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Long-term investment plans prepare businesses for growth
A worker waters seedlings at Mariashoni tree nursery in Nakuru. A business with focus on the future has plenty of benefits like a tree that takes long to mature. Photo/Suleiman Mbatiah
Last week, I visited a tree nursery to buy various seedlings to plant in my rural land that has been lying idle for a while. A gardener was assigned to take me round the nursery pointing out the various trees that would do well in my area, their maturity time and economic benefits.
After a while she realised I had a bias towards trees that took shorter time to mature irrespective of expected benefits. She tried to convince me to plant trees that took long to mature.
Most often, though not always, trees that take longer to mature yield better returns in the market, she noted. The gardener told me that 15 to 20 or even 30 years is such a short time, that I will not even realise since I am not relying on the land for my current survival.
Our discussion led me to seriously think about time perspective, an attitude that plays a very important role in success. Various studies have pointed out that time perspective is the single greatest determiner of success both in business and personal life.
The first well documented study on the relationship between time perspective and success was done by Dr Edward Banfield at Harvard University in 1950s and 1960s.
This study concludes that the most successful people in the society are the ones who take the longest time frame into consideration when making day-to-day decisions. Businesses that focus on short-term gains from customers hardly grow.
Profitability and phenomenal growth is prevalent in enterprises that put the future into consideration when developing their products, dealing with customers and building a brand name.
One characteristic of struggling individuals and enterprises is short time perspective. Both focus on immediate gratification, quick profit regardless of the consequences. They think of how to make money this month, next month or this year.
They spend most of their time and money planning or engaging in activities that will bring immediate returns and hardly invest on future projects.
Take for example a trader who cheats a customer knowing very well that the client will eventually discover the truth or a person who takes drugs to forget problems instead of confronting them head on.
Such people have a very short time perspective. They give very little thought to the long term consequences. They make short-term choices that lead to long-term hardships.
In business as in life, you must take a long term perspective and be willing to pay the cost of forfeiting current gratification, gains and comfort to make a better future.
Though not always, most profitable business take several years to establish themselves and building a strong brand in the market. It takes time to build trust, win customers and become proficient in the market.
However, as the gardener told me, whether I planted those trees or not, God giving me long life, the next few decades will find me here, most likely doing what I am doing. But if I forfeit short-term gains, I will harvest bountifully.
Mr Kiunga is the author of ‘The Art of Entrepreneurship: Strategies to Succeed in a Competitive Market’. Email: [email protected]