The Key Differences Between Short-Term and Long-Term Planning
The Key Differences Between Short-Term and Long-Term Planning
In the present business context, business owners strategize their businesses in terms of short-term, long-term, and medium-term. Short and long-term goals are crucial to achieving success. Don’t you believe us? Look at the data because numbers never lie.
The study conducted by BiWorldWide finds that goal-oriented organizations have 6.7 times more employees who are proud of their organization. Also, this other reports of 2020 show that goal-oriented people are ten times more successful than non-goals-oriented people.
Organizations need clear goals to exponentially increase their work performance and success rate. However, they need to be careful while setting up goals since a project significantly depends on both short- and long-term planning.
That’s why it’s important for organizations to understand the key differences between short-term and long-term planning so they can choose the right approach to handle their business processes.
Follow this article to learn a brief overview of the two types of planning and explains the key differences between them.
What are short-term, medium-term planning, and long-term planning?
Companies adopt different approaches to execute their business processes. This includes the two most common types of planning: short-term and long-term. Both approaches have different objectives, horizons, and techniques. These two aren’t the only approach in use. Medium-term planning is also quite in use these days.
Overall, these planning methods help to measure and improve the performance of both employees and the organization. Let’s start defining them one by one.
What is short-term planning?
Short-term planning is a process that businesses use to create a roadmap for achieving specific goals within a specific timeframe. This process generally covers a period of time ranging from six months to one year.
The goal of short-term planning is to identify the steps that need to be taken in order to achieve the desired objectives. This process typically begins with a review of the current situation and the identification of the desired outcomes. Once the goals have been identified, the steps that need to be taken to achieve them can be mapped out.
The main vision of short-term planning focus on satisfying the investors who want to improve the company’s bottom line. As a final result, your organization can get additional financing to achieve long-term goals.
When planning such a strategy, a company must consider the current situation and issues as soon as possible. An evaluation can take a day, a month, or a year, depending on the problems and their complexity.
Short-term planning requires consideration of the following concepts:
- Cash flow
- Stock investments
- Savings of capital
- Networking ability
- Daily routines
Further, depending on the organization’s characteristics, short-term plans focus on improving things—for instance, developing a new product.
However, the company must ensure that the plan facilitates long-term objectives too. The newly launched product must secure the company’s brand name.
Short-term planning includes the solution of short-term issues such as the skills of the employees, product quality, machine condition, employee attitudes, and product complaints.
However, organizations can set training courses for employees, quality assurance, and equipment servicing as short-term solutions. It will help you to address long-term problems as well.
What is medium-term planning?
Medium-term planning mainly focuses on ensuring that the short-term issues of the organization won’t reoccur again. For that, it requires implementing lasting solutions to short-term problems and applying procedures and policies.
The medium-term plan focuses on resolving short-term issues permanently. For example, when the equipment fails, the short-term goal is to repair it. In contrast, the medium-term plan or the solution is to sign a service contract.
As another example of medium-term planning, investing in employees’ training programs is a better option than holding workshops periodically.
It may take up to 3 years to achieve medium-term goals. It’s a long enough time to be thoughtful about your long-term goal. However, it is still not enough for you to project the desired result.
What is long-term planning?
As the name suggests, long-term planning means setting goals that take a long time to achieve. It focuses on eliminating the problem permanently and archive entire goals.
The long-term strategy analyzes the company’s competitive condition and threats that they face. The threats can be the social, political, and economic environment, possible changes in suppliers, and the development of new products. Based on the analysis, it develops a long-term strategy for adopting its position.
Furthermore, it evaluates the major capital expenditure, such as buying tools/equipment and facilities and implementing rules and procedures that elevate the company’s profile to match top management’s goals.
Long-term planning builds on short-term and medium-term accomplishments, preserving those achievements and ensuring continued progress.
A management team has to reach a consensus when creating long-term goals so they are unlikely to be changed once they are set.
The time frame to achieve the long-term goal is between four to five years. However, the timeframe will vary depending on the type of business and goal.
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Key differences between long-term and short-term planning.
Planning for the short term involves analyzing your current performance and formulating an action plan for enhancing it. In contrast, long-term planning is a complete systematic framework comprising goals the company needs to meet within a specific four-to-five-year timeframe.
Let’s discuss the main differences between long-term and short-term planning.
Typically, short-term planning involves solving short-term or immediate problems. This will enable us to see the results in less than a year.
In contrast, long-term planning evaluates the company’s stability and long-term goals in the projected future to drive it in a strategic direction. Long-term planning has no upper limit. But normally it’s up to 5 years. Also, it depends on how short-term plans are achieved.
The short-term goal is tied to a long-term goal. But to ensure you’re working properly, daily adjustments are needed. That’s why the scope of short-term planning gets changes often in contrast to the long-term plan.
Unlike long-term planning, which is based on consultation with key employees, short-term planning changes daily.
A short-term plan is executed based on ongoing operations, which can indicate if projects are being completed. It is the determining factor in long-term planning. The long-term goal depends on the short-term goals.
For example, you are going to open new a new office branch. To accomplish this, you need to first research the area, analyze your competitors, and hire employees to attract potential buyers.
Here, your short-term goal can be finding the perfect area and analyzing competitors. And if you don’t have time on researching them, you won’t be able to achieve them. Further, these short-term objectives are not related to each other.
However, without analyzing competitors, and doing research on the area, you can’t open a brand office. So, it is clear that several short-term plans must successfully achieve one long-term plan.
Normally, short-term planning focus on solving current internal issues such as hiring new employee, the relationship between stakeholders and staff, team leader, leadership teams, and organizational structure.
Further, it includes a lack of training, high rejection rates, customer complaints, etc. To minimize the damage, they devise an action plan that can be implemented in a short period of time.
In contrast, long-term planning in business covers internal and external problems that impact the business. You should consider external factors such as the current political situation, global trends and economic change, etc.
It also includes competition pressure, key supplier, legal issues, and social problems that affect your efforts to fulfill your vision.
Planning for the short term is straightforward and flexible. This is because short-term plans only cover a short period, so they can easily adapt to changing circumstances. They are the stepping stones that help you to achieve the long-term objective.
Meanwhile, long-term goals are complex and tactical. So, it is difficult to achieve them. They require detailed planning on how to succeed and get there. Your short-term goals naturally take you to your long-term goals.
Finally, short-term plans are typically more flexible than long-term plans. Long-term plans, on the other hand, are more difficult to change because they cover a more extended time.
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The difference between long-term and strategic planning
A question that is frequently asked is: Are strategic plans the same as long-term plans? If not, what makes them different?
Many people think they are the same. However, there is a difference between long-term and strategic planning. Let’s find out what it is.
Business plan statistics show that 25% of startups without business plans will fail within two years.
That’s why for any business to get successful, there must have a solid strategy plan. Strategic planning is a structured process that includes making specific business strategies, implementing them, and determining the result.
It helps you determine what strategic initiatives and objectives to focus on to accomplish your vision and goals.
A strategic plan consists of three fundamental steps:
- Formulation of plan
- Implementation and execution of the plan
In contrast, long-term planning determines the actions and processes you need to achieve specific strategic goals. Further, it concentrates on setting priorities, handling unforeseen changes, forecasting, and managing resources.
In a single sentence, a company’s strategic planning dictates what it will do, and long-term planning dictates how it will do it.
How to use SMART goals for short-term planning?
A short-term plan can be interpreted as measurable action taken to execute a strategy agreed to by management and the organization as a whole.
As a result, short-term success depends on assigning and completing a series of objectives. In fact, short-term planning can be handled under the SMART formula. However, if you don’t know how to use the SMART framework for short-term planning, continue reading the blog.
Get familiar with the SMART framework.
Short-term planning can be categorized as SMART planning. Usually, lower-level employees execute the short-term plan specified by their manager.
SMART stands for
S ➡ Specific,
M ➡ Measurable,
A ➡ Achievable/Actionable,
R ➡ Relevant/Realistic, and
T ➡ Time-bound.
The SMART formula has five components, each of which is broken down here.
The purpose of this component is to determine what you want to achieve in a short period. While drafting your goal, you should focus on five “Wh” questions.
- What exactly do I want to achieve?
- Who are involved?
- Why is the goal important?
- Where is it situated?
- Which limits or resources are involved?
You must have a clear and specific goal. Otherwise, you can’t focus on your efforts and feel motivated to accomplish them.
The milestones you set will help you to visualize the time required to complete your short-term planning steps. To know whether you’re making progress, you have to measure it. That’s why it is essential to have measurable goals.
When you track the progress, you can stay focused, meet the deadlines and feel the pleasure and enthusiasm of getting closer to accomplishing your goal.
Measurable goals should answer questions like these:
- How many?
- How much?
- How will I know when it is achieved?
Your short-term goal must be realistic and achievable to be successful. In simple terms, it’s okay if the goal stretches your capability, but it should remain possible to attain.
By setting an achievable goal, you may find the previously missed chances or resources that can help you bring closer to the goal.
- Your attainable goal normally answers queries like
- How can I achieve this goal?
- How realistic is the goal, depending on resources like the financial components?
Now, this component is about ensuring that your target goal matter to you. And they are aligned with other related goals.
Plan your strategy according to the company’s core values. Creating a process that promotes employee efficiency will benefit your business.
Answering “yes” to the following questions is indicative of a relevant goal:
- Does the goal seem worthy?
- Is now the right time?
- Does the goal match our other efforts?
- Is it relevant in today’s socioeconomic environment?
Management should define the timeframe for the team to plan for and adapt to changes. When they have a deadline, they can focus on them and look toward it.
These SMART goal criteria help you prioritize your long-term goals over everyday tasks.
A time-bound goal will usually answer these questions:
In six months, what can I do?
In six weeks, what can I do?
Today, what can I do?
Discuss short-term planning needs with management to ensure the employees’ satisfaction.
It is important to discuss short-term planning needs with management to ensure the employees’ satisfaction. This will help to ensure that the company’s goals are being met and that the employees are happy with their current situation. Doing this will also help to foster a positive working environment and to keep the company’s morale high.
By asking team members what their views are on short-term planning and listening to their idea, they feel heard and valued.
So, before deciding on a short-term goal, make sure that your team shares the same expectations on how short-term planning should be done. Getting employee feedback is the best solution for any organization to gain success.
Prioritize what your company needs to achieve.
Understanding the SMART framework’s working mechanism helps your company perform daily tasks and determine which areas need immediate attention.
Many companies make the mistake of trying to achieve too many things at once. This can lead to scattered effort and ultimately, subpar results. If you want your company to be successful, you need to focus on a few key objectives and prioritize them accordingly.
Ask yourself what your company needs to achieve in order to be successful. Once you have your answer, you can develop a short plan to make it happen. By focusing on objectives with higher priorities first, you can ensure that your company is on the right track to success.
How to set short-term goals in 5 steps?
Goals can play an important role in your career development. The purpose of short-term goals is to increase proficiency and develop abilities within a realistic timeframe. A goal that complements your daily priorities can be greatly beneficial for your professional development over the long run.
Using the SMART formula, you can set short-term goals in a quick time. Here are some of the short-term goal-setting tips that you can follow.
Define your vision to the team member
You must start from the end. Imagine your (your organization’s) target goal and take the steps required to achieve them. Your long-term planning holds several short-term goals. So, first, decide what you actually want to achieve.
What is restricting you from accomplishing them? What are the core values of your company? And what do you need to do to achieve them? Once you have your vision, remind your team member what your company’s short-term goals are.
Provide skills to the team
Identify what skills or tools your team members need to achieve that success. It can be the training and webinars to new technology, more extensive staff, access to the latest technology, or anything required to achieve a short-term goal. You must add them to the goal-creation process.
Review your progress regularly
Keep track of your progress periodically by checking in with yourself. Analyze how far you’ve come by using some kind of metric. You can discuss with the human resource team how to track business goals’ success. It will motivate you to keep going.
Prioritize your goal
Go through the list of your short-term goals and determine which ones are most urgent. After that, you can move on to other projects as you become more comfortable with them. First, concentrate on the goals that matter to you most and coincide with your values.
Adapt to the change
The world around us is unpredictable. So, while trying to achieve your goals, problems may arise. But you should always be ready to make changes. You have to change the tactics but not the goal. Don’t hesitate to shift the approach if you need to.
How to set long-term goals in 5 steps?
Creating long-term goals is essential because it helps you to lead your business in the right direction by making strategic plans. But do you know how to set long-term goals?
If not, continue reading the blog.
The following five steps will assist you to set long-term ambitions.
Identify your vision
The first and foremost step while setting a long-term goal is acknowledging the goal that you want to achieve.
Whether you want to open a new branch in another state or list among the best companies, the goals can differ. However, you must identify what you want to accomplish. Further, the goals should be realistic and measurable. You can use a SMART formula to set the goals.
If you have multiple long-term goals, divide your efforts and time to work on them simultaneously. But if you don’t find it flexible, it’s better to prioritize the crucial long-term aims.
Find out how much time it will take to complete
After finding the goal you want to achieve, it’s time to determine the time it may require. Though the ideal time the goals need completion is difficult to find, you can have an estimated time.
Ensure that you have a realistic timeline to achieve your goal. However, sometimes external factors can affect the time-bound required to complete the goal. So, consider some possible delays when estimating your goal’s duration.
Prepare an action plan
Writing an action plan is an essential part of setting a long-term objective. It is a checklist that gives you the detailed information about all the required steps and tasks to complete prior to achieving a certain goal.
It usually comprises a description of a particular goal, the steps, the responsible team member for each task, deadlines for each, required resources, and measures to track the progress of each step.
Track your progress
Now, you must measure the progress of your goal. It will allow you to see what positive improvements you are making toward your goal. The progress tracking process differs depending on the number of people involved and the type of goal.
External or internal issues may restrict you from achieving your ultimate goal. They may halt the progress. That’s why you must prepare to adjust if anything interrupts achieving the goal.
Be consistent and if one approach fails, try to apply the next one. But never give up.
Effects of long-term planning on the organization
Long-term planning is essential to set the organization because they help you maintain focus. When you define practical long-term objectives, explaining the steps necessary to achieve them is easier. Having a long-term goal can also help you gain a sense of purpose and motivation.
- Long-term planning ensures that the company stays on track and meets its goals while providing a roadmap for employees to follow.
- Additionally, long-term planning can help to foster a sense of teamwork and cooperation within the organization, as everyone works towards the same objectives.
- Further, long-term goal makes businesses become proactive with their growth rather than reacting to the present conditions.
- Finally, long-term goals streamline communication between different all levels of the organization, as everyone is aware of the company’s overall objectives.
Many benefits can come from long-term planning within an organization:
- Less Risk: Taking a risk on an initiative without sufficient testing and tweaking time means rolling the dice. When you commit to a short-term schedule, you may not be able to adjust based on what you see. However, long-term goals help you track results and adjust if necessary.
- Spread costs: Long-term planning allows you to budget for new initiatives over time. A new product line or division may not be feasible to fund with cash. You add interest to your costs when you take out a loan to create something new.
You can adequately fund new initiatives by budgeting some of your revenues or profits over a period of several years without compromising current operations.
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- Remove distractions: Management, through retreats, can concentrate on a specific task by eliminating interruptions from colleagues, clients, or suppliers.
The use of email, texts, and phones at work often interrupts employees’ work. During a retreat, focusing on strategic planning will be more effective if outside communication is limited to a few breaks each day.
Success doesn’t come easily. You must set SMART goals in your short-term, long term planning. Each step of your long- and short-term planning contributes to your success and plays a vital role. The common thread among them is setting realistic goals, thinking ahead, and solving problems.
However, the key dissimilarity between short-term VS long-term planning is that short-term planning targets immediate actions while long-term planning concentrates on predicted outcomes.
Now that you know how short-term and long-term planning differ, you can start making plans that are right for you and your business.