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  • Writer's pictureHayden Griffin

Short vs. Long term results for your small business

Updated: Feb 15, 2023

Small businesses have financial goals too. We provide specific insights on how you could protect and grow your company.

As one goes about the day - to - day value exchange of goods and services for money, it is important to know the decisions and expenses that would call for short term results and those that would serve for the long term. Why must business owners be wary of this?

Delaying gratification sounds so good and feasible but the reality is far from sweetness. Instead, knowing how to differentiate your seeds from your fruits may be a big, tempting task for you as a business owner and this calls for a lot of reflection for business owners.

Small businesses stay protected by financially planning ahead.

Small business owner recession planning

As one goes about the day - to - day value exchange of goods and services for money, it is important to know the decisions and expenses that would call for short term results and those that would serve for the long term. Why must business owners be wary of this?

Delaying gratification sounds so good and feasible but the reality is far from sweetness. Instead, knowing how to differentiate your seeds from your fruits may be a big, tempting task for you as a business owner and this calls for a lot of reflection for business owners.

  • 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

How to Manage Performance and Maintain Balance

The management team has a duty to emphasize to their boards and the capital markets the relevance of both long-term value development and short-term financial gain. Business health can be determined by the capacity to maintain and enhance performance throughout time. This performance during the previous year is used as a key performance indicator (KPI). It is a mistake to prioritize short-term outcomes over the future cash flows that the company will accrue from its growth prospects, competencies, and connections. Share prices are the center of attention for all businesses, public or private.

Focusing too much on the short term could endanger your business and threaten market confidence and trust.

The primary factor influencing shareholder returns and, consequently, share price is the expectation of future performance. Business analysts estimate that cash flow projections beyond the next three years can account for up to 80% of a company's market value. Even private equity firms that anticipate realizing their investments in five years must still have a solid case for predicted future growth in earnings and cash flow to support a sale or IPO.


Juggling These Five Elements Is Required For Balance

Are the five elements necessary for long-term value growth and profitability in place?

  • Business roadmap: a solid and reliable plan

  • Harvesting your resources: productive, well-kept resources

  • Knowing your value prop: items and services that are innovative

  • Automating your processes: what procedures demand an adjustment?

  • Earning & retaining new customers: ability to attract, retain, and develop high-performing individuals a good reputation with clients, regulators, governments, and other stakeholders

It's difficult to strike the right balance between the short- and long-term. Managing both time spans is quite difficult. However, it is crucial that your company's strategy include initiatives over a range of time periods, some of which should be focused on short-term results and others which should create opportunities for the future, such as new products and/or services, entering a new market, or developing new channels.

In order to be effective with this strategy, you must define how future success will be measured.

There should be a gauge around the percentage of sales that come from new items, for instance, if long-term performance depends on revenue from new products. The elements that support your long-term health, such as new goods, customer retention, category ownership, etc., will determine your success factors and, consequently, your metrics. Naturally, you'll want a well-balanced selection of KPIs that take into account all facets of the organization.

Businesses must always strike a balance between the pressing need to address the here and now and provide short-term outcomes and concentrating on strategy and pursuing long-term objectives. Because the two commonly clash, business owners and other leaders must make difficult choices about what to prioritize and how to strike the correct balance.

A short-term objective might be to boost your advertising expenditure each month for the following three months. To double business revenue by the end of the fiscal year is an example of a long-term business objective that the short-term aim aids in achieving.


Direct elements to improve your business today.

Revenue Objectives and Related Objectives

Another example of a supporting short-term objective is to hire an advertising consultant for one month to help you study and capitalize on your customers' buying tendencies if your long-term revenue goal is to double revenue by the end of the current fiscal year. Spending the next month researching your main competitors and coming up with ideas for what you have to offer that they don't is another example of a short-term aim.

Customer Service Objectives

A long-term objective for customer service would be to receive at least 95% favorable feedback from customers. Designing new surveys and benefits, such as periodical giveaways for free samples or discounts on future orders for clients who devote the time to reply, into the customer service research procedure is an illustration of a complementing short-term target.

Employee Appreciation Goals

Some businesses establish a long-term employee appreciation goal of awarding an employee of the year award to the employee who provides the most creative input during the year in terms of practical ideas to improve the company. Supporting short-term goals are to award employee of the month designations each month throughout the year to mark the progression of creative input, and to include more employees in the reward process than is possible with a single annual award.

Community Outreach Objectives

A common long-term objective for businesses is increasing the company's brand recognition in the neighborhood through community engagement initiatives. Employees that volunteer with specified community initiatives should be recognized with extra time off, bonuses, or gift cards, as examples of short-term supporting goals. Choosing one or two prestigious annual charity events to sponsor is another short-term supportive objective.

Website Traffic Objectives

To at least double website traffic for your business by the conclusion of the current fiscal year is a long-term objective in terms of online traffic. Purchasing web traffic analysis software, doing research on it, and hiring a web consultant for a month to suggest and implement programming modifications are supporting short-term goals that will help you better understand current traffic trends.

To better understand current traffic trends, research and buy web traffic analysis software. Additionally, hire a web specialist for one month to suggest and incorporate computer program changes that will make the site more alluring to a wide range of customers than your traffic pattern research suggests exists currently.

Another example of a short-term aim is to choose a channel for advertising your website other than the Web, such a bus campaign where you lease a banner in a prominent location in town for one month and promote your website URL on the side of city buses.


How do business owners strike a balance between immediate needs and long-term goals?

The standard of the workforce

Your business will be able to adapt to short-term issues and accomplish long-term goals more efficiently with the aid of a qualified and competent team. Putting off investing in skills today may allow you to save money in the short run, but it may also prevent you from achieving your long-term objectives.

When businesses don't have enough employees, business executives may end up doing more of the everyday work that should be delegated and spending less time developing and implementing the long-term strategy of the organization.

Financial soundness

A corporation will be better equipped to allocate the resources it needs to address immediate problems the more financially sound it is. Strong financial standing also allows a business the assurance to make investments for the future.

Owners' and investors' mindset

Some investors and business owners prioritize maximizing near-term profitability. However, this can come at the cost of long-term growth. For instance, a company may decide to forego a planned investment in staff or technology because of a brief decline in sales, but this impulsive action will prevent the company from achieving its long-term objectives.

The level of business development

Due to a lack of funding and the desire to develop their brand, new firms are frequently obliged to concentrate on the short term. Long-term goals should be considered as a firm evolves in order to reduce risks and create a framework that can sustain future expansion.


Common mistakes when balancing short-term needs with long-term targets

Strategy is not given enough attention by leaders.

Business owners and executives devote too much time to handling urgent and immediate duties and insufficient time to making sure the organization is on track to achieve its long-term objectives. And to make matters worse, they don't assign routine tasks to others.

Too centered on quick victories

These choices are likely to go back to haunt you in the future if you are particularly worried with immediate success or too frightened to experience brief failures.

This is made worse off by peoples choices inclination to act in an impulsive manner, to prioritize urgent activities above important ones, and to listen to those who speak the loudest.

Concluding this blog, not your business...

If your organization hasn't established its goals, it is practically difficult to know if what you are doing now is endangering or promoting the long-term success of the business. Many businesses also fail to adequately communicate this to their workforce, even when they've done so. A business without one is rudderless and susceptible to being blown from one item to the next..



About Hayden, Owner/Founder of Nucleo Financial:

A people person that happens to be good with numbers. Hayden started Nucleo with one thing in mind, help others build their financial "core". Through accounting, he set the stage for accounting firms across the US by focusing on what matters most to clients, a strong financial foundation. Outside of accounting, Hayden enjoys spending time with his two children and wife as well as making a fool of himself on the golf course. Whether you desire services or not, he is always welcome to meeting a new friend!

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