2018-03-07 13:44:29Business PlanningEnglishFind out what a planning horizon is, and learn how to choose the best horizon for your small business based on the industry, the project,...https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2018/03/Female-small-business-owner-reviews-business-horizon-planning.jpgHow to Determine Your Business's Planning Horizon

How to Determine Your Business’s Planning Horizon

1 min read

Every plan in your business has a beginning and end, and for each plan, you set aside a realistic amount of time to get to the next level successfully. That amount of time is called a planning horizon. If you’re writing a strategic plan for your small business, you might use a one- to three-year planning horizon. A social media marketing plan for a new product launch might have a horizon of just six months.

The planning horizon you choose depends on your situation. One important thing to consider is uncertainty. How predictable is your company’s industry? Imagine you develop apps for iPhones. If Apple changes its API, your business could change overnight. Industries with this type of high uncertainty usually use shorter planning horizons because it’s impossible to predict what might happen. In this case, you might opt for a three-month or six-month horizon and reevaluate your plan at the end of each period. Businesses with lower levels of uncertainty, such as coffee shops, can use a longer planning horizon.

As you pick a planning horizon, think about the information that’s available to you. Some industries, such as agriculture, have been around for a long time. That means that it’s easy to find data and well-established government regulations. With that kind of solid information, you can safely plan for years in the future. On the flip side, if you’re working in a new industry — think autonomous vehicles — the lack of long-term studies is an argument for a shorter horizon. Can you can confidently predict what might happen to your business over the next three years? If so, it’s probably safe to use a three-year horizon. If you can name two or three trends that could force you to change your operations or strategy, a shorter horizon is a better bet.

Choosing a planning horizon is a bit like looking into a crystal ball, but if you know what to look for, you can confidently plan for the future.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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