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What Is a Business Plan?

Understanding business plans, how to write a business plan, common elements of a business plan, how often should a business plan be updated, the bottom line, business plan: what it is, what's included, and how to write one.

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

planning business def

A business plan is a document that details a company's goals and how it intends to achieve them. Business plans can be of benefit to both startups and well-established companies. For startups, a business plan can be essential for winning over potential lenders and investors. Established businesses can find one useful for staying on track and not losing sight of their goals. This article explains what an effective business plan needs to include and how to write one.

Key Takeaways

  • A business plan is a document describing a company's business activities and how it plans to achieve its goals.
  • Startup companies use business plans to get off the ground and attract outside investors.
  • For established companies, a business plan can help keep the executive team focused on and working toward the company's short- and long-term objectives.
  • There is no single format that a business plan must follow, but there are certain key elements that most companies will want to include.

Investopedia / Ryan Oakley

Any new business should have a business plan in place prior to beginning operations. In fact, banks and venture capital firms often want to see a business plan before they'll consider making a loan or providing capital to new businesses.

Even if a business isn't looking to raise additional money, a business plan can help it focus on its goals. A 2017 Harvard Business Review article reported that, "Entrepreneurs who write formal plans are 16% more likely to achieve viability than the otherwise identical nonplanning entrepreneurs."

Ideally, a business plan should be reviewed and updated periodically to reflect any goals that have been achieved or that may have changed. An established business that has decided to move in a new direction might create an entirely new business plan for itself.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. These include being able to think through ideas before investing too much money in them and highlighting any potential obstacles to success. A company might also share its business plan with trusted outsiders to get their objective feedback. In addition, a business plan can help keep a company's executive team on the same page about strategic action items and priorities.

Business plans, even among competitors in the same industry, are rarely identical. However, they often have some of the same basic elements, as we describe below.

While it's a good idea to provide as much detail as necessary, it's also important that a business plan be concise enough to hold a reader's attention to the end.

While there are any number of templates that you can use to write a business plan, it's best to try to avoid producing a generic-looking one. Let your plan reflect the unique personality of your business.

Many business plans use some combination of the sections below, with varying levels of detail, depending on the company.

The length of a business plan can vary greatly from business to business. Regardless, it's best to fit the basic information into a 15- to 25-page document. Other crucial elements that take up a lot of space—such as applications for patents—can be referenced in the main document and attached as appendices.

These are some of the most common elements in many business plans:

  • Executive summary: This section introduces the company and includes its mission statement along with relevant information about the company's leadership, employees, operations, and locations.
  • Products and services: Here, the company should describe the products and services it offers or plans to introduce. That might include details on pricing, product lifespan, and unique benefits to the consumer. Other factors that could go into this section include production and manufacturing processes, any relevant patents the company may have, as well as proprietary technology . Information about research and development (R&D) can also be included here.
  • Market analysis: A company needs to have a good handle on the current state of its industry and the existing competition. This section should explain where the company fits in, what types of customers it plans to target, and how easy or difficult it may be to take market share from incumbents.
  • Marketing strategy: This section can describe how the company plans to attract and keep customers, including any anticipated advertising and marketing campaigns. It should also describe the distribution channel or channels it will use to get its products or services to consumers.
  • Financial plans and projections: Established businesses can include financial statements, balance sheets, and other relevant financial information. New businesses can provide financial targets and estimates for the first few years. Your plan might also include any funding requests you're making.

The best business plans aren't generic ones created from easily accessed templates. A company should aim to entice readers with a plan that demonstrates its uniqueness and potential for success.

2 Types of Business Plans

Business plans can take many forms, but they are sometimes divided into two basic categories: traditional and lean startup. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

  • Traditional business plans : These plans tend to be much longer than lean startup plans and contain considerably more detail. As a result they require more work on the part of the business, but they can also be more persuasive (and reassuring) to potential investors.
  • Lean startup business plans : These use an abbreviated structure that highlights key elements. These business plans are short—as short as one page—and provide only the most basic detail. If a company wants to use this kind of plan, it should be prepared to provide more detail if an investor or a lender requests it.

Why Do Business Plans Fail?

A business plan is not a surefire recipe for success. The plan may have been unrealistic in its assumptions and projections to begin with. Markets and the overall economy might change in ways that couldn't have been foreseen. A competitor might introduce a revolutionary new product or service. All of this calls for building some flexibility into your plan, so you can pivot to a new course if needed.

How frequently a business plan needs to be revised will depend on the nature of the business. A well-established business might want to review its plan once a year and make changes if necessary. A new or fast-growing business in a fiercely competitive market might want to revise it more often, such as quarterly.

What Does a Lean Startup Business Plan Include?

The lean startup business plan is an option when a company prefers to give a quick explanation of its business. For example, a brand-new company may feel that it doesn't have a lot of information to provide yet.

Sections can include: a value proposition ; the company's major activities and advantages; resources such as staff, intellectual property, and capital; a list of partnerships; customer segments; and revenue sources.

A business plan can be useful to companies of all kinds. But as a company grows and the world around it changes, so too should its business plan. So don't think of your business plan as carved in granite but as a living document designed to evolve with your business.

Harvard Business Review. " Research: Writing a Business Plan Makes Your Startup More Likely to Succeed ."

U.S. Small Business Administration. " Write Your Business Plan ."

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Business Jargons

A Business Encyclopedia

Definition : Planning is the fundamental management function, which involves deciding beforehand , what is to be done, when is it to be done, how it is to be done and who is going to do it. It is an intellectual process which lays down an  organisation’s objectives and develops various courses of action , by which the organisation can achieve those objectives. It chalks out exactly, how to attain a specific goal.

Planning is nothing but thinking before the action takes place . It helps us to take a peep into the future and decide in advance the way to deal with the situations, which we are going to encounter in future. It involves logical thinking and rational decision making.

Characteristics of Planning

characteristics of planning

  • Managerial function : Planning is a first and foremost managerial function provides the base for other functions of the management, i.e. organising, staffing, directing and controlling, as they are performed within the periphery of the plans made.
  • Goal oriented : It focuses on defining the goals of the organisation, identifying alternative courses of action and deciding the appropriate action plan, which is to be undertaken for reaching the goals.
  • Pervasive : It is pervasive in the sense that it is present in all the segments and is required at all the levels of the organisation. Although the scope of planning varies at different levels and departments.
  • Continuous Process : Plans are made for a specific term, say for a month, quarter, year and so on. Once that period is over, new plans are drawn, considering the organisation’s present and future requirements and conditions. Therefore, it is an ongoing process, as the plans are framed, executed and followed by another plan.
  • Intellectual Process : It is a mental exercise at it involves the application of mind, to think, forecast, imagine intelligently and innovate etc.
  • Futuristic : In the process of planning we take a sneak peek of the future. It encompasses looking into the future, to analyse and predict it so that the organisation can face future challenges effectively.
  • Decision making : Decisions are made regarding the choice of alternative courses of action that can be undertaken to reach the goal. The alternative chosen should be best among all, with the least number of the negative and highest number of positive outcomes.

Planning is concerned with setting objectives, targets, and formulating plan to accomplish them. The activity helps managers analyse the   present condition to identify the ways of attaining the desired position in future . It is both, the need of the organisation and the responsibility of managers.

Importance of Planning

  • It helps managers to improve future performance , by establishing objectives and selecting a course of action, for the benefit of the organisation.
  • It minimises risk and uncertainty , by looking ahead into the future.
  • It facilitates the coordination of activities . Thus, reduces overlapping among activities and eliminates unproductive work.
  • It states in advance, what should be done in future, so it provides direction for action.
  • It uncovers and identifies future opportunities and threats .
  • It sets out standards for controlling . It compares actual performance with the standard performance and efforts are made to correct the same.

Planning is present in all types of organisations, households, sectors, economies, etc. We need to plan because the future is highly uncertain and no one can predict the future with 100% accuracy, as the conditions can change anytime. Hence, planning is the basic requirement of any organization for the survival, growth and success.

Steps involved in Planning

Steps of Planning

By planning process, an organisation not only gets the insights of the future, but it also helps the organisation to shape its future. Effective planning involves simplicity of the plan, i.e. the plan should be clearly stated and easy to understand  because if the plan is too much complicated it will create chaos among the members of the organisation. Further, the plan should fulfil all the requirements of the organisation .

Related terms:

  • Strategic Planning
  • Human Resource Planning Process
  • Controlling
  • Succession Planning
  • Gap Analysis

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What Is Business Planning?

Why Business Planning Isn't Just for Startups

Susan Ward wrote about small businesses for The Balance for 18 years. She has run an IT consulting firm and designed and presented courses on how to promote small businesses.

planning business def

Morsa Images / Getty Images

Business planning takes place when the key stakeholders in a business sit down and flesh out all the goals , strategies, and actions that they envision taking to ensure the business’s survival, prosperity, and growth.

Here are some strategies for business planning and the ways it can benefit your business.

Business planning can play out in many different ways. Anytime upper management comes together to plan for the success of a business, it is a form of business planning. Business planning commonly involves collecting ideas in a formal business plan that outlines a summary of the business's current state, as well as the state of the broader market, along with detailed steps the business will take to improve performance in the coming period.

Business plans aren't just about money. The business plan outlines the general planning needed to start and run a successful business, and that includes profits, but it also goes beyond that. A plan should account for everything from scoping out the competition and figuring out how your new business will fit into the industry to assessing employee morale and planning for how to retain talent.

How Does Business Planning Work?

Every new business needs a business plan —a blueprint of how you will develop your new business, backed by research, that demonstrates how the business idea is viable. If your new business idea requires investment capital, you will have a better chance of obtaining debt or equity financing from financial institutions, angel investors , or venture capitalists if you have a solid business plan to back up your ideas.

Businesses should prepare a business plan, even if they don't need to attract investors or secure loans.

Post-Startup Business Planning

The business plan isn’t a set-it-and-forget-it planning exercise. It should be a living document that is updated throughout the life cycle of your business.

Once the business has officially started, business planning will shift to setting and meeting goals and targets. Business planning is most effective when it’s done on a consistent schedule that revisits existing goals and projects throughout the year, perhaps even monthly. In addition to reviewing short-term goals throughout the year, it's also important to establish a clear vision and lay the path for your long-term success.

Daily business planning is an incredibly effective way for individuals to focus on achieving both their own goals and the goals of the organization.

Sales Forecasting

The sales forecast is a key section of the business plan that needs to be constantly tracked and updated. The sales forecast is an estimate of the sales of goods and services your business is likely to achieve over the forecasted period, along with the estimated profit from those sales. The forecast should take into account trends in your industry, the general economy, and the projected needs of your primary customers.

Cash Flow Analysis

Another crucial component of business planning is cash flow analysis. Avoiding extended cash flow shortages is vital for businesses, and many business failures can be blamed on cash flow problems.

Your business may have a large, lucrative order on the books, but if it can't be invoiced until the job is completed, then you may run into cash flow problems. That scenario can get even worse if you have to hire staff, purchase inventory, and make other expenditures in the meantime to complete the project.

Performing regular cash flow projections is an important part of business planning. If managed properly, cash flow shortages can be covered by additional financing or equity investment.

Business Contingency Planning

In addition to business planning for profit and growth, your business should have a contingency plan. Contingency business planning (also known as business continuity planning or disaster planning) is the type of business planning that deals with crises and worst-case scenarios. A business contingency plan helps businesses deal with sudden emergencies, unexpected events, and new information that could disrupt your business.

The goals of a contingency plan are to:

  • Provide for the safety and security of yourself, your employees, and your customers in the event of a fire, flood, robbery, data breach, illness, or some other disaster
  • Ensure that your business can resume operations after an emergency as quickly as possible

Business Succession Planning

If your business is a family enterprise or you have specific plans for who you want to take over in the event of your retirement or illness, then you should have a plan in place to hand over control of the business . The issues of management, ownership, and taxes can cause a great deal of discord within families unless a succession plan is in place that clearly outlines the process.

Key Takeaways

  • Business planning is when key stakeholders review the state of their business and plan for how they will improve the business in the future.
  • Business planning isn't a one-off event—it should be an ongoing practice of self-assessment and planning.
  • Business planning isn't just about improving sales; it can also address safety during natural disasters or the transfer of power after an owner retires.

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What Is a Business Plan? Definition and Planning Essentials Explained

Posted february 21, 2022 by kody wirth.

planning business def

What is a business plan? It’s the roadmap for your business. The outline of your goals, objectives, and the steps you’ll take to get there. It describes the structure of your organization, how it operates, as well as the financial expectations and actual performance. 

A business plan can help you explore ideas, successfully start a business, manage operations, and pursue growth. In short, a business plan is a lot of different things. It’s more than just a stack of paper and can be one of your most effective tools as a business owner. 

Let’s explore the basics of business planning, the structure of a traditional plan, your planning options, and how you can use your plan to succeed. 

What is a business plan?

A business plan is a document that explains how your business operates. It summarizes your business structure, objectives, milestones, and financial performance. Again, it’s a guide that helps you, and anyone else, better understand how your business will succeed.  

Why do you need a business plan?

The primary purpose of a business plan is to help you understand the direction of your business and the steps it will take to get there. Having a solid business plan can help you grow up to 30% faster and according to our own 2021 Small Business research working on a business plan increases confidence regarding business health—even in the midst of a crisis. 

These benefits are directly connected to how writing a business plan makes you more informed and better prepares you for entrepreneurship. It helps you reduce risk and avoid pursuing potentially poor ideas. You’ll also be able to more easily uncover your business’s potential. By regularly returning to your plan you can understand what parts of your strategy are working and those that are not.

That just scratches the surface for why having a plan is valuable. Check out our full write-up for fifteen more reasons why you need a business plan .  

What can you do with your plan?

So what can you do with a business plan once you’ve created it? It can be all too easy to write a plan and just let it be. Here are just a few ways you can leverage your plan to benefit your business.

Test an idea

Writing a plan isn’t just for those that are ready to start a business. It’s just as valuable for those that have an idea and want to determine if it’s actually possible or not. By writing a plan to explore the validity of an idea, you are working through the process of understanding what it would take to be successful. 

The market and competitive research alone can tell you a lot about your idea. Is the marketplace too crowded? Is the solution you have in mind not really needed? Add in the exploration of milestones, potential expenses, and the sales needed to attain profitability and you can paint a pretty clear picture of the potential of your business.

Document your strategy and goals

For those starting or managing a business understanding where you’re going and how you’re going to get there are vital. Writing your plan helps you do that. It ensures that you are considering all aspects of your business, know what milestones you need to hit, and can effectively make adjustments if that doesn’t happen. 

With a plan in place, you’ll have an idea of where you want your business to go as well as how you’ve performed in the past. This alone better prepares you to take on challenges, review what you’ve done before, and make the right adjustments.

Pursue funding

Even if you do not intend to pursue funding right away, having a business plan will prepare you for it. It will ensure that you have all of the information necessary to submit a loan application and pitch to investors. So, rather than scrambling to gather documentation and write a cohesive plan once it’s relevant, you can instead keep your plan up-to-date and attempt to attain funding. Just add a use of funds report to your financial plan and you’ll be ready to go.

The benefits of having a plan don’t stop there. You can then use your business plan to help you manage the funding you receive. You’ll not only be able to easily track and forecast how you’ll use your funds but easily report on how it’s been used. 

Better manage your business

A solid business plan isn’t meant to be something you do once and forget about. Instead, it should be a useful tool that you can regularly use to analyze performance, make strategic decisions, and anticipate future scenarios. It’s a document that you should regularly update and adjust as you go to better fit the actual state of your business.

Doing so makes it easier to understand what’s working and what’s not. It helps you understand if you’re truly reaching your goals or if you need to make further adjustments. Having your plan in place makes that process quicker, more informative, and leaves you with far more time to actually spend running your business.

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What should your business plan include?

The content and structure of your business plan should include anything that will help you use it effectively. That being said, there are some key elements that you should cover and that investors will expect to see. 

Executive summary

The executive summary is a simple overview of your business and your overall plan. It should serve as a standalone document that provides enough detail for anyone—including yourself, team members, or investors—to fully understand your business strategy. Make sure to cover the problem you’re solving, a description of your product or service, your target market, organizational structure, a financial summary, and any necessary funding requirements.

This will be the first part of your plan but it’s easiest to write it after you’ve created your full plan.

Products & Services

When describing your products or services, you need to start by outlining the problem you’re solving and why what you offer is valuable. This is where you’ll also address current competition in the market and any competitive advantages your products or services bring to the table. Lastly, be sure to outline the steps or milestones that you’ll need to hit to successfully launch your business. If you’ve already hit some initial milestones, like taking pre-orders or early funding, be sure to include it here to further prove the validity of your business. 

Market analysis

A market analysis is a qualitative and quantitative assessment of the current market you’re entering or competing in. It helps you understand the overall state and potential of the industry, who your ideal customers are, the positioning of your competition, and how you intend to position your own business. This helps you better explore the long-term trends of the market, what challenges to expect, and how you will need to initially introduce and even price your products or services.

Check out our full guide for how to conduct a market analysis in just four easy steps .  

Marketing & sales

Here you detail how you intend to reach your target market. This includes your sales activities, general pricing plan, and the beginnings of your marketing strategy. If you have any branding elements, sample marketing campaigns, or messaging available—this is the place to add it. 

Additionally, it may be wise to include a SWOT analysis that demonstrates your business or specific product/service position. This will showcase how you intend to leverage sales and marketing channels to deal with competitive threats and take advantage of any opportunities.

Check out our full write-up to learn how to create a cohesive marketing strategy for your business. 

Organization & management

This section addresses the legal structure of your business, your current team, and any gaps that need to be filled. Depending on your business type and longevity, you’ll also need to include your location, ownership information, and business history. Basically, add any information that helps explain your organizational structure and how you operate. This section is particularly important for pitching to investors but should be included even if attempted funding is not in your immediate future.

Financial projections

Possibly the most important piece of your plan, your financials section is vital for showcasing the viability of your business. It also helps you establish a baseline to measure against and makes it easier to make ongoing strategic decisions as your business grows. This may seem complex on the surface, but it can be far easier than you think. 

Focus on building solid forecasts, keep your categories simple, and lean on assumptions. You can always return to this section to add more details and refine your financial statements as you operate. 

Here are the statements you should include in your financial plan:

  • Sales and revenue projections
  • Profit and loss statement
  • Cash flow statement
  • Balance sheet

The appendix is where you add additional detail, documentation, or extended notes that support the other sections of your plan. Don’t worry about adding this section at first and only add documentation that you think will be beneficial for anyone reading your plan.

Types of business plans explained

While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. So, to get the most out of your plan, it’s best to find a format that suits your needs. Here are a few common business plan types worth considering. 

Traditional business plan

The tried-and-true traditional business plan is a formal document meant to be used for external purposes. Typically this is the type of plan you’ll need when applying for funding or pitching to investors. It can also be used when training or hiring employees, working with vendors, or any other situation where the full details of your business must be understood by another individual. 

This type of business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix. We recommend only starting with this business plan format if you plan to immediately pursue funding and already have a solid handle on your business information. 

Business model canvas

The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea. 

The structure ditches a linear structure in favor of a cell-based template. It encourages you to build connections between every element of your business. It’s faster to write out and update, and much easier for you, your team, and anyone else to visualize your business operations. This is really best for those exploring their business idea for the first time, but keep in mind that it can be difficult to actually validate your idea this way as well as adapt it into a full plan.

One-page business plan

The true middle ground between the business model canvas and a traditional business plan is the one-page business plan. This format is a simplified version of the traditional plan that focuses on the core aspects of your business. It basically serves as a beefed-up pitch document and can be finished as quickly as the business model canvas.

By starting with a one-page plan, you give yourself a minimal document to build from. You’ll typically stick with bullet points and single sentences making it much easier to elaborate or expand sections into a longer-form business plan. This plan type is useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business.

Now, the option that we here at LivePlan recommend is the Lean Plan . This is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance.

It holds all of the benefits of the single-page plan, including the potential to complete it in as little as 27-minutes . However, it’s even easier to convert into a full plan thanks to how heavily it’s tied to your financials. The overall goal of Lean Planning isn’t to just produce documents that you use once and shelve. Instead, the Lean Planning process helps you build a healthier company that thrives in times of growth and stable through times of crisis.

It’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.

Try the LivePlan Method for Lean Business Planning

Now that you know the basics of business planning, it’s time to get started. Again we recommend leveraging a Lean Plan for a faster, easier, and far more useful planning process. 

To get familiar with the Lean Plan format, you can download our free Lean Plan template . However, if you want to elevate your ability to create and use your lean plan even further, you may want to explore LivePlan. 

It features step-by-step guidance that ensures you cover everything necessary while reducing the time spent on formatting and presenting. You’ll also gain access to financial forecasting tools that propel you through the process. Finally, it will transform your plan into a management tool that will help you easily compare your forecasts to your actual results. 

Check out how LivePlan streamlines Lean Planning by downloading our Kickstart Your Business ebook .

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Kody Wirth

Posted in Business Plan Writing

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What is a Business Plan? Definition, Tips, and Templates

AJ Beltis

Published: June 07, 2023

In an era where more than 20% of small enterprises fail in their first year, having a clear, defined, and well-thought-out business plan is a crucial first step for setting up a business for long-term success.

Business plan graphic with business owner, lightbulb, and pens to symbolize coming up with ideas and writing a business plan.

Business plans are a required tool for all entrepreneurs, business owners, business acquirers, and even business school students. But … what exactly is a business plan?

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In this post, we'll explain what a business plan is, the reasons why you'd need one, identify different types of business plans, and what you should include in yours.

What is a business plan?

A business plan is a documented strategy for a business that highlights its goals and its plans for achieving them. It outlines a company's go-to-market plan, financial projections, market research, business purpose, and mission statement. Key staff who are responsible for achieving the goals may also be included in the business plan along with a timeline.

The business plan is an undeniably critical component to getting any company off the ground. It's key to securing financing, documenting your business model, outlining your financial projections, and turning that nugget of a business idea into a reality.

What is a business plan used for?

The purpose of a business plan is three-fold: It summarizes the organization’s strategy in order to execute it long term, secures financing from investors, and helps forecast future business demands.

Business Plan Template [ Download Now ]

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Working on your business plan? Try using our Business Plan Template . Pre-filled with the sections a great business plan needs, the template will give aspiring entrepreneurs a feel for what a business plan is, what should be in it, and how it can be used to establish and grow a business from the ground up.

Purposes of a Business Plan

Chances are, someone drafting a business plan will be doing so for one or more of the following reasons:

1. Securing financing from investors.

Since its contents revolve around how businesses succeed, break even, and turn a profit, a business plan is used as a tool for sourcing capital. This document is an entrepreneur's way of showing potential investors or lenders how their capital will be put to work and how it will help the business thrive.

All banks, investors, and venture capital firms will want to see a business plan before handing over their money, and investors typically expect a 10% ROI or more from the capital they invest in a business.

Therefore, these investors need to know if — and when — they'll be making their money back (and then some). Additionally, they'll want to read about the process and strategy for how the business will reach those financial goals, which is where the context provided by sales, marketing, and operations plans come into play.

2. Documenting a company's strategy and goals.

A business plan should leave no stone unturned.

Business plans can span dozens or even hundreds of pages, affording their drafters the opportunity to explain what a business' goals are and how the business will achieve them.

To show potential investors that they've addressed every question and thought through every possible scenario, entrepreneurs should thoroughly explain their marketing, sales, and operations strategies — from acquiring a physical location for the business to explaining a tactical approach for marketing penetration.

These explanations should ultimately lead to a business' break-even point supported by a sales forecast and financial projections, with the business plan writer being able to speak to the why behind anything outlined in the plan.

planning business def

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Free Business Plan [Template]

Fill out the form to access your free business plan., 3. legitimizing a business idea..

Everyone's got a great idea for a company — until they put pen to paper and realize that it's not exactly feasible.

A business plan is an aspiring entrepreneur's way to prove that a business idea is actually worth pursuing.

As entrepreneurs document their go-to-market process, capital needs, and expected return on investment, entrepreneurs likely come across a few hiccups that will make them second guess their strategies and metrics — and that's exactly what the business plan is for.

It ensures an entrepreneur's ducks are in a row before bringing their business idea to the world and reassures the readers that whoever wrote the plan is serious about the idea, having put hours into thinking of the business idea, fleshing out growth tactics, and calculating financial projections.

4. Getting an A in your business class.

Speaking from personal experience, there's a chance you're here to get business plan ideas for your Business 101 class project.

If that's the case, might we suggest checking out this post on How to Write a Business Plan — providing a section-by-section guide on creating your plan?

What does a business plan need to include?

  • Business Plan Subtitle
  • Executive Summary
  • Company Description
  • The Business Opportunity
  • Competitive Analysis
  • Target Market
  • Marketing Plan
  • Financial Summary
  • Funding Requirements

1. Business Plan Subtitle

Every great business plan starts with a captivating title and subtitle. You’ll want to make it clear that the document is, in fact, a business plan, but the subtitle can help tell the story of your business in just a short sentence.

2. Executive Summary

Although this is the last part of the business plan that you’ll write, it’s the first section (and maybe the only section) that stakeholders will read. The executive summary of a business plan sets the stage for the rest of the document. It includes your company’s mission or vision statement, value proposition, and long-term goals.

3. Company Description

This brief part of your business plan will detail your business name, years in operation, key offerings, and positioning statement. You might even add core values or a short history of the company. The company description’s role in a business plan is to introduce your business to the reader in a compelling and concise way.

4. The Business Opportunity

The business opportunity should convince investors that your organization meets the needs of the market in a way that no other company can. This section explains the specific problem your business solves within the marketplace and how it solves them. It will include your value proposition as well as some high-level information about your target market.

businessplan_9

5. Competitive Analysis

Just about every industry has more than one player in the market. Even if your business owns the majority of the market share in your industry or your business concept is the first of its kind, you still have competition. In the competitive analysis section, you’ll take an objective look at the industry landscape to determine where your business fits. A SWOT analysis is an organized way to format this section.

6. Target Market

Who are the core customers of your business and why? The target market portion of your business plan outlines this in detail. The target market should explain the demographics, psychographics, behavioristics, and geographics of the ideal customer.

7. Marketing Plan

Marketing is expansive, and it’ll be tempting to cover every type of marketing possible, but a brief overview of how you’ll market your unique value proposition to your target audience, followed by a tactical plan will suffice.

Think broadly and narrow down from there: Will you focus on a slow-and-steady play where you make an upfront investment in organic customer acquisition? Or will you generate lots of quick customers using a pay-to-play advertising strategy? This kind of information should guide the marketing plan section of your business plan.

8. Financial Summary

Money doesn’t grow on trees and even the most digital, sustainable businesses have expenses. Outlining a financial summary of where your business is currently and where you’d like it to be in the future will substantiate this section. Consider including any monetary information that will give potential investors a glimpse into the financial health of your business. Assets, liabilities, expenses, debt, investments, revenue, and more are all useful adds here.

So, you’ve outlined some great goals, the business opportunity is valid, and the industry is ready for what you have to offer. Who’s responsible for turning all this high-level talk into results? The "team" section of your business plan answers that question by providing an overview of the roles responsible for each goal. Don’t worry if you don’t have every team member on board yet, knowing what roles to hire for is helpful as you seek funding from investors.

10. Funding Requirements

Remember that one of the goals of a business plan is to secure funding from investors, so you’ll need to include funding requirements you’d like them to fulfill. The amount your business needs, for what reasons, and for how long will meet the requirement for this section.

Types of Business Plans

  • Startup Business Plan
  • Feasibility Business Plan
  • Internal Business Plan
  • Strategic Business Plan
  • Business Acquisition Plan
  • Business Repositioning Plan
  • Expansion or Growth Business Plan

There’s no one size fits all business plan as there are several types of businesses in the market today. From startups with just one founder to historic household names that need to stay competitive, every type of business needs a business plan that’s tailored to its needs. Below are a few of the most common types of business plans.

For even more examples, check out these sample business plans to help you write your own .

1. Startup Business Plan

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As one of the most common types of business plans, a startup business plan is for new business ideas. This plan lays the foundation for the eventual success of a business.

The biggest challenge with the startup business plan is that it’s written completely from scratch. Startup business plans often reference existing industry data. They also explain unique business strategies and go-to-market plans.

Because startup business plans expand on an original idea, the contents will vary by the top priority goals.

For example, say a startup is looking for funding. If capital is a priority, this business plan might focus more on financial projections than marketing or company culture.

2. Feasibility Business Plan

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This type of business plan focuses on a single essential aspect of the business — the product or service. It may be part of a startup business plan or a standalone plan for an existing organization. This comprehensive plan may include:

  • A detailed product description
  • Market analysis
  • Technology needs
  • Production needs
  • Financial sources
  • Production operations

According to CBInsights research, 35% of startups fail because of a lack of market need. Another 10% fail because of mistimed products.

Some businesses will complete a feasibility study to explore ideas and narrow product plans to the best choice. They conduct these studies before completing the feasibility business plan. Then the feasibility plan centers on that one product or service.

3. Internal Business Plan

businessplan_5

Internal business plans help leaders communicate company goals, strategy, and performance. This helps the business align and work toward objectives more effectively.

Besides the typical elements in a startup business plan, an internal business plan may also include:

  • Department-specific budgets
  • Target demographic analysis
  • Market size and share of voice analysis
  • Action plans
  • Sustainability plans

Most external-facing business plans focus on raising capital and support for a business. But an internal business plan helps keep the business mission consistent in the face of change.

4. Strategic Business Plan

businessplan_8

Strategic business plans focus on long-term objectives for your business. They usually cover the first three to five years of operations. This is different from the typical startup business plan which focuses on the first one to three years. The audience for this plan is also primarily internal stakeholders.

These types of business plans may include:

  • Relevant data and analysis
  • Assessments of company resources
  • Vision and mission statements

It's important to remember that, while many businesses create a strategic plan before launching, some business owners just jump in. So, this business plan can add value by outlining how your business plans to reach specific goals. This type of planning can also help a business anticipate future challenges.

5. Business Acquisition Plan

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Investors use business plans to acquire existing businesses, too — not just new businesses.

A business acquisition plan may include costs, schedules, or management requirements. This data will come from an acquisition strategy.

A business plan for an existing company will explain:

  • How an acquisition will change its operating model
  • What will stay the same under new ownership
  • Why things will change or stay the same
  • Acquisition planning documentation
  • Timelines for acquisition

Additionally, the business plan should speak to the current state of the business and why it's up for sale.

For example, if someone is purchasing a failing business, the business plan should explain why the business is being purchased. It should also include:

  • What the new owner will do to turn the business around
  • Historic business metrics
  • Sales projections after the acquisition
  • Justification for those projections

6. Business Repositioning Plan

businessplan_6 (1)

When a business wants to avoid acquisition, reposition its brand, or try something new, CEOs or owners will develop a business repositioning plan.

This plan will:

  • Acknowledge the current state of the company.
  • State a vision for the future of the company.
  • Explain why the business needs to reposition itself.
  • Outline a process for how the company will adjust.

Companies planning for a business reposition often do so — proactively or retroactively — due to a shift in market trends and customer needs.

For example, shoe brand AllBirds plans to refocus its brand on core customers and shift its go-to-market strategy. These decisions are a reaction to lackluster sales following product changes and other missteps.

7. Expansion or Growth Business Plan

When your business is ready to expand, a growth business plan creates a useful structure for reaching specific targets.

For example, a successful business expanding into another location can use a growth business plan. This is because it may also mean the business needs to focus on a new target market or generate more capital.

This type of plan usually covers the next year or two of growth. It often references current sales, revenue, and successes. It may also include:

  • SWOT analysis
  • Growth opportunity studies
  • Financial goals and plans
  • Marketing plans
  • Capability planning

These types of business plans will vary by business, but they can help businesses quickly rally around new priorities to drive growth.

Getting Started With Your Business Plan

At the end of the day, a business plan is simply an explanation of a business idea and why it will be successful. The more detail and thought you put into it, the more successful your plan — and the business it outlines — will be.

When writing your business plan, you’ll benefit from extensive research, feedback from your team or board of directors, and a solid template to organize your thoughts. If you need one of these, download HubSpot's Free Business Plan Template below to get started.

Editor's note: This post was originally published in August 2020 and has been updated for comprehensiveness.

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Table of Contents

What is a business plan, the advantages of having a business plan, the types of business plans, the key elements of a business plan, best business plan software, common challenges of writing a business plan, become an expert business planner, business planning: it’s importance, types and key elements.

Business Planning: It’s Importance, Types and Key Elements

Every year, thousands of new businesses see the light of the day. One look at the  World Bank's Entrepreneurship Survey and database  shows the mind-boggling rate of new business registrations. However, sadly, only a tiny percentage of them have a chance of survival.   

According to the Bureau of Labor Statistics, about 20% of small businesses fail in their first year, about 50% in their fifth year.

Research from the University of Tennessee found that 44% of businesses fail within the first three years. Among those that operate within specific sectors, like information (which includes most tech firms), 63% shut shop within three years.

Several  other statistics  expose the abysmal rates of business failure. But why are so many businesses bound to fail? Most studies mention "lack of business planning" as one of the reasons.

This isn’t surprising at all. 

Running a business without a plan is like riding a motorcycle up a craggy cliff blindfolded. Yet, way too many firms ( a whopping 67%)  don't have a formal business plan in place. 

It doesn't matter if you're a startup with a great idea or a business with an excellent product. You can only go so far without a roadmap — a business plan. Only, a business plan is so much more than just a roadmap. A solid plan allows a business to weather market challenges and pivot quickly in the face of crisis, like the one global businesses are struggling with right now, in the post-pandemic world.  

But before you can go ahead and develop a great business plan, you need to know the basics. In this article, we'll discuss the fundamentals of business planning to help you plan effectively for 2021.  

Now before we begin with the details of business planning, let us understand what it is.

No two businesses have an identical business plan, even if they operate within the same industry. So one business plan can look entirely different from another one. Still, for the sake of simplicity, a business plan can be defined as a guide for a company to operate and achieve its goals.  

More specifically, it's a document in writing that outlines the goals, objectives, and purpose of a business while laying out the blueprint for its day-to-day operations and key functions such as marketing, finance, and expansion.

A good business plan can be a game-changer for startups that are looking to raise funds to grow and scale. It convinces prospective investors that the venture will be profitable and provides a realistic outlook on how much profit is on the cards and by when it will be attained. 

However, it's not only new businesses that greatly benefit from a business plan. Well-established companies and large conglomerates also need to tweak their business plans to adapt to new business environments and unpredictable market changes. 

Before getting into learning more about business planning, let us learn the advantages of having one.

Since a detailed business plan offers a birds-eye view of the entire framework of an establishment, it has several benefits that make it an important part of any organization. Here are few ways a business plan can offer significant competitive edge.

  • Sets objectives and benchmarks: Proper planning helps a business set realistic objectives and assign stipulated time for those goals to be met. This results in long-term profitability. It also lets a company set benchmarks and Key Performance Indicators (KPIs) necessary to reach its goals. 
  • Maximizes resource allocation: A good business plan helps to effectively organize and allocate the company’s resources. It provides an understanding of the result of actions, such as, opening new offices, recruiting fresh staff, change in production, and so on. It also helps the business estimate the financial impact of such actions.
  • Enhances viability: A plan greatly contributes towards turning concepts into reality. Though business plans vary from company to company, the blueprints of successful companies often serve as an excellent guide for nascent-stage start-ups and new entrepreneurs. It also helps existing firms to market, advertise, and promote new products and services into the market.
  • Aids in decision making: Running a business involves a lot of decision making: where to pitch, where to locate, what to sell, what to charge — the list goes on. A well thought-out business plan provides an organization the ability to anticipate the curveballs that the future could throw at them. It allows them to come up with answers and solutions to these issues well in advance.
  • Fix past mistakes: When businesses create plans keeping in mind the flaws and failures of the past and what worked for them and what didn’t, it can help them save time, money, and resources. Such plans that reflects the lessons learnt from the past offers businesses an opportunity to avoid future pitfalls.
  • Attracts investors: A business plan gives investors an in-depth idea about the objectives, structure, and validity of a firm. It helps to secure their confidence and encourages them to invest. 

Now let's look at the various types involved in business planning.

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Business plans are formulated according to the needs of a business. It can be a simple one-page document or an elaborate 40-page affair, or anything in between. While there’s no rule set in stone as to what exactly a business plan can or can’t contain, there are a few common types of business plan that nearly all businesses in existence use.  

Here’s an overview of a few fundamental types of business plans. 

  • Start-up plan: As the name suggests, this is a documentation of the plans, structure, and objections of a new business establishments. It describes the products and services that are to be produced by the firm, the staff management, and market analysis of their production. Often, a detailed finance spreadsheet is also attached to this document for investors to determine the viability of the new business set-up.
  • Feasibility plan: A feasibility plan evaluates the prospective customers of the products or services that are to be produced by a company. It also estimates the possibility of a profit or a loss of a venture. It helps to forecast how well a product will sell at the market, the duration it will require to yield results, and the profit margin that it will secure on investments. 
  • Expansion Plan: This kind of plan is primarily framed when a company decided to expand in terms of production or structure. It lays down the fundamental steps and guidelines with regards to internal or external growth. It helps the firm to analyze the activities like resource allocation for increased production, financial investments, employment of extra staff, and much more.
  • Operations Plan: An operational plan is also called an annual plan. This details the day-to-day activities and strategies that a business needs to follow in order to materialize its targets. It outlines the roles and responsibilities of the managing body, the various departments, and the company’s employees for the holistic success of the firm.
  • Strategic Plan: This document caters to the internal strategies of the company and is a part of the foundational grounds of the establishments. It can be accurately drafted with the help of a SWOT analysis through which the strengths, weaknesses, opportunities, and threats can be categorized and evaluated so that to develop means for optimizing profits.

There is some preliminary work that’s required before you actually sit down to write a plan for your business. Knowing what goes into a business plan is one of them. 

Here are the key elements of a good business plan:

  • Executive Summary: An executive summary gives a clear picture of the strategies and goals of your business right at the outset. Though its value is often understated, it can be extremely helpful in creating the readers’ first impression of your business. As such, it could define the opinions of customers and investors from the get-go.  
  • Business Description: A thorough business description removes room for any ambiguity from your processes. An excellent business description will explain the size and structure of the firm as well as its position in the market. It also describes the kind of products and services that the company offers. It even states as to whether the company is old and established or new and aspiring. Most importantly, it highlights the USP of the products or services as compared to your competitors in the market.
  • Market Analysis: A systematic market analysis helps to determine the current position of a business and analyzes its scope for future expansions. This can help in evaluating investments, promotions, marketing, and distribution of products. In-depth market understanding also helps a business combat competition and make plans for long-term success.
  • Operations and Management: Much like a statement of purpose, this allows an enterprise to explain its uniqueness to its readers and customers. It showcases the ways in which the firm can deliver greater and superior products at cheaper rates and in relatively less time. 
  • Financial Plan: This is the most important element of a business plan and is primarily addressed to investors and sponsors. It requires a firm to reveal its financial policies and market analysis. At times, a 5-year financial report is also required to be included to show past performances and profits. The financial plan draws out the current business strategies, future projections, and the total estimated worth of the firm.

The importance of business planning is it simplifies the planning of your company's finances to present this information to a bank or investors. Here are the best business plan software providers available right now:

  • Business Sorter

The importance of business planning cannot be emphasized enough, but it can be challenging to write a business plan. Here are a few issues to consider before you start your business planning:

  • Create a business plan to determine your company's direction, obtain financing, and attract investors.
  • Identifying financial, demographic, and achievable goals is a common challenge when writing a business plan.
  • Some entrepreneurs struggle to write a business plan that is concise, interesting, and informative enough to demonstrate the viability of their business idea.
  • You can streamline your business planning process by conducting research, speaking with experts and peers, and working with a business consultant.

Whether you’re running your own business or in-charge of ensuring strategic performance and growth for your employer or clients, knowing the ins and outs of business planning can set you up for success. 

Be it the launch of a new and exciting product or an expansion of operations, business planning is the necessity of all large and small companies. Which is why the need for professionals with superior business planning skills will never die out. In fact, their demand is on the rise with global firms putting emphasis on business analysis and planning to cope with cut-throat competition and market uncertainties.

While some are natural-born planners, most people have to work to develop this important skill. Plus, business planning requires you to understand the fundamentals of business management and be familiar with business analysis techniques . It also requires you to have a working knowledge of data visualization, project management, and monitoring tools commonly used by businesses today.   

Simpliearn’s Executive Certificate Program in General Management will help you develop and hone the required skills to become an extraordinary business planner. This comprehensive general management program by IIM Indore can serve as a career catalyst, equipping professionals with a competitive edge in the ever-evolving business environment.

What Is Meant by Business Planning?

Business planning is developing a company's mission or goals and defining the strategies you will use to achieve those goals or tasks. The process can be extensive, encompassing all aspects of the operation, or it can be concrete, focusing on specific functions within the overall corporate structure.

What Are the 4 Types of Business Plans?

The following are the four types of business plans:

Operational Planning

This type of planning typically describes the company's day-to-day operations. Single-use plans are developed for events and activities that occur only once (such as a single marketing campaign). Ongoing plans include problem-solving policies, rules for specific regulations, and procedures for a step-by-step process for achieving particular goals.

Strategic Planning

Strategic plans are all about why things must occur. A high-level overview of the entire business is included in strategic planning. It is the organization's foundation and will dictate long-term decisions.

Tactical Planning

Tactical plans are about what will happen. Strategic planning is aided by tactical planning. It outlines the tactics the organization intends to employ to achieve the goals outlined in the strategic plan.

Contingency Planning

When something unexpected occurs or something needs to be changed, contingency plans are created. In situations where a change is required, contingency planning can be beneficial.

What Are the 7 Steps of a Business Plan?

The following are the seven steps required for a business plan:

Conduct Research

If your company is to run a viable business plan and attract investors, your information must be of the highest quality.

Have a Goal

The goal must be unambiguous. You will waste your time if you don't know why you're writing a business plan. Knowing also implies having a target audience for when the plan is expected to get completed.

Create a Company Profile

Some refer to it as a company profile, while others refer to it as a snapshot. It's designed to be mentally quick and digestible because it needs to stick in the reader's mind quickly since more information is provided later in the plan.

Describe the Company in Detail

Explain the company's current situation, both good and bad. Details should also include patents, licenses, copyrights, and unique strengths that no one else has.

Create a marketing plan ahead of time.

A strategic marketing plan is required because it outlines how your product or service will be communicated, delivered, and sold to customers.

Be Willing to Change Your Plan for the Sake of Your Audience

Another standard error is that people only write one business plan. Startups have several versions, just as candidates have numerous resumes for various potential employers.

Incorporate Your Motivation

Your motivation must be a compelling reason for people to believe your company will succeed in all circumstances. A mission should drive a business, not just selling, to make money. That mission is defined by your motivation as specified in your business plan.

What Are the Basic Steps in Business Planning?

These are the basic steps in business planning:

Summary and Objectives

Briefly describe your company, its objectives, and your plan to keep it running.

Services and Products

Add specifics to your detailed description of the product or service you intend to offer. Where, why, and how much you plan to sell your product or service and any special offers.

Conduct research on your industry and the ideal customers to whom you want to sell. Identify the issues you want to solve for your customers.

Operations are the process of running your business, including the people, skills, and experience required to make it successful.

How are you going to reach your target audience? How you intend to sell to them may include positioning, pricing, promotion, and distribution.

Consider funding costs, operating expenses, and projected income. Include your financial objectives and a breakdown of what it takes to make your company profitable. With proper business planning through the help of support, system, and mentorship, it is easy to start a business.

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What is a Business Plan? Definition and Resources

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9 min. read

Updated March 4, 2024

If you’ve ever jotted down a business idea on a napkin with a few tasks you need to accomplish, you’ve written a business plan — or at least the very basic components of one.

The origin of formal business plans is murky. But they certainly go back centuries. And when you consider that 20% of new businesses fail in year 1 , and half fail within 5 years, the importance of thorough planning and research should be clear.

But just what is a business plan? And what’s required to move from a series of ideas to a formal plan? Here we’ll answer that question and explain why you need one to be a successful business owner.

  • What is a business plan?

Definition: Business plan is a description of a company's strategies, goals, and plans for achieving them.

A business plan lays out a strategic roadmap for any new or growing business.

Any entrepreneur with a great idea for a business needs to conduct market research , analyze their competitors , validate their idea by talking to potential customers, and define their unique value proposition .

The business plan captures that opportunity you see for your company: it describes your product or service and business model , and the target market you’ll serve. 

It also includes details on how you’ll execute your plan: how you’ll price and market your solution and your financial projections .

Reasons for writing a business plan

If you’re asking yourself, ‘Do I really need to write a business plan?’ consider this fact: 

Companies that commit to planning grow 30% faster than those that don’t.

Creating a business plan is crucial for businesses of any size or stage. 

If you plan to raise funds for your business through a traditional bank loan or SBA loan , none of them will want to move forward without seeing your business plan. Venture capital firms may or may not ask for one, but you’ll still need to do thorough planning to create a pitch that makes them want to invest.

But it’s more than just a means of getting your business funded . The plan is also your roadmap to identify and address potential risks. 

It’s not a one-time document. Your business plan is a living guide to ensure your business stays on course.

Related: 14 of the top reasons why you need a business plan

What’s your biggest business challenge right now?

What research shows about business plans.

Numerous studies have established that planning improves business performance:

  • 71% of fast-growing companies have business plans that include budgets, sales goals, and marketing and sales strategies.
  • Companies that clearly define their value proposition are more successful than those that can’t.
  • Companies or startups with a business plan are more likely to get funding than those without one.
  • Starting the business planning process before investing in marketing reduces the likelihood of business failure.

The planning process significantly impacts business growth for existing companies and startups alike.

Read More: Research-backed reasons why writing a business plan matters

When should you write a business plan?

No two business plans are alike. 

Yet there are similar questions for anyone considering writing a plan to answer. One basic but important question is when to start writing it.

A Harvard Business Review study found that the ideal time to write a business plan is between 6 and 12 months after deciding to start a business. 

But the reality can be more nuanced – it depends on the stage a business is in, or the type of business plan being written.

Ideal times to write a business plan include:

  • When you have an idea for a business
  • When you’re starting a business
  • When you’re preparing to buy (or sell)
  • When you’re trying to get funding
  • When business conditions change
  • When you’re growing or scaling your business

Read More: The best times to write or update your business plan

How often should you update your business plan?

As is often the case, how often a business plan should be updated depends on your circumstances.

A business plan isn’t a homework assignment to complete and forget about. At the same time, no one wants to get so bogged down in the details that they lose sight of day-to-day goals. 

But it should cover new opportunities and threats that a business owner surfaces, and incorporate feedback they get from customers. So it can’t be a static document.

For an entrepreneur at the ideation stage, writing and checking back on their business plan will help them determine if they can turn that idea into a profitable business .

And for owners of up-and-running businesses, updating the plan (or rewriting it) will help them respond to market shifts they wouldn’t be prepared for otherwise. 

It also lets them compare their forecasts and budgets to actual financial results. This invaluable process surfaces where a business might be out-performing expectations and where weak performance may require a prompt strategy change. 

The planning process is what uncovers those insights.

Related Reading: 10 prompts to help you write a business plan with AI

  • How long should your business plan be?

Thinking about a business plan strictly in terms of page length can risk overlooking more important factors, like the level of detail or clarity in the plan. 

Not all of the plan consists of writing – there are also financial tables, graphs, and product illustrations to include.

But there are a few general rules to consider about a plan’s length:

  • Your business plan shouldn’t take more than 15 minutes to skim.
  • Business plans for internal use (not for a bank loan or outside investment) can be as short as 5 to 10 pages.

A good practice is to write your business plan to match the expectations of your audience. 

If you’re walking into a bank looking for a loan, your plan should match the formal, professional style that a loan officer would expect . But if you’re writing it for stakeholders on your own team—shorter and less formal (even just a few pages) could be the better way to go.

The length of your plan may also depend on the stage your business is in. 

For instance, a startup plan won’t have nearly as much financial information to include as a plan written for an established company will.

Read More: How long should your business plan be?  

What information is included in a business plan?

The contents of a plan business plan will vary depending on the industry the business is in. 

After all, someone opening a new restaurant will have different customers, inventory needs, and marketing tactics to consider than someone bringing a new medical device to the market. 

But there are some common elements that most business plans include:

  • Executive summary: An overview of the business operation, strategy, and goals. The executive summary should be written last, despite being the first thing anyone will read.
  • Products and services: A description of the solution that a business is bringing to the market, emphasizing how it solves the problem customers are facing.
  • Market analysis: An examination of the demographic and psychographic attributes of likely customers, resulting in the profile of an ideal customer for the business.
  • Competitive analysis: Documenting the competitors a business will face in the market, and their strengths and weaknesses relative to those competitors.
  • Marketing and sales plan: Summarizing a business’s tactics to position their product or service favorably in the market, attract customers, and generate revenue.
  • Operational plan: Detailing the requirements to run the business day-to-day, including staffing, equipment, inventory, and facility needs.
  • Organization and management structure: A listing of the departments and position breakdown of the business, as well as descriptions of the backgrounds and qualifications of the leadership team.
  • Key milestones: Laying out the key dates that a business is projected to reach certain milestones , such as revenue, break-even, or customer acquisition goals.
  • Financial plan: Balance sheets, cash flow forecast , and sales and expense forecasts with forward-looking financial projections, listing assumptions and potential risks that could affect the accuracy of the plan.
  • Appendix: All of the supporting information that doesn’t fit into specific sections of the business plan, such as data and charts.

Read More: Use this business plan outline to organize your plan

  • Different types of business plans

A business plan isn’t a one-size-fits-all document. There are numerous ways to create an effective business plan that fits entrepreneurs’ or established business owners’ needs. 

Here are a few of the most common types of business plans for small businesses:

  • One-page plan : Outlining all of the most important information about a business into an adaptable one-page plan.
  • Growth plan : An ongoing business management plan that ensures business tactics and strategies are aligned as a business scales up.
  • Internal plan : A shorter version of a full business plan to be shared with internal stakeholders – ideal for established companies considering strategic shifts.

Business plan vs. operational plan vs. strategic plan

  • What questions are you trying to answer? 
  • Are you trying to lay out a plan for the actual running of your business?
  • Is your focus on how you will meet short or long-term goals? 

Since your objective will ultimately inform your plan, you need to know what you’re trying to accomplish before you start writing.

While a business plan provides the foundation for a business, other types of plans support this guiding document.

An operational plan sets short-term goals for the business by laying out where it plans to focus energy and investments and when it plans to hit key milestones.

Then there is the strategic plan , which examines longer-range opportunities for the business, and how to meet those larger goals over time.

Read More: How to use a business plan for strategic development and operations

  • Business plan vs. business model

If a business plan describes the tactics an entrepreneur will use to succeed in the market, then the business model represents how they will make money. 

The difference may seem subtle, but it’s important. 

Think of a business plan as the roadmap for how to exploit market opportunities and reach a state of sustainable growth. By contrast, the business model lays out how a business will operate and what it will look like once it has reached that growth phase.

Learn More: The differences between a business model and business plan

  • Moving from idea to business plan

Now that you understand what a business plan is, the next step is to start writing your business plan . 

If you’re stuck, start with a one-page business plan and check out our collection of over 550 business plan examples for inspiration. They’re broken out over dozens of industries—you can even copy and paste sections into your plan and rewrite them with information specific to your business.

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See why 1.2 million entrepreneurs have written their business plans with LivePlan

Content Author: Tim Berry

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

planning business def

Table of Contents

  • Reasons to write a business plan
  • Business planning research
  • When to write a business plan
  • When to update a business plan
  • Information to include
  • Business vs. operational vs. strategic plans

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The Business Planning Process: 6 Steps To Creating a New Plan

The Business Planning Process 6 Steps to Create a New Plan

In this article, we will define and explain the basic business planning process to help your business move in the right direction.

What is Business Planning?

Business planning is the process whereby an organization’s leaders figure out the best roadmap for growth and document their plan for success.

The business planning process includes diagnosing the company’s internal strengths and weaknesses, improving its efficiency, working out how it will compete against rival firms in the future, and setting milestones for progress so they can be measured.

The process includes writing a new business plan. What is a business plan? It is a written document that provides an outline and resources needed to achieve success. Whether you are writing your plan from scratch, from a simple business plan template , or working with an experienced business plan consultant or writer, business planning for startups, small businesses, and existing companies is the same.

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The Better Business Planning Process

The business plan process includes 6 steps as follows:

  • Do Your Research
  • Calculate Your Financial Forecast
  • Draft Your Plan
  • Revise & Proofread
  • Nail the Business Plan Presentation

We’ve provided more detail for each of these key business plan steps below.

1. Do Your Research

Conduct detailed research into the industry, target market, existing customer base,  competitors, and costs of the business begins the process. Consider each new step a new project that requires project planning and execution. You may ask yourself the following questions:

  • What are your business goals?
  • What is the current state of your business?
  • What are the current industry trends?
  • What is your competition doing?

There are a variety of resources needed, ranging from databases and articles to direct interviews with other entrepreneurs, potential customers, or industry experts. The information gathered during this process should be documented and organized carefully, including the source as there is a need to cite sources within your business plan.

You may also want to complete a SWOT Analysis for your own business to identify your strengths, weaknesses, opportunities, and potential risks as this will help you develop your strategies to highlight your competitive advantage.

2. Strategize

Now, you will use the research to determine the best strategy for your business. You may choose to develop new strategies or refine existing strategies that have demonstrated success in the industry. Pulling the best practices of the industry provides a foundation, but then you should expand on the different activities that focus on your competitive advantage.

This step of the planning process may include formulating a vision for the company’s future, which can be done by conducting intensive customer interviews and understanding their motivations for purchasing goods and services of interest. Dig deeper into decisions on an appropriate marketing plan, operational processes to execute your plan, and human resources required for the first five years of the company’s life.

3. Calculate Your Financial Forecast

All of the activities you choose for your strategy come at some cost and, hopefully, lead to some revenues. Sketch out the financial situation by looking at whether you can expect revenues to cover all costs and leave room for profit in the long run.

Begin to insert your financial assumptions and startup costs into a financial model which can produce a first-year cash flow statement for you, giving you the best sense of the cash you will need on hand to fund your early operations.

A full set of financial statements provides the details about the company’s operations and performance, including its expenses and profits by accounting period (quarterly or year-to-date). Financial statements also provide a snapshot of the company’s current financial position, including its assets and liabilities.

This is one of the most valued aspects of any business plan as it provides a straightforward summary of what a company does with its money, or how it grows from initial investment to become profitable.

4. Draft Your Plan

With financials more or less settled and a strategy decided, it is time to draft through the narrative of each component of your business plan . With the background work you have completed, the drafting itself should be a relatively painless process.

If you have trouble writing convincing prose, this is a time to seek the help of an experienced business plan writer who can put together the plan from this point.

5. Revise & Proofread

Revisit the entire plan to look for any ideas or wording that may be confusing, redundant, or irrelevant to the points you are making within the plan. You may want to work with other management team members in your business who are familiar with the company’s operations or marketing plan in order to fine-tune the plan.

Finally, proofread thoroughly for spelling, grammar, and formatting, enlisting the help of others to act as additional sets of eyes. You may begin to experience burnout from working on the plan for so long and have a need to set it aside for a bit to look at it again with fresh eyes.

6. Nail the Business Plan Presentation

The presentation of the business plan should succinctly highlight the key points outlined above and include additional material that would be helpful to potential investors such as financial information, resumes of key employees, or samples of marketing materials. It can also be beneficial to provide a report on past sales or financial performance and what the business has done to bring it back into positive territory.

Business Planning Process Conclusion

Every entrepreneur dreams of the day their business becomes wildly successful.

But what does that really mean? How do you know whether your idea is worth pursuing?

And how do you stay motivated when things are not going as planned? The answers to these questions can be found in your business plan. This document helps entrepreneurs make better decisions and avoid common pitfalls along the way. ​

Business plans are dynamic documents that can be revised and presented to different audiences throughout the course of a company’s life. For example, a business may have one plan for its initial investment proposal, another which focuses more on milestones and objectives for the first several years in existence, and yet one more which is used specifically when raising funds.

Business plans are a critical first step for any company looking to attract investors or receive grant money, as they allow a new organization to better convey its potential and business goals to those able to provide financial resources.

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  • What is strategic planning? A 5-step gu ...

What is strategic planning? A 5-step guide

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Strategic planning is a process through which business leaders map out their vision for their organization’s growth and how they’re going to get there. In this article, we'll guide you through the strategic planning process, including why it's important, the benefits and best practices, and five steps to get you from beginning to end.

Strategic planning is a process through which business leaders map out their vision for their organization’s growth and how they’re going to get there. The strategic planning process informs your organization’s decisions, growth, and goals.

Strategic planning helps you clearly define your company’s long-term objectives—and maps how your short-term goals and work will help you achieve them. This, in turn, gives you a clear sense of where your organization is going and allows you to ensure your teams are working on projects that make the most impact. Think of it this way—if your goals and objectives are your destination on a map, your strategic plan is your navigation system.

In this article, we walk you through the 5-step strategic planning process and show you how to get started developing your own strategic plan.

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What is strategic planning?

Strategic planning is a business process that helps you define and share the direction your company will take in the next three to five years. During the strategic planning process, stakeholders review and define the organization’s mission and goals, conduct competitive assessments, and identify company goals and objectives. The product of the planning cycle is a strategic plan, which is shared throughout the company.

What is a strategic plan?

[inline illustration] Strategic plan elements (infographic)

A strategic plan is the end result of the strategic planning process. At its most basic, it’s a tool used to define your organization’s goals and what actions you’ll take to achieve them.

Typically, your strategic plan should include: 

Your company’s mission statement

Your organizational goals, including your long-term goals and short-term, yearly objectives

Any plan of action, tactics, or approaches you plan to take to meet those goals

What are the benefits of strategic planning?

Strategic planning can help with goal setting and decision-making by allowing you to map out how your company will move toward your organization’s vision and mission statements in the next three to five years. Let’s circle back to our map metaphor. If you think of your company trajectory as a line on a map, a strategic plan can help you better quantify how you’ll get from point A (where you are now) to point B (where you want to be in a few years).

When you create and share a clear strategic plan with your team, you can:

Build a strong organizational culture by clearly defining and aligning on your organization’s mission, vision, and goals.

Align everyone around a shared purpose and ensure all departments and teams are working toward a common objective.

Proactively set objectives to help you get where you want to go and achieve desired outcomes.

Promote a long-term vision for your company rather than focusing primarily on short-term gains.

Ensure resources are allocated around the most high-impact priorities.

Define long-term goals and set shorter-term goals to support them.

Assess your current situation and identify any opportunities—or threats—allowing your organization to mitigate potential risks.

Create a proactive business culture that enables your organization to respond more swiftly to emerging market changes and opportunities.

What are the 5 steps in strategic planning?

The strategic planning process involves a structured methodology that guides the organization from vision to implementation. The strategic planning process starts with assembling a small, dedicated team of key strategic planners—typically five to 10 members—who will form the strategic planning, or management, committee. This team is responsible for gathering crucial information, guiding the development of the plan, and overseeing strategy execution.

Once you’ve established your management committee, you can get to work on the planning process. 

Step 1: Assess your current business strategy and business environment

Before you can define where you’re going, you first need to define where you are. Understanding the external environment, including market trends and competitive landscape, is crucial in the initial assessment phase of strategic planning.

To do this, your management committee should collect a variety of information from additional stakeholders, like employees and customers. In particular, plan to gather:

Relevant industry and market data to inform any market opportunities, as well as any potential upcoming threats in the near future.

Customer insights to understand what your customers want from your company—like product improvements or additional services.

Employee feedback that needs to be addressed—whether about the product, business practices, or the day-to-day company culture.

Consider different types of strategic planning tools and analytical techniques to gather this information, such as:

A balanced scorecard to help you evaluate four major elements of a business: learning and growth, business processes, customer satisfaction, and financial performance.

A SWOT analysis to help you assess both current and future potential for the business (you’ll return to this analysis periodically during the strategic planning process). 

To fill out each letter in the SWOT acronym, your management committee will answer a series of questions:

What does your organization currently do well?

What separates you from your competitors?

What are your most valuable internal resources?

What tangible assets do you have?

What is your biggest strength? 

Weaknesses:

What does your organization do poorly?

What do you currently lack (whether that’s a product, resource, or process)?

What do your competitors do better than you?

What, if any, limitations are holding your organization back?

What processes or products need improvement? 

Opportunities:

What opportunities does your organization have?

How can you leverage your unique company strengths?

Are there any trends that you can take advantage of?

How can you capitalize on marketing or press opportunities?

Is there an emerging need for your product or service? 

What emerging competitors should you keep an eye on?

Are there any weaknesses that expose your organization to risk?

Have you or could you experience negative press that could reduce market share?

Is there a chance of changing customer attitudes towards your company? 

Step 2: Identify your company’s goals and objectives

To begin strategy development, take into account your current position, which is where you are now. Then, draw inspiration from your vision, mission, and current position to identify and define your goals—these are your final destination. 

To develop your strategy, you’re essentially pulling out your compass and asking, “Where are we going next?” “What’s the ideal future state of this company?” This can help you figure out which path you need to take to get there.

During this phase of the planning process, take inspiration from important company documents, such as:

Your mission statement, to understand how you can continue moving towards your organization’s core purpose.

Your vision statement, to clarify how your strategic plan fits into your long-term vision.

Your company values, to guide you towards what matters most towards your company.

Your competitive advantages, to understand what unique benefit you offer to the market.

Your long-term goals, to track where you want to be in five or 10 years.

Your financial forecast and projection, to understand where you expect your financials to be in the next three years, what your expected cash flow is, and what new opportunities you will likely be able to invest in.

Step 3: Develop your strategic plan and determine performance metrics

Now that you understand where you are and where you want to go, it’s time to put pen to paper. Take your current business position and strategy into account, as well as your organization’s goals and objectives, and build out a strategic plan for the next three to five years. Keep in mind that even though you’re creating a long-term plan, parts of your plan should be created or revisited as the quarters and years go on.

As you build your strategic plan, you should define:

Company priorities for the next three to five years, based on your SWOT analysis and strategy.

Yearly objectives for the first year. You don’t need to define your objectives for every year of the strategic plan. As the years go on, create new yearly objectives that connect back to your overall strategic goals . 

Related key results and KPIs. Some of these should be set by the management committee, and some should be set by specific teams that are closer to the work. Make sure your key results and KPIs are measurable and actionable. These KPIs will help you track progress and ensure you’re moving in the right direction.

Budget for the next year or few years. This should be based on your financial forecast as well as your direction. Do you need to spend aggressively to develop your product? Build your team? Make a dent with marketing? Clarify your most important initiatives and how you’ll budget for those.

A high-level project roadmap . A project roadmap is a tool in project management that helps you visualize the timeline of a complex initiative, but you can also create a very high-level project roadmap for your strategic plan. Outline what you expect to be working on in certain quarters or years to make the plan more actionable and understandable.

Step 4: Implement and share your plan

Now it’s time to put your plan into action. Strategy implementation involves clear communication across your entire organization to make sure everyone knows their responsibilities and how to measure the plan’s success. 

Make sure your team (especially senior leadership) has access to the strategic plan, so they can understand how their work contributes to company priorities and the overall strategy map. We recommend sharing your plan in the same tool you use to manage and track work, so you can more easily connect high-level objectives to daily work. If you don’t already, consider using a work management platform .  

A few tips to make sure your plan will be executed without a hitch: 

Communicate clearly to your entire organization throughout the implementation process, to ensure all team members understand the strategic plan and how to implement it effectively. 

Define what “success” looks like by mapping your strategic plan to key performance indicators.

Ensure that the actions outlined in the strategic plan are integrated into the daily operations of the organization, so that every team member's daily activities are aligned with the broader strategic objectives.

Utilize tools and software—like a work management platform—that can aid in implementing and tracking the progress of your plan.

Regularly monitor and share the progress of the strategic plan with the entire organization, to keep everyone informed and reinforce the importance of the plan.

Establish regular check-ins to monitor the progress of your strategic plan and make adjustments as needed. 

Step 5: Revise and restructure as needed

Once you’ve created and implemented your new strategic framework, the final step of the planning process is to monitor and manage your plan.

Remember, your strategic plan isn’t set in stone. You’ll need to revisit and update the plan if your company changes directions or makes new investments. As new market opportunities and threats come up, you’ll likely want to tweak your strategic plan. Make sure to review your plan regularly—meaning quarterly and annually—to ensure it’s still aligned with your organization’s vision and goals.

Keep in mind that your plan won’t last forever, even if you do update it frequently. A successful strategic plan evolves with your company’s long-term goals. When you’ve achieved most of your strategic goals, or if your strategy has evolved significantly since you first made your plan, it might be time to create a new one.

Build a smarter strategic plan with a work management platform

To turn your company strategy into a plan—and ultimately, impact—make sure you’re proactively connecting company objectives to daily work. When you can clarify this connection, you’re giving your team members the context they need to get their best work done. 

A work management platform plays a pivotal role in this process. It acts as a central hub for your strategic plan, ensuring that every task and project is directly tied to your broader company goals. This alignment is crucial for visibility and coordination, allowing team members to see how their individual efforts contribute to the company’s success. 

By leveraging such a platform, you not only streamline workflow and enhance team productivity but also align every action with your strategic objectives—allowing teams to drive greater impact and helping your company move toward goals more effectively. 

Strategic planning FAQs

Still have questions about strategic planning? We have answers.

Why do I need a strategic plan?

A strategic plan is one of many tools you can use to plan and hit your goals. It helps map out strategic objectives and growth metrics that will help your company be successful.

When should I create a strategic plan?

You should aim to create a strategic plan every three to five years, depending on your organization’s growth speed.

Since the point of a strategic plan is to map out your long-term goals and how you’ll get there, you should create a strategic plan when you’ve met most or all of them. You should also create a strategic plan any time you’re going to make a large pivot in your organization’s mission or enter new markets. 

What is a strategic planning template?

A strategic planning template is a tool organizations can use to map out their strategic plan and track progress. Typically, a strategic planning template houses all the components needed to build out a strategic plan, including your company’s vision and mission statements, information from any competitive analyses or SWOT assessments, and relevant KPIs.

What’s the difference between a strategic plan vs. business plan?

A business plan can help you document your strategy as you’re getting started so every team member is on the same page about your core business priorities and goals. This tool can help you document and share your strategy with key investors or stakeholders as you get your business up and running.

You should create a business plan when you’re: 

Just starting your business

Significantly restructuring your business

If your business is already established, you should create a strategic plan instead of a business plan. Even if you’re working at a relatively young company, your strategic plan can build on your business plan to help you move in the right direction. During the strategic planning process, you’ll draw from a lot of the fundamental business elements you built early on to establish your strategy for the next three to five years.

What’s the difference between a strategic plan vs. mission and vision statements?

Your strategic plan, mission statement, and vision statements are all closely connected. In fact, during the strategic planning process, you will take inspiration from your mission and vision statements in order to build out your strategic plan.

Simply put: 

A mission statement summarizes your company’s purpose.

A vision statement broadly explains how you’ll reach your company’s purpose.

A strategic plan pulls in inspiration from your mission and vision statements and outlines what actions you’re going to take to move in the right direction. 

For example, if your company produces pet safety equipment, here’s how your mission statement, vision statement, and strategic plan might shake out:

Mission statement: “To ensure the safety of the world’s animals.” 

Vision statement: “To create pet safety and tracking products that are effortless to use.” 

Your strategic plan would outline the steps you’re going to take in the next few years to bring your company closer to your mission and vision. For example, you develop a new pet tracking smart collar or improve the microchipping experience for pet owners. 

What’s the difference between a strategic plan vs. company objectives?

Company objectives are broad goals. You should set these on a yearly or quarterly basis (if your organization moves quickly). These objectives give your team a clear sense of what you intend to accomplish for a set period of time. 

Your strategic plan is more forward-thinking than your company goals, and it should cover more than one year of work. Think of it this way: your company objectives will move the needle towards your overall strategy—but your strategic plan should be bigger than company objectives because it spans multiple years.

What’s the difference between a strategic plan vs. a business case?

A business case is a document to help you pitch a significant investment or initiative for your company. When you create a business case, you’re outlining why this investment is a good idea, and how this large-scale project will positively impact the business. 

You might end up building business cases for things on your strategic plan’s roadmap—but your strategic plan should be bigger than that. This tool should encompass multiple years of your roadmap, across your entire company—not just one initiative.

What’s the difference between a strategic plan vs. a project plan?

A strategic plan is a company-wide, multi-year plan of what you want to accomplish in the next three to five years and how you plan to accomplish that. A project plan, on the other hand, outlines how you’re going to accomplish a specific project. This project could be one of many initiatives that contribute to a specific company objective which, in turn, is one of many objectives that contribute to your strategic plan. 

What’s the difference between strategic management vs. strategic planning?

A strategic plan is a tool to define where your organization wants to go and what actions you need to take to achieve those goals. Strategic planning is the process of creating a plan in order to hit your strategic objectives.

Strategic management includes the strategic planning process, but also goes beyond it. In addition to planning how you will achieve your big-picture goals, strategic management also helps you organize your resources and figure out the best action plans for success. 

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3.10: Pros and Cons of Planning

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  • Page ID 47621
  • Lumen Learning

Learning Objectives

  • Explain benefits of planning.
  • Explain the drawbacks of planning.

Notebook planner

Planning is the process of setting goals and defining the actions required to achieve the goals.

Planning begins with goals. Goals are derived from the vision and mission statements, but these statements describe what the organization wants to achieve, not necessarily what it can achieve. The organization is affected both by conditions in its external environment—competitors, laws, availability of resources, etc.—and its internal conditions—the skills and experience of its workforce, its equipment and resources, and the abilities of its management. These conditions are examined through a process called a SWOT analysis. (SWOT will be discussed in greater detail in another module.) Together, the vision and mission statements and the results of the situation analysis determine the goals of the organization. This idea is illustrated by the figure that follows.

The words “Values,” “Vision,” and “Mission” are in a box. The words “Situation Analysis” are in another box. Both these boxes have arrows pointing from them to a third box, which has the word “Goals” in it.

The rest of the planning process outlines how the goals are to be met. This includes determining what resources will be needed and how they can be obtained, defining tasks that need to be done, creating a schedule for completing the tasks, and providing milestones to indicate progress toward meeting goals. The planning process will be discussed in more detail in the following section.

Benefits of Planning

In today’s chaotic environment, planning more than a few months in advance may seem futile. Progress, however, is rarely made through random activity. Planning does provide benefits that facilitate progress even when faced with uncertainty and a constantly changing environment. Some of the benefits include the following:

  • Planning provides a guide for action. Plans can direct everyone’s actions toward desired outcomes. When actions are coordinated and focused on specific outcomes they are much more effective.
  • Planning improves resource utilization. Resources are always scarce in organizations, and managers need to make sure the resources they have are used effectively. Planning helps managers determine where resources are most needed so they can be allocated where they will provide the most benefit.
  • Plans provide motivation and commitment. People are not motivated when they do not have clear goals and do not know what is expected of them. Planning reduces uncertainty and indicates what everyone is expected to accomplish. People are more likely to work toward a goal they know and understand.
  • Plans set performance standards. Planning defines desired outcomes as well as mileposts to define progress. These provide a standard for assessing when things are progressing and when they need correction.
  • Planning allows flexibility. Through the goal-setting process, managers identify key resources in the organization as well as critical factors outside the organization that need to be monitored. When changes occur, managers are more likely to detect them and know how to deploy resources to respond.

Practice Question

https://assessments.lumenlearning.co...essments/12164

Drawbacks to Planning

Planning provides clear benefits to organizations, but planning can also harm organizations if is not implemented properly. The following are some drawbacks to planning that can occur:

  • Planning prevents action. Managers can become so focused on planning and trying to plan for every eventuality that they never get around to implementing the plans. This is called “death by planning.” Planning does little good if it does not lead to the other functions.
  • Planning leads to complacency. Having a good plan can lead managers to believe they know where the organization is going and how it will get there. This may cause them to fail to monitor the progress of the plan or to detect changes in the environment. As we discussed earlier, planning is not a one-time process. Plans must be continually adjusted as they are implemented.
  • Plans prevent flexibility. Although good plans can lead to flexibility, the opposite can also occur. Mid- and lower-level managers may feel that they must follow a plan even when their experience shows it is not working. Instead of reporting problems to upper managers so changes can be made, they will continue to devote time and resources to ineffective actions.
  • Plans inhibit creativity. Related to what was said earlier, people in the organization may feel they must carry out the activities defined in the plan. If they feel they will be judged by how well they complete planned tasks, then creativity, initiative, and experimentation will be inhibited. Success often comes from innovation as well as planning, and plans must not prevent creativity in the organization.

https://assessments.lumenlearning.co...essments/12165

Goals and plans do not have to be formal documents. In small organizations, they may exist only in the minds of the manager. But research and experience have shown that planning brings clear advantages to an organization, whether through formal procedures or informal intuition. However, when plans become the object instead of a means to an objective, they can have negative consequences for the organization. For example, General Motors missed the opportunity to become the first American automaker to produce an electric car because it was committed to its plan rather than its goals. GM had EV-1 prototypes designed and produced in the 1990s and literally destroyed the cars rather than sell them.

Contributors and Attributions

  • Pros and Cons of Planning. Authored by : John/Lynn Bruton and Lumen Learning. License : CC BY: Attribution
  • Image: Planner. Authored by : NikolayFrolochkin. Located at : https://pixabay.com/en/diary-weekly-planning-notebook-2134248/ . License : CC0: No Rights Reserved

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Business Planning

True Tamplin, BSc, CEPF®

Written by True Tamplin, BSc, CEPF®

Reviewed by subject matter experts.

Updated on June 08, 2023

Are You Retirement Ready?

Table of contents, what is business planning.

Business planning is a crucial process that involves creating a roadmap for an organization to achieve its long-term objectives. It is the foundation of every successful business and provides a framework for decision-making, resource allocation, and measuring progress towards goals.

Business planning involves identifying the current state of the organization, determining where it wants to go, and developing a strategy to get there.

It includes analyzing the market, identifying target customers, determining a competitive advantage, setting financial goals, and establishing operational plans.

The business plan serves as a reference point for all stakeholders , including investors, employees, and partners, and helps to ensure that everyone is aligned and working towards the same objectives.

Importance of Business Planning

Business planning plays a critical role in the success of any organization, as it helps to establish a clear direction and purpose for the business. It allows the organization to identify its goals and objectives, develop strategies and tactics to achieve them, and establish a framework of necessary resources and operational procedures to ensure success.

Additionally, a well-crafted business plan can serve as a reference point for decision-making, ensuring that all actions taken by the organization are aligned with its long-term objectives.

It can also facilitate communication and collaboration among team members, ensuring that everyone is working towards a common goal.

Furthermore, a business plan is often required when seeking funding or investment from external sources, as it demonstrates the organization's potential for growth and profitability. Overall, business planning is essential for any organization looking to succeed and thrive in a competitive market.

Business Planning Process

Step 1: defining your business purpose and goals.

Begin by clarifying your business's purpose, mission, and long-term goals. These elements should align with the organization's core values and guide every aspect of the planning process.

Step 2: Conducting Market Research and Analysis

Thorough market research and analysis are crucial to understanding the industry landscape, identifying target customers, and gauging the competition. This information will inform your business strategy and help you find your niche in the market.

Step 3: Creating a Business Model and Strategy

Based on the insights from your market research, develop a business model that outlines how your organization will create, deliver, and capture value. This will inform the overall business strategy, including identifying target markets, value propositions, and competitive advantages.

Step 4: Developing a Marketing Plan

A marketing plan details how your organization will promote its products or services to target customers. This includes defining marketing objectives, tactics, channels, budgets, and performance metrics to measure success.

Step 5: Establishing Operational and Financial Plans

The operational plan outlines the day-to-day activities, resources, and processes required to run your business. The financial plan projects revenue, expenses, and cash flow, providing a basis for assessing the organization's financial health and long-term viability.

Step 6: Reviewing and Revising the Business Plan

Regularly review and update your business plan to ensure it remains relevant and reflects the organization's current situation and goals. This iterative process enables proactive adjustments to strategies and tactics in response to changing market conditions and business realities.

Business Planning Process

Components of a Business Plan

Executive summary.

The executive summary provides a high-level overview of your business plan, touching on the company's mission, objectives, strategies, and key financial projections.

It is critical to make this section concise and engaging, as it is often the first section that potential investors or partners will read.

Company Description

The company description offers a detailed overview of your organization, including its history, mission, values, and legal structure. It also outlines the company's goals and objectives and explains how the business addresses a market need or problem.

Products or Services

Describe the products or services your company offers, emphasizing their unique features, benefits, and competitive advantages. Detail the development process, lifecycle, and intellectual property rights, if applicable.

Market Analysis

The market analysis section delves into the industry, target market, and competition. It should demonstrate a thorough understanding of market trends, growth potential, customer demographics, and competitive landscape.

Marketing and Sales Strategy

Outline your organization's approach to promoting and selling its products or services. This includes marketing channels, sales tactics, pricing strategies, and customer relationship management .

Management and Organization

This section provides an overview of your company's management team, including their backgrounds, roles, and responsibilities. It also outlines the organizational structure and any advisory or support services employed by the company.

Operational Plan

The operational plan describes the day-to-day operations of your business, including facilities, equipment, technology, and personnel requirements. It also covers supply chain management, production processes, and quality control measures.

Financial Plan

The financial plan is a crucial component of your business plan, providing a comprehensive view of your organization's financial health and projections.

This section should include income statements , balance sheets , cash flow statements , and break-even analysis for at least three to five years. Be sure to provide clear assumptions and justifications for your projections.

Appendices and Supporting Documents

The appendices and supporting documents section contains any additional materials that support or complement the information provided in the main body of the business plan. This may include resumes of key team members, patents , licenses, contracts, or market research data.

Components of a Business Plan

Benefits of Business Planning

Helps secure funding and investment.

A well-crafted business plan demonstrates to potential investors and lenders that your organization is well-organized, has a clear vision, and is financially viable. It increases your chances of securing the funding needed for growth and expansion.

Provides a Roadmap for Growth and Success

A business plan serves as a roadmap that guides your organization's growth and development. It helps you set realistic goals, identify opportunities, and anticipate challenges, enabling you to make informed decisions and allocate resources effectively.

Enables Effective Decision-Making

Having a comprehensive business plan enables you and your management team to make well-informed decisions, based on a clear understanding of the organization's goals, strategies, and financial situation.

Facilitates Communication and Collaboration

A business plan serves as a communication tool that fosters collaboration and alignment among team members, ensuring that everyone is working towards the same objectives and understands the organization's strategic direction.

Benefits of Business Planning

Business planning should not be a one-time activity; instead, it should be an ongoing process that is continually reviewed and updated to reflect changing market conditions, business realities, and organizational goals.

This dynamic approach to planning ensures that your organization remains agile, responsive, and primed for success.

As the business landscape continues to evolve, organizations must embrace new technologies, methodologies, and tools to stay competitive.

The future of business planning will involve leveraging data-driven insights, artificial intelligence, and predictive analytics to create more accurate and adaptive plans that can quickly respond to a rapidly changing environment.

By staying ahead of the curve, businesses can not only survive but thrive in the coming years.

Business Planning FAQs

What is business planning, and why is it important.

Business planning is the process of setting goals, outlining strategies, and creating a roadmap for your company's future. It's important because it helps you identify opportunities and risks, allocate resources effectively, and stay on track to achieve your goals.

What are the key components of a business plan?

A business plan typically includes an executive summary, company description, market analysis, organization and management structure, product or service line, marketing and sales strategies, and financial projections.

How often should I update my business plan?

It is a good idea to review and update your business plan annually, or whenever there's a significant change in your industry or market conditions.

What are the benefits of business planning?

Effective business planning can help you anticipate challenges, identify opportunities for growth, improve decision-making, secure financing, and stay ahead of competitors.

Do I need a business plan if I am not seeking funding?

Yes, even if you're not seeking funding, a business plan can be a valuable tool for setting goals, developing strategies, and keeping your team aligned and focused on achieving your objectives.

planning business def

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide , a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University , where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon , Nasdaq and Forbes .

Related Topics

  • Business Continuity Planning (BCP)
  • Business Exit Strategies
  • Buy-Sell Agreements
  • Capital Planning
  • Change-In-Control Agreements
  • Cross-Purchase Agreements
  • Decision Analysis (DA)
  • Employee Retention and Compensation Planning
  • Endorsement & Sponsorship Management
  • Enterprise Resource Planning (ERP)
  • Entity-Purchase Agreements
  • Family Business Continuity
  • Family Business Governance
  • Family Limited Partnerships (FLPs) and Buy-Sell Agreements
  • Human Resource Planning (HRP)
  • Manufacturing Resource Planning (MRP II)
  • Plan Restatement

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Image mindmesh logo

What is planning

Definition: Planning is the process of establishing the goals and objectives of a project and determining the resources and actions needed to achieve those goals.

It involves creating a detailed project plan that outlines the steps and tasks required to complete the project, as well as identifying potential risks or challenges and developing strategies to manage them.

The goal of planning is to create a roadmap for the project that ensures its successful completion.

To do this, managers need to have a good understanding of the current situation and where they want to be in the future. 

Types of planning

There are four types of planning: 

  • Operational
  • Contingency

‍ Strategic planning

Strategic planning is defining a company's direction and goals and allocating its resources to pursue them. It consists of analyzing the competitive environment and identifying external and internal factors that can affect the organization.

An example of strategic planning for a SaaS company that offers project management software and wants to expand its customer base and increase revenue would look like this:

  • Conduct market research to understand the needs and preferences of its target audience.
  • Analyze the competitive landscape to identify potential opportunities and threats. 

Based on this analysis, the company sets the following goals :

  • Introduce new features and functionality to the software that addresses the specific needs and pain points of the construction and engineering industries.
  • Develop targeted marketing campaigns to reach small and medium-sized businesses in these industries through targeted online advertising, social media marketing, and content marketing.
  • Increase customer retention by providing exceptional customer support and offering a loyalty program for long-term subscribers.

To achieve these goals, the company allocates needed resources for marketing, development, and customer support staff.

Operational planning

Operational planning is the process of defining specific actions and resources needed to achieve the goals set out in the strategic plan. 

It involves developing detailed plans and budgets to implement the strategies and tactics outlined in the strategic plan and identifying and addressing any potential risks or challenges that may arise.

The example SaaS company has identified introducing new features and functionality to its software as a key goal in its strategic plan. To achieve this goal, the company develops an operational plan that outlines the specific actions and resources needed to execute this strategy. 

The operational plan includes tasks such as:

  • Implementing new features.
  • Allocating development resources and setting goals and timelines for developing the new features.
  • Developing a budget for testing and quality assurance efforts .
  • Assigning staff members to oversee the development and testing of the new features.

Tactical planning

Tactical planning develops plans and actions to achieve the goals set out in the operational plan . 

It involves breaking down the larger goals and objectives into smaller, more manageable tasks that can be completed within a shorter time frame, typically ranging from a few weeks to a few months. 

Tactical planning includes developing content marketing campaigns, promoting new features, assigning tasks to developers, etc.

Contingency planning

Contingency planning is the process of identifying potential risks or challenges that may arise and developing plans to mitigate or address them . 

To ensure the success of the launch of the new features, our example SaaS company develops a contingency plan to mitigate potential risks or challenges that may arise. 

The contingency plan includes the following measures:

  • Identifying potential disruptions to the development process, such as staff illness or unexpected delays, and minimizing their impact on the timeline for launching the new software.
  • Identifying potential IT issues, such as server outages or security breaches, and ensuring that the software remains accessible to customers and secure.
  • Sudden change in market conditions or a major competitor entering the market.

How to plan in Mindmesh

Mindmesh is a productivity and project management tool that helps users plan, organize, and execute tasks and projects. Here's how to use the Mindmesh app to plan:

  • Log in to Mindmesh and create a new card in the app . Give it a name and add any relevant details or information.

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2. Organize the tasks by dragging and dropping them across days or snoozing them in the calendar to work on what matters. Get access to the planning view and get an overview by clicking the W key on the Mindmesh desk.

3.  Link relevant cards to create a task hierarchy:

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4. Organize your tasks with Tags and manage multiple projects with Boards:

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5. Assign tasks to other team members:

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6. Keep track of completed assignments.

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Go to homepage business.govt.nz business.govt.nz

Business.govt.nz, in association with, introduction to business planning.

If you are self-employed, own or run a business, planning helps you step out of day-to-day tasks to set work goals and decide how you’re going to reach them.

Business planning is about setting a clear plan for where you and your business are going and how to achieve goals. It also involves regular monitoring to make sure you’re on track.

Why it’s important

Every business benefits from a business plan, whether you’re a one-person, part-time operation or a large corporation. Regular business planning helps you:

  • have a clear plan of where you’re going and the path ahead
  • build a business that best suits you and your lifestyle
  • understand your current business skills and identify any gaps
  • spot opportunities that can help you reach your end goal
  • use your resources wisely — without a plan you can end up spreading your time, money and energy too thinly
  • know whether to say yes or no to opportunities that come up — if they don’t support your vision, move on.

Countdown to launch

Before launching Common Ledger, Carlos Chambers and his team had an idea for software to streamline the information accountants received from their clients’ different programs. They spent six months speaking to accountants in New Zealand and Australia to understand their potential market and refine their product.

“We learned there was this really deep problem that accountants around the world were facing. That’s what we were looking for — huge problem and huge opportunity and a huge way to really help this industry move forward.”

The next step was to develop an 18-month plan and a three-to-five-year strategy to turn their start-up into a fully fledged company. They’ve since raised more than $1m and launched in both countries.

“We’re close to our targets on our initial forecasts. We’ve brought on the right board. We’ve hired the right team members. All these things are probably the result of thorough planning. We would never have been able to usefully create our strategy if we hadn’t done that first six months of research.”

Read Common Ledger’s full story — and those of other small businesses — on our case studies page:

See what others are doing

Common elements in business planning

What goes into a business plan can vary, but often includes:

  • an overview of your business — name, products or services you offer, revenue, key partners, goals
  • an overview of your market — your customers, your industry, how many people will buy your product or service, whether you’ll sell overseas
  • your marketing strategy — how you’ll get customers, the cost of attracting customers
  • competitor analysis — your rivals, how your strengths and weaknesses compare, your competitive edge
  • financials — your costs, revenues, growth rates, measures of success
  • team — employees’ skills, skills you need, your mentors and advisors
  • operations information — IT, systems, compliance.

Introduction to business finance

What you need to know about exporting

Business planning tips

  • Put time in your diary for business planning — monitoring progress regularly is good to do.
  • Set short-term, mid-term, and long-term goals to help you understand the milestones you’re trying to reach.
  • Do your planning offsite — getting out of your normal workplace can put you in a different mindset and help you see things you wouldn’t normally.

Involving your team in business planning can be a good thing. Don’t delegate the planning though. Having the owner or manager involved in setting the direction of the business is important.

Common mistakes

Avoid these common mistakes:

  • Getting caught up in the day-to-day running of the business without taking the time to look forward.
  • Reacting to things as they pop up as opposed to setting clear goals.
  • Investing time and money into things outside your value proposition. Make sure you have a clear statement that sets out how your product or service solves customers’ problems, and refer to it when you plan.
  • Creating a business plan that sits on the shelf and doesn’t get used.
  • Failing to regularly check in on how you’re tracking to your plan.
  • Failing to think through what happens if your business grows. For example, if you might export your goods or services in future, you’ll need to prepare well in advance.

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Strategic planning — what it is and how to do it well

Strategic planning guide

It can be difficult to reach your business goals and ambitions, regardless of what preparation you’ve done. But if you have a strategic plan in place, you’ll be more likely to achieve a favorable outcome.

This post will explain the importance of strategic planning, when and how to make a strategic plan, and how to manage it and stay on course. It will allow the audience to move forward with their planning efforts.

Read on to learn:

  • What strategic planning is

Benefits of strategic planning

  • When you should do strategic planning

Steps in strategic planning

  • What strategic management is

Strategic mapping

What is strategic planning.

Strategic planning is the process of defining your business’s direction and outlining a path toward a preferred future. The goal of a strategic plan is to capture an organization’s mission and core principles — to envision the fulfillment of these ideals. Strategic planning is both conceptual and practical, as it presents both high-level goals and specific approaches to achieve them.

A strategic plan needs to answer the following questions:

  • Where are we now?
  • Where are we going?
  • How do we get there?

Strategic planning helps businesses set and maintain a clear vision and ensure they’re moving in the right direction. Once the plan has been put in place, it helps maintain alignment between various stakeholders and teams within your business. This plan can make resource allocation simpler — by determining if certain resources are being used in ways that don’t align with the broader strategic plan.

Running a business without a strategic plan is like planning a vacation with no destination in mind. How will you get there? What do you need to bring with you? The same applies to planning for your business. Strategic planning:

  • Gives a sense of purpose and direction. A strategic plan provides a clear goal and end result so all other business functions can work to get you closer to that outcome. This clarity helps keep employees aligned on their efforts, make better decisions, and work towards a shared goal.
  • Makes you aware of opportunities for success. Tying your plans to strategy helps your organization identify opportunities that you discover along your journey. If you find an opportunity that aligns with your strategy — and desired outcomes — you can more easily adapt to take advantage of the situation.
  • Alerts you to risks to avoid. Part of the strategic planning process is scanning the external environment and competitive landscape, which allows you to identify potential roadblocks you may encounter.
  • Helps you understand what resources you will need. When you have a strategic plan in place, you can more effectively allocate your resources. By aligning resources with strategic goals, businesses can focus on the initiatives, projects, and investments that maximize their ROI.
  • Helps prioritize critical tasks. When deciding which tasks are most important and which can be put on hold, a strategic plan streamlines that decision making. Tasks that don’t contribute to your mission can wait, while mission-critical tasks get prioritized.
  • Fosters teamwork and communication. Without a strategic plan, team members can feel isolated and siloed. However, when that strategic plan is clearly communicated to everyone, your team will feel more connected as they work towards a common goal.
  • Increases motivation. And when your team understands the desired outcomes and bigger goals behind their daily tasks, they’ll be more motivated to do high-quality work in a timely manner.
  • Helps measure and evaluate results. Because you’ve likely identified key performance indicators (KPIs) in your planning process, you’ll have an easier time tracking your progress. When you measure your progress, you can more easily identify areas for improvement and make changes on the fly.

When should you do strategic planning?

When and how often your business does strategic planning depends on the size and stage of your company, the speed of your business, and the scope of the projects you’re working on. Strategic planning should not be a one-time event. It should be an iterative process with continuous monitoring, evaluation, and adjustment.

If you’re a new business, you’ll want to create a business plan first, before you move into strategic planning. Once your business is established you can then set a strategic plan to outline your goals and manage your business’s strategic direction. For planning more short-term projects, use a project plan .

Once you’ve created a strategic plan, you should review it regularly — quarterly and yearly, for example — to make sure it is still aligned with your business’s goals and industry landscape. Generally, you should create a new strategic plan every 3–5 years. However, newer or faster-moving companies may need to create a new strategic plan every 1–2 years. Another scenario when you should rework your strategic plan is when you’re preparing to make a major pivot in your business.

How to write a strategic plan for a project

Learn how to write a strategic plan, why you need to create one, and the topics it should cover.

Steps in strategic planning

While every strategic plan might look a little different depending on the organization, industry, and other context, there is still a general outline of the process that you can follow to get you started.

Before you get started, there are a few preliminary steps you can take to make sure your planning process goes smoothly. You need to decide who is involved in the process and what documentation they’ll need. You’ll also want to revisit your company’s vision and mission statements which define where your business is aiming to go.

These are the steps you can take to create a strategic plan for your business:

1. Identify and assess your current position

To understand where you’re headed, you first need to look at where you are now. I n this stage you should:

  • Collect customer and employee feedback to understand what is working well for you and what could use improvement.
  • Perform a needs assessment or SWOT analysis to understand more about the current state of your business.
  • Assess your available resources so you can understand what you have enough of and what you may need to reach your goals.

2. Set goals

Next, you can set goals that you’d like your business to achieve over the short and long term. It’s important to choose goals that align with your company mission and vision. You can use marketing and sales forecasts to give you an idea of what types of goals are realistic. In this phase you’ll also want to prioritize the goals you set — so you know which to choose if conflicts arise.

When setting goals, remember to set SMART goals that are specific, measurable, attainable, relevant, and time bound.

3. Develop your plan

In this phase it’s time to put your plan together and map out a project roadmap. This is where your plan becomes clearer both to your planning committee and to your team members who will execute based on the plan.

You want to make sure that your plan is achievable with your current resources — so that you aren’t setting yourself up for failure. You’ll also want to set measurable milestones so you can track your progress along the way. You also need to set KPIs so you have objective numbers to determine if you’re heading in the right direction.

When developing your plan, you should make sure that any short-term action items align with long-term goals. And finally, you’ll need to get approval from leadership and stakeholders.

4. Implement your plan

Now that you’ve created your strategic plan it’s time to act. In fact, the first step of implementation is creating a strategic action plan. Your action plan will outline the specific tactics you’ll use to execute your strategic plan.

In this phase, you’ll also assign tasks to your team members so everyone knows what they are responsible for and what they will be contributing to your mission. It’s important to distribute and communicate your plan across your organization. This helps encourage transparency and will drive buy-in from everyone on your team.

As you are executing on your plan, you should rely on metrics and KPIs to track your performance.

5. Revise your plan as necessary

Next, you’ll want to revise your plan as you encounter roadblocks or market changes. Even the best strategic plans will change as you gather more data or feedback. Using tools — like a project management solution — can help you monitor the progress your team is making. You should schedule periodic evaluations to see which parts of the plan are going well and which need to be revised or reevaluated.

You can conduct reviews on a quarterly basis, so you have information at the end of the year to revise your plan if needed. Even if things are going well, you should make minor adjustments every year to keep your teams aligned and your strategy up to date. Any major revisions you make will require a new planning process — because a major adjustment could derail the rest of your strategic plan.

What is strategic management?

Strategic management is the process of formulating, implementing, and evaluating strategies to achieve the larger goals and objectives of an organization. It can sometimes be used interchangeably with the term strategic planning — but within strategic planning, strategic management means managing the plan being put into action.

Part of strategic management is being adaptive and adjusting to headwinds or organizational changes. You’ll also need to maintain a strong team culture, so your plan stays on track and team members stay engaged.

There are several models that strategic management can follow. Each takes a different approach to the management process, and how it solves problems that may arise.

One of these frameworks is the balanced scorecard method. This method looks at the strategic measures of a business beyond just financial metrics to get a more “balanced” look at performance. The phrase “balanced scorecard” refers to the management report that leaders may use to drive decision making within the business, since this approach looks at more than just numbers, it provides a more wholistic view of a business.

A strategic map is a visual representation of a business’s strategic objectives and their cause-and-effect relationships between each objective. This diagram helps visualize the strategic plan and understand which tasks are dependent on others. This map should be drawn during the development of the strategic plan to get a better understanding of how things should get done and in what order.

Strategic mapping can turn complex strategic plans into easily understandable visual representations. These can be helpful tools for communicating your strategy more clearly to team members and stakeholders within your organization. Strategic maps also help organizations identify success factors, prioritize initiatives, allocate resources, and monitor progress.

A strategic map can be designed in several ways, but needs to address the four main facets of business:

Strategic mapping

  • Financial. This section of the map should identify how the strategy helps meet the financial goals of the business.
  • Customer. This section should address the benefits that the customer will see from the specific strategy.
  • Internal business processes (IBPs). This section shares the benefits of the strategy to the processes of the business and their efficiency.
  • Learning and growth. This section will address how the business’s capabilities and knowledge will improve by using a given strategy.

Getting started with strategic planning

Strategic planning is a helpful tool for aligning everyone in your organization with your objectives and long-term goals. It can also help you gain a better understanding of your place in the market and how you can improve your business outcomes.

When you’re ready to get started, assemble your leadership team, draft your mission and vision statements, and begin by assessing the current state of your business. But you can’t get the most out of your strategic plan without a platform to drive the process forward.

That’s where Adobe Workfront can help. Workfront is an enterprise work management tool that connects work to strategy and drives better collaboration to deliver measurable business outcomes. It integrates people, data, processes, and technology across an organization so you can manage the entire lifecycle of projects from start to finish. By centralizing digital projects, cross-functional teams can connect, collaborate, and execute from anywhere to help them do their best work.

Take a product tour or watch an overview video to see how Workfront can help you execute on your strategic plan to improve your business outcomes.

https://business.adobe.com/blog/perspectives/workfront-and-the-employee-experience

https://business.adobe.com/blog/perspectives/get-the-most-out-of-workfront-discovery-by-avoiding-common-challenges

https://business.adobe.com/blog/basics/annual-planning

  • Introduction, Meaning, Importance, Features and Limitations of Planning

Just like management is a never-ending activity, so is planning. In fact business planning, it is one of the primary functions of management . It sets up the stage for all further functions of management like organizing, directing etc. Let us understand the concept of planning.

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We already know what planning is, it is the deciding of what is to be done in advance. It is the groundwork for all future plans of the organization . Planning bridges the gap between where the organization currently find itself and where it wishes to be.

So in essence business planning comprises of setting objectives for the organization and developing a plan of action to achieve these objectives. Once the objectives are set, the managers and workers can have a clear vision of what to work towards.

Managers are a very important part of the function of business planning. Planning requires innovation, creativity and multi-tasking from the managers. And planning is a function that managers of all levels must perform, i.e upper, middle and lower management .

Browse more Topics under Planning

  • Planning Process
  • Types of Plan

Importance of Business Planning

Planning is an important function of management, it tells the manager where the organization should be headed. It also helps the organization reduce uncertainty. Let us take a look at some important functions of planning.

1] Planning provides a sense of Direction

Planning means coming up with a predetermined action plan for the organization. It actually states in advance what and how the work is to be done. This helps provide the workers and the managers with a sense of direction , a guidance in a way. Without planning their actions would be uncoordinated and unorganized.

2] Planning reduces Uncertainty

Planning not only sets objectives but also anticipates any future changes in the industry or the organization. So it allows the managers to prepare for these changes, and allow them to deal with the uncertainties. Planning takes into consideration past events and trends and prepares the managers to deal with any uncertain events.

3] Planning reduces Wastefulness

The detailed plans made keep in mind the needs of all the departments. This ensures that all the departments are on the same page about the plan and that all their activities are coordinated. There is clarity in thought which leads to clarity in action. All work is carried out without interruptions or waste of time or resources ,

4] Planning invokes Innovation

Planning actually involves a lot of innovation on the part of the managers . Being the first function of management it is a very difficult activity. It encourages the manager to broaden their horizons and forces them to think differently. So the managers have to be creative, perceptive and innovative.

5] Makes Decision=Making Easier

In business planning the goals of the organization have been set, an action plan developed and even predictions have been made for future events. This makes it easier for all managers across all levels to make decisions with some ease. The decision-making process also becomes faster.

6] Establishes Standards

Once the business planning is done, the managers now have set goals and standards. This provides the manager’s standards against which they can measure actual performances. This will help the organization measure if the goals have been met or not. So planning is a prerequisite to controlling.

Limitations of Planning

While business planning is important and a requisite for every organization, it does have some limitations. Let us take a look at some limitations of business planning.

1] Rigidity

Once the planning function is complete and the action plan is set, then the manager tends to only follow the plan. The manager may not be in a position to change the plan according to circumstances. Or the manager may be unwilling to change the plan. This sort of rigidity is not ideal for an organization.

2] Not ideal in Dynamic Conditions

In an economic environment rarely anything is stagnant or static. Economic, political, environmental, legal conditions keep changing. In such a dynamic environment it becomes challenging to predict future changes. And if a manager cannot forecast accurately, the plan may fail.

3] Planning can also reduce creativity

While making a plan takes creativity after that managers blindly follow the plan. They do not change the plan according to the dynamic nature of the business. Sometimes they do not even make the appropriate suggestions to upper management. The work becomes routine.

4] Planning is Expensive

Planning is a cost-consuming process. Since it is an intellectual and creative process, specialized professionals must be hired for the job. Also, it involves a lot of research and facts collection and number crunching. At certain times the cost of the planning process can outweigh its benefits.

5] Not Completely Accurate

When planning we have to forecast the future and predict certain upcoming events in the organization and the industry. So, of course, there cannot be hundred per cent certainty in such cases. So it can be said that business planning lacks accuracy

Solved Question for You

Q: Which of the following can be referred to planning?

  • Departmentation
  • Government policy
  • Forecasting
  • All of the above

Ans: The correct option is C. Planning is forecasting as it is deciding what to do in advance. Planning is futuristic as it never relates to the past. So planning bridges the gap between where the company is and where it wishes to go.

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One response to “Introduction, Meaning, Importance, Features and Limitations of Planning”

You made a good point that I should be wary of dynamic situations when dealing with business planning. Nevertheless, I still think that having a good business plan is essential for the game development company that I’m planning to start in the future. Perhaps hiring a business planning consultant would be a good way to have a good footing from the very beginning of the venture.

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  • Business Planning
  • Skills & Tools

Business planning skills describe your ability to create a roadmap for the success of a business. This ability encompasses documenting the specific details of the business such as the goals and aims that a firm sets, the planned steps towards the achievement of those goals, and the criteria that measures and monitors the firm’s success.

Whether an already established company or a new start-up, business planning is needed everywhere. Any document created in the process that organizes all the data, manages your plans, and communicates them to stakeholders is known as a ‘business plan’.

Why is business planning important

Business planning can be arduous as well as time-consuming but its importance is not debatable in any case. Whether planning an expansion of operations or launch of a new and exciting product, business planning is the necessity of all large and small companies.

Utilizing your skills to come up with a sound business plan requires a lot of research, hence, keeping you well-informed about the true position of your business in the market, relative to competitors. Gathering information for business planning purposes can help you identify any weaknesses and foresee potential threats so that strategies can be developed to deal with problems even before they occur.

The business plan that a company comes up with also serves as a reference point. It helps you determine whether or not you have drifted from your original vision and in case you have, it helps you get back on track. Therefore, starting a business without carefully planning it is like setting off on a journey without a roadmap. It can also serve as a great motivational tool when you review the plan to see how far you have already come.

How to improve business planning skills

Take the following measures to improve your business planning skills:

  • Adopt a conservative approach . In all your financial projections and estimates, you must be conservative so that you don’t overpromise the returns to any particular business. For instance, if you are certain that the business will capture 30% of the market share I the first year, you may state is only as an opinion and give reasons for why you believe so. However, in making financial projections, taking only 10% market share into consideration will give much more credible results.
  • Emphasize on people as much as ideas and concepts . As good as the business idea may be, it can never be successful enough until you make the acquisition of a strong management team a part of your planning. Venture capitalists as well as individual financiers are much more likely to invest in businesses that not only have a good concept but also a team with good credentials and expertise.
  • Support every claim with evidence . Business planning requires making several claims but all those claims must be backed up by proof. Otherwise, you will have no credibility. If you say, for instance, that your staff qualified enough to make the business success, their resumes must reflect it too.

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Planning Business Definition – All You Need To Know

Welcome to the world of planning business! Whether you are an aspiring entrepreneur or a seasoned business owner, understanding the importance of effective planning is crucial for success.

In this comprehensive guide, we will dive deep into the definition and significance of planning in the business world. From strategic planning to operational planning, we will explore the different types of planning, their purpose, and how they contribute to achieving organizational goals.

We will also uncover the key elements of a well-crafted business plan and provide valuable insights on how to create one that captures the attention of investors and lenders. So, if you are ready to take your business to the next level and maximize your chances of success, let’s embark on this exciting journey of planning business together!

Table of Contents

The Importance of Planning in Business

Planning is the foundation upon which successful businesses are built. It involves setting goals, developing strategies, and outlining the steps needed to achieve those goals. Without proper planning, businesses would operate in a state of chaos, lacking direction and focus. Effective planning helps businesses anticipate and prepare for the future, identify potential risks and opportunities, allocate resources efficiently, and make informed decisions. It allows businesses to stay ahead of the competition, adapt to changing market conditions, and maximize their chances of success. In short, planning is the roadmap that guides businesses towards their desired outcomes.

Planning Statistic

Types of Business Planning

Business planning encompasses various types, each serving a specific purpose within the organization. Strategic planning focuses on defining the long-term goals and objectives of the business and determining the best course of action to achieve them. It involves conducting market research, analyzing competition, and identifying growth opportunities. Tactical planning, on the other hand, focuses on the short-term actions and strategies needed to implement the broader strategic plan. It involves setting specific targets, allocating resources, and coordinating activities to achieve these targets. Operational planning deals with the day-to-day operations of the business, such as production schedules, inventory management, and workforce planning. It ensures that the business runs smoothly and efficiently on a daily basis.

Key Elements of a Successful Business Plan

A well-crafted business plan is essential for any business looking to attract investors, secure financing, or simply to guide its own growth. While the specific elements may vary depending on the industry and nature of the business, there are key components that every business plan should include. These include an executive summary, which provides an overview of the business and its goals; a company description, which outlines the nature of the business and its competitive advantage; a market analysis, which assesses the target market and competition; a description of products or services offered; a marketing and sales strategy; an organizational structure; a financial plan including projected revenues, expenses, and cash flow; and finally, an appendix with supporting documents such as resumes, legal agreements, and market research data.

Steps to Develop an Effective Business Plan

Creating a business plan may seem like a daunting task, but by following a systematic approach, it can be a manageable and rewarding process. The first step is to conduct thorough research to understand the industry, market trends, and competition. This will help identify the unique selling proposition and target market for the business. The next step is to define the business goals and objectives. These should be specific, measurable, attainable, relevant, and time-bound (SMART). Once the goals are defined, the next step is to develop a strategy that outlines the actions and resources needed to achieve these goals. This includes defining the marketing and sales approach, operational processes, and financial projections. Finally, the business plan should be regularly reviewed and updated to reflect changes in the business environment and to ensure its continued relevance and effectiveness.

Common Challenges in Business Planning

While business planning is essential, it is not without its challenges. One common challenge is the lack of accurate and up-to-date data. Without reliable information, businesses may make decisions based on assumptions or outdated market trends, leading to inefficiencies and missed opportunities. Another challenge is the difficulty in balancing long-term strategic planning with short-term tactical planning. Often, businesses get caught up in day-to-day operations and neglect the broader strategic vision. Additionally, limited resources, such as time, money, and expertise, can pose challenges in the planning process. Finally, resistance to change and a lack of buy-in from stakeholders can hinder the implementation of the business plan.

Tools and Resources for Business Planning

Fortunately, there are numerous tools and resources available to aid businesses in their planning efforts. Business planning software, such as LivePlan, allows businesses to create professional and comprehensive business plans with ease. These software solutions often come with built-in templates, financial forecasting tools, and collaboration features. Additionally, there are countless online resources, books, and courses that provide guidance and best practices for business planning. Seeking the assistance of a business consultant or mentor can also be valuable, as they can provide expert advice and insights based on their own experiences.

Case Studies of Successful Business Planning

Examining real-life examples of successful business planning can provide inspiration and valuable insights. One such example is Amazon. In the early days of the company, founder Jeff Bezos developed a comprehensive business plan that outlined his vision for the future of e-commerce. This plan included strategies for customer acquisition, supply chain management, and continuous innovation. Another notable example is Apple, which under the leadership of Steve Jobs, developed a business plan that focused on creating innovative and user-friendly products that would disrupt industries. These case studies demonstrate the power of effective planning in achieving extraordinary results.

The Role of Technology in Business Planning

Technology plays a vital role in modern business planning. With the advancement of digital tools and software, businesses can streamline the planning process, improve collaboration among team members, and access real-time data for informed decision-making. Cloud-based solutions allow businesses to store and access their business plans from anywhere, making it easier to share and update information. Additionally, data analytics tools enable businesses to gather and analyze large amounts of data, providing valuable insights into market trends, customer behavior, and operational efficiency. Embracing technology in the planning process can give businesses a competitive edge and help them stay agile in a rapidly evolving business landscape.

Conclusion and Final Thoughts

In conclusion, planning is the backbone of successful businesses. It provides direction, clarity, and a roadmap for achieving goals. By understanding the different types of planning, the key elements of a business plan, and the steps involved in its development, businesses can create a solid foundation for growth and success. While business planning may come with its challenges, leveraging tools, resources, and technology can help overcome these obstacles. So, whether you are starting a new venture or looking to expand an existing one, investing time and effort into effective planning is essential. Remember, a well-crafted business plan can be the difference between mediocrity and greatness. So, get started on your planning journey today and unlock the full potential of your business!

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Effective Business Planning: Definition, Purpose, and Help to Start Now

Effective Business Planning_ Definition, Purpose, and Help to Start Now

Business planning is the best way to document your company’s expenses, profits, and financial forecasts to share with potential investors. Startups usually develop a simple business plan, then update to meet individual company needs. Many small businesses work with a spreadsheet, and others use software and templates to maintain business plans. There are plenty of free and low-cost options to accomplish the task. We’ll share links to recommended plans and services to help you start the process.

The purpose of a business plan is to provide investors with information about the company’s past, present, and future. It also provides guidance for management on how to make decisions in order to achieve their goals. Your plan will likely change over time, but it’s important to track certain measurable numbers to make informed decisions when it comes to funding, hiring, expanding, selling, etc. Your company’s business plan is the roadmap to profitability and growth.

Read on to get a better understanding of the typical business plan and find links to write your plan now or get help from the experts.

What is a Business Plan?

A business plan is a written document that contains all the information to answer questions like “What will my business do?” “Why will my business succeed?” and “How much money do I need?”. An effective plan can be as basic or complex as necessary to create an accurate picture of the company’s progress, issues, and finances.

All plans should include the following information:

  • Mission Statement
  • Description of Product/Service
  • Market Analysis
  • Strategic Objectives
  • Operational Objectives
  • Financial Plan

What is the Purpose of a Business Plan?

The purpose of a business plan is to outline a company’s strategy for profitability and growth over time. If you apply for funding, investors want to see realistic goals and numbers to help them decide whether or not their investment is worth the risk. When you present financial projections and marketing strategies in writing, potential lenders can make decisions quickly. They’ll want to know how much you need to borrow, how long it will take to repay, etc.

A well-written business plan is a powerful tool that shows whether or not you can be successful with a particular business model. You can actually save a lot of time and money by working out a quick business plan before you register a company or make any other plans. Some business models simply are not profitable or just may not be the best match for your personality . It’s better to know before you start spending money. If you decide that you have a solid business idea, your plan will tell you how much funding you’ll need throughout the initial growth phase (future phases will be reworked as you go along).

Are Business Plans Important?

Business plans are important because they provide a clear path for your business to grow. They help you to identify the market need and how you can fill it. They also help you to identify your strengths, weaknesses, opportunities, and threats.

A business plan is not a set of rigid rules but rather a flexible document that will change as the needs of the business change. It is important to note that different types of businesses require different types of plans. important for companies because it helps them to organize their thoughts and goals. It also serves as a roadmap for what they want to achieve in the future. A business plan can be used internally by managers to make decisions or externally by investors when they are deciding whether or not to invest in a company’s project.

Who Needs a Business Plan?

Even if you never apply for funding, every business should document a plan. Jot down business ideas, products, designs, sales and marketing programs, pricing, etc. in an organized spreadsheet or template. Starting a business is exciting, but successful businesses are always looking ahead to the future and plan accordingly. If you want your company to bring in a million+ in revenue, you have to have a plan to make that happen. Every single company should have an active business plan.

Find the right business plan for your startup.

Writing a business plan.

The process of writing a business plan takes place through several steps. You’ll want to 1) analyze your competitors, 2) research your industry, 3) identify your target market, 4) research your product or service and its potential markets, 5) determine your financial needs and resources available to you, and 6) create an action plan for achieving success. With these facts, you can decide on what kinds of products or services to offer and the market that would benefit from your offerings.

Helpful Resources Writing a Business Plan from Scratch | New Business Ideas | Get Your Business Funded

Plan for your business growth and future.

If they try hard enough, many people can – and do start new businesses. Some of them may start without a plan and even be successful to a degree. But the only way to real success and profits is by working with an effective business plan. You’ll have a visual chart of your progress, forecasts, and funding needs. When you can see beyond what your business is doing right now, you can make changes and plan for success before it passes by.

Find startup capital for your business idea

Your local bank or credit union can discuss traditional funding options like home equity loans and other personal funding options. There are plenty of online crowdfunding platforms like Kickstarter , Indiegogo , and SeedInvest to launch a funding campaign. Requirements vary by industry, and some of these platforms are better suited for particular businesses. A quick Google search shows a bunch of options to research.

TIP: Crowdfunding platforms usually charge fees for using their services. You’ll need to factor those fees into your funding request so they’re covered when you withdraw funds. For example, Claire’s Cleaning Crew starts a Kickstarter campaign to purchase their first commercial van. They need $50,000 after fees, so Claire needs to calculate the fees and add that amount to her funding request if she wants to collect $50k when the funding company takes their cut.

What Does a Good Business Plan Look Like?

Every business that wants to be successful needs to have an effective business plan. You know you have a complete plan if it includes an executive summary and mission statement, description of business and services, market and competition research, pricing, and financial forecast. An outline of goals and objectives will act as a roadmap to follow to growth and success.

Whether you fill in a basic template or hire a professional business planner, starting a business without a detailed plan can be both costly and close your business. There’s no sense in starting a company if you’re not prepared to stabilize and grow it. You can save a lot of time and unnecessary headaches by doing research and writing a business plan even before you make any real commitments. Numbers don’t lie, so it’s best to make an informed decision based on facts and numbers instead of emotion. A good business plan will show you exactly where your business has been and where it is going, so you can make profitable adjustments along the way.

Learn how to conduct a business audit in our guide.

Explore new business ideas and start one today.

Now is a great time to explore online and other small business ideas. Read helpful new business guides on our blog for inspiring ideas and tips to get started. MyCompanyWorks can form an LLC or Corporation for any US business. Start your business online now or contact us for help and more information . Everything you need to start your business is available in our one-stop entrepreneur shop. Reach out today!

Helpful Articles and Resources Write a DIY Small Business Plan | Get Business Planning Help from the Experts at BPlans | Recommended Business Planning Vendors | Keep Your Business Plan Updated with LivePlan

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Geektonight

Planning in Management: Definitions, Importance, Characteristics, Process

  • Post last modified: 10 August 2023
  • Reading time: 35 mins read
  • Post category: Management

What is Planning?

Planning is the primary function of management that involves formulating a future course of action for accomplishing a specific purpose. Planning enables managers to decide what task to do, how to do the task, when to do the task and by whom the task has to be done.

Table of Content

  • 1 What is Planning?
  • 2 Definitions of Planning
  • 3.1 Forms Goals
  • 3.2 Remains as a Continuous Process
  • 3.3 Gives Direction
  • 3.4 Tackles Uncertainty
  • 3.5 Minimises Duplication and Wasteful Activities
  • 3.6 Supports and Promotes Innovative Ideas
  • 3.7 Facilitates Decision Making
  • 3.8 Sets Standards for Controlling Function
  • 3.9 Facilitates Coordination
  • 4.1 Continuous Process
  • 4.2 Intellectual Process
  • 4.3 Futuristic Approach
  • 4.4 Flexible process
  • 4.5 Primary Function of Management
  • 4.6 Assists Decision Making
  • 4.7 Goal-oriented Approach
  • 4.8 Pervasive
  • 5.1 Setting Organisational Objectives
  • 5.2 Examining Business Environment
  • 5.3 Assessing Available Alternatives and Selecting the Most Appropriate Alternative
  • 5.4 Formulating secondary plans
  • 5.5 Ensuring cooperation and participation
  • 5.6 Following up
  • 6.1 Time-consuming
  • 6.2 Expensive
  • 6.3 Gap Between Targets and Results
  • 6.4 Resistance Towards Change
  • 6.5 Paperwork
  • 6.6 Reason of Frustration
  • 6.7 Problem of Over-target
  • 7.1 Strategic plans
  • 7.2 Tactical plans
  • 7.3 Operational plans
  • 7.4 Contingency plans
  • 8.1 What is Planning?
  • 8.2 What are the Features of Planning?
  • 8.3 What is the Process of Planning?
  • 8.4 What is the Importance of Planning in Management?
  • 9 Management Topics

To be more precise planning lays a foundation for establishing a mission statement, defining organisational goals and determining resources needed to achieve organisational goals. On the other hand, in a narrow sense, planning is the tactic to complete a specific task.

Definitions of Planning

By going through the definitions of planning we will be able to understand its concept therefore some definitions are as follows:

Planning is the continuous process of making present entrepreneurial decisions systematically and with best possible knowledge their futurity, organising systematically the ef- forts needed to carry out these decisions and measuring the results of these decisions against the expectation through organised systematic feedback. Peter Drucker
Planning is deciding in advance what to do, how to do and who is to do it. Planning bridges the gap between where we are, where we want to go. It makes possible things to occur, which would not otherwise occur. Koontz and O’Donnell

Importance of Planning in Management

The importance of planning in management is explained in the following points:

Forms Goals

Remains as a continuous process, gives direction, tackles uncertainty, minimises duplication and wasteful activities, supports and promotes innovative ideas, facilitates decision making, sets standards for controlling function, facilitates coordination.

Planning is a goal-oriented process that helps in determining what each individual in an organisation has to achieve at the end and executing work accordingly. In addition, the planning function enhances the efficiency of other managerial functions.

Planning in any organisation is a never-ending function. This is because every organisation operates in a dynamic business environment which is subject to frequent changes. As new changes become known, revisions and amendments are made to plans.

Planning channelises the efforts of people in an organisation in the best possible manner to attain the desired results. For example, during the planning process, plans are laid for each department of the organisation, which helps people at all levels to know exactly what work they have to perform so that organisational goals can be achieved without any hindrances.

Planning is helpful in making predictions with the available amount of information. This helps organisations/businesses tackle an uncertain future. Planning assists in finding a better way to achieve goals by anticipating a future risk or chances of occurrence of future risks.

As mentioned earlier, planning helps individuals at all levels to know what they exactly need to do. This helps in preventing the duplication of work, authority, responsibility, etc. As a result, wastage of resources and efforts is minimised.

Nowadays, organisations operate in an environment of cut-throat competition. Customers always demand something new or unique. If an organisation fails to fulfil customers’ demands, customers can easily switch to competitors.

Planning enables managers to think out of the box, generate new ideas and provide something unique to customers with less cost and more efficiency, thereby satisfying customers.

Planning as a guide plays an important role in making efficient and accurate decisions. For instance, the production department of an organisation needs to choose between two vendors who supply raw materials at the same cost and of the same quality level.

However, the two vendors differ in delivery time. In this case, the decision of choosing the vendor will be made as per the planned number of days.

Planning and controlling are inter-related functions of management. Planning sets goals for the organisation and controlling ensures their accomplishment within the decided time period. In addition, controlling direct the course of planning by highlighting the areas where planning is required.

The planning function helps management in aligning department-wise activities of the organisation. The plans made by one department are understood and supported by another department.

Overall planning that is done by top management facilitates departments to coordinate and plan accordingly to achieve organisational goals.

Characteristics of Planning

The characteristics of the planning function are explained as follows:

Continuous Process

Intellectual process, futuristic approach, flexible process, primary function of management, assists decision making, goal-oriented approach.

Planning is done for a specific period of time and plans are reformed at the end of that specific period as per the new requirements and changing conditions. Planning goes on, till the existence of an organisation, as issues and problems keep cropping up, and plans are needed to tackle the problems effectively.

Planning requires creative thinking to visualise the future situation and frame plans accordingly. It is the outcome of managers’ thinking process based on their experience and knowledge.

Planning is conducted to achieve future organisational goals while efficiently utilising organisational re- sources. This is done by predicting future situations and making forecasts.

Planning involves a flexible approach. Since the future is uncertain and unpredictable, changes in the business environment take place in the form of competition, government policies, customer demand, etc. Thus, there is always room for flexibility in planning to incorporate future changes.

Planning is done prior to all other functions of management, i.e., organising, staffing, directing, controlling, coordinating, reporting and budgeting. It is the first, foremost and base managerial function of any organisation. The effectiveness of a management’s plan determines the competence of the management’s activity for the planned time period.

Planning comprises decision making because it is an activity of making choices from the available alternatives for performing tasks. Hence, planning comprehends decision making as its indispensable part.

Planning emphasises defining the aims, objectives and goals of the organisation. It also involves the identification of alternative courses of action to decide on a suitable action plan, which should be undertaken for the attainment of goals.

Planning is regarded as pervasive because it is present in all the segments of an organisation. It is required at all levels of management. The scope of planning differs at different levels of management and departments.

Process of Planning

The process of planning involves a number of steps in chronological order which are given below:

Setting Organisational Objectives

Examining business environment, assessing available alternatives and selecting the most appropriate alternative, formulating secondary plans, ensuring cooperation and participation, following up.

The planning process begins with the first step of establishing organisational objectives. It involves identifying organisational goals to be achieved by examining internal and external business conditions. For this, the answers to be given for the following questions:

  • What is to be achieved?
  • What actions are to be taken?
  • Who is to perform it?
  • How is it to be undertaken?
  • What should be the time frame?

The next step in the planning process is to examine internal and external factors that influence the business environment.

The internal factors include strengths and weaknesses (for example, the efficiency of available resources) of the organisation, while external factors involve threats and opportunities (for example, overall economic and industrial environment and competitive position of the organisation).

The next step in the planning process is to evaluate all available alternatives and then select the best alternative. Generally, an alternative is evaluated against risks associated, costs involved, upcoming benefits, etc.

The successful accomplishment of organisational objectives is confirmed by formulating secondary or alternative plans. These plans are derived for various activities, units, departments, etc., and indicate a sequence in which various tasks are to be performed and the time schedule for per- forming those tasks.

In this step, employees at middle and lower levels of management are encouraged to participate in the successful accomplishment of organisational goals. Suggestions were given by operating personnel to help the management rectify shortcomings in plans and set things right at the start of the planning process and at the time of its implementation.

The last step in the planning process is to provide the scope of follow-up for determining the value of plans made and implemented. This step involves a continuous review of plans for ensuring their relevance and effectiveness.

Reviewing plans on a continuous basis helps the organisation develop sound plans for the future and avoid mistakes that took place while implementing the previous plans.

Limitations of Planning

In spite of several advantages, the planning function also has certain limitations. We have here listed the key limitations of planning :

Time-consuming

Gap between targets and results, resistance towards change, reason of frustration, problem of over-target.

Planning turns out to be a time-consuming activity as it requires data collection, data analysis, forecasting, etc., for selecting the best future course of action.

Planning requires expertise and the collection of authentic data, which incurs a lot of costs for the organisation. For instance, companies like IBM need to do a lot of planning prior to starting any new venture. For this, such companies also spend a lot on research and pay highly to experts to get their advice.

Planning is done by top-level management and implemented by middle and lower-level management. This creates a gap between the plan set and actual results achieved as different employees may have different perceptions of accomplishing plans.

Planning often requires changes due to the dynamic business environment. However, as a natural human tendency, employees are always reluctant to accept changes and may not provide their full cooperation.

Planning involves paperwork as plans cannot be finalised in one go. The plans are reworked again and again and after getting a final plan, subordinates give the copies of the plan to the top-level management in the form of a report or a proposal to get the plans finalised for implementation.

Sometimes, planned targets are not achieved by managers and employees irrespective of their best efforts. Such failures frustrate them and cause a low level of motivation in them.

Planning sometimes makes the top-level management fix targets that are unachievable and causes problems of over-expectation from employees.

Types of Plans

Plans bind individuals, resources, departments and organisations to achieve specific goals in the future. Plans help design organisational goals effectively which fits into the hierarchy from top to lower level of management. In an organisation, there are different types of plans made.

Some important types of plans are explained as follows:

Strategic plans

Tactical plans, operational plans, contingency plans.

Strategic plans are a framework for an organisation. These plans contain the mission of an organisation and outline goals to be achieved. Strategic plans aim to turn the vision of an organisation into reality. Thus, strategic plans are long-term and forward-looking in nature and accommodate future growth and expansion of an organisation. These plans are generally developed by top management and are implemented by middle and lower management.

For instance, Varun works as a top-level manager for Dino’s PizzaSizz. As a top-level manager, he has to make use of strategic planning to ensure that the long-term goals of the organisation are attained. Varun in consultation with other top-level managers developed strategic plans for achieving growth, increasing productivity and profitability and boosting return on investments, as all these are parts of the desired future of the pizzeria.

Varun and other top-level managers developed organisational objectives through strategic plans so that middle- and lower-level managers can create compatible plans aligned with those objectives. Varun also involved other level personnels because strategic plans require multilevel involvement.

Tactical plans are developed by middle-level management for a span of generally less than three years. These plans contain instructions for lower-level management on what should be done, how should be done and by whom should be done. In addition, tactical plans define tactics which managers adopt for achieving objectives mentioned in the strategic plan. Tactical plans also provide information on resources to be employed and work distribution among the sublevels within each department.

For instance, when Mira, the middle-level manager at Dino’s PizzaSizz, learns about Varun’s strategic plan for improving productivity, Mira im- mediately began to think about possible tactical plans. Tactical planning for Mira included things like testing a new process in making pizzas in a shorter amount of time or perhaps looking into purchasing a better oven that can speed up cooking pizza or even exploring ways to better map out the delivery routes and drivers.

As a tactical planner, Mira required to form a set of calculated actions that takes a shorter amount of time and is narrower in scope than the strategic plan but still help to bring the organisation closer to its long-term goal.

An operational plan is developed by the supervisors, team leaders and facilitators for supporting tactical plans. It governs the day-to-day operations of an organisation/business. Operational plans can be of two types, namely single use plans (for example, budget) and ongoing plans.

For instance, Ravi, the frontline manager at Dino’s PizzaSizz, has the responsibility of operational planning. Scheduling employees each week, creating a monthly budget, developing a promotional advertisement for the quarter to increase the sales of a certain product or outlining an employee’s performance goals for the year and doing an assessment, ordering and stocking inventory are the operation plans Ravi need to make and get executed.

A continuing or ongoing plan is the one which is made once and its value is retained over a period of years. The plan undergoes periodic revisions and updates. Following are examples of on-going plans:

  • Policy : A policy is a broad guideline followed by managers to deal with the important aspects and areas of decision making. Policies are referred to as those general statements which explain how managers should handle their routine management responsibilities. For example, a typical human resources policy of an organisation addresses the matters related to the hiring of employees, terminations of non-performing employees, performance appraisals as an important culture, pay increases and discipline of employees.
  • Procedure : A procedure is a standard set of directions that provides stepwise instructions of carrying out activities or tasks for achieving and attaining the organisational objectives. For example, typically, organisations have procedures/processes to purchase supplies and equipment. The procedure of purchasing supplies and equipment generally starts with a supervisor who completes the purchase requisition. After that, the requisition is then sent for approval to the next level of management. As the requisition gets approved, it is forwarded to the purchasing department. The amount of the purchase requisition is considered by the purchasing department either to place an order or to secure quotations bids from several vendors before placing the order.
  • Rule : A rule is a statement that explicitly guides employees for what they can and cannot do. Rules promote the safety of employees by placing the ‘do’ and ‘don’t’ statements. It also directs for the uniform treatment and the behaviour of employees in an organisation/business. For example, the rules of absenteeism and unpunctuality allow supervisors to make discipline related to fair decisions quickly.

A successful organisation depends upon the fact that how intelligently, flexibly and constantly its management chases, adapts and masters the changing conditions. A strong management entails to ‘keep all options open’ approach at all times. This is where contingency planning comes into the organisation.

In contingency planning, an alternate plan is identified, analysed and implemented so that in case the original plan proves insufficient, the backup is ready to be used. The factors which are beyond managers’ control are kept in mind and the alternative future scenarios are prepared carefully.

When unanticipated problems and events occur, managers may need to change their plans. It is best to anticipate the changes during the planning process as things don’t always go as expected. Management should develop alternatives to the existing plan and keep them ready for use when unexpected circumstances occur.

Planning is the primary function of management that involves formulating a future course of action for accomplishing a specific purpose.

What are the Features of Planning?

The Features of the planning function are as follows: 1. Planning is a Continuous Process 2. Planning is Intellectual Process 3. Planning is a Futuristic Approach 4. Planning is a Flexible process 5. Planning is the Primary Function of Management 6. Planning Assists in Decision Making 7. Planning is Goal-oriented Approach 8. Planning is Pervasive

What is the Process of Planning?

The process of planning involves a number of steps in chronological order which are given below: 1. Setting Organisational Objectives 2. Examining the Business Environment 3. Assessing Available Alternatives and Selecting the Most Appropriate Alternative 4. Formulating secondary plans 5. Ensuring cooperation and participation 6. Following up

What is the Importance of Planning in Management?

The importance of planning in management is explained in the following points: 1. Planning Forms Goals in Management 2. Planning Gives Directions in Management towards Achieving Organisational Goals 3. Planning Tackles Uncertainties of future 4. Planning assists in finding a better way to achieve goals 5. Planning Minimises Duplication and Wasteful Activities 6. Planning Supports and Promotes Innovative Ideas in Management 7. Planning Facilitates Decision Making 8. Planning Sets Standards for Controlling Function 9. Planning helps management to Build Coordination

Management Topics

  • What is Management ?
  • Who Is a Manager ?
  • Marketing CIs Management an Art or Science
  • Classical Management Approach
  • Planning in Management
  • Decision Making in Management
  • Organising in Management
  • What is Organisation Structure ?
  • What is Departmentation ?
  • What is Span of Control ?
  • What is Authority ?
  • What is Staffing ?
  • What is Human Resource Planning ?
  • What is Job Analysis ?
  • What is Recruitment ?

Modern and Others Schools of Management Thought

  • What is Selection ?
  • What is Coordination ?
  • What is Controlling ?
  • What is Leadership ?
  • What is Organisational Change ?
  • Motivation in Management
  • Motivation Theories
  • Maslow’s Hierarchy of Needs
  • Herzberg Two Factor Theory
  • Mcclelland’s Needs Theory of Motivation

Business Ethics

( Click on Topic to Read )

  • What is Ethics?
  • What is Business Ethics?
  • Values, Norms, Beliefs and Standards in Business Ethics
  • Indian Ethos in Management
  • Ethical Issues in Marketing
  • Ethical Issues in HRM
  • Ethical Issues in IT
  • Ethical Issues in Production and Operations Management
  • Ethical Issues in Finance and Accounting
  • What is Corporate Governance?
  • What is Ownership Concentration?
  • What is Ownership Composition?
  • Types of Companies in India
  • Internal Corporate Governance
  • External Corporate Governance
  • Corporate Governance in India
  • What is Enterprise Risk Management (ERM)?
  • What is Assessment of Risk?
  • What is Risk Register?
  • Risk Management Committee

Corporate social responsibility (CSR)

  • Theories of CSR
  • Arguments Against CSR
  • Business Case for CSR
  • Importance of CSR in India
  • Drivers of Corporate Social Responsibility
  • Developing a CSR Strategy
  • Implement CSR Commitments
  • CSR Marketplace
  • CSR at Workplace
  • Environmental CSR
  • CSR with Communities and in Supply Chain
  • Community Interventions
  • CSR Monitoring
  • CSR Reporting
  • Voluntary Codes in CSR
  • What is Corporate Ethics?

Lean Six Sigma

  • What is Six Sigma?
  • What is Lean Six Sigma?
  • Value and Waste in Lean Six Sigma
  • Six Sigma Team
  • MAIC Six Sigma
  • Six Sigma in Supply Chains
  • What is Binomial, Poisson, Normal Distribution?
  • What is Sigma Level?
  • What is DMAIC in Six Sigma?
  • What is DMADV in Six Sigma?
  • Six Sigma Project Charter
  • Project Decomposition in Six Sigma
  • Critical to Quality (CTQ) Six Sigma
  • Process Mapping Six Sigma
  • Flowchart and SIPOC
  • Gage Repeatability and Reproducibility
  • Statistical Diagram
  • Lean Techniques for Optimisation Flow
  • Failure Modes and Effects Analysis (FMEA)
  • What is Process Audits?
  • Six Sigma Implementation at Ford
  • IBM Uses Six Sigma to Drive Behaviour Change
  • Research Methodology
  • What is Research?
  • What is Hypothesis?
  • Sampling Method
  • Research Methods
  • Data Collection in Research
  • Methods of Collecting Data
  • Application of Business Research
  • Levels of Measurement
  • What is Sampling?
  • Hypothesis Testing
  • Research Report
  • What is Management?
  • What is Controlling?
  • What is Coordination?
  • What is Staffing?
  • Organization Structure
  • What is Departmentation?
  • Span of Control
  • What is Authority?
  • Centralization vs Decentralization
  • Organizing in Management
  • Schools of Management Thought
  • Is Management an Art or Science?
  • Who is a Manager?

Operations Research

  • What is Operations Research?
  • Operation Research Models
  • Linear Programming
  • Linear Programming Graphic Solution
  • Linear Programming Simplex Method
  • Linear Programming Artificial Variable Technique
  • Duality in Linear Programming
  • Transportation Problem Initial Basic Feasible Solution
  • Transportation Problem Finding Optimal Solution
  • Project Network Analysis with Critical Path Method
  • Project Network Analysis Methods
  • Project Evaluation and Review Technique (PERT)
  • Simulation in Operation Research
  • Replacement Models in Operation Research

Operation Management

  • What is Strategy?
  • What is Operations Strategy?
  • Operations Competitive Dimensions
  • Operations Strategy Formulation Process
  • What is Strategic Fit?
  • Strategic Design Process
  • Focused Operations Strategy
  • Corporate Level Strategy
  • Expansion Strategies
  • Stability Strategies
  • Retrenchment Strategies
  • Competitive Advantage
  • Strategic Choice and Strategic Alternatives
  • What is Production Process?
  • What is Process Technology?
  • What is Process Improvement?
  • Strategic Capacity Management
  • Production and Logistics Strategy
  • Taxonomy of Supply Chain Strategies
  • Factors Considered in Supply Chain Planning
  • Operational and Strategic Issues in Global Logistics
  • Logistics Outsourcing Strategy
  • What is Supply Chain Mapping?
  • Supply Chain Process Restructuring
  • Points of Differentiation
  • Re-engineering Improvement in SCM
  • What is Supply Chain Drivers?
  • Supply Chain Operations Reference (SCOR) Model
  • Customer Service and Cost Trade Off
  • Internal and External Performance Measures
  • Linking Supply Chain and Business Performance
  • Netflix’s Niche Focused Strategy
  • Disney and Pixar Merger
  • Process Planning at Mcdonald’s

Service Operations Management

  • What is Service?
  • What is Service Operations Management?
  • What is Service Design?
  • Service Design Process
  • Service Delivery
  • What is Service Quality?
  • Gap Model of Service Quality
  • Juran Trilogy
  • Service Performance Measurement
  • Service Decoupling
  • IT Service Operation
  • Service Operations Management in Different Sector

Procurement Management

  • What is Procurement Management?
  • Procurement Negotiation
  • Types of Requisition
  • RFX in Procurement
  • What is Purchasing Cycle?
  • Vendor Managed Inventory
  • Internal Conflict During Purchasing Operation
  • Spend Analysis in Procurement
  • Sourcing in Procurement
  • Supplier Evaluation and Selection in Procurement
  • Blacklisting of Suppliers in Procurement
  • Total Cost of Ownership in Procurement
  • Incoterms in Procurement
  • Documents Used in International Procurement
  • Transportation and Logistics Strategy
  • What is Capital Equipment?
  • Procurement Process of Capital Equipment
  • Acquisition of Technology in Procurement
  • What is E-Procurement?
  • E-marketplace and Online Catalogues
  • Fixed Price and Cost Reimbursement Contracts
  • Contract Cancellation in Procurement
  • Ethics in Procurement
  • Legal Aspects of Procurement
  • Global Sourcing in Procurement
  • Intermediaries and Countertrade in Procurement

Strategic Management

  • What is Strategic Management?
  • What is Strategic Management Process?
  • What is Value Chain Analysis?
  • Mission Statement
  • Business Level Strategy
  • What is SWOT Analysis?

Supply Chain

  • What is Supply Chain Management?
  • Supply Chain Planning and Measuring Strategy Performance
  • What is Warehousing?
  • What is Packaging?
  • What is Inventory Management?
  • What is Material Handling?
  • What is Order Picking?
  • Receiving and Dispatch, Processes
  • What is Warehouse Design?
  • What is Warehousing Costs?

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A New Generation of Drug Therapies Requires New Business Strategies

  • Alex Vadas,
  • Jeff Holder,
  • Adam Siebert

planning business def

The shift toward advanced therapeutic modalities will require life sciences companies to rethink strategy, investments, and risk management.

The shift to advanced therapeutic modalities (ATMs) promises to change the nature of competition in the pharmaceuticals industry. ATMs include engineered cell therapies that reprogram cells to fight disease, gene therapies that involve replacing or editing dysfunctional genes, and nucleic acid therapies that promote or shut down production of a protein. They are shifting the nature of drug R&D risk and establishing manufacturing as a critical strategic priority alongside therapeutic safety and efficacy while also introducing new commercialization challenges.

The life sciences industry is undergoing a fundamental evolution in how drugs are discovered, developed, and manufactured. The industry is shifting from traditional drug research and development techniques used for small molecules and antibodies to advanced therapeutic modalities (ATMs), a category that encompasses engineered cell therapies that reprogram cells to fight disease, gene therapies that involve replacing or editing dysfunctional genes, and nucleic acid therapies that promote or shut down production of a protein (e.g., the mRNA vaccines indicated for Covid-19 from Moderna and Pfizer/BioNTech).

  • Alex Vadas is a managing director and partner in L.E.K. Consulting’s Los Angeles office. He is a member of the firm’s Health Care practice and coleads the Life Sciences Enablers practice.
  • Jeff Holder is a managing director and partner in L.E.K. Consulting San Francisco office and is a member of the firm’s Life Sciences practice.
  • Adam Siebert is a managing director and partner in L.E.K. Consulting’s New York office and is a member of the firm’s Life Sciences practice.

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'new productive forces'.

Additional reporting by Yuhan Lin, Xu Jing, Ellen Zhang, Ella Cao, Ethan Wang, Joe Cash, Judy Hua, Albee Zhang, Qiaoyi Li, Laurie Chen, Yew Lun Tian, Liz Lee, Kevin Yao, Liangping Gao, Samuel Shen, Summer Zhen, Xie Yu and the Beijing and Shanghai newsrooms; Writing by Marius Zaharia; Editing by Lincoln Feast

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Thomson Reuters

Andrew reports on energy and energy policy in China. He previously worked in investment banking in London, covering European high-yield debt transactions. Andrew speaks Mandarin and is learning Russian.

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  • MARKETPLACE

Preston nears completion of its long-term plan

Preston ― Interviews, surveys and public forums held over the past eight months have generated a draft strategic plan for the town with goals ranging from the need for a study of town properties to improving cell phone and internet service.

About 20 people listened as Justin Martin, president of Martin & Associates, and Phil Auger, vice president, reviewed the five goals and proposed plans to address them on Tuesday night. Residents peppered the consultants and town leaders with questions and suggestions for the strategic plan.

The Board of Selectmen and Board of Education have slated a joint meeting at 6 p.m. March 28 at the Preston Plains Middle School to hear a presentation on the final draft. First Selectwoman Sandra Allyn-Gauthier said it’s too early to say whether the boards will be ready to adopt the plan.

With the former Norwich Hospital cleanup winding down and the property to be turned over to the Mohegan tribe months later for development, the consultants recommended the town create an economic development plan. Residents have said the town needs to balance the expected new development with the town’s rural, agricultural character.

Allyn-Gauthier said the town could reestablish an economic development commission that has fallen dormant over the years.

Residents on Tuesday questioned why Preston hasn’t seen development along routes 2 and 2A, with all the casino traffic whizzing by. One answer is the lack of sewer and water lines along the two roads.

The second goal calls for creating a plan to improve the quality of schools and municipal services. This goal, Martin said, pertains to what is inside the buildings by recruiting and retaining quality staff to educate students and provide town services.

The next goal involves conducting a study and implement a plan to best use all school and town buildings. After the meeting, Allyn-Gauthier said a facilities committee is being formed to do this. The committee will include one representative each from the boards of selectmen, education, planning and zoning and finance and three members of the public.

Resident Mike Clancy said Preston Plains Middle School, site of Tuesday’s meeting, along with Town Hall and the library all are aging and obsolete. But while the consultants cited statewide statistics that show school-age population declining, Preston’s projections are for a slow rise in enrollment in the coming years, Superintendent Roy Seitsinger said.

During past forums and in the survey, residents expressed frustration over slow internet and lack of cellphone service in parts of town. Investing in technology, such as broadband, for schools and residents was the fourth goal in the draft report.

“Validate and reinvigorate civic pride through communication and community initiative events” is the final goal. Residents on Tuesday said communication with them is lacking, including lack of publicity about the strategic plan itself.

Resident Jill Keith asked that the town create a section on the town website to post all documents related to the strategic plan and add to it as the plan progresses. Others said the town should create an email system to notify residents of important meetings.

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