We are having a debate in our office if our financial plan should be three years or five years. How many years do you take your plan out to?

We take ours out to 3 years, after that it is too difficult to forecast. Plus as a small business we are more worried about next year than three years out.

We are just a small shop so we only look year to year.

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I think having a five year plan is a waste of time for a small business. Most will not be around to see if they make it to the 5 years. What we suggest to clients is to have a budget year - year 1 and a forecast year - year 2 if they want to go out beyond that we tell them to straight line it.

I think anything after a year for a small business is a waste of time things are changing so rapidly especially for a new business.

Very optimistic

If no long term plan, then the probability to have the above case increases, I think.

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I was using 5 yrs for my own use, but since lenders prefer 3 yrs I've been sticking with that. It's difficult enough to forecast for 3 yrs with any accuracy. Five is just not necessary for most needs.

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Sylvia
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