Begin with the end in mind – strategic planning for the new decade

| December 20, 2019

“If you want to have a successful enterprise, you clearly define what you’re trying to accomplish… the extent to which you begin with the end in mind often determines whether or not you are able to create a successful enterprise.”​

– Stephen Covey, 1932-2012

 What does your business look like in 2040? 

“What makes sense in business also makes sense in stocks: An investor should ordinarily hold a small piece of an outstanding business with the same tenacity that an owner would exhibit if he owned all of that business.” – Warren Buffett, 1993 

Over the last 20-30 years, we have seen a wealth eroding trend in investments (and as a result amongst business owners). Our news cycle has shortened dramatically, so has our attention span and in my view so has our investment horizon. 

We regularly see CEOs of public companies “hammered” after poor quarterly results (in the same way sports coaches are sacked after six bad games in a row). There is a whole school of entrepreneurship that teaches “fail fast”, and the government has invested substantial $$$ in start-ups and focuses very little attention on “boring” mid-market businesses that have been around for 20 years.

I read an interesting article a few weeks ago, courtesy of Isaac Pino CPA, that goes to the very heart of this issue, about the investment timeframes of Warren Buffett, the world’s most successful investor. 

It drew a straightforward comparison between the “average” investment holding period for American investors (6 months down from 8.3 years in 1960) and the average holding period for Warren Buffett (20 years – with some investments held for more than 40 years). 

Which also reminds me of a quote I often refer to in presentations – “The proper man understands equity, the small man, profits.” – Confucius, 551 – 479 BC

Imagine the value business owners could create if they had a time horizon for their business of 20 years or longer. 

In “The Essays of Warren Buffett: Lessons for Corporate America”, Buffett says: “Just run your business as if: 

1 you own 100% of it, 

2 it is the only asset in the world that you and your family have or will ever have; and 

3 you can’t sell or merge it for at least a century.” 

Buffett’s third point is especially relevant, as it indirectly touches on a critical issue plaguing global economies: public companies, beholden to their shareholders, focus far too much on short-term prospects and quarterly earnings. 

In his “simple mission,” the Buffett argues that businesses should abandon that type of short-term thinking and instead focus on the long-term outlook. 

As we enter the new decade, it is very important for business owners to map out a strategic plan focused on the end game –  What is your business going to look like in 2040 – do you still own it ? Are you still working in the business ? Are you now the Chairman of the board, working 1 day per week ? Is it owned by Employees and independently managed ?

All of these outcomes are possible – but none of them will happen without some serious focus on strategic ( long term )  planning.  We are running a mid-market focused free strategic planning workshop in January 2020.

During this interactive 2-hour workshop Craig West will work through a strategic planning workbook template to help you map out your end game.

Thursday 30th January at 2pm – 4pm at Level 6, 50 York Street, Sydney – as well as live streamed so you can access from anywhere!

Followed by the SME Association of Australia monthly networking drinks – hope you can join us.