or break your business plan.

Shaun Heng, VP of Operations at Coin Market Cap , gives the following advice on the writing, “Your business plan is your sales pitch to an investor. And as with any sales pitch, you need to strike the right tone and hit a few emotional chords. This is a little tricky in a business plan, because you also need to be formal and matter-of-fact. But you can still impress by weaving in descriptive language and saying things in a more elegant way.

“A great way to do this is by expanding your vocabulary, avoiding word repetition, and using business language. Instead of saying that something ‘will bring in as many customers as possible,’ try saying ‘will garner the largest possible market segment.’ Elevate your writing with precise descriptive words and you'll impress even the busiest investor.”

Additionally, Dean recommends that you “stay consistent and concise by keeping your tone and style steady throughout, and your language clear and precise. Include only what is 100 percent necessary.”

Resources for Writing a Business Plan

While a template provides a great outline of what to include in a business plan, a live document or more robust program can provide additional functionality, visibility, and real-time updates. The U.S. Small Business Association also curates resources for writing a business plan.

Additionally, you can use business plan software to house data, attach documentation, and share information with stakeholders. Popular options include LivePlan, Enloop, BizPlanner, PlanGuru, and iPlanner.

How a Business Plan Helps to Grow Your Business

A business plan — both the exercise of creating one and the document — can grow your business by helping you to refine your product, target audience, sales plan, identify opportunities, secure funding, and build new partnerships. 

Outside of these immediate returns, writing a business plan is a useful exercise in that it forces you to research the market, which prompts you to forge your unique value proposition and identify ways to beat the competition. Doing so will also help you build (and keep you accountable to) attainable financial and product milestones. And down the line, it will serve as a welcome guide as hurdles inevitably arise.

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What is a business plan?

1. write an executive summary, 2. describe your company, 3. state your business goals, 4. describe your products and services, 5. do your market research, 6. outline your marketing and sales plan, 7. perform a business financial analysis, 8. make financial projections, 9. summarize how your company operates, 10. add any additional information to an appendix, business plan tips and resources.

A business plan outlines your business’s financial goals and explains how you’ll achieve them over the next three to five years. Here’s a step-by-step guide to writing a business plan that will offer a strong, detailed road map for your business.

ZenBusiness

A business plan is a document that explains what your business does, how it makes money and who its customers are. Internally, writing a business plan should help you clarify your vision and organize your operations. Externally, you can share it with potential lenders and investors to show them you’re on the right track.

Business plans are living documents; it’s OK for them to change over time. Startups may update their business plans often as they figure out who their customers are and what products and services fit them best. Mature companies might only revisit their business plan every few years. Regardless of your business’s age, brush up this document before you apply for a business loan .

» Need help writing? Learn about the best business plan software .

This is your elevator pitch. It should include a mission statement, a brief description of the products or services your business offers and a broad summary of your financial growth plans.

Though the executive summary is the first thing your investors will read, it can be easier to write it last. That way, you can highlight information you’ve identified while writing other sections that go into more detail.

» MORE: How to write an executive summary in 6 steps

Next up is your company description. This should contain basic information like:

Your business’s registered name.

Address of your business location .

Names of key people in the business. Make sure to highlight unique skills or technical expertise among members of your team.

Your company description should also define your business structure — such as a sole proprietorship, partnership or corporation — and include the percent ownership that each owner has and the extent of each owner’s involvement in the company.

Lastly, write a little about the history of your company and the nature of your business now. This prepares the reader to learn about your goals in the next section.

» MORE: How to write a company overview for a business plan

The third part of a business plan is an objective statement. This section spells out what you’d like to accomplish, both in the near term and over the coming years.

If you’re looking for a business loan or outside investment, you can use this section to explain how the financing will help your business grow and how you plan to achieve those growth targets. The key is to provide a clear explanation of the opportunity your business presents to the lender.

For example, if your business is launching a second product line, you might explain how the loan will help your company launch that new product and how much you think sales will increase over the next three years as a result.

» MORE: How to write a successful business plan for a loan

In this section, go into detail about the products or services you offer or plan to offer.

You should include the following:

An explanation of how your product or service works.

The pricing model for your product or service.

The typical customers you serve.

Your supply chain and order fulfillment strategy.

You can also discuss current or pending trademarks and patents associated with your product or service.

Lenders and investors will want to know what sets your product apart from your competition. In your market analysis section , explain who your competitors are. Discuss what they do well, and point out what you can do better. If you’re serving a different or underserved market, explain that.

Here, you can address how you plan to persuade customers to buy your products or services, or how you will develop customer loyalty that will lead to repeat business.

Include details about your sales and distribution strategies, including the costs involved in selling each product .

» MORE: R e a d our complete guide to small business marketing

If you’re a startup, you may not have much information on your business financials yet. However, if you’re an existing business, you’ll want to include income or profit-and-loss statements, a balance sheet that lists your assets and debts, and a cash flow statement that shows how cash comes into and goes out of the company.

Accounting software may be able to generate these reports for you. It may also help you calculate metrics such as:

Net profit margin: the percentage of revenue you keep as net income.

Current ratio: the measurement of your liquidity and ability to repay debts.

Accounts receivable turnover ratio: a measurement of how frequently you collect on receivables per year.

This is a great place to include charts and graphs that make it easy for those reading your plan to understand the financial health of your business.

This is a critical part of your business plan if you’re seeking financing or investors. It outlines how your business will generate enough profit to repay the loan or how you will earn a decent return for investors.

Here, you’ll provide your business’s monthly or quarterly sales, expenses and profit estimates over at least a three-year period — with the future numbers assuming you’ve obtained a new loan.

Accuracy is key, so carefully analyze your past financial statements before giving projections. Your goals may be aggressive, but they should also be realistic.

NerdWallet’s picks for setting up your business finances:

The best business checking accounts .

The best business credit cards .

The best accounting software .

Before the end of your business plan, summarize how your business is structured and outline each team’s responsibilities. This will help your readers understand who performs each of the functions you’ve described above — making and selling your products or services — and how much each of those functions cost.

If any of your employees have exceptional skills, you may want to include their resumes to help explain the competitive advantage they give you.

Finally, attach any supporting information or additional materials that you couldn’t fit in elsewhere. That might include:

Licenses and permits.

Equipment leases.

Bank statements.

Details of your personal and business credit history, if you’re seeking financing.

If the appendix is long, you may want to consider adding a table of contents at the beginning of this section.

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We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

Here are some tips to write a detailed, convincing business plan:

Avoid over-optimism: If you’re applying for a business bank loan or professional investment, someone will be reading your business plan closely. Providing unreasonable sales estimates can hurt your chances of approval.

Proofread: Spelling, punctuation and grammatical errors can jump off the page and turn off lenders and prospective investors. If writing and editing aren't your strong suit, you may want to hire a professional business plan writer, copy editor or proofreader.

Use free resources: SCORE is a nonprofit association that offers a large network of volunteer business mentors and experts who can help you write or edit your business plan. The U.S. Small Business Administration’s Small Business Development Centers , which provide free business consulting and help with business plan development, can also be a resource.

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How to Create a Long-Term Business Strategy in 7 Steps

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goal setting , plan execution , Strategic Planning , strategy execution

Navigating the dynamic B2B landscape requires a clear vision and a well-defined roadmap. Building a long-term business strategy is the cornerstone of sustainable growth, guiding your organization toward its ultimate goals. This guide explores a 7-step framework to help you chart a course for long-term B2B success.

Step 1: Articulate Your Vision – Crafting a Compelling Vision Statement

A robust vision statement serves as the guiding star for your organization. It encapsulates your aspirations, core values, and the impact you aim to make within the B2B ecosystem. Consider these prompts to ignite your vision crafting:

• What specific problem are you addressing within the B2B landscape?
• Who are your ideal clients, and how do you empower their success?
• What unique value proposition sets you apart from competitors?
• What lasting legacy do you aspire to leave on the B2B world?

An effective vision statement is clear, concise, and inspiring, resonates with your team and stakeholders, and propels them toward a shared future.

Step 2: Conduct a SWOT Analysis – Gaining Strategic Self-Awareness

Before embarking on your journey, a thorough SWOT analysis is essential. This exercise provides a realistic assessment of your organization’s strengths, weaknesses, opportunities, and threats (SWOT) within the B2B market.

• Strengths : Identify your organization’s unique skills, resources, or competitive advantages that position you for success.
• Weaknesses : Acknowledge internal limitations that hinder your growth and areas requiring improvement.
• Opportunities : Explore external trends, emerging market gaps, or potential partnerships that can be leveraged for your benefit.
• Threats : Analyze potential obstacles, competitive pressures, or economic factors that could pose risks to your organization.

By honestly evaluating the state of your business, you gain valuable insights to capitalize on strengths, address weaknesses, seize opportunities, and mitigate potential threats.

Step 3: Setting SMART Goals – Transforming Vision into Actionable Objectives

Your vision provides the ultimate destination, but achieving it requires a defined roadmap. SMART goals – Specific, Measurable, Achievable, Relevant, and Time-bound – bridge the gap between your vision and actionable steps. These goals translate your long-term aspirations into tangible objectives for different departments and timeframes.

For instance, instead of aiming for “increased brand awareness,” a SMART goal for your B2B marketing team could be: “Enhance website traffic by 20% within the next quarter through targeted LinkedIn advertising campaigns.”  This goal is specific, measurable (20% increase in website traffic), achievable within a realistic timeframe (next quarter), relevant to the department’s responsibilities, and time-bound.

To create effective SMART goals, start by clearly defining the objective. What do you want to achieve? Then, consider how you will measure success. Is it through increased sales? Website traffic? Customer satisfaction ratings? Next, assess if the goal is achievable within a certain timeframe and whether it aligns with your overall vision and objectives. Be realistic about what can specifically contribute to the goal and set a specific deadline.

By setting SMART goals, you provide your team with clear direction and focus. It also allows for tracking progress and celebrating accomplishments along the way. Additionally, it helps identify potential roadblocks or areas that may need additional attention.

Step 4: Develop Strategic Initiatives – Translating Goals into Action

Now, let’s move into the execution phase. Based on your SWOT analysis and SMART goals, brainstorm strategic initiatives that act as the building blocks for achieving your desired outcomes. These initiatives should be specific actions or projects undertaken by various departments to drive progress toward your goals.

Consider these questions to guide your brainstorming:

• What resources are required to execute each initiative effectively?
• Who will be responsible for leading and implementing these initiatives?
• How will you measure the success of each initiative using relevant KPIs?

Remember, strategic initiatives should be aligned with your overall vision and goals, have a clear timeline, and possess the necessary resources for successful execution.

Once you have identified your strategic initiatives, it’s time to assign roles and responsibilities. This step is crucial in ensuring that each initiative has a designated leader who will drive its progress and hold team members accountable. Consider the skills and strengths of your team members when assigning roles, as well as their availability and workload.

With roles assigned, it’s important to create a detailed action plan for each strategic initiative. This should include specific tasks, timelines, and deadlines for completion. Be sure to involve all relevant departments or team members in the planning process to ensure alignment and collaboration.

As you begin executing your strategic initiatives, make sure to regularly track and measure progress using key performance indicators (KPIs). These metrics will help you assess the effectiveness of your initiatives and make any necessary adjustments to ensure their success.

Step 5: Foster a Winning Team – Aligning and Empowering Your People

The success of your long-term strategy hinges on the capabilities and dedication of your team. Effective communication and team alignment are crucial for seamless implementation. Ensure everyone understands the company’s vision, goals, and their individual roles in achieving them.

• Organize regular team meetings to discuss progress, address challenges, and celebrate successes.
• Invest in training and development opportunities to equip your team with the necessary skills and knowledge to excel in their roles.
• Cultivate a culture of open communication and encourage feedback to ensure everyone feels valued and heard.

A motivated and empowered team is the driving force behind any successful long-term B2B strategy.

Listen to The Strategy Gap

A podcast about the space between savvy strategy and practical execution, including everything that can go wrong on the way. 

Step 6: Embrace Continuous Improvement – Monitoring, Adapting, and Evolving

The B2B landscape is inherently dynamic. Therefore, your strategy shouldn’t be static. Regularly monitor your progress, analyze results, and be prepared to adapt as needed. This continuous improvement mindset will ensure your strategy remains relevant and effective in the ever-changing business landscape.

One way to monitor your progress is by setting measurable goals and tracking key performance indicators (KPIs). These could include metrics such as lead generation, sales conversion rates, customer satisfaction, and revenue growth. By regularly reviewing these KPIs, you can identify areas that need improvement and make necessary changes to your strategy.

In addition to monitoring progress, it’s also important to stay up-to-date with industry trends and advancements. This will allow you to identify new opportunities or potential challenges that may impact your B2B strategy. Stay informed through industry publications, attending conferences and networking events, and keeping an eye on what your competitors are doing.

• Track your KPIs and assess the effectiveness of your strategic initiatives.
• Conduct periodic reviews to evaluate overall progress towards your vision and goals.
• Remain receptive to feedback and be willing to adjust your approach based on market shifts or unforeseen circumstances.

Also read: You Shouldn’t Spend More Than a Few Days on Your Strategic Reporting

Agility and adaptability are key to ensuring your long-term strategy remains effective and relevant in the ever-changing B2B landscape. Embrace continuous improvement to stay ahead of the curve and maintain a competitive edge.

Step 7: Celebrate Milestones and Sustain the Momentum

Building a successful B2B organization is a marathon, not a sprint. Take time to acknowledge and celebrate milestones along the way. Recognizing achievements boosts morale, reinforces team spirit, and maintains the momentum required to achieve your long-term goals.

Additionally, it’s important to sustain the momentum once you’ve reached a milestone. Use these moments as opportunities to reflect on what has worked well and where there is room for improvement. Keep communication channels open with both your team and clients to continue building strong relationships and ensure continued success. By fostering a culture of recognition and appreciation, you can sustain the motivation and commitment necessary to navigate the long-term journey toward B2B success.

Remember, this 7-step framework is a starting point. The specific details of your long-term business strategy will depend on your unique industry, company goals, and market dynamics. But by following these core principles and adapting them to your specific context, you can chart a course for sustainable growth and long-term achievement.

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Long-Term Business Planning

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What Is a Dehydrated Business Plan?

What are the main purposes of a business plan, why is strategic planning important to a business.

• What Is a Short-Term Marketing Plan?
• Goals, Priorities & Planning

If you're starting a business you probably plan to stay in business for a long time. In order to accomplish this goal, you probably have at least an inkling of what you want your business to accomplish. You take these goals and attempt to make them come to fruition. If your successful, your business will thrive. Once you've met your original goals, you make new ones. Some of these new goals might be ones you want to meet immediately, while others will take longer. Those are your business' long-term business goals, and they're important.

Why Make a Plan?

If you were going on vacation, you would determine where you're going; how you were getting there; how long you were staying; and what you would do, once there. In other words, you would plan your vacation. So, if traveling to Tahiti requires some set-up and parameters, wouldn't starting and running a business also require these? A business takes time, energy and resources; the wise thing would be to sit down and determine the most effective ways of how to use your time, energy and resources – so that your business has the best chance for success.

Short-term Plan vs. Long-term Planning

You started your business because you wanted to fill a niche, meet a need or provide a service that's desperately needed – with the ultimate objective – to make money. To fulfill all of your business objectives, you have to set goals for your business, and a plan of action to reach each goal.

Most businesses have a combination of short-term plans and long-term plans. A short-term plan could include launching three products during a calendar year, making X-amount in profits in a certain period of time, or gaining 5,000 new social media followers in a month. A long-term plan based on those short-term plans is to expand your business from one facility to two or more within three years.

Short-term plans are more immediate objections, while long-term plans are for a longer period of time: a year is generally the minimum. Thus, your long-term plans can include goals such as five-year income projections, expansion plans, hiring goals or other bigger goals that take more than a month or two to meet. The plans should be kept separate but reviewed on a regular basis so progress can be tracked and adjustments can be made if necessary.

Why You Need a Business Plan

Revisiting the vacation scenario from above, let's say you decide to drive to your vacation destination. You've never been there before so you punch your destination into your GPS tool and use it to navigate to your destination. Once you've arrived, you can also use that same tool to find interesting places to visit and places to eat.

Think of a business plan as a business' GPS. You can use the strategic business plan to guide your business from one objective to the next, find the best course of action for your business and recognize and correct issues as they arise. This is where you'll include the short and long term plans you have for the business, as well as other pertinent information such as key personnel, the business' mission statement, competitor information and market research and development ideas. Financial projects are also a vital part of a business plan.

Benefits of a Long Term Strategy

Having a long term plan for your business shows that you are in it for the long haul. Knowing where you want to be in three, five or even ten years can help you choose the short-term plans of an organization. Long-term business goals don't have to be large goals. The goal to never miss a client deadline could be a long-term goal. Most of a business' short-term plans lead toward long-term plans, so when making immediate business plans, keeping a longer-term objective in mind isn't a bad idea. A long term plan gives you something to aim for as well as a built-in measuring tool to review the progress of your short-term plans.

• Small Biz Technology: 6 Short-Term Goals for Long-Term Success
• Forbes: 11 Ways To Establish, And Then Reach, Your Long-Term Goals
• Entrepreneur: 5 Ways to Think Long-Term in a Short-Term Market
• The action plans for year one of each of the long-term projects become part of the annual plan for the upcoming year. In that plan, the steps are broken out in more detail and budgets are created for each one, to be included in the total company budget.
• Although the long-term planning in a small business may not be as formal as that in a large corporation, the process is just as valuable in making sure the owner looks beyond the day-to-day problems he must deal with and thinks about where he wants to take his company in the future.
• Review and revise the long-term plan each year as the business environment changes. Opportunities may emerge that are potentially more profitable than the ones you selected to pursue in the previous year’s long-term plan.

K.A. Francis has been a freelance and small business owner for 20 years. She has been writing about personal finance and budgeting since 2008. She taught Accounting, Management, Marketing and Business Law at WV Business College and Belmont College and holds a BA and an MAED in Education and Training.

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Long-range planning is an effective way of aligning the organization’s activities with a strategic plan and helping preempt those situations that could threaten its business model and success.

What Is Long-Range Planning?

Long-range planning can be defined as the processes used to implement an organization’s strategic plan. It’s about aligning the business’ long-term goals and developing action plans in line with the strategic plan.

Depending upon the type of business, the time scale for long-range plans can vary from three years through to one or two decades. This is particularly the case for organizations such as utilities, large-scale high-tech manufacturers, chemical plants and research companies where the time and costs associated with investments is such that plants take years to build and returns are measured over long periods.

Short-term planning deals with the here and now. Medium-term plans address actions intended to permanently resolve short-term issues. Long-range planning is about changing the direction of the organization to meet its long-term goals and insulate it from the upheavals that periodically affect the economy.

The History of Long-Range Planning

During the 1950s and 1960s, the economy was stable and growing. Organizations experienced substantial growth, and planners started using numerical theory to extrapolate growth predictions. However, the landscape changed in the ‘70s, and the economy suffered an upheaval due to the US’s inability to maintain the gold standard. Static long-range strategies of the time could not cope with these upheavals, and many but not all businesses abandoned long-term planning for some time.

Subsequently, a number of events caused further economic instability, including the 1973 oil crisis, the 2008 housing bubble and banking crisis, and more recently, the impact of trade wars . Despite this, savvy organizations adopted long-range planning strategies intended to cushion the business from unpredictable upheaval through techniques, such as the SWOT analysis (Strengths, Weaknesses, Opportunities and Threats), and planned accordingly.

The Relationship Between Strategic Planning and the Long-Range Plan

Strategic planning is a structured process, usually carried out by the executive, which determines long-term organizational goals. During this process, executives analyze the organization’s current business and determine though various processes a strategic view of what they believe the organization should become.

The final strategic plan will usually consist of a number of statements and goals of what the organization should focus on, how they believe it should look, what markets they should be in and anticipated financial performance.

None of those goals are directly actionable, and this is where the long-range plan comes in, as it contains the steps and actions needed to achieve strategic plan goals.

Avoiding Confusion Between Long-Range, Tactical, Operation and Short-Term Planning

There are many different planning terms in use, and a degree of confusion is almost inevitable. Depending on the author, specific terms mean different things, and, in many instances, definitions are used interchangeably.

In this blog, the long-range planning definition refers to those longer-term actions necessary to implement long-range strategic planning. These actions usually have a time horizon of more than three years. The focus of tactical planning is the short-term or, at most, the medium-term. Plans are funded by the current budget and intended to help the organization achieve its short- and medium-term goals, which will also include immediate actions intended to align the organization with its strategic plan. In this context, tactical planning and operation planning have much in common.

Characteristics of Long-Range Planning

If not already stated in the strategic plan, a long-range plan should start with a statement of the organization’s mission and vision. The mission statement defines the reason the business exists, such as to become a leading manufacturer of high-quality consumer goods. The vision statement is more specific in that it defines time horizons, anticipated sales volumes, profitability and other specific measurable targets.

A key purpose of the long-range plan is to avoid random, non-specific growth and focus the organization’s skills toward those areas where it excels, such as making high-quality consumer goods. It’s this process that often guides an organization to sell off non-core activities that distract from the overall goal of the organization. So, typically, the long-range plan will focus on identifying the organization’s key strengths and what it’s good at with specific plans to grow the business in that direction.

Techniques for Focusing Long-Range Thinking

Most companies are good at short-term planning and often have excellent strategic plans but fail in the implementation. According to an article in the Harvard Business Review on long-term success , it’s because they don’t adequately focus on how to bring those new ideas and technologies onboard. Here are four techniques that help focus long-range thinking.

Forecasting

Long-range planning activities and goals need to be specific. Actions should be deliberate and focused, not rough cut or vague. At the same time, they need to recognize the realties and vagaries of business life. The environment will change and plans should not be immutable, but amended as and when necessary.

Handle uncertainty and unexpected change

The planning process should take into account risk and structural uncertainties. There are certain events that are simply unknowable, until they happen. To the extent that’s it possible, plans should be flexible and robust enough to handle risk. Take small bites and don’t expose your organization to unnecessary risk. Use sophisticated analytics to determine the most appropriate business decisions to achieve your strategic goals.

Understand whether specific goals and targets are realistic

Set targets that are feasible and realistic. Don’t be tempted to follow your gut by making grandiose plans which can never succeed. Test all decisions using decision support software, such as prescriptive analytics, that allows you to model how your business works.

Optimize long-range planning practices

It’s important to think holistically, ensure you have adequate decision support software and have integrated your long-range planning with your budgeting process to avoid conflict and unrealistic goals.

Examples of Long-Range Planning

While many businesses are wary of long-range planning, others embrace it. Ferrari went from being a joke in Formula 1 to becoming its undisputed leader through implementing a bold and ambitious long-range plan. Companies such as BASF, VW and Nestle adopted 10-year and longer strategies and outperformed many of their industrial peers. Others used sophisticated optimization techniques to determine future plant investment strategies, while a large UK water utility, Yorkshire Water Services, used prescriptive analytics to develop a long-term risk model.

Long-Range Planning: Bridging the Gap Between the Present and the Future

Long-range planning is key to bridging the gap between where your organization is and where you want it to go. Starting with strategic planning, it’s an effective technique for designing and implementing effective plans to take the organization down the road to the future.

While many companies are hesitant about long-range planning, thanks to ongoing economic disruption, others have discovered that a systematic approach supported by sophisticated analytics works. This allows them to understand and balance risk, and identify the best decisions to take them toward their strategic goals.

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How to Do Strategic Planning Like a Futurist

You don’t need a time line; you need a time cone.

Chief strategy officers and those responsible for shaping the direction of their organizations are often asked to facilitate “visioning” meetings. This helps teams brainstorm ideas, but it isn’t a substitute for critical thinking about the future. Neither are the one-, three-, or five-year strategic plans that have become a staple within most organizations, though they are useful for addressing short-term operational goals. Futurists think about time differently, and company strategists could learn from their approach. For any given uncertainty about the future — whether that’s risk, opportunity, or growth — we tend to think in the short- and long-term simultaneously. To do this, consider using a framework that doesn’t rely on linear timelines or simply mark the passage of time as quarters or years. Instead, use a time cone that measures certainty and charts actions.

I recently helped a large industrial manufacturing company with its strategic planning process. With so much uncertainty surrounding autonomous vehicles, 5G, robotics, global trade, and the oil markets, the company’s senior leaders needed a set of guiding objectives and strategies linking the company’s future to the present day. Before our work began in earnest, executives had already decided on a title for the initiative: Strategy 2030.

• Amy Webb is a quantitative futurist, CEO of Future Today Institute, and professor of strategic foresight at the New York University Stern School of Business. She is the author of The Signals Are Talking: Why Today’s Fringe Is Tomorrow’s Mainstream ,  The Big Nine: How the Tech Titans and Their Thinking Machines Could Warp Humanity , and The Genesis Machine: Our Quest to Rewrite Life in the Age of Synthetic Biology .

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10 Examples of Long-Term Business Goals to Set Now

December 15, 2023, identify, set, and achieve long-term business goals for success.

Today I want to share examples of long-term business goals with you. Because thinking long-term about your business is key to its success.

One of my former bosses had a good saying. And I think it applies to long-term goals for a business.

My boss used to tell us this. “In the long run, we are only limited by our thoughts. Don’t hold back. Think big!”

So, let’s dive in and think big about our businesses…

Disclosure: At no cost to you, I may get commissions for purchases made through links in this post.

Examples Of Long-Term Business Goals

First of all, here you will find today’s examples of long-term business goals list for your consideration:

• Expand into a new geographic market
• Market through a new channel
• Penetrate a new demographic
• Broaden product and service offerings
• Acquire a competitor
• Expand personnel and facilities
• Migrate to a new technology platform
• Put financing sources in place
• Increase earnings
• Improve profit margins

Next, let’s make sure we are completely aligned on today’s topic.  Identifying, setting, and achieving these 10 examples of long-term goals for a business.

Long-Term Business Goals Definition

First of all, a goal is an outcome you want to achieve. That a person envisions, plans for, and commits to achieve.

Furthermore, goals can relate to many aspects of our lives. For example, self-development, career, health, fitness, and personal finance outcomes .

But today, we are talking about goals related to your business.

More specifically, we are talking about long-term goals for a small business . Or, larger businesses too.

Typically, long-term goals take more planning. And more time to achieve. Normally, it takes 5 years or more to accomplish a long-term goal.

Furthermore, long-term goals are more strategic. And they require a vision of what your business will look like in the distant future.

While ensuring its long-term success, growth, and profitability. As you make the journey.

Finally, business goals can be non-financial . Or, they can be tied to a specific financial outcome.

Long-Term Goals For A Business Versus Other Types Of Goals

Businesses also have short-term goals and medium-term goals. Let’s compare and contrast…

Short-Term Business Goals

Short-term business goals are to be accomplished within 1 year.

Their focus is on solving today’s problems. Or, activities in the near term. That creates a foundation for long-term success.

Examples of short-term business goals include:

• Increase on-time delivery from 95% to 99%
• Reduce overhead costs by 3%
• Prepare a business plan

Medium-Term Business Goals

Medium-term goals should be set and completed within a 1-5 year time horizon.

These goals are intended to move your business forward in a meaningful way. But, are too involved to complete within a year.

Examples of good medium-term goals for business include:

• Increase market share by 5%
• Develop and bring to market a product line extension
• Increase shareholder value by $1 million

Next, before we touch on the examples. A little more talk about long-term goals for a business…

The Big Picture View Of Long-Term Business Goals

Today’s examples of long-term business goals are more strategic. Versus short and medium-term goals.

They are not about solving today’s problems. Or, about improving your business on the margins in the next few years.

They are for taking big steps forward. And transforming your business into something bigger and better in the future. Versus what it is today.

These goals take more than 2-3 years to accomplish without causing business instability.

They require careful thought about the direction you wish your business to take. Then planning, resources, and careful execution.

For more on these strategic topics…

consider this excellent course on business strategy and leadership .

But for now, I think about long-term goals for a business in one of three categories:

1. Extending market reach. Specifically, growing business revenue in different and dramatic ways.

2. Ensuring the ability to scale. Having success with growth means being able to handle it. In other words, scaling operations to service the new markets and customers you are reaching.

3 . Balancing growth and profits. Substantial business growth is good. It certainly beats the alternative.

But rapid growth is hard to execute. And it must be done profitably.

Thus, all 10 of today’s examples of long-term business goals fall into one of these categories.

Now, let’s go through each of the 10 goals on our list. All of them can be good investments to make in your business .

1. Expand Into A New Geographic Market

Plan for and expand into new geographic markets. For example, if you operate in Utah. Expand into the high business growth state of Colorado .

If your business services the Western portion of the country. Extend it throughout the United States.

Finally, consider foreign expansion. But, understand that these are big steps. Require careful thought and planning.

Up next in the long-term goals examples for business: channel strategy…

2. Go To Market Through A New Channel

Identify all the possible channels through which your products and services can be sold. Then delivered to your customers.

Utilize one or more marketing channels that have not yet been tapped.

For example, consider a targeted social media strategy. That drives traffic to an online store on your website.

3. Penetrate A New Demographic

Your current products and services are likely popular with a certain demographic.

So, evaluate your marketing plan. To tap into demand from a different segment of the population .

4. Broaden Product And Service Offerings

Enhance and broaden your product lines. Innovate and develop new products and services.

But, be sure they fit within your company’s mission. And customer service value proposition.

So, don’t stray too far. From your business’s core strengths.

Okay.  It’s time for the 5th in our series of long-term goals for business examples: mergers and acquisitions…

5. Acquire A Competitor

Acquiring a competitor can be the quickest way to extend your business’s market reach. And this brings us to the “buy or build” dilemma.

You have to decide if it’s more effective to extend your market reach on your own. In other words, building out those capabilities internally.

Or doing so. by buying a competitor. Specifically, a competitor that has accomplished what your business has not. This is the reasoning behind strategic acquisitions.

When it comes to the buy or build decisions. There is no right or wrong answer.

Each situation will be different. And every business will be different. Including yours.

Okay. So the first 5 examples of long-term business goals relate to extending your business’s market reach.

Accomplish any one or more of these goals. And your business will experience revenue growth. Sometimes, rapid revenue growth.

And rapid growth requires the ability to scale. This leads us to the next few long-term goals for business…

6. Expand Personnel And Facilities

Ensure you have the team in place to handle the influx of business. Including the quantity and quality of staff. Also, management personnel.

Develop and put a personnel plan in place. Including an employee professional development and onboarding program.

Then make sure you have the appropriate facilities. That solves for the right locations, footprint, and space.

This includes production, warehouse, distribution, and office space. Depending on your specific business needs.

Also, consider business outsourcing. Another buy or build decision. As part of scaling up to meet demand.

7. Migrate To A New Technology Platform

Don’t forget about technology. Because most successful businesses run on an enterprise-wide system.

If your business does not have the appropriate technology in place. Or, its capacity is limited.

Then make improving your technology infrastructure a long-term business goal.

8. Put Financing Sources In Place

If you have one, your CFO should be in charge of this goal.

Because growth by extending market reach. And putting the people, facilities, and technology in place to service it. Requires one very important thing.

What’s that? It is cash.

Because it takes money to make money. And investing in growth doesn’t come for free.

Where your cash comes from . Be it debt financing, equity financing, or internally generated funds. Don’t let access to capital derail your long-term business plans.

Okay now. Our final 2 examples of long-term business goals fall in the third category.

Specifically, balancing growth versus business profit goals . Since growth without profit, or at the very least, profit potential. Is no fun when operating a business.

9. Increase Earnings

So, set a long-term earnings goal. And first, put it into dollar terms.

For example, increase pre-tax income from $250,000 to $750,000. That’s a big jump in profit. And why it’s a long-term goal for a business.

But, make sure you have accurate financial information. To do so, consider outsourcing your financial management. Assuming you aren’t up to doing it yourself.

Now, it’s time for our last example of long-term goals in business. Then I will wrap up…

10. Maintain or Improve Profit Margins

Then, make sure your business’s profit margin is stable or even increasing. When I say profit margin, I’m talking about pre-tax income divided by revenue.

Continuing the example from above. Let’s say you did $250,000 in pre-tax profit on $1 million in revenue. So, your profit margin is 25%

Your long-term goal should be to at least maintain that margin. Therefore the new income target of $750,000. Should be generated from no more than $3,000,000 in revenue.

Your profit goals should be part of your financial planning . And, included in pro-forma financial statements.

Make sure the financials encompass all of the economics. Of whatever goals you choose to set.

Finally, I always recommend that business owners keep their personal finances. Separate from their business finances.

I use Personal Capital to track all of my spending and investments. And keep them separate from my business.

Best of all, Personal Capital is free to sign up and use. You can learn more about Personal Capital here .

Next, a few words about setting business goals. Here’s the best way to go about it…

How To Set Long-Term Business Goals

Business long-term goals should be set using SMART . A SMART goal includes the following 5 attributes…

Specific. Make your goals as detailed as possible. Outlining exactly what you want to accomplish.

Measurable. Determine how you will measure success. Both the interim steps and the completion of the goal.

Achievable. Stretch yourself and your organization. But don’t waste time with goals that can’t be achieved.

Realistic. A goal may be achievable. But it may not be realistic. Determine this by looking at your constraints.

For example, a goal may be achievable. But if it requires an amount of capital that you are unable to obtain. Then it’s not realistic.

In this case, access to capital is the constraint. Other constraints include the ability to attract employees and overall market conditions.

Time-bound. Set a deadline for when the goal will be accomplished. A long-term business goal should be out at least 4-5 years from now.

Finally, be sure to align your goals from short to long term . As a result, they will complement each other.

Since the complexity of long-term goals leads to long time horizons. Achieving these goals is challenging.

So, set yourself up for success…

How To Achieve Long-Term Business Goals

Students of goal-setting use three more steps. After setting goals using the SMART system.

Specifically, businesses that achieve these examples of long-term goals for business do 3 more things.

Specifically, they plan, act, and monitor (PAM) to successfully achieve goals .

Plan. Long-run goals require a plan. Those step-by-step actions, deliverables, and accountability that must be completed on the path to success.

Action. This should speak for itself. But it’s important. Get the planning done. Then, act. Furthermore, involve your employees in goal-setting processes.

Because people tend to delay working on long-term goals in a business. Thus, time management is critical for success.

Monitor. Finally, it’s important to monitor progress against the plan. Every 3-6 months.

Work through the SMART and PAM goal systems. Document as you go. Commit to all your goals and plans in writing.

Research shows that a written goal. Has a much higher success rate. Versus a goal that is not.

Then appoint a person who has the overall task to see the goal through to the end. And give them the resources required to be successful.

Lack of focus and lack of accountability diminishes the chances of success. When pursuing your organization’s goals over a long period.

Okay. Let’s wrap today’s article up with a summary…

Summary: Examples Of Long-Term Business Goals

10 Examples Of Long-Term Business Goals include:

In my opinion, any of these 10 objectives are good examples of long-term goals for a new business. Or, a mature business that has been operating for a while.

They are perfect complements to this…

course I really like about business strategy

…it’s full of great lessons on how to take your business to the next level.

Categories Of Long-Term Business Goals

These business goal examples fall into 1 of the 3 broad categories:

• Extending market reach
• Ensuring the ability to scale
• Balancing growth and profit

In the case of the first two categories. A business owner will be confronted with the options to buy, build, or outsource.

Finally, all goals should be set with an eye on the third category. That is balancing growth and profit.

Setting Long-Term Business Goals

Make SMART goals for your company . They should be:

Achieve Your Long-Term Business Goals

Achieve your goals with PAM:

Document your goals and your plan. By committing to them in writing. Then get to work on your long-term goals for a business.

More Reading About Setting And Achieving Goals

• Level up your money game with these articles
• Move your business to this low-tax state
• Avoid these financial problems

Author Bio : Tom Scott founded the consulting and coaching firm Dividends Diversify, LLC. He leverages his expertise and decades of experience in goal setting, relocation assistance, and investing for long-term wealth to help clients reach their full potential.

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PESTLE Analysis

Insights and resources on business analysis tools

PEST Analysis: Examples and Meaning in Business

Last Updated: Apr 8, 2024 by Jim Makos Filed Under: PEST Analysis

What is a PEST analysis, and what are its four parts? What is the difference between PESTLE analysis and PEST, and why is it important for every business? As a business student, analyst, manager or owner, you are called to conduct a PEST analysis sooner or later. In the next 10 minutes, I’ll go through everything you need to know about PEST analysis and how you can do a PEST analysis of an organization starting from scratch. I promise you’ll know more about PEST analysis than 99% of people out there, as I’m explaining everything as concisely as possible. Let’s start with the PEST analysis definition.

What is a PEST Analysis?

PEST analysis is a strategic tool for organizations to identify and assess how Political, Economic, Social, and Technological external factors impact operations so that they can gain a competitive edge. A PEST analysis helps you determine how these factors will affect a business’s performance and strategy in the long term. It is often used in collaboration with other analytical business tools. For example:

• A combination of PEST and SWOT analysis usually gives a clearer understanding of a situation with related internal and external factors
• PESTLE analysis is an extension of PEST analysis that covers legal and environmental factors

I’m going to explain the PEST analysis as simply as possible with examples and a template for better understanding. I will also show how to do a PEST analysis starting from scratch, even for people without any business education like me!

Why Do a PEST Analysis

It’s simple: to succeed. For a business to be successful, they need a few things:

• A solid product
• Marketing plan
• Identifiable brand
• Happy customers
• Thorough budget
• An investor or two
• Unique selling position
• And a whole lot of research

Throughout the endless market research, customer acquisition costs, and project risk assessments, business managers could forget about outside influences ( we call these external factors in this type of analysis). Aside from the company’s internal resources and industry factors, PEST’s macroeconomic factors can impact a company’s performance in a big way.

By being aware of external factors, managers can aid their business. But if they don’t know them, they can cripple their business before it begins. That’s how advantageous PEST analysis is .

What are the four parts of PEST analysis?

Now, let me explain each of the four parts of a PEST analysis more thoroughly. You’ll better understand what each of these external factors in this analysis is all about.

• Political – Here, government regulations and legal factors are assessed in terms of their ability to affect the business environment and trade markets. The main issues addressed in this section include political stability, tax guidelines, trade regulations, safety regulations, and employment laws.
• Economic – Next, businesses examine the economic issues that have an impact on the company. This would include factors like inflation, interest rates, economic growth, the unemployment rate and policies, and the business cycle followed in the country.
• Social – At this stage, businesses focus on the society and people. Elements like customer demographics, cultural limitations, lifestyle attitudes, and education come into play here. This part allows a business to understand how consumer needs are shaped.
• Technological – This may come as a surprise, but technology may not always be an ally for businesses. Depending on the product, technology may affect the organization positively but also negatively. In PEST’s last section we find technological advancements, the role of the Internet, and how an industry’s innovation creates winners and losers.

Every business is different. Some factors may not affect a firm or industry as they would with others. But it’s beneficial to have a well-rounded view of the many factors that could affect them. Along with the ones that will affect them.

This is why we do PEST analysis for a business — to be aware of risks, opportunities, influences, and limitations. Let’s go deeper into these external factors that impact the success of a business. I’ll also briefly mention a specific example for each of them.

Political Factors

Political factors in PEST analysis refer to the extent to which the government and political actions in a country influence the business climate. Here are some examples that will occasionally make it into the (P) of my PEST analysis:

• Tax policies
• Tax incentives
• Political tensions
• Employment laws
• Import restrictions
• Health and safety laws
• Consumer protection laws
• Tariff and Trade restrictions
• Regulation and deregulation

For instance, a country’s foreign policy often plays an important role in determining trade regulations. This can either result in trade restrictions or trade incentives and can affect an organization’s operations. Read my dedicated page on political factors with more examples here .

Economic Factors

In the (E) part of PEST Analysis, we run into how the economy affects the organization. I consider the following economic factors when doing a PEST analysis:

• Interest rate
• Inflation rates
• Exchange rates
• Unemployment rate

For instance, exchange rates affect a global organization by influencing the cost of imported and exported goods. Furthermore, interest rates influence the cost of capital available to the organization. Thus they are significant in the expansion and growth of a business. Find more economic factors and examples of how they affect businesses here .

Social Factors

Social factors include different cultural and demographic aspects of society. These can affect the macro-environment in which the organization operates.

In the ‘S’ part of the PEST analysis I usually examine:

• Age distribution
• Cultural diversity
• Demographics shifts
• Population growth rate
• Health consciousness and trends
• Changing consumer lifestyles and preferences

A study of these factors can help organizations understand the dynamics of existing and emerging potential markets along with future customer needs.

Social factors are more unpredictable than economic and political factors, simply because people are unpredictable. But every business needs customers. And what and how they buy has an immediate effect on an organization’s profitability.

Based on these social factors, marketers create buyer personas. These avatars are necessary for businesses to target the ideal customer.

For example, if you’re selling whey powder, you go after fitness enthusiasts and bodybuilders. You are looking for people that follow an active lifestyle. Hence, a declining trend in health consciousness doesn’t seem encouraging.

That’s the tip of the iceberg. Learn more about social factors here .

Technological Factors

Technological factors aren’t important only for tech-related businesses. The (T) part in PEST analysis may affect even the most old-school organization that’s been operating for a century.

Technology is evolving at a rapid pace and consumers are becoming extremely tech-savvy. With the advent of new technology, older technology gets outdated and obsolete. If an organization does not look out for technological changes, it can lag behind its competitors.

I often include the following technological factors when conducting a PEST analysis:

• Cybersecurity Threats
• Emerging Technologies
• Big data and computing
• AI and Machine Learning
• Supply Chain Automation

Let’s consider the advancements in computing; more specifically, networking.

If a business offers the latest and fastest Wi-Fi in their store, it’s an added luxury. It’s annoying if it still operates on 3G speeds, but won’t ruin sales. However, if they handle all receipts in an online database and that goes offline because they didn’t keep their network infrastucture up-to-date then they have a major problem. Especially in big holidays like Black Friday.

Again, this is about impact on the business operation. How will ‘X’ technology affect the business in the long and short term? That’s what we’re trying to figure out with PEST analysis.

A ton more technological factors can be found here .

PEST Analysis Examples

Here is a hypothetical PEST analysis example that can give you a clear understanding of how this works:

Here at PESTLEanalysis.com I rarely limit myself to PEST analysis. I almost always go the extra mile and include the Legal and Environmental factors when I initiate a PEST analysis. This leads to a more detailed analysis called PESTLE.

PESTLE Analysis: An extension of PEST Analysis

PESTLE analysis is an extension of PEST that is used to assess two additional macroeconomic factors. These factors are the  Legal and Environmental conditions that can have an impact on a organization. Examples of PESTLE analysis are similar to those of a PEST analysis, but they will include factors such as these:

• Discrimination laws
• Copyright and patent laws

Environment:

• Waste management
• Changes in weather and climate
• Laws regarding pollution and recycling
• Use of green or eco-friendly products and practices

So, if you want to assess a business situation comprehensively, a PESTLE analysis is a definite must. You can find more about that analysis here .

Why PEST Analysis Is Important For Every Business

So, now that we did a PEST analysis, how’s that going to help the business?

What does a five-year business plan look like? Or a ten-year plan? It likely involves growth.

Whether it’s the expansion of a product line or opening stores in new locations, business changes need proper preparation. And that’s where the PEST analysis comes in.

PEST analysis is the foolproof plan for business expansion !

Both new business owners and veterans should include PEST analysis in their business plan. By breaking down the critical influences in the P.E.S.T. categories, businesses get a better understanding of whether their next business move is strategic or doesn’t make sense.

For example, politics isn’t just about political tensions, unrest and elections. Politics are also about trade policies, regulations and taxation. Companies doing business worldwide have to consider laws in the countries they operate, as well. Even if they aren’t doing international trade yet, it could be a possibility in the future, and going in blind is a good way to toss success out the window.

PEST analysis helps people become aware.

Aware of how political parties and regulations can impact a business. And how the economy (past, present, and future) affects an industry. It allows people to understand consumers — who they are, what they buy, and why they don’t buy. And finally, it identifies what technology is necessary for the development and success of a product, business, or industry.

It’s almost like an outline. It shows people what influences impact the quality, success, or devastation of businesses and industries. You can’t stop the four influences, but if you’re aware of them and their impact, you can plan around, against, or with them.

PEST analysis is often used by business analysts, marketers, students, and business owners, since it’s super important for every business!

All you need to do a proper PEST analysis is time. And the payoff is worth every second.

How PEST analysis works

PEST analysis requires research and data, sometimes ten years old, sometimes only a couple. The more information I have to go through, the more accurate my final results will be. By looking into the past and the present, I can make predictions for the future.

By studying these recent developments through a PEST analysis lens, organizations are deciding whether to jump into this for the long haul or for the time being.

You want to look at your industry in a similar light. Ten years ago, did it exist? Has it slowed down within the last two years or are more companies diving in? More competition can be a strong sign an industry is booming, but it could also be the first sign of oversaturation.

Break down your assessment into the four categories of PEST analysis. Start with politics and work your way through the remaining factors. Or start from the bottom. Whatever gets the job done and makes the analysis enjoyable.

How to Do a PEST Analysis From Scratch

I’ve written dozens of PEST analyses over the last couple of years. Below I document my process on how to do a PEST analysis , even when you’ve never written one before.

You should have a topic in mind. Most PEST analyses are about a specific business, industry, or product. However, they can also be applied to countries, too. You can’t start without a topic, though, so have it ready.

Where to find information for your PEST analysis

It’ll be easier to find and segment information if you break your analysis down into four sections, like the acronym implies:

• Technological

Each section will require its own information. However, some of this information will overlap.

For instance, the economy is often closely tied to political (in)stability. And the state of the economy always affects consumers (social). You don’t need to look for these patterns specifically— it’ll become apparent as you discover new information.

Start with the history

You should be familiar with your topic. If you’re not, read about its history. Learn how it was established, how long it has been around, and who founded it. Read about any major achievements on the organization in question over the last few years. Jot down notes whenever something that seems relevant or important pops up.

After this informational primer, it’s time to start on the four sections. I do my PEST analysis in order of the acronym because the information often bleeds into the next section.

Finding Political Information

Political information is easier to find than in other sections of the analysis (social and technological, specifically). Here, you’ll want to investigate the current political climate.

For instance, if the organization originates from America, you’ll research the current political parties. Who is in charge? Has this affected business operations in any way?

If your topic (business, product, industry) was established years ago, what was the political climate like then? Are different parties in power now? If this is the case, then you’ll want to compare how things have changed for your topic from then to now.

This is also the section where you’ll look into laws and regulations affecting business. Remember the list we went through in the beginning.

I find this information with a simple Google search. Such as “tariff laws USA” (plug in the country you’re searching for if it’s not the United States).

It’s best to get this information from a government site. These sites end in .gov. You may also find information from organizations (websites ending in .org) but not all of these sites are legitimate organizations. Be wary while you research.

Honestly, most of the information you’ll find is dense. But it’s easier if you have a goal. Look for signs of:

• Government (in)stability
• Possible political corruption
• New bills/regulations that may impact your topic
• Any issues your topic has had with current/former regulations or political parties

If your topic is a company, finding the right information may be easier. Search for “company name + political issues” or “company name + policies” and see what comes up. Avoid any information from untrustworthy sites and sites with no legitimate source.

Finding Economic Information

While you’re researching political information, you may come across connections to the current economy. For instance, political instability often leads to economic instability. This causes unemployment rates to rise and employee strikes. This affects how much disposable income people have.

You may have already found information in your political section that confirms economic problems. But if you haven’t, search government sites for current tax rates, interest rates (if your topic involves international business), and the current state of the economy. Is it good? Thriving? Or bad and declining?

Again, use government websites. Search for economic statistics over the last few years. If your topic is an industry, see how many companies (startups) have started within the last few years.

If your topic is a business that has international stores, look into the relationship between the country of origin and each country the company does business. If the relationship is good, it’s often a good outlook for the company. But if it’s bad, it may lead to problems. What problems? Do a bit of digging online.

Also, if your PEST analysis is for a company, you may look into stocks . Have they been declining? On the rise? Because if it’s the former, then the business may not be looking good. And you’ll want to find out why .

If my topic is a business, I sometimes check out the competition. I’ll look into how that other company has been fairing economically, specifically how its sales have risen or fallen over the last couple of years. If it’s dropped products, shifted marketing efforts, etc., I want to know why . A competitor analysis isn’t always necessary , but it can shed light on possible problems your topic may face.

Finding Social Information

This section is a bit trickier. Political and economic sectors rely heavily on data and evidence. You can find this information on government websites. News sites too, even. And although you can find databases about demographics and population growth for this section — all applicable in a PEST analysis — I wouldn’t stop there.

In the social section, I often examine how consumers are impacted by political and economic factors. You can draw conclusions based on the information you’ve already gathered from your political and economic segments.

For instance, if there is political instability and the economy is on the fritz, then consumers may feel uneasy. They may have fewer job options. And that means they’re less likely to spend frivolously. If your topic is a luxury product, it may mean the company that makes it may have lower sales this year.

But you also want to learn about how consumers feel about your topic. If it’s a company, do consumers generally like it? Or is public opinion souring? There should be a reason for why.

Consider Facebook. The company’s CEO, Mark Zuckerberg, has consistently been in hot water over the years. If not for data breaches affecting millions of users, but for their shady involvement with fake news and political tampering.

This has led many consumers to shy away from using Facebook. And this affects businesses that use Facebook to reach new customers.

In this section of the PEST analysis, I’m more likely to search for my topic on news sites and publications. The more popular the topic, the easier it’ll be to find articles written about it. But if the topic has ever been in the news, you’ll likely find it online.

Websites to search include :

• Consumer Reports
• Local news websites
• Other reputable sources

If you know your topic has been in the news for something bad, you can search the topic + the problem.

Although the information may overlap, take keynotes here. See how the problem is affecting consumer opinion. You may even want to take a look at the comments (if there are any) and see what people are saying. It’s coming straight from the lion’s mouth (consumers).

I think many PEST analyses favor numbers too much. We live in a world where anyone with an opinion can be heard, thanks to the internet. And enough of those voices can cause a business to change its policies and products. It can even cause the company to collapse.

So it’s important to search for how consumers feel about your topic too.

Finding Technological Information

This section of the PEST analysis is a bit abstract as well. You’re looking into how new technological advancements has affected your topic positively or negatively. You should also look into what technology your topic uses (currently). And what technology they may want to incorporate.

You may want to look at competitors if your topic is a product or business. See what others are using. And think about why they are.

Press releases

It may be beneficial to search for press releases involving your topic, if possible. If your company is using new technology, they may have announced it through a press release. You can search “company name + press release” or search through these press release websites:

• PR NewsWire
• NPR: National Public Radio

You may also find other information here for the other sections of the PEST analysis. Which is just an overall bonus. If all else fails, check if your topic has a website (unless it’s an industry or country). Discuss how they use social media (if they don’t, then… discuss that too!). In this section, you’re assessing what your topic uses, what it doesn’t, and why.

Putting it all together in a final PEST analysis

You’ll likely have heaps of information at hand. For some it’ll feel like too much — but that’s never the case for a PEST analysis. As you begin to read through each section’s notes, incorporate the most interesting, pressing, or surprising information. If anything overlaps with other sections, include that too.

I write each section of a PEST analysis at a time. I take my notes and create coherent sentences. Sometimes I make a list of the most important points and include them that way. If the section is long, I’ll use subheadings to break up the information.

Work on each section separately. And then if there are overlapping themes, incorporate those in. You may want to use those at the end of each section to connect to the next.

Once you’ve done this, you’ve completed your PEST analysis! Most of the work is in finding the information and making it coherent. The last 10-20 percent is putting it all together. So, once the research phase is done, you’re basically done too!

Understanding PEST Analysis: Taking Action

In conclusion, developing an understanding of what is PEST analysis becomes even more important when a company is about to launch a new business or a new product. In general, when they are about to change something drastically. That’s when all these factors play an important role in determining the feasibility and profitability of the new venture.

Therefore, developing an understanding of PEST analysis is useful for organizations for analyzing and understanding the ground realities of the environment they have to operate in.

Realizing what is PEST and knowing how to take this analysis into consideration, the organization can be in a better position to analyze the challenges, environment, factors, opportunities, restrictions and incentives it faces. In case an organization fails to take into account any one of these factors, it may fail to plan and operate properly.

But don’t PEST analysis stop you. Here are some variations that may come in handy when assessing how the external environment affects an organization:

• STEEP Analysis
• STEEPLED Analysis
• SWOT Analysis

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• May 7, 2024
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Yokogawa Announces Growth for Sustainability 2028 Medium-term Business Plan

- Approaching business from an ESG perspective and picking up the pace of efforts to enhance social and corporate value in alignment with Yokogawa's Purpose -

Tokyo, Japan - May 7, 2024

Yokogawa Electric Corporation (TOKYO: 6841) announces the formulation of Growth for Sustainability 2028 (GS2028), a new medium-term business plan for the period ending fiscal year 2028.

In fiscal year 2021, Yokogawa fundamentally revised its long-term business framework and announced the Accelerate Growth 2023 (AG2023) medium-term business plan with the aim of achieving sustainable growth through the provision of shared value to society. For the three-year period ending with fiscal year 2023, Yokogawa worked to establish a business structure centered on addressing broad social issues, with the aim of realizing its vision for where it wishes to be as a company in the year 2030. Under the new Growth for Sustainability 2028 medium-term business plan commencing this fiscal year, the company will pick up the pace of its efforts to achieve a transformation that will enhance social and corporate value based on an environmental, social, and governance (ESG) business approach and the industry-oriented business structure that was established under AG2023.

Long-term Business Framework

Yokogawa’s long-term business framework was fundamentally revised when AG2023 was being drawn up, and no major revisions have been made this time. The same Vision statement outlining where Yokogawa wishes to be in 2030 has been carried over to GS2028.

Vision statement

Through autonomy and symbiosis, Yokogawa will create sustainable value and lead the way in solving global issues.

Value provision to customers

The world is now in an age where everything is ever more intricately connected. In this system of systems (SoS) world, where independently operated and managed systems connect to form a larger system that delivers synergies and emergent value, Yokogawa will promote effective connections and enable overall optimization through integration, autonomy, and digitalization. The company will lead the way forward and achieve this through its IA2IA *1 and smart manufacturing *2 approaches.

*1 An initiative to promote the evolution from industrial automation to industrial autonomy (IA2IA) by incorporating DX enablers such as AI, digital twins, and robotics *2 The achievement of autonomy and improvement of productivity in production operations, enterprises, and supply chains through DX and IA2IA

Growth for Sustainability 2028 Medium-term Business Plan

The starting point for GS2028 is Yokogawa’s Purpose, which states, “Utilizing our ability to measure and connect, we fulfill our responsibilities for the future of our planet.”

Value creation process

In line with Yokogawa’s Purpose, the company has defined the following value creation process for achieving the goals of its medium-term business plan: “Based on the strengths and the trust that have been built up over the years by solving operational technology (OT) issues for our customers, we will leverage our human capital and DX-enabling technologies to co-create diverse high-value solutions in SoS-related businesses. We will utilize the strong trust-based relationships with customers, know-how, human resources, and other forms of business capital enhanced through this process to achieve our business aims.”

Basic strategies for value creation

To realize the vision for 2030 defined in Yokogawa’s long-term business framework, and to achieve the aims of the value creation process described above, the company has formulated four basic strategies to be carried out over the five-year period ending with fiscal year 2028. The overview of each basic strategy is below.

• Provide value as a trusted partner in the system of systems domain To deliver value through SoS, Yokogawa takes a two-pronged approach: IA2IA and smart manufacturing. By leveraging the know-how, experience, and advanced technological capabilities that have been accumulated at numerous manufacturing sites, the company will deliver value through strategic consulting and seamless integration.
• Strengthen industry responsiveness and expand cross-industry business In response to customers who are seeking to improve production efficiency and stabilize their production operations, Yokogawa will strengthen its ability to provide integrated IT/OT solutions to targeted industries. At the same time, the company will work to grow its business by addressing issues in areas such as quality control and facility management that are common concerns in every industry. To support customer DX, Yokogawa will expand on its strengths in field instruments and control systems to also offer solutions that include MES, ERP, and other upper-layer systems.  The company will also enhance the solutions provided to customers who are adapting their business operations in response to a changing business environment and evolving market needs.
• Create value by utilizing and developing intangible capital Yokogawa will focus on utilizing its human capital, intellectual capital, and social and relationship capital. These three types of intangible capital contain hidden strengths that have been built up over the years, such as the ability to create value, empathize, identify issues, and connect to stakeholders. The company will make use of these strengths to spur growth.
• Group-wide profitability improvement initiatives: The company will generate and allocate strategic resources, optimize operations, and optimize its management foundations.
• DX strategy: Based on its global IT foundation, the company will promote internal DX measures to improve the customer experience, partner experience, and employee experience. As for external DX, with the overall aim of shifting to a recurring revenue business model it will actively apply the know-how cultivated in the OT field to develop applications and services that utilize Yokogawa Cloud.
• Enhancement of corporate governance: Yokogawa will transition from “a company with a board of auditors” to “a company with a nominating committee, etc.” This will clarify the division of supervisory and execution roles, improve the efficiency of decision-making processes, clarify responsibility for the achievement of business decisions and business plans, strengthen auditing functions, and improve efficiency.

Business Strategies in GS2028

In fiscal year 2021, Yokogawa transitioned to a structure that is based on industry-oriented business segments, and established a system for expanding its business through global collaboration. These business segments are based on the businesses that customers are engaged in and center on issues that need to be resolved in order to realize a sustainable society.  The main strategies and policies of each business segment aim for growth in specific business areas while also connecting to the business focus areas and activities of the six contribution areas that have been defined based on Yokogawa’s Three Goals for sustainability.

Energy & Sustainability

• Expand solution offerings for the renewable energy market.
• Accelerate solution deployment by leveraging consulting and IT capabilities.
• Maintain strong relationships with oil & gas customers to expand business and capture needs in growth areas.
• Optimize supply chains; expand into the mobility sector.
• Further accelerate consulting and solution-based business.
• Expand customer base in chemical and mining industries.
• Develop new technologies for the rapidly growing fields of biotechnology and regenerative medicine.
• Accelerate overseas deployment of solutions that have a strong track record in the Japanese market.
• Provide value through problem-solving solutions.
• Further develop relations and expand activities with leading companies.

Measuring Instruments

• Provide measurement solutions to improve energy efficiency.
• Expand business areas by applying core technologies.
• Create new business using spectroscopic application technology.
• Pursue highly profitable business by developing and providing one-of-a-kind products.

New Businesses and Others

Yokogawa will accelerate activities to establish and quickly monetize businesses in areas such as video analysis AI, IoT, bio-related fields, and research and development/contract manufacturing of active pharmaceutical ingredients.

Areas for Exploration

These will continue to be disaster prevention, space, and ocean.

Management Targets

• The company will set aside a total of 100 billion yen for capital investments for growth (strategic investments) to be made over the first three years of the business plan (FY2024 to FY2026). It will maintain an optimal capital structure that takes into account overall risks, increases or decreases in equity, and the assumption of increased risk associated with the execution of investments that use debt financing, in order to maintain a level of shareholders' equity that can retain a Grade A rating even when risks materialize, and to secure a certain level of risk investment capacity for the next stage of growth.
• Under its dividend policy (basic policy on allocation of profits), the company will seek to preferentially allocate profits to investments that maximize corporate value over the medium- to long-term, but will also strive to improve shareholder return through the proactive payment of dividends, while ensuring it retains a certain financial stability. Yokogawa will continue to return a certain percentage of profit each period based on the target dividend payout ratio, and maintain a stable dividend based on the equity dividend rate, while also flexibly considering share buybacks to provide additional shareholder returns, taking into consideration financial conditions, stock price levels, etc.

In full alignment with Yokogawa's Purpose, and with the aim of being a company that is depended upon by society into the future, Yokogawa will accelerate its efforts to achieve a transformation that enables it to achieve its vision for the year 2030.

For more information

• Growth for Sustainability 2028 medium-term business plan presentation materials (PDF)

About Yokogawa

Yokogawa provides advanced solutions in the areas of measurement, control, and information to customers across a broad range of industries, including energy, chemicals, materials, pharmaceuticals, and food. Yokogawa addresses customer issues regarding the optimization of production, assets, and the supply chain with the effective application of digital technologies, enabling the transition to autonomous operations. Founded in Tokyo in 1915, Yokogawa continues to work toward a sustainable society through its 17,000+ employees in a global network of 129 companies spanning 60 countries. For more information, visit www.yokogawa.com 

The names of corporations, organizations, products, services and logos herein are either registered trademarks or trademarks of Yokogawa Electric Corporation or their respective holders.

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