planning horizon

Planning Horizon Can Mess With Your Business Results

The holiday season is the perfect time to see the impact something like a planning horizon can have on somebody’s results, especially this year!

There was only one year in my life, where I happened to be be working retail. More specifically, the 24th of December, as part of the holiday season. I remember getting up that morning and thinking it was going to be a boring day, because everyone would have their shopping complete. In fact, was I very wrong.

That year, I was introduced to the “last minute shopper”.

I worked at a camera counter. All day long the last minute shoppers just kept dropping by. After the first few, I started to realize they were a bit different breed. They were unlike the customers I dealt with on a day to day basis. This group of shoppers didn’t care about options. They didn’t need me to pull camera after camera out of the case so they could hold them and get a feel for them. They didn’t take hours of time and then in the end tell you that they needed to think things over.

The last minute shopper only had two considerations to purchase in mind….the first was whether there was a physical camera they could take home and the second was whether they had enough available cash or credit to pay for it. Where it would normally take an hour to make one sale, I was making a sale every fifteen minutes for the first part of the day and it was easy.

I often wonder how many of those cameras ended up being returned, versus how many ended up never really being used. It was obvious the person doing the buying was there because they needed a gift and they wanted it to look like they had made a real effort and not a last minute panic pick up. There was little thought given to value, long term use and whether the purchase was what was really needed.

As I watch things transpire this year, I wonder what last minute shopping will look like. The requirement for curbside pickup or delivery may have a huge impact on the last minute shopper, because without extending their planning horizon, there could be a whole lot of IOUs under the tree.

So let’s bring this back to business for a moment. We each have our own planning horizon generally based on your position. Your payroll person likely thinks in about things in two week chunks of time. They know payroll is due every two weeks and then taxes are due two weeks after month end. Two weeks is pretty comfortable. Your purchasing people probably have a pretty good idea on lead times, and therefore think about time in those terms.

So what about you? As the business owner, how far out are you looking?

The owners of big business look way out. Think about Amazon. Their planning horizon could be as far out as mulit-generational. They have a vision to fundamentally change how we all make purchases and it takes a long time to turn a ship as big as that. If they don’t look way out and survey the landscape, then they don’t have the time necessary to create software and systems to fulfill that vision.

You know of mid-sized businesses and while they may not look out as far as Amazon, they have a planning horizon that looks out three to five, and maybe even ten years. In both cases, will they have a clear and concise picture? Maybe not, but they will have at least a direction and a concept in how they intend to get there. They will put together a plan that leads their actions both in the short and long term.

Small business owners sometimes forgo things like planning and instead stay focused on just getting by today. They get caught up in the busi-ness of running their business and unfortunately their behavior is more reflective of the last minute shopper. They make decisions to purchase things that work for the moment, but don’t help them in the long run. They are immediate in making decisions, without weighing out the pros and cons. They jump from project to project, without staying the course long enough, to realize the gains. They are reactive, rather than being proactive and as a result, tend to stay small.

Building a business requires some thinking about where you want to go and then finding the strategies that will help you get there. With a little planning, everything gets easier!

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