steps in business planning process

The Business Planning Process: 6 Steps To Creating 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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The 7 Steps of the Business Planning Process: A Complete Guide

In this article, we'll provide a comprehensive guide to the seven steps of the business planning process, and discuss the role of Strikingly website builder in creating a professional business plan.

Step 1: Conducting a SWOT Analysis

The first step in the business planning process is to conduct a SWOT analysis. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. This analysis will help you understand your business's internal and external environment, and it can help you identify areas of improvement and growth.

Strengths and weaknesses refer to internal factors such as the company's resources, capabilities, and culture. Opportunities and threats are external factors such as market trends, competition, and regulations.

You can conduct a SWOT analysis by gathering information from various sources such as market research, financial statements, and feedback from customers and employees. You can also use tools such as a SWOT matrix to visualize your analysis.

What is a SWOT Analysis?

A SWOT analysis is a framework for analyzing a business's internal and external environment. The acronym SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.

Strengths and weaknesses include internal factors such as the company's resources, capabilities, and culture. Opportunities and threats are external factors such as market trends, competition, and regulations.

A SWOT analysis can help businesses identify areas of improvement and growth, assess their competitive position, and make informed decisions. It can be used for various purposes, such as business planning, product development, marketing strategy, and risk management.

Importance of Conducting a SWOT Analysis

Conducting a SWOT analysis is crucial for businesses to develop a clear understanding of their internal and external environment. It can help businesses identify their strengths and weaknesses and uncover new opportunities and potential threats. By doing so, businesses can make informed decisions about their strategies, resource allocation, and risk management.

A SWOT analysis can also help businesses identify their competitive position in the market and compare themselves to their competitors. This can help businesses differentiate themselves from their competitors and develop a unique value proposition.

Example of a SWOT Analysis

Here is an example of a SWOT analysis for a fictional business that sells handmade jewelry:

• Unique and high-quality products
• Skilled and experienced craftsmen
• Strong brand reputation and customer loyalty
• Strategic partnerships with local boutiques
• Limited production capacity
• High production costs
• Limited online presence
• Limited product variety

Opportunities

• Growing demand for handmade products
• Growing interest in sustainable and eco-friendly products
• Opportunities to expand online presence and reach new customers
• Opportunities to expand product lines
• Increasing competition from online and brick-and-mortar retailers
• Fluctuating consumer trends and preferences
• Economic downturns and uncertainty
• Increased regulations and compliance requirements

This SWOT analysis can help the business identify areas for improvement and growth. For example, the business can invest in expanding its online presence, improving its production efficiency, and diversifying its product lines. The business can also leverage its strengths, such as its skilled craftsmen and strategic partnerships, to differentiate itself from its competitors and attract more customers.

Step 2: Defining Your Business Objectives

Once you have conducted a SWOT analysis, the next step is to define your business objectives. Business objectives are specific, measurable, achievable, relevant, and time-bound (SMART) goals that align with your business's mission and vision.

Your business objectives can vary depending on your industry, target audience, and resources. Examples of business objectives include increasing sales revenue, expanding into new markets, improving customer satisfaction, and reducing costs.

You can use tools such as a goal-setting worksheet or a strategic planning framework to define your business objectives. You can also seek input from your employees and stakeholders to ensure your objectives are realistic and achievable.

What is Market Research?

Market research is an integral part of the business planning process. It gathers information about a target market or industry to make informed decisions. It involves collecting and analyzing data on consumer behavior, preferences, and buying habits, as well as competitors, industry trends, and market conditions.

Market research can help businesses identify potential customers, understand their needs and preferences, and develop effective marketing strategies. It can also help businesses identify market opportunities, assess their competitive position, and make informed product development, pricing, and distribution decisions.

Importance of Market Research in Business Planning

Market research is a crucial component of the business planning process. It can help businesses identify market trends and opportunities, assess their competitive position, and make informed decisions about their marketing strategies, product development, and business operations.

By conducting market research, businesses can gain insights into their target audience's behavior and preferences, such as their purchasing habits, brand loyalty, and decision-making process. This can help businesses develop targeted marketing campaigns and create products that meet their customers' needs.

Market research can also help businesses assess their competitive position and identify gaps in the market. Businesses can differentiate themselves by analyzing their competitors' strengths and weaknesses and developing a unique value proposition.

Different Types of Market Research Methods

Businesses can use various types of market research methods, depending on their research objectives, budget, and time frame. Here are some of the most common market research methods:

Surveys are a common market research method that involves asking questions to a sample of people about their preferences, opinions, and behaviors. Surveys can be conducted through various channels like online, phone, or in-person surveys.

• Focus Groups

Focus groups are a qualitative market research method involving a small group to discuss a specific topic or product. Focus groups can provide in-depth insights into customers' attitudes and perceptions and can help businesses understand the reasoning behind their preferences and behaviors.

Interviews are a qualitative market research method that involves one-on-one conversations between a researcher and a participant. Interviews can be conducted in person, over the phone, or through video conferencing and can provide detailed insights into a participant's experiences, perceptions, and preferences.

• Observation

Observation is a market research method that involves observing customers' behavior and interactions in a natural setting such as a store or a website. Observation can provide insights into customers' decision-making processes and behavior that may not be captured through surveys or interviews.

• Secondary Research

Secondary research involves collecting data from existing sources, like industry reports, government publications, or academic journals. Secondary research can provide a broad overview of the market and industry trends and help businesses identify potential opportunities and threats.

By combining these market research methods, businesses can comprehensively understand their target market and industry and make informed decisions about their business strategy.

Step 3: Conducting Market Research

Market research should always be a part of your strategic business planning. This step gathers information about your target audience, competitors, and industry trends. This information can help you make informed decisions about your product or service offerings, pricing strategy, and marketing campaigns.

There are various market research methods, such as surveys, focus groups, and online analytics. You can also use tools like Google Trends and social media analytics to gather data about your audience's behavior and preferences.

Market research can be time-consuming and costly, but it's crucial for making informed decisions that can impact your business's success. Strikingly website builder offers built-in analytics and SEO optimization features that can help you track your website traffic and audience engagement.

Step 4: Identifying Your Target Audience

Identifying your target audience is essential in the business planning process. Your target audience is the group of people who are most likely to buy your product or service. Understanding their needs, preferences, and behaviors can help you create effective marketing campaigns and improve customer satisfaction.

You can identify your target audience by analyzing demographic, psychographic, and behavioral data. Demographic data include age, gender, income, and education level. Psychographic data includes personality traits, values, and lifestyle. Behavioral data includes buying patterns, brand loyalty, and online engagement.

Once you have identified your target audience, you can use tools such as buyer personas and customer journey maps to create a personalized and engaging customer experience. Strikingly website builder offers customizable templates and designs to help you create a visually appealing and user-friendly website for your target audience.

What is a Target Audience?

A target audience is a group most likely to be interested in and purchase a company's products or services. A target audience can be defined based on various factors such as age, gender, location, income, education, interests, and behavior.

Identifying and understanding your target audience is crucial for developing effective marketing strategies and improving customer engagement and satisfaction. By understanding your target audience's needs, preferences, and behavior, you can create products and services that meet their needs and develop targeted marketing campaigns that resonate with them.

Importance of Identifying Your Target Audience

Identifying your target audience is essential for the success of your business. By understanding your target audience's needs and preferences, you can create products and services that meet their needs and develop targeted marketing campaigns that resonate with them.

Here are reasons why identifying your target audience is important:

• Improve customer engagement. When you understand your target audience's behavior and preferences, you can create a more personalized and engaging customer experience to improve customer loyalty and satisfaction.
• Develop effective marketing strategies. Targeting your marketing efforts to your target audience creates more effective and efficient marketing campaigns that can increase brand awareness, generate leads, and drive sales.
• Improve product development. By understanding your target audience's needs and preferences, you can develop products and services that meet their specific needs and preferences, improving customer satisfaction and retention.
• Identify market opportunities. If you identify gaps in the market or untapped market segments, you can develop products and services to meet unmet needs and gain a competitive advantage.

Examples of Target Audience Segmentation

Here are some examples of target audience segmentation based on different demographic, geographic, and psychographic factors:

• Demographic segmentation. Age, gender, income, education, occupation, and marital status.
• Geographic segmentation. Location, region, climate, and population density.
• Psychographic segmentation. Personality traits, values, interests, and lifestyle.

Step 5: Developing a Marketing Plan

A marketing plan is a strategic roadmap that outlines your marketing objectives, strategies, tactics, and budget. Your marketing plan should align with your business objectives and target audience and include a mix of online and offline marketing channels.

Marketing strategies include content marketing, social media marketing, email marketing, search engine optimization (SEO), and paid advertising. Your marketing tactics can include creating blog posts, sharing social media posts, sending newsletters, optimizing your website for search engines, and running Google Ads or Facebook Ads.

To create an effective marketing plan , research your competitors, understand your target audience's behavior, and set clear objectives and metrics. You can also seek customer and employee feedback to refine your marketing strategy.

Strikingly website builder offers a variety of marketing features such as email marketing, social media integration, and SEO optimization tools. You can also use the built-in analytics dashboard to track your website's performance and monitor your marketing campaign's effectiveness.

What is a Marketing Plan?

A marketing plan is a comprehensive document that outlines a company's marketing strategy and tactics. It typically includes an analysis of the target market, a description of the product or service, an assessment of the competition, and a detailed plan for achieving marketing objectives.

A marketing plan can help businesses identify and prioritize marketing opportunities, allocate resources effectively, and measure the success of their marketing efforts. It can also provide the marketing team with a roadmap and ensure everyone is aligned with the company's marketing goals and objectives.

Importance of a Marketing Plan in Business Planning

A marketing plan is critical to business planning. It can help businesses identify their target audience, assess their competitive position, and develop effective marketing strategies and tactics.

Here are a few reasons why a marketing plan is important in business planning:

• Provides a clear direction. A marketing plan can provide a clear direction for the marketing team and ensure everyone is aligned with the company's marketing goals and objectives.
• Helps prioritize marketing opportunities. By analyzing the target market and competition, a marketing plan can help businesses identify and prioritize marketing opportunities with the highest potential for success.
• Ensures effective resource allocation. A marketing plan can help businesses allocate resources effectively and ensure that marketing efforts are focused on the most critical and impactful activities.
• Measures success. A marketing plan can provide a framework for measuring the success of marketing efforts and making adjustments as needed.

Examples of Marketing Strategies and Tactics

Here are some examples of marketing strategies and tactics that businesses can use to achieve their marketing objectives:

• Content marketing. Creating and sharing valuable and relevant content that educates and informs the target audience about the company's products or services.
• Social media marketing. Leveraging social media platforms like Facebook, Twitter, and Instagram to engage with the target audience, build brand awareness, and drive website traffic.
• Search engine optimization (SEO). Optimizing the company's website and online content to rank higher in search engine results and drive organic traffic.
• Email marketing. Sending personalized and targeted emails to the company's email list to nurture leads, promote products or services, and drive sales.
• Influencer marketing. Partnering with influencers or industry experts to promote the company's products or services and reach a wider audience.

By using a combination of these marketing strategies and tactics, businesses can develop a comprehensive and effective marketing plan that aligns with their marketing goals and objectives.

Step 6: Creating a Financial Plan

A financial plan is a detailed document that outlines your business's financial projections, budget, and cash flow. Your financial plan should include a balance sheet, income statement, and cash flow statement, and it should be based on realistic assumptions and market trends.

To create a financial plan, you should consider your revenue streams, expenses, assets, and liabilities. You should also analyze your industry's financial benchmarks and projections and seek input from financial experts or advisors.

.jpg)Image taken from Strikingly Templates

Strikingly website builder offers a variety of payment and e-commerce features, such as online payment integration and secure checkout. You can also use the built-in analytics dashboard to monitor your revenue and expenses and track your financial performance over time.

What is a Financial Plan?

A financial plan is a comprehensive document that outlines a company's financial goals and objectives and the strategies and tactics for achieving them. It typically includes a description of the company's financial situation, an analysis of revenue and expenses, and a projection of future financial performance.

A financial plan can help businesses identify potential risks and opportunities, allocate resources effectively, and measure the success of their financial efforts. It can also provide a roadmap for the finance team and ensure everyone is aligned with the company's financial goals and objectives.

Importance of Creating a Financial Plan in Business Planning

Creating a financial plan is a critical component of the business planning process. It can help businesses identify potential financial risks and opportunities, allocate resources effectively, and measure the success of their financial efforts.

Here are some reasons why creating a financial plan is important in business planning:

• Provides a clear financial direction. A financial plan can provide a clear direction for the finance team and ensure everyone is in sync with the company's financial goals and objectives.
• Helps prioritize financial opportunities. By analyzing revenue and expenses, a financial plan can help businesses identify and prioritize financial opportunities with the highest potential for success.
• Ensures effective resource allocation. A financial plan can help businesses allocate resources effectively and ensure that financial efforts are focused on the most critical and impactful activities.
• Measures success. A financial plan can provide a framework for measuring the success of financial efforts and making adjustments as needed.

Examples of Financial Statements and Projections

Here are some examples of financial statements and projections that businesses can use in their financial plan:

• Income statement. A financial statement that shows the company's revenue and expenses over a period of time, typically monthly or annually.
• Balance sheet. A financial statement shows the company's assets, liabilities, and equity at a specific time, typically at the end of a fiscal year.
• Cash flow statement. A financial statement that shows the company's cash inflows and outflows over a period of time, typically monthly or annually.
• Financial projections. Forecasts of the company's future financial performance based on assumptions and market trends. This can include revenue, expenses, profits, and cash flow projections.

Step 7: Writing Your Business Plan

The final step in the business planning process is to write your business plan. A business plan is a comprehensive document that outlines your business's mission, vision, objectives, strategies, and financial projections.

A business plan can help you clarify your business idea, assess the feasibility of your business, and secure funding from investors or lenders. It can also provide a roadmap for your business and ensure that you stay focused on your goals and objectives.

Importance of Writing a Business Plan

Writing a business plan is an essential component of the business planning process. It can help you clarify your business idea , assess the feasibility of your business, and secure funding from investors or lenders.

Here are some reasons why writing a business plan is important:

• Clarifies your business idea. Writing a business plan can help you clarify your business idea and understand your business's goals, objectives, and strategies.
• Assesses the feasibility of your business. A business plan can help you assess the feasibility of your business and identify potential risks and opportunities.
• Secures funding. A well-written business plan can help you secure funding from investors or lenders by demonstrating the potential of your business and outlining a clear path to success.
• Provides a roadmap for your business. A business plan can provide a roadmap and ensure that you stay focused on your goals and objectives.

Tips on How to Write a Successful Business Plan

Here are some tips on how to write a business plan successfully:

• Start with an executive summary. The executive summary is a brief business plan overview and should include your business idea, target market, competitive analysis, and financial projections.
• Describe your business and industry. Provide a detailed description of your business and industry, including your products or services, target market, and competitive landscape.
• Develop a marketing strategy. Outline your marketing strategy and tactics, including your target audience, pricing strategy, promotional activities, and distribution channels.
• Provide financial projections. Provide detailed financial projections, including income statements, balance sheets, and cash flow statements, as well as assumptions and risks.
• Keep it concise and clear. Keep your business plan concise and clear, and avoid using jargon or technical terms that may confuse or intimidate readers.

Role of Strikingly Website Builder in Creating a Professional Business Plan

Strikingly website builder can play a significant role in creating a professional business plan. Strikingly provides an intuitive and user-friendly platform that allows you to create a professional-looking website and online store without coding or design skills.

Using Strikingly, you can create a visually appealing business plan and present it on your website with images, graphics, and videos to enhance the reader's experience. You can also use Strikingly's built-in templates and a drag-and-drop editor to create a customized and professional-looking business plan that reflects your brand and style.

Strikingly also provides various features and tools that can help you showcase your products or services, promote your business, and engage with your target audience. These features include e-commerce functionality, social media integration, and email marketing tools.

Let’s Sum Up!

In conclusion, the 7 steps of the business planning process are essential for starting and growing a successful business. By conducting a SWOT analysis, defining your business objectives, conducting market research, identifying your target audience, developing a marketing plan, creating a financial plan, and writing your business plan, you can set a solid foundation for your business's success.

Strikingly website builder can help you throughout the business planning process by offering a variety of features such as analytics, marketing, e-commerce , and business plan templates. With Strikingly, you can create a professional and engaging website and business plan that aligns with your business objectives and target audience.

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Business Planning Process: Create a Business Plan That Works

Free Business Startup Checklist

Radhika Agarwal

• December 15, 2023

If you are planning to start or grow your business, you might have heard about the importance of the business planning process countless times. And yes, it is necessary to have a plan. After all, it’ll be your roadmap to success.

But how would you go about it? Where will you start? And most importantly is there a tried and tested process that can make your job easier? What if we told you there is such a process?

And through this article, we’ll walk you through everything from what is business planning to the steps of the business planning process .

What is Business Planning?

Business planning is the process of giving structure to your business idea. It acts as a roadmap to your business journey, helps you get through obstacles, and maximizes opportunities.

It also helps you set realistic goals and pursue the same with a structured action plan.

Moreover, through a business plan, you can analyze your company’s strengths and weaknesses, and understand how that would impact your company while dealing with market competition and how your strengths would help you achieve your goal.

Above all, doing business with a well-written business plan increases your chances of success.

Steps of the Business Planning Process

Although there’s no sole right way to go about the process of planning your business, here’s a compilation of steps that’ll make your planning process faster and easier.

1. Carry out your research

The first step to creating a business plan is to do thorough research about the business and industry you are trying to get into. Tap into all the information you can get about your target audience, potential customer base, competitors, market and industry trends, cost of business, etc.

You can give a form to your research by asking yourself the following questions:

• What are your goals?
• Where does your business stand currently?
• What are the prevailing market trends?
• What strategies is your competitor following?

You can find your answers by conducting market surveys , talking to customers and industry experts, designing good questionnaires, reading articles, blogs, and news updates about your industry and related ones, and so on.

Also, it is a good practice to conduct a SWOT analysis for your company to understand how your company’s strengths and weaknesses would help you stand apart from your competitors based on the current market statistics.

2. Make a Framework

Once you’re done with your research the next step is to make a framework or a set of strategies for your business based on your research and business goals. You can either design strategies from scratch or reframe previously tried and tested successful strategies to fit your business goals.

But remember that you’ll have to tweak strategies to fit your unique competitive advantages and goals. Hence, strategies that are already being used can act as a good foundation, but it is essential to remember that you’ll have to expand upon them or improvise them for your business.

This step can be completed by taking a deep dive into your customer’s buying motivations and challenges that your product can help solve. Based on that, make a marketing plan, operations plan, and cost structure for your business at least for the first few years of your business.

3. Formulate your Financial Forecasts

No matter how tedious finances might seem, they are an integral part of any business. When you map out your finances it is essential to note down all the costs you’ll incur as you grow and run your business for the next five years and what would be your potential revenue, and if or not it would leave room for profit.

You can get your financial forecast by adding your financial assumptions to a financial system which will give you your cash flow statements and give you an idea of what amount of funds you’ll need to start and run your business for the first year.

This step is especially helpful if you want to acquire funding for your business. Nonetheless, it helps you prepare to deal with the financial aspects of your business.

A financial statement essentially provides details of a company’s expenses and profits. It also provides an overview of the company’s current financial stance, including its assets and liabilities.

Through this section try to write down and explain how you plan to use your investments and how would the same give a return.

4. Draft a Plan

As you’re done with creating business strategies and planning your finances, it is time to draft your business plan and compile everything into a single document. As you are done with all the technical aspects, this step should feel relatively easy.

But if you need help drafting a business plan and making it look presentable, you can subscribe to business plan software that comes with predesigned templates and tools to make your work easier .

5. Recheck and Improvise

Now as you’re done with writing your plan, it is a good idea to give it enough time to edit it. Check for any unclear sentences, irrelevant phrases, or confusing terms.

Take suggestions from your team members who are familiar with the functioning of your business. Finally, proofread for any grammar or punctuation errors. One of the most popular and useful pieces of editing advice is to put your work aside for a while and then look at it with fresh eyes to edit it better.

6. Create an Impressive Business Plan Presentation

Now, as you’re done with writing your business plan, it is time to create a presentation that leaves an excellent impression on your audience. Highlight all the important and relevant points.

Also, add references for your investors like your financial reports , resumes of your key team members, snippets of your marketing plan, and past sales reports to have a well-rounded presentation.

It is true that starting a business is intimidating. It includes a bunch of emotions, chaotic ideas, and a will to take risks. (Risks are a part and parcel of starting a business, no matter how much you plan, but yes planning helps you prepare for it.) But in the end, all of us know that all of it is worth it if you have a profitable business in the end.

And business planning is something that takes you one step closer to your idea of success. Moreover, a plan keeps you going in the face of challenges and adversities, and helps you push yourself a little harder to achieve your dreams when things get tougher.

Above all, a business plan helps you take action and turn ideas into a real and functioning business. So, what are you waiting for? Go ahead and start planning !

And while you’re at it, to check out Upmetrics’s business planning software to make business planning easier and faster.

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with step-by-step Guidance & AI Assistance.

About the Author

Radhika is an economics graduate and likes to read about every subject and idea she comes across. Apart from that she can discuss her favorite books to lengths( to the point you\'ll start feeling a little annoyed) and spends most of her free time on Google word coach.

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Learning Objectives

• Outline the planning and controlling processes.

Planning is a process. Ideally, it is future-oriented, comprehensive, systematic, integrated, and negotiated. 11 It involves an extensive search for alternatives and analyzes relevant information, is systematic in nature, and is commonly participative. 12 The planning model described in this section breaks the managerial function of planning into several steps, as shown in Figure 17.2.1. Following this step-by-step procedure helps ensure that organizational planning meets these requirements.

Figure \(\PageIndex{1}\): The Planning Process Source: Adapted from H. Koontz and C. O’Donnell, 1972. Principles of management: An analysis of managerial functions . New York: McGraw-Hill, 113.

Step 1: Developing an Awareness of the Present State

According to management scholars Harold Koontz and Cyril O’Donnell, the first step in the planning process is awareness. 13 It is at this step that managers build the foundation on which they will develop their plans. This foundation specifies an organization’s current status, pinpoints its commitments, recognizes its strengths and weaknesses, and sets forth a vision of the future. Because the past is instrumental in determining where an organization expects to go in the future, managers at this point must understand their organization and its history. It has been said—“The further you look back, the further you can see ahead.” 14

Step 2: Establishing Outcome Statements

The second step in the planning process consists of deciding “where the organization is headed or is going to end up.” Ideally, this involves establishing goals. Just as your goal in this course might be to get a certain grade, managers at various levels in an organization’s hierarchy set goals. For example, plans established by a university’s marketing department curriculum committee must fit with and support the plans of the department, which contribute to the goals of the business school, whose plans must, in turn, support the goals of the university. Managers, therefore, develop an elaborate network of organizational plans, such as that shown in Figure 17.2.2, to achieve the overall goals of their organization.

Figure \(\PageIndex{2}\): Network of Organization Plans (Attribution: Copyright Rice University, OpenStax, under CC-BY 4.0 license)

Goal vs. Domain Planning

Outcome statements can be constructed around specific goals or framed in terms of moving in a particular direction toward a viable set of outcomes. In goal planning , people set specific goals and then create action statements. 15 For example, freshman Kristin Rude decides that she wants a bachelor of science degree in biochemistry (the goal). She then constructs a four-year academic plan that will help her achieve this goal. Kristin is engaging in goal planning. She first identifies a goal and then develops a course of action to realize her goal.

Another approach to planning is domain/directional planning, in which managers develop a course of action that moves an organization toward one identified domain (and therefore away from other domains). 16 Within the chosen domain may lie a number of acceptable and specific goals. For example, high-school senior Neil Marquardt decides that he wants to major in a business-related discipline in college. During the next four years, he will select a variety of courses from the business school curriculum yet never select a major. After selecting courses based on availability and interest, he earns a sufficient number of credits within this chosen domain that enables him to graduate with a major in marketing. Neil never engaged in goal planning, but in the end, he will realize one of many acceptable goals within an accepted domain.

The development of the Post-it® product by the 3M Corporation demonstrates how domain planning works. In the research laboratories at 3M, efforts were being made to develop new forms and strengths of cohesive substances. One result was cohesive material with no known value because of its extremely low cohesive level. A 3M division specialist, Arthur L. Fry, frustrated by page markers falling from his hymn book in church, realized that this material, recently developed by Spencer F. Silver, would stick to paper for long periods and could be removed without destroying the paper. Fry experimented with the material as page markers and note pads—out of this came the highly popular and extremely profitable 3M product Scotch Post-it®. Geoff Nicholson, the driving force behind the Post-it® product, comments that rather than get bogged down in the planning process, innovations must be fast-tracked and decisions made whether to continue or move on early during the product development process. 17

Figure \(\PageIndex{3}\): Post-it® notes, a 3M product, are often used to create and edit shared documents, such as a company strategic plan. How might technology that allows multiple people to share and edit documents such as Word or PowerPoint files affect the sales of Post-it® products? (Credit: Kevin Wen/ flickr/ Attribution 2.0 Generic (CC BY 2.0))

Situations in which managers are likely to engage in domain planning include (1) when there is a recognized need for flexibility, (2) when people cannot agree on goals, (3) when an organization’s external environment is unstable and highly uncertain, and (4) when an organization is starting up or is in a transitional period. In addition, domain planning is likely to prevail at upper levels in an organization, where managers are responsible for dealing with the external environment and when task uncertainty is high. Goal planning (formulating goals compatible with the chosen domain) is likely to prevail in the technical core, where there is less uncertainty.

Hybrid Planning

Occasionally, the coupling of domain and goal planning occurs, creating a third approach, called hybrid planning. In this approach, managers begin with more general domain planning and commit to moving in a particular direction. As time passes, learning occurs, uncertainty is reduced, preferences sharpen, and managers are able to make the transition to goal planning as they identify increasingly specific targets in the selected domain. Movement from domain planning to goal planning occurs as knowledge accumulates, preferences for a particular goal emerge, and action statements are created.

Consequences of Goal, Domain, and Hybrid Planning

Setting goals not only affects performance directly, but also encourages managers to plan more extensively. That is, once goals are set, people are more likely to think systematically about how they should proceed to realize the goals. 18 When people have vague goals, as in domain planning, they find it difficult to draw up detailed action plans and are therefore less likely to perform effectively. When studying the topic of motivation, you will learn about goal theory. Research suggests that goal planning results in higher levels of performance than does domain planning alone. 19

Step 3: Premising

In this step of the planning process, managers establish the premises, or assumptions, on which they will build their action statements. The quality and success of any plan depend on the quality of its underlying assumptions. Throughout the planning process, assumptions about future events must be brought to the surface, monitored, and updated. 20

Managers collect information by scanning their organization’s internal and external environments. They use this information to make assumptions about the likelihood of future events. As Kristin considers her four-year pursuit of her biochemistry major, she anticipates that in addition to her savings and funds supplied by her parents, she will need a full-time summer job for two summers in order to cover the cost of her undergraduate education. Thus, she includes finding full-time summer employment between her senior year of high school and her freshman year and between her freshman and sophomore years of college as part of her plan. The other two summers she will devote to an internship and finding postgraduate employment—much to mom and dad’s delight! Effective planning skills can be used throughout your life. The plan you develop to pay for and complete your education is an especially important one.

Step 4: Determining a Course of Action (Action Statements)

In this stage of the planning process, managers decide how to move from their current position toward their goal (or toward their domain). They develop an action statement that details what needs to be done, when, how, and by whom. The course of action determines how an organization will get from its current position to its desired future position. Choosing a course of action involves determining alternatives by drawing on research, experimentation, and experience; evaluating alternatives in light of how well each would help the organization reach its goals or approach its desired domain; and selecting a course of action after identifying and carefully considering the merits of each alternative.

Step 5: Formulating Supportive Plans

The planning process seldom stops with the adoption of a general plan. Managers often need to develop one or more supportive or derivative plans to bolster and explain their basic plan. Suppose an organization decides to switch from a 5-day, 40-hour workweek (5/40) to a 4-day, 40-hour workweek (4/40) in an attempt to reduce employee turnover. This major plan requires the creation of a number of supportive plans. Managers might need to develop personnel policies dealing with payment of daily overtime. New administrative plans will be needed for scheduling meetings, handling phone calls, and dealing with customers and suppliers.

Planning, Implementation, and Controlling

After managers have moved through the five steps of the planning process and have drawn up and implemented specific plans, they must monitor and maintain their plans. Through the controlling function (to be discussed in greater detail later in this chapter), managers observe ongoing human behavior and organizational activity, compare it to the outcome and action statements formulated during the planning process, and take corrective action if they observe unexpected and unwanted deviations. Thus, planning and controlling activities are closely interrelated (planning ➨ controlling ➨ planning...). Planning feeds controlling by establishing the standards against which behavior will be evaluated during the controlling process. Monitoring organizational behavior (the control activity) provides managers with input that helps them prepare for the upcoming planning period—it adds meaning to the awareness step of the planning process.

Influenced by total quality management (TQM) and the importance of achieving continuous improvement in the processes used, as well as the goods and services produced, organizations such as IBM-Rochester have linked their planning and controlling activities by adopting the Deming cycle (also known as the Shewhart cycle).

It has been noted on numerous occasions that many organizations that do plan fail to recognize the importance of continuous learning. Their plans are either placed on the shelf and collect dust or are created, implemented, and adhered to without a systematic review and modification process. Frequently, plans are implemented without first measuring where the organization currently stands so that future comparisons and evaluations of the plan’s effectiveness cannot be determined. The Deming cycle, shown in Figure 17.2.4, helps managers assess the effects of planned action by integrating organizational learning into the planning process. The cycle consists of four key stages: (1) Plan—create the plan using the model discussed earlier. (2) Do—implement the plan. (3) Check—monitor the results of the planned course of action; organizational learning about the effectiveness of the plan occurs at this stage. (4) Act—act on what was learned, modify the plan, and return to the first stage in the cycle, and the cycle begins again as the organization strives for continuous learning and improvement.

Figure \(\PageIndex{4}\): The Deming (Shewhart) Cycle (Attribution: Copyright Rice University, OpenStax, under CC-BY 4.0 license)

concept check

• What are the five steps in the planning process?
• What is the difference between goal, domain, and hybrid planning?
• How are planning, implementation, and controlling related?

How to Write a Business Plan: Step-by-Step Guide + Examples

Noah Parsons

24 min. read

Updated May 7, 2024

Writing a business plan doesn’t have to be complicated. 

In this step-by-step guide, you’ll learn how to write a business plan that’s detailed enough to impress bankers and potential investors, while giving you the tools to start, run, and grow a successful business.

• The basics of business planning

If you’re reading this guide, then you already know why you need a business plan . 

You understand that planning helps you: 

• Raise money
• Grow strategically
• Keep your business on the right track 

As you start to write your plan, it’s useful to zoom out and remember what a business plan is .

At its core, a business plan is an overview of the products and services you sell, and the customers that you sell to. It explains your business strategy: how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

Most business plans also include financial forecasts for the future. These set sales goals, budget for expenses, and predict profits and cash flow. 

A good business plan is much more than just a document that you write once and forget about. It’s also a guide that helps you outline and achieve your goals. 

After completing your plan, you can use it as a management tool to track your progress toward your goals. Updating and adjusting your forecasts and budgets as you go is one of the most important steps you can take to run a healthier, smarter business. 

We’ll dive into how to use your plan later in this article.

There are many different types of plans , but we’ll go over the most common type here, which includes everything you need for an investor-ready plan. However, if you’re just starting out and are looking for something simpler—I recommend starting with a one-page business plan . It’s faster and easier to create. 

It’s also the perfect place to start if you’re just figuring out your idea, or need a simple strategic plan to use inside your business.

Dig deeper : How to write a one-page business plan

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• What to include in your business plan

Executive summary

The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally just one to two pages. Most people write it last because it’s a summary of the complete business plan.

Ideally, the executive summary can act as a stand-alone document that covers the highlights of your detailed plan. 

In fact, it’s common for investors to ask only for the executive summary when evaluating your business. If they like what they see in the executive summary, they’ll often follow up with a request for a complete plan, a pitch presentation , or more in-depth financial forecasts .

Your executive summary should include:

• A summary of the problem you are solving
• A description of your product or service
• An overview of your target market
• A brief description of your team
• A summary of your financials
• Your funding requirements (if you are raising money)

Dig Deeper: How to write an effective executive summary

Products and services description

This is where you describe exactly what you’re selling, and how it solves a problem for your target market. The best way to organize this part of your plan is to start by describing the problem that exists for your customers. After that, you can describe how you plan to solve that problem with your product or service. 

This is usually called a problem and solution statement .

To truly showcase the value of your products and services, you need to craft a compelling narrative around your offerings. How will your product or service transform your customers’ lives or jobs? A strong narrative will draw in your readers.

This is also the part of the business plan to discuss any competitive advantages you may have, like specific intellectual property or patents that protect your product. If you have any initial sales, contracts, or other evidence that your product or service is likely to sell, include that information as well. It will show that your idea has traction , which can help convince readers that your plan has a high chance of success.

Market analysis

Your target market is a description of the type of people that you plan to sell to. You might even have multiple target markets, depending on your business. 

A market analysis is the part of your plan where you bring together all of the information you know about your target market. Basically, it’s a thorough description of who your customers are and why they need what you’re selling. You’ll also include information about the growth of your market and your industry .

Try to be as specific as possible when you describe your market. 

Include information such as age, income level, and location—these are what’s called “demographics.” If you can, also describe your market’s interests and habits as they relate to your business—these are “psychographics.” 

Related: Target market examples

Essentially, you want to include any knowledge you have about your customers that is relevant to how your product or service is right for them. With a solid target market, it will be easier to create a sales and marketing plan that will reach your customers. That’s because you know who they are, what they like to do, and the best ways to reach them.

Next, provide any additional information you have about your market. 

What is the size of your market ? Is the market growing or shrinking? Ideally, you’ll want to demonstrate that your market is growing over time, and also explain how your business is positioned to take advantage of any expected changes in your industry.

Dig Deeper: Learn how to write a market analysis

Competitive analysis

Part of defining your business opportunity is determining what your competitive advantage is. To do this effectively, you need to know as much about your competitors as your target customers. 

Every business has some form of competition. If you don’t think you have competitors, then explore what alternatives there are in the market for your product or service. 

For example: In the early years of cars, their main competition was horses. For social media, the early competition was reading books, watching TV, and talking on the phone.

A good competitive analysis fully lays out the competitive landscape and then explains how your business is different. Maybe your products are better made, or cheaper, or your customer service is superior. Maybe your competitive advantage is your location – a wide variety of factors can ultimately give you an advantage.

Dig Deeper: How to write a competitive analysis for your business plan

Marketing and sales plan

The marketing and sales plan covers how you will position your product or service in the market, the marketing channels and messaging you will use, and your sales tactics. 

The best place to start with a marketing plan is with a positioning statement . 

This explains how your business fits into the overall market, and how you will explain the advantages of your product or service to customers. You’ll use the information from your competitive analysis to help you with your positioning. 

For example: You might position your company as the premium, most expensive but the highest quality option in the market. Or your positioning might focus on being locally owned and that shoppers support the local economy by buying your products.

Once you understand your positioning, you’ll bring this together with the information about your target market to create your marketing strategy . 

This is how you plan to communicate your message to potential customers. Depending on who your customers are and how they purchase products like yours, you might use many different strategies, from social media advertising to creating a podcast. Your marketing plan is all about how your customers discover who you are and why they should consider your products and services. 

While your marketing plan is about reaching your customers—your sales plan will describe the actual sales process once a customer has decided that they’re interested in what you have to offer. 

If your business requires salespeople and a long sales process, describe that in this section. If your customers can “self-serve” and just make purchases quickly on your website, describe that process. 

A good sales plan picks up where your marketing plan leaves off. The marketing plan brings customers in the door and the sales plan is how you close the deal.

Together, these specific plans paint a picture of how you will connect with your target audience, and how you will turn them into paying customers.

Dig deeper: What to include in your sales and marketing plan

Business operations

The operations section describes the necessary requirements for your business to run smoothly. It’s where you talk about how your business works and what day-to-day operations look like. 

Depending on how your business is structured, your operations plan may include elements of the business like:

• Supply chain management
• Manufacturing processes
• Equipment and technology
• Distribution

Some businesses distribute their products and reach their customers through large retailers like Amazon.com, Walmart, Target, and grocery store chains. 

These businesses should review how this part of their business works. The plan should discuss the logistics and costs of getting products onto store shelves and any potential hurdles the business may have to overcome.

If your business is much simpler than this, that’s OK. This section of your business plan can be either extremely short or more detailed, depending on the type of business you are building.

For businesses selling services, such as physical therapy or online software, you can use this section to describe the technology you’ll leverage, what goes into your service, and who you will partner with to deliver your services.

Dig Deeper: Learn how to write the operations chapter of your plan

Key milestones and metrics

Although it’s not required to complete your business plan, mapping out key business milestones and the metrics can be incredibly useful for measuring your success.

Good milestones clearly lay out the parameters of the task and set expectations for their execution. You’ll want to include:

• A description of each task
• The proposed due date
• Who is responsible for each task

If you have a budget, you can include projected costs to hit each milestone. You don’t need extensive project planning in this section—just list key milestones you want to hit and when you plan to hit them. This is your overall business roadmap. 

Possible milestones might be:

• Website launch date
• Store or office opening date
• First significant sales
• Break even date
• Business licenses and approvals

You should also discuss the key numbers you will track to determine your success. Some common metrics worth tracking include:

• Conversion rates
• Customer acquisition costs
• Profit per customer
• Repeat purchases

It’s perfectly fine to start with just a few metrics and grow the number you are tracking over time. You also may find that some metrics simply aren’t relevant to your business and can narrow down what you’re tracking.

Dig Deeper: How to use milestones in your business plan

Organization and management team

Investors don’t just look for great ideas—they want to find great teams. Use this chapter to describe your current team and who you need to hire . You should also provide a quick overview of your location and history if you’re already up and running.

Briefly highlight the relevant experiences of each key team member in the company. It’s important to make the case for why yours is the right team to turn an idea into a reality. 

Do they have the right industry experience and background? Have members of the team had entrepreneurial successes before? 

If you still need to hire key team members, that’s OK. Just note those gaps in this section.

Your company overview should also include a summary of your company’s current business structure . The most common business structures include:

• Sole proprietor
• Partnership

Be sure to provide an overview of how the business is owned as well. Does each business partner own an equal portion of the business? How is ownership divided? 

Potential lenders and investors will want to know the structure of the business before they will consider a loan or investment.

Dig Deeper: How to write about your company structure and team

Financial plan

Last, but certainly not least, is your financial plan chapter. 

Entrepreneurs often find this section the most daunting. But, business financials for most startups are less complicated than you think, and a business degree is certainly not required to build a solid financial forecast. 

A typical financial forecast in a business plan includes the following:

• Sales forecast : An estimate of the sales expected over a given period. You’ll break down your forecast into the key revenue streams that you expect to have.
• Expense budget : Your planned spending such as personnel costs , marketing expenses, and taxes.
• Profit & Loss : Brings together your sales and expenses and helps you calculate planned profits.
• Cash Flow : Shows how cash moves into and out of your business. It can predict how much cash you’ll have on hand at any given point in the future.
• Balance Sheet : A list of the assets, liabilities, and equity in your company. In short, it provides an overview of the financial health of your business. 

A strong business plan will include a description of assumptions about the future, and potential risks that could impact the financial plan. Including those will be especially important if you’re writing a business plan to pursue a loan or other investment.

Dig Deeper: How to create financial forecasts and budgets

This is the place for additional data, charts, or other information that supports your plan.

Including an appendix can significantly enhance the credibility of your plan by showing readers that you’ve thoroughly considered the details of your business idea, and are backing your ideas up with solid data.

Just remember that the information in the appendix is meant to be supplementary. Your business plan should stand on its own, even if the reader skips this section.

Dig Deeper : What to include in your business plan appendix

Optional: Business plan cover page

Adding a business plan cover page can make your plan, and by extension your business, seem more professional in the eyes of potential investors, lenders, and partners. It serves as the introduction to your document and provides necessary contact information for stakeholders to reference.

Your cover page should be simple and include:

• Company logo
• Business name
• Value proposition (optional)
• Business plan title
• Completion and/or update date
• Address and contact information
• Confidentiality statement

Just remember, the cover page is optional. If you decide to include it, keep it very simple and only spend a short amount of time putting it together.

Dig Deeper: How to create a business plan cover page

How to use AI to help write your business plan

Generative AI tools such as ChatGPT can speed up the business plan writing process and help you think through concepts like market segmentation and competition. These tools are especially useful for taking ideas that you provide and converting them into polished text for your business plan.

The best way to use AI for your business plan is to leverage it as a collaborator , not a replacement for human creative thinking and ingenuity. 

AI can come up with lots of ideas and act as a brainstorming partner. It’s up to you to filter through those ideas and figure out which ones are realistic enough to resonate with your customers. 

There are pros and cons of using AI to help with your business plan . So, spend some time understanding how it can be most helpful before just outsourcing the job to AI.

Learn more: 10 AI prompts you need to write a business plan

• Writing tips and strategies

To help streamline the business plan writing process, here are a few tips and key questions to answer to make sure you get the most out of your plan and avoid common mistakes .  

Determine why you are writing a business plan

Knowing why you are writing a business plan will determine your approach to your planning project. 

For example: If you are writing a business plan for yourself, or just to use inside your own business , you can probably skip the section about your team and organizational structure. 

If you’re raising money, you’ll want to spend more time explaining why you’re looking to raise the funds and exactly how you will use them.

Regardless of how you intend to use your business plan , think about why you are writing and what you’re trying to get out of the process before you begin.

Keep things concise

Probably the most important tip is to keep your business plan short and simple. There are no prizes for long business plans . The longer your plan is, the less likely people are to read it. 

So focus on trimming things down to the essentials your readers need to know. Skip the extended, wordy descriptions and instead focus on creating a plan that is easy to read —using bullets and short sentences whenever possible.

Have someone review your business plan

Writing a business plan in a vacuum is never a good idea. Sometimes it’s helpful to zoom out and check if your plan makes sense to someone else. You also want to make sure that it’s easy to read and understand.

Don’t wait until your plan is “done” to get a second look. Start sharing your plan early, and find out from readers what questions your plan leaves unanswered. This early review cycle will help you spot shortcomings in your plan and address them quickly, rather than finding out about them right before you present your plan to a lender or investor.

If you need a more detailed review, you may want to explore hiring a professional plan writer to thoroughly examine it.

Use a free business plan template and business plan examples to get started

Knowing what information to include in a business plan is sometimes not quite enough. If you’re struggling to get started or need additional guidance, it may be worth using a business plan template. 

There are plenty of great options available (we’ve rounded up our 8 favorites to streamline your search).

But, if you’re looking for a free downloadable business plan template , you can get one right now; download the template used by more than 1 million businesses. 

Or, if you just want to see what a completed business plan looks like, check out our library of over 550 free business plan examples . 

We even have a growing list of industry business planning guides with tips for what to focus on depending on your business type.

Common pitfalls and how to avoid them

It’s easy to make mistakes when you’re writing your business plan. Some entrepreneurs get sucked into the writing and research process, and don’t focus enough on actually getting their business started. 

Here are a few common mistakes and how to avoid them:

Not talking to your customers : This is one of the most common mistakes. It’s easy to assume that your product or service is something that people want. Before you invest too much in your business and too much in the planning process, make sure you talk to your prospective customers and have a good understanding of their needs.

• Overly optimistic sales and profit forecasts: By nature, entrepreneurs are optimistic about the future. But it’s good to temper that optimism a little when you’re planning, and make sure your forecasts are grounded in reality. 
• Spending too much time planning: Yes, planning is crucial. But you also need to get out and talk to customers, build prototypes of your product and figure out if there’s a market for your idea. Make sure to balance planning with building.
• Not revising the plan: Planning is useful, but nothing ever goes exactly as planned. As you learn more about what’s working and what’s not—revise your plan, your budgets, and your revenue forecast. Doing so will provide a more realistic picture of where your business is going, and what your financial needs will be moving forward.
• Not using the plan to manage your business: A good business plan is a management tool. Don’t just write it and put it on the shelf to collect dust – use it to track your progress and help you reach your goals.
• Presenting your business plan

The planning process forces you to think through every aspect of your business and answer questions that you may not have thought of. That’s the real benefit of writing a business plan – the knowledge you gain about your business that you may not have been able to discover otherwise.

With all of this knowledge, you’re well prepared to convert your business plan into a pitch presentation to present your ideas. 

A pitch presentation is a summary of your plan, just hitting the highlights and key points. It’s the best way to present your business plan to investors and team members.

Dig Deeper: Learn what key slides should be included in your pitch deck

Use your business plan to manage your business

One of the biggest benefits of planning is that it gives you a tool to manage your business better. With a revenue forecast, expense budget, and projected cash flow, you know your targets and where you are headed.

And yet, nothing ever goes exactly as planned – it’s the nature of business.

That’s where using your plan as a management tool comes in. The key to leveraging it for your business is to review it periodically and compare your forecasts and projections to your actual results.

Start by setting up a regular time to review the plan – a monthly review is a good starting point. During this review, answer questions like:

• Did you meet your sales goals?
• Is spending following your budget?
• Has anything gone differently than what you expected?

Now that you see whether you’re meeting your goals or are off track, you can make adjustments and set new targets. 

Maybe you’re exceeding your sales goals and should set new, more aggressive goals. In that case, maybe you should also explore more spending or hiring more employees. 

Or maybe expenses are rising faster than you projected. If that’s the case, you would need to look at where you can cut costs.

A plan, and a method for comparing your plan to your actual results , is the tool you need to steer your business toward success.

Learn More: How to run a regular plan review

Free business plan templates and examples

Kickstart your business plan writing with one of our free business plan templates or recommended tools.

Free business plan template

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Sample business plan library

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How to write a business plan FAQ

What is a business plan?

A document that describes your business , the products and services you sell, and the customers that you sell to. It explains your business strategy, how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

What are the benefits of a business plan?

A business plan helps you understand where you want to go with your business and what it will take to get there. It reduces your overall risk, helps you uncover your business’s potential, attracts investors, and identifies areas for growth.

Having a business plan ultimately makes you more confident as a business owner and more likely to succeed for a longer period of time.

What are the 7 steps of a business plan?

The seven steps to writing a business plan include:

• Write a brief executive summary
• Describe your products and services.
• Conduct market research and compile data into a cohesive market analysis.
• Describe your marketing and sales strategy.
• Outline your organizational structure and management team.
• Develop financial projections for sales, revenue, and cash flow.
• Add any additional documents to your appendix.

What are the 5 most common business plan mistakes?

There are plenty of mistakes that can be made when writing a business plan. However, these are the 5 most common that you should do your best to avoid:

• 1. Not taking the planning process seriously.
• Having unrealistic financial projections or incomplete financial information.
• Inconsistent information or simple mistakes.
• Failing to establish a sound business model.
• Not having a defined purpose for your business plan.

What questions should be answered in a business plan?

Writing a business plan is all about asking yourself questions about your business and being able to answer them through the planning process. You’ll likely be asking dozens and dozens of questions for each section of your plan.

However, these are the key questions you should ask and answer with your business plan:

• How will your business make money?
• Is there a need for your product or service?
• Who are your customers?
• How are you different from the competition?
• How will you reach your customers?
• How will you measure success?

How long should a business plan be?

The length of your business plan fully depends on what you intend to do with it. From the SBA and traditional lender point of view, a business plan needs to be whatever length necessary to fully explain your business. This means that you prove the viability of your business, show that you understand the market, and have a detailed strategy in place.

If you intend to use your business plan for internal management purposes, you don’t necessarily need a full 25-50 page business plan. Instead, you can start with a one-page plan to get all of the necessary information in place.

What are the different types of business plans?

While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. 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 when applying for funding or pitching to investors. 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.

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.

One-page business plan: This format is a simplified version of the traditional plan that focuses on the core aspects of your business. You’ll typically stick with bullet points and single sentences. It’s most 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.

Lean Plan: The Lean Plan 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’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.

What’s the difference between a business plan and a strategic plan?

A business plan covers the “who” and “what” of your business. It explains what your business is doing right now and how it functions. The strategic plan explores long-term goals and explains “how” the business will get there. It encourages you to look more intently toward the future and how you will achieve your vision.

However, when approached correctly, your business plan can actually function as a strategic plan as well. If kept lean, you can define your business, outline strategic steps, and track ongoing operations all with a single plan.

Noah is the COO at Palo Alto Software, makers of the online business plan app LivePlan. He started his career at Yahoo! and then helped start the user review site Epinions.com. From there he started a software distribution business in the UK before coming to Palo Alto Software to run the marketing and product teams.

Table of Contents

• Use AI to help write your plan
• Common planning mistakes
• Manage with your business plan
• Templates and examples

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Business Planning Process: Everything You Need to Know

The business planning process should envision your business's immediate and long-term goals. 3 min read updated on February 01, 2023

Why Is it Important to Develop a Business Plan?

A business plan will serve as a guide for management to run the company. Planning will help avoid problems that can arise from cash shortages, inability to meet customer deadlines, or too few employees. Before planning for the future, companies need to look honestly and critically at the current state of their business by assessing where the company's strengths lie and what needs improvement.

How to Begin the Business Planning Process

To start the business planning process, ask yourself where your business is currently and where you want it to go. A clear vision is the starting point of the business planning process. From there, the process breaks down into more detailed steps.

Develop a Pitch

Start the business planning process with a pitch , which gives a simple outline of your business strategy.

Your pitch should include:

• Your main proposition
• A summary of the problem you are solving
• Your solution to this problem
• Description of who your target customer is
• An overview of who your company's competitors are

Research Your Market and Products

When you have defined your vision, begin researching products and your target market to help you better understand your business and your potential customer base.

Create a Company Bio

Create a company bio to include in your business plan that highlights your company's core mission and values. Answer the question, "Why did you start your business?" Include bios of personnel underlining their experience and expertise, and how they collaborate as a team to run the business.

When you've built a strong identity, you can incorporate this same text into funding applications, materials that you distribute about your company, and your company's website.

Outline Your Business Model

The basic business model should be laid out in four to five paragraphs that clearly explain how your business operates on a daily basis.

This section should outline the following:

• Your products or services
• A profile of who your customer is
• How your business plans to make profits

Create a Basic Marketing Plan

Include a section in your plan document outlining how your company will market itself to bring in new clients or customers. The first strategy that entrepreneurs use is typically paid advertising. However, in this day and age you should consider exploring other strategies, like referrals, word-of-mouth, mailings, and email blasts.

Prepare Your Business's Financial Projections

A section outlining your financial projects is an integral part of your business plan . Keep these projections fairly conservative, especially in your company's first fiscal year. Consider how you expect revenues to pay for company costs and allow for room for growth in the future. Base all financial projections on concrete assumptions, using data to support your projections.

Draft a Document

With your financial projections in place, it's time to actually draft your business plan. After having conducted the research, the drafting process should be fairly easy to fill in.

Set Goals, Track Progress, and Make Adjustments

Assign different tasks and responsibilities to keep track of and manage progress, and to create accountability among your staff.

A monthly review of your progress and strategy is crucial to checking in on your business's progress, tracking your goals and changing directions should things not go as planned.

Develop Your Executive Summary

Often, investors will ask for an executive summary rather than your detailed business plan to get a feel for what your company has to offer.

It's best to write your executive summary last since you'll be able to highlight the essential details of your business plan and exclude the minutiae.

Edit and Proof Your Final Document

To make sure that your plan is straightforward and easy to understand, proofread, and edit your final document. For this step, also hire a professional copy editor to check formatting, proof, and edit your document.

Keep the design of your document professional to give a good visual first impression to potential investors and employees.

Finally, refine the pitch you created at the beginning of the business planning process before presenting to investors.

If you need help with your business planning process, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

Hire the top business lawyers and save up to 60% on legal fees

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What is strategic planning? A 5-step guide

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?

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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The 5 steps of the strategic planning process

Starting a project without a strategy is like trying to bake a cake without a recipe — you might have all the ingredients you need, but without a plan for how to combine them, or a vision for what the finished product will look like, you’re likely to end up with a mess. This is especially true when working with a team — it’s crucial to have a shared plan that can serve as a map on the pathway to success.

Creating a strategic plan not only provides a useful document for the future, but also helps you define what you have right now, and think through and outline all of the steps and considerations you’ll need to succeed.

What is strategic planning?

While there is no single approach to creating a strategic plan, most approaches can be boiled down to five overarching steps:

• Define your vision
• Assess where you are
• Determine your priorities and objectives
• Define responsibilities
• Measure and evaluate results

Each step requires close collaboration as you build a shared vision, strategy for implementation, and system for understanding performance.

Related: Learn how to hold an effective strategic planning meeting

Why do I need a strategic plan?

Building a strategic plan is the best way to ensure that your whole team is on the same page, from the initial vision and the metrics for success to evaluating outcomes and adjusting (if necessary) for the future. Even if you’re an expert baker, working with a team to bake a cake means having a collaborative approach and clearly defined steps so that the result reflects the strategic goals you laid out at the beginning.

The benefits of strategic planning also permeate into the general efficiency and productivity of your organization as a whole. They include: 

• Greater attention to potential biases or flaws, improving decision-making 
• Clear direction and focus, motivating and engaging employees
• Better resource management, improving project outcomes 
• Improved employee performance, increasing profitability
• Enhanced communication and collaboration, fostering team efficiency 

Next, let’s dive into how to build and structure your strategic plan, complete with templates and assets to help you along the way.

Before you begin: Pick a brainstorming method

There are many brainstorming methods you can use to come up with, outline, and rank your priorities. When it comes to strategy planning, it’s important to get everyone’s thoughts and ideas out before committing to any one strategy. With the right facilitation , brainstorming helps make this process fair and transparent for everyone involved.  

First, decide if you want to run a real-time rapid ideation session or a structured brainstorming . In a rapid ideation session, you encourage sharing half-baked or silly ideas, typically within a set time frame. The key is to just get out all your ideas quickly and then edit the best ones. Examples of rapid ideation methods include round robin , brainwriting , mind mapping , and crazy eights . 

In a structured brainstorming session, you allow for more time to prepare and edit your thoughts before getting together to share and discuss those more polished ideas. This might involve brainstorming methods that entail unconventional ways of thinking, such as reverse brainstorming or rolestorming . 

Using a platform like Mural, you can easily capture and organize your team’s ideas through sticky notes, diagrams, text, or even images and videos. These features allow you to build actionable next steps immediately (and in the same place) through color coding and tagging. 

Whichever method you choose, the ideal outcome is that you avoid groupthink by giving everyone a voice and a say. Once you’ve reached a consensus on your top priorities, add specific objectives tied to each of those priorities.

Related: Brainstorming and ideation template

1. Define your vision

Whether it’s for your business as a whole, or a specific initiative, successful strategic planning involves alignment with a vision for success. You can think of it as a project-specific mission statement or a north star to guide employees toward fulfilling organizational goals. 

To create a vision statement that explicitly states the ideal results of your project or company transformation, follow these four key steps: 

• Engage and involve the entire team . Inclusivity like this helps bring diverse perspectives to the table. 
• Align the vision with your core values and purpose . This will make it familiar and easy to follow through. 
• Stay grounded . The vision should be ambitious enough to motivate and inspire yet grounded enough to be achievable and relevant.
• Think long-term flexibility . Consider future trends and how your vision can be flexible in the face of challenges or opportunities. 

For example, say your vision is to revolutionize customer success by streamlining and optimizing your process for handling support tickets. It’s important to have a strategy map that allows stakeholders (like the support team, marketing team, and engineering team) to know the overall objective and understand the roles they will play in realizing the goals. 

This can be done in real time or asynchronously , whether in person, hybrid, or remote. By leveraging a shared digital space , everyone has a voice in the process and room to add their thoughts, comments, and feedback. 

Related: Vision board template

2. Assess where you are

The next step in creating a strategic plan is to conduct an assessment of where you stand in terms of your own initiatives, as well as the greater marketplace. Start by conducting a resource assessment. Figure out which financial, human, and/or technological resources you have available and if there are any limitations. You can do this using a SWOT analysis.

What is SWOT analysis?

SWOT analysis is an exercise where you define:

• Strengths: What are your unique strengths for this initiative or this product? In what ways are you a leader?
• Weaknesses: What weaknesses can you identify in your offering? How does your product compare to others in the marketplace?
• Opportunities: Are there areas for improvement that'd help differentiate your business?
• Threats: Beyond weaknesses, are there existing potential threats to your idea that could limit or prevent its success? How can those be anticipated?

For example, say you have an eco-friendly tech company and your vision is to launch a new service in the next year. Here’s what the SWOT analysis might look like: 

• Strengths : Strong brand reputation, loyal customer base, and a talented team focused on innovation
• Weaknesses : Limited bandwidth to work on new projects, which might impact the scope of its strategy formulation 
• Opportunities : How to leverage and experiment with existing customers when goal-setting
• Threats : Factors in the external environment out of its control, like the state of the economy and supply chain shortages

This SWOT analysis will guide the company in setting strategic objectives and formulating a robust plan to navigate the challenges it might face. 

Related: SWOT analysis template

3. Determine your priorities and objectives

Once you've identified your organization’s mission and current standing, start a preliminary plan document that outlines your priorities and their corresponding objectives. Priorities and objectives should be set based on what is achievable with your available resources. The SMART framework is a great way to ensure you set effective goals . It looks like this:  

• Specific: Set clear objectives, leaving no room for ambiguity about the desired outcomes.
• Measurable : Choose quantifiable criteria to make it easier to track progress.
• Achievable : Ensure it is realistic and attainable within the constraints of your resources and environment.
• Relevant : Develop objectives that are relevant to the direction your organization seeks to move.
• Time-bound : Set a clear timeline for achieving each objective to maintain a sense of urgency and focus.

For instance, going back to the eco-friendly tech company, the SMART goals might be: 

• Specific : Target residential customers and small businesses to increase the sales of its solar-powered device line by 25%. 
• Measurable : Track monthly sales and monitor customer feedback and reviews. 
• Achievable : Allocate more resources to the marketing, sales, and customer service departments. 
• Relevant : Supports the company's growth goals in a growing market of eco-conscious consumers. 
• Time-bound : Conduct quarterly reviews and achieve this 25% increase in sales over the next 12 months.

With strategic objectives like this, you’ll be ready to put the work into action. 

Related: Project kickoff template

4. Define tactics and responsibilities

In this stage, individuals or units within your team can get granular about how to achieve your goals and who'll be accountable for each step. For example, the senior leadership team might be in charge of assigning specific tasks to their team members, while human resources works on recruiting new talent. 

It’s important to note that everyone’s responsibilities may shift over time as you launch and gather initial data about your project. For this reason, it’s key to define responsibilities with clear short-term metrics for success. This way, you can make sure that your plan is adaptable to changing circumstances. 

One of the more common ways to define tactics and metrics is to use the OKR (Objectives and Key Results) method. By outlining your OKRs, you’ll know exactly what key performance indicators (KPIs) to track and have a framework for analyzing the results once you begin to accumulate relevant data. 

For instance, if our eco-friendly tech company has a goal of increasing sales, one objective might be to expand market reach for its solar-powered products. The sales team lead would be in charge of developing an outreach strategy. The key result would be to successfully launch its products in two new regions by Q2. The KPI would be a 60% conversation rate in those targeted markets.  

Related: OKR planning template  

5. Manage, measure, and evaluate

Once your plan is set into motion, it’s important to actively manage (and measure) progress. Before launching your plan, settle on a management process that allows you to measure success or failure. In this way, everyone is aligned on progress and can come together to evaluate your strategy execution at regular intervals.

Determine the milestones at which you’ll come together and go over results — this can take place weekly, monthly, or quarterly, depending on the nature of the project.

One of the best ways to evaluate progress is through agile retrospectives (or retros) , which can be done in real time or asynchronously. During this process, gather and organize feedback about the key elements that played a role in your strategy. 

Related: Retrospective radar template

Retrospectives are typically divided into three parts:

• What went well.
• What didn’t go well.
• New opportunities for improvement.

This structure is also sometimes called the “ rose, thorn, bud ” framework. By using this approach, team members can collectively brainstorm and categorize their feedback, making the next steps clear and actionable. Creating an action plan during a post-mortem meeting is a crucial step in ensuring that lessons learned from past projects or events are effectively translated into tangible improvements. 

Another method for reviewing progress is the quarterly business review (QBR). Like the agile retrospective, it allows you to collect feedback and adjust accordingly. In the case of QBRs, however, we recommend dividing your feedback into four categories:

• Start (what new items should be launched?).
• Stop (what items need to be paused?).
• Continue (what is going well?).
• Change (what could be modified to perform better?).

Strategic planners know that planning activities continue even after a project is complete. There’s always room for improvement and an action plan waiting to be implemented. Using the above approaches, your team can make room for new ideas within the existing strategic framework in order to track better to your long-term goals.

Related: Quarterly business review template

Conclusions

The beauty of the strategic plan is that it can be applied from the campaign level all the way up to organizational vision. Using the strategic planning framework, you build buy-in , trust, and transparency by collaboratively creating a vision for success, and mapping out the steps together on the road to your goals.

Also, in so doing, you build in an ability to adapt effectively on the fly in response to data through measurement and evaluation, making your plan both flexible and resilient.

Related: 5 Tips for Holding Effective Post-mortems

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About the authors

Bryan Kitch

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Module 3: Planning and Mission

The planning cycle, learning outcomes.

• Explain the stages of the planning cycle.
• Explain why the planning cycle is an essential part of running a business.

Organizations have goals they want to achieve, so they must consider the best way of reaching their goals and must decide the specific steps to be taken. However, this is not a linear, step-by-step process. It is an iterative process with each step reconsidered as more information is gathered. As organizations go through the planning, they may realize that a different approach is better and go back to start again.

Remember that planning is only one of the management functions and that the functions themselves are part of a cycle. Planning, and in fact all of the management functions, is a cycle within a cycle. For most organizations, new goals are continually being made or existing goals get changed, so planning never ends. It is a continuing, iterative process.

In the following discussion, we will look at the steps in the planning cycle as a linear process. But keep in mind that at any point in the process, the planner may go back to an earlier step and start again.

Stages in the Planning Cycle

The stages in the planning cycle

Define objectives

The first, and most crucial, step in the planning process is to determine what is to be accomplished during the planning period. The vision and mission statements provide long-term, broad guidance on where the organization is going and how it will get there. The planning process should define specific goals and show how the goals support the vision and mission. Goals should be stated in measurable terms where possible. For example, a goal should be “to increase sales by 15 percent in the next quarter” not “increase sales as much as possible.”

Develop premises

Planning requires making some assumptions about the future. We know that conditions will change as plans are implemented and managers need to make forecasts about what the changes will be. These include changes in external conditions (laws and regulations, competitors’ actions, new technology being available) and internal conditions (what the budget will be, the outcome of employee training, a new building being completed). These assumptions are called the plan premises. It is important that these premises be clearly stated at the start of the planning process. Managers need to monitor conditions as the plan is implemented. If the premises are not proven accurate, the plan will likely have to be changed.

Evaluate alternatives

There may be more than one way to achieve a goal. For example, to increase sales by 12 percent, a company could hire more salespeople, lower prices, create a new marketing plan, expand into a new area, or take over a competitor. Managers need to identify possible alternatives and evaluate how difficult it would be to implement each one and how likely each one would lead to success. It is valuable for managers to seek input from different sources when identifying alternatives. Different perspectives can provide different solutions.

Identify resources

Next, managers must determine the resources needed to implement the plan. They must examine the resources the organization currently has, what new resources will be needed, when the resources will be needed, and where they will come from. The resources could include people with particular skills and experience, equipment and machinery, technology, or money. This step needs to be done in conjunction with the previous one, because each alternative requires different resources. Part of the evaluation process is determining the cost and availability of resources.

Plan and implement tasks

Management will next create a road map that takes the organization from where it is to its goal. It will define tasks at different levels in the organizations, the sequence for completing the tasks, and the interdependence of the tasks identified. Techniques such as Gantt charts and critical path planning are often used to help establish and track schedules and priorities.

Determine tracking and evaluation methods

It is very important that managers can track the progress of the plan. The plan should determine which tasks are most critical, which tasks are most likely to encounter problems, and which could cause bottlenecks that could delay the overall plan. Managers can then determine performance and schedule milestones to track progress. Regular monitoring and adjustment as the plan is implemented should be built into the process to assure things stay on track.

Practice Question

The planning cycle: essential part of running a business.

Following the planning cycle process assures the essential aspects of running a business are completed. In addition, the planning process itself can have benefits for the organization. The essential activities include the following:

• Maintaining organizational focus: Defining specific goals requires managers to consider the vision, mission, and values of the organization and how these will be operationalized. The methods and selected goals can demonstrate that the vision, mission, and values statements are working documents that are not just for show but prescribe activities.
• Encouraging diverse participation: Planning activities provide an opportunity for input from different functions, departments, and people. Some organizations establish planning committees that intentionally include people from diverse backgrounds to bring new perspectives into the planning process.
• Empowering and motivating employees: When people are involved in developing plans they will be more committed to the plans. Allowing diverse input into the planning cycle empowers people to contribute and motivates them to support the outcomes.

PRactice Question

There are several stages, or steps, in the planning process. It is not unusual to have to repeat steps as conditions change. This process is essential to a business to maintain focus, gather diverse opinions, and empower and motivate employees.

• The Planning Cycle. Authored by : John/Lynn Bruton and Lumen Learning. License : CC BY: Attribution
• Image: Stages in the Planning Cycle. Authored by : Lumen Learning. License : CC BY: Attribution

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Strategic planning: Read this before it's that time again

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What is strategic planning?

What is strategic plan management?

Benefits of robust strategic planning and management

10 steps in the strategic planning process.

Plans are worthless, but planning is everything. - Dwight D. Eisenhower

It’s that time again. 

Every three to five years, most larger organizations periodically plan for the future. Many times strategic planning documents are shelved and forgotten until the next cycle begins. On the other hand, many smaller and newer organizations, propelled by urgency, may not devote the necessary time and energy to the strategic planning process. 

Only 63% of businesses plan more than a year out. They fail to see that — contrary to Alice in Wonderland’s Cheshire cat — “any way” does not take you there. 

For all organizations, a more rigorous annual planning process is critical for driving future success, profitability, value, and impact.

John Kotter, a former professor at Harvard Business School and noted expert on innovation says, “ Strategy should be viewed as a dynamic force that constantly seeks opportunities, identifies initiatives that will capitalize on them, and completes those initiatives swiftly and efficiently.”

There’s hardly a better case that can be made for dynamic planning than in the tech industry, where mergers and acquisitions are accelerating exponentially. Companies need to be nimble enough to navigate rapid change . In this case, planning should occur quarterly.

Strategic planning is an ongoing process by which an organization sets its forward course by bringing all of its stakeholders together to examine current realities and define its vision for the future.

It examines its strengths and weaknesses, resources available, and opportunities. Strategic planning seeks to anticipate future industry trends .  During the process, the organization creates a vision, articulates its purpose, and sets strategic goals that are long-term and forward-focused. 

Those strategic goals inform operational goals and incremental milestones that need to be reached. The operational plan has clear objectives and supporting initiatives tied to metrics to which everyone is accountable . The plan should be agile enough to allow for recalibrating when necessary and redistributing resources based on internal and external forces.

The output of the planning process is a document that is shared across the enterprise. 

Strategic planning for individuals

Strategic planning isn’t just for companies. At BetterUp, strategic planning is one of the skills that we identify, track, and develop within the Whole Person Model . For individuals, strategic planning is the ability to think through ways to achieve desired outcomes. Just as strategic planning helps organizations realize their goals for the future, it helps individuals grow and achieve goals in a unified direction. 

Working backward from the desired outcome, effective strategic planning consists of coming up with the steps we need to take today in order to get where we want to be tomorrow. 

While no plan is infallible, people who develop this skill are good at checking to make sure that their actions are in alignment with the outcomes that they want to see in the future. Even when things don’t go according to plan, their long-term goals act as a “North star” to get them back on course. In addition, envisioning desired future states and figuring out how to turn them into reality enhances an individual’s sense of personal meaning and motivation. 

Whether we’re talking about strategic planning for the company or the individual, strategic plans can go awry in a variety of ways including: 

• Unrealistic goals and too many priorities
• Poor communication
• Using the wrong measures
• Lack of leadership

The extent to which that document is shelved until the next planning cycle or becomes a dynamic map of the future depends on the people responsible for overseeing the execution of the plan.

What is strategic plan management? 

"Most people think of strategy as an event, but that’s not the way the world works," according to Harvard Business School Professor Clayton Christensen. "When we run into unanticipated opportunities and threats, we have to respond. Sometimes we respond successfully; sometimes we don’t. But most strategies develop through this process. More often than not, the strategy that leads to success emerges through a process that works 24/7 in almost every industry."

Strategic business management is the ongoing process by which an organization creates and sustains a successful roadmap that moves the company in the direction it needs to move, year after year, for long-term success. It spans from research and formulation to execution, evaluation, and adjustment. Given the pace of change, strategic management is more relevant and important than ever for assigning measurable goals and action steps

Many organizations fail because they don’t have the strategic management team at the table right from the beginning of the planning process. A strategic plan is only as good as its ability to be executed and sustained. 

A strategic management initiative might be driven by an internal group — many companies have an internal strategy team — or an outside consulting firm. Ultimately company leaders need to own executing and sustaining the strategy. 

Strategic management teams

In this Harvard Business Review article, Ron Carucci from consulting firm Navalent reports that 61% of executives in a 10-year longitudinal study felt they were not prepared for the strategic challenges they faced upon being appointed to senior leadership roles. Lack of commitment to the plan is also a contributing factor. In addition, leaders attending to quarterly targets, crisis management , and reconciling budgets often consider the execution of a long-term strategy a low priority.

A dedicated strategic management team works with those senior leaders and managers throughout the organization to communicate, coordinate and evaluate progress against goals. They tie strategic objectives to day-to-day operational metrics throughout the enterprise. 

A good strategic management group can assist in creating a culture of empowerment and learning . It holds regular meetings with employees. It sets a clear agenda and expectations to make the strategic plan real and compelling to the organization through concrete objectives, results, and timelines. 

Strategy development is a lot of work, but the benefits are lasting. After all, as the saying goes, "If you fail to plan, you plan to fail." Taking the time for review and planning activities has the following benefits:

• Organizations and people are set up to succeed
• Increased likelihood of staying on track
• Decreased likelihood of being distracted or derailed
• Progress through the plan is communicated throughout the organization
• Metrics facilitate course correction
• Budgets enterprise-wide are based on strategy
• Cross-organization alignment
• Robust employee performance and compensation plans
• Commitment to learning and training
• A robust strategic planning process gets everyone involved and invested in the organizations
• Employees inform management about what’s working or not working at the operational level
• Innovation is encouraged and rewarded
• Increased productivity

1. Define mission and vision  

Begin by articulating the organization's vision for the future. Ask, "What would success look like in five years?" Create a mission statement describing organizational values and how you intend to reach the vision. What values inform and determine mission, vision, and purpose?

Purpose-driven strategic goals articulate the “why” of what the corporation is doing. It connects the vision statement to specific objectives, drawing a line between the larger goals and the work that teams and individuals do.

2. Conduct a comprehensive assessment  

This stage includes identifying an organization’s strategic position.

Gathering data from internal and external environments and respective stakeholders takes place at this time. Involving employees and customers in the research.

The task is to gather market data through research. One of the most critical components of this stage is a comprehensive SWOT analysis that involves gathering people and bringing perspectives from all stakeholders to determine:

• W eaknesses
• O pportunities

Strengths and weaknesses  — In this stage, planners identify the company’s assets that contribute to its current competitive advantage and/or the likelihood of a significant increase in the organization’s market share in the future. It should be an objective assessment rather than an inflated perspective of its strengths. 

An accurate assessment of weaknesses requires looking outward at external forces that can reveal new opportunities as well as threats. Consider the massive shift in multiple industries whose strategy has been disrupted by the COVID-19 pandemic. While it was disastrous to the airline and restaurant industries’ business models , tech companies were able to seize the opportunity and address the demands of remote work. 

Michael Porter’s book Competetive Strategy: Techniques for Analyzing Industries and Competitors claims that there are five forces at work in an industry that influence that industry’s ability to develop a competitive strategy. Since the book was published in 1979, organizations have turned to Porter’s theory to create their strategic framework. 

Here are the 5 forces (and key questions) that determine the competitive strategy for most industries.

• Competitive rivalry : When considering the strengths of an organization’s competitors it’s important to ask: How do our products/services hold up to our competition? If the rivalry is intense, companies need to consider what capacity they have to gain leverage through price cuts or bold marketing strategies. If there is little competition, the organization has a substantial gain in the market.
• Supplier power: How might suppliers influence strategy? For example, what if suppliers raised their prices? To what extent would a company need a particular supplier for our product(s)? Is it possible to switch suppliers in a way that is more cost effective and efficient? The number of suppliers that exist will determine your ability to keep costs low.
• Buyer power: To what extent do buyers have the ability to shop around right into the hands of your competitors? How much power does your customer base have in determining price? A small number of well-informed buyers shifts the power in their direction while a large pool may give you the strategic advantage
• Threat of substitution:  What is the threat of a company’s buyer substituting your services/products from the competition? What if the buyer figures out another way to access the services/products that it offers?
• Threat of new entry:  How easy is it for newcomers to enter the organization’s market?

3. Forecast  

Considering the factors above, determine the company’s value through financial forecasting . While almost certainly to become a moving target influenced by the five forces, a forecast can assign initial anticipated measurable results expected in the plan or ROI: profits/cost of investment.

4. Set the organizational direction of the business

The above research and assessment will help an organization to set goals and priorities. Too often an organization’s strategic plan is too broad and over-ambitious. Planners need to ask, ”What kind of impact are we seeking to have, and in what time frame?” They need to drill down to objectives that will have the most impact. 

5. Create strategic objectives

This next phase of operational planning consists of creating strategic objectives and initiatives. Kaplan and Norton posit in their balanced scorecard methodology that there are four perspectives for consideration in identifying the conditions for success. They are interrelated and must be evaluated simultaneously.

• Financial : Such considerations as growing shareholder value, increasing revenue, managing cost, profitability, or financial stability inform strategic initiatives. 
• Customer-satisfaction:  Objectives can be determined by identifying targets related to one or some of the following: value for the cost, best service, increased market share, or providing customers with solutions.
• Internal processes such as operational processes and efficiencies, investment in innovation, investment in total quality and performance management , cost reduction, improvement of workplace safety, or streamlining processes.
• Learning and growth: Organizations must ask: Are initiatives in place in terms of human capital and learning and growth to sustain change? Objectives may include employee retention, productivity, building high-performing teams, or creating a pipeline for future leaders .

6. Align with key stakeholders

It’s a team effort. The success of the plan is in direct proportion to the organization’s commitment to inform and engage the entire workforce in strategy execution. People will only be committed to strategy implementation when they're connected to the organization's goals. With everyone pulling in the same direction, cross-functional decision-making becomes easier and more aligned.

7. Begin strategy mapping

A strategy map is a powerful tool for illustrating the cause-effect of those perspectives and connecting them to between 12 and 18 strategic objectives. Since most people are visual learners, the map provides an easy-to-understand diagram for everyone in the organization creating shared knowledge at all levels.

8. Determine strategic initiatives

Following the development of strategic objectives, strategic initiatives are determined. These are the actions the organization will take to reach those objectives. They may relate initiatives related to factors such as scope, budget, raising brand awareness, product development, and employee training.

9. Benchmark performance measures and analysis

Strategic initiatives inform SMART goals to which metrics are assigned to evaluate performance. These measures cascade from senior management to management to front-line workers. At this stage, the task is to create goals that are specific, measurable, attainable, relevant, and time-based informing the operational plan.

Benchmarks are established against so that performance can be measures, and a time frame is created. Key performance indicators (KPI’s) are assigned based on organizational goals. These indicators align workers’ performance and productivity with long-term strategic objectives. 

10. Performance evaluation

Assessment of whether the plan has been successful . It measures activities and progress toward objectives and allows for the creation of improved plans and objectives in order to improve overall performance . 

Think of strategic planning as a circular process beginning and ending with evaluation. Adjust a  plan as necessary. The pace at which review of the plan is necessary may be once a year for many organizations or quarterly for organizations in rapidly evolving industries. 

Prioritizing the strategic planning process

The strategic planning meeting may have a reputation for being just another to-do, but it might be time to take a second look. With the right action plan and a little strategic thinking, you can reinvigorate your business environment and start planning for success.

It's that time to get excited about the future again.

Elevate your strategic planning

Discover how targeted coaching can enhance your strategic insight and execution across all levels of your organization.

Meredith Betz, M.S.Ed, M.S.O.D.

Meredith Betz is a Betterup Fellow Coach. As an organizational consultant and Executive Coach, Meredith's work focuses on leaders, teams, and the dynamics in the systems in which they live and work. She helps people become more influential and exhibit executive presence. Meredith is a certified Conscious Business Coach who helps leaders to exercise empathy and lead in a way that is consistent with their values. She gives them the tools to communicate and negotiate effectively with their stakeholders. Meredith recently co-wrote a memoir with a 103-year-old Estonian man who lived through the Nazi and Soviet occupations of Estonia in the 1940s. It was a profound experience. A seminal book for her is Man's Search for Meaning by Viktor Frankl, an Austrian Holocaust survivor and psychiatrist.

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17.2 The Planning Process

• Outline the planning and controlling processes.

Planning is a process. Ideally it is future oriented, comprehensive, systematic, integrated, and negotiated. 11 It involves an extensive search for alternatives and analyzes relevant information, is systematic in nature, and is commonly participative. 12 The planning model described in this section breaks the managerial function of planning into several steps, as shown in Exhibit 17.3 . Following this step-by-step procedure helps ensure that organizational planning meets these requirements.

Step 1: Developing an Awareness of the Present State

According to management scholars Harold Koontz and Cyril O’Donnell, the first step in the planning process is awareness. 13 It is at this step that managers build the foundation on which they will develop their plans. This foundation specifies an organization’s current status, pinpoints its commitments, recognizes its strengths and weaknesses, and sets forth a vision of the future. Because the past is instrumental in determining where an organization expects to go in the future, managers at this point must understand their organization and its history. It has been said—“The further you look back, the further you can see ahead.” 14

Step 2: Establishing Outcome Statements

The second step in the planning process consists of deciding “where the organization is headed, or is going to end up.” Ideally, this involves establishing goals. Just as your goal in this course might be to get a certain grade, managers at various levels in an organization’s hierarchy set goals. For example, plans established by a university’s marketing department curriculum committee must fit with and support the plans of the department, which contribute to the goals of the business school, whose plans must, in turn, support the goals of the university. Managers therefore develop an elaborate network of organizational plans, such as that shown in Exhibit 17.4 , to achieve the overall goals of their organization.

Goal vs. Domain Planning

Outcome statements can be constructed around specific goals or framed in terms of moving in a particular direction toward a viable set of outcomes. In goal planning , people set specific goals and then create action statements. 15 For example, freshman Kristin Rude decides that she wants a bachelor of science degree in biochemistry (the goal). She then constructs a four-year academic plan that will help her achieve this goal. Kristin is engaging in goal planning. She first identifies a goal and then develops a course of action to realize her goal.

Another approach to planning is domain/directional planning , in which managers develop a course of action that moves an organization toward one identified domain (and therefore away from other domains). 16 Within the chosen domain may lie a number of acceptable and specific goals. For example, high-school senior Neil Marquardt decides that he wants to major in a business-related discipline in college. During the next four years, he will select a variety of courses from the business school curriculum yet never select a major. After selecting courses based on availability and interest, he earns a sufficient number of credits within this chosen domain that enables him to graduate with a major in marketing. Neil never engaged in goal planning, but in the end he will realize one of many acceptable goals within an accepted domain.

The development of the Post-it® product by the 3M Corporation demonstrates how domain planning works. In the research laboratories at 3M, efforts were being made to develop new forms and strengths of cohesive substances. One result was cohesive material with no known value because of its extremely low cohesive level. A 3M division specialist, Arthur L. Fry, frustrated by page markers falling from his hymn book in church, realized that this material, recently developed by Spencer F. Silver, would stick to paper for long periods and could be removed without destroying the paper. Fry experimented with the material as page markers and note pads—out of this came the highly popular and extremely profitable 3M product Scotch Post-it®. Geoff Nicholson, the driving force behind the Post-it® product, comments that rather than get bogged down in the planning process, innovations must be fast-tracked and decisions made whether to continue or move on early during the product development process. 17

Situations in which managers are likely to engage in domain planning include (1) when there is a recognized need for flexibility, (2) when people cannot agree on goals, (3) when an organization’s external environment is unstable and highly uncertain, and (4) when an organization is starting up or is in a transitional period. In addition, domain planning is likely to prevail at upper levels in an organization, where managers are responsible for dealing with the external environment and when task uncertainty is high. Goal planning (formulating goals compatible with the chosen domain) is likely to prevail in the technical core, where there is less uncertainty.

Hybrid Planning

Occasionally, coupling of domain and goal planning occurs, creating a third approach, called hybrid planning . In this approach, managers begin with the more general domain planning and commit to moving in a particular direction. As time passes, learning occurs, uncertainty is reduced, preferences sharpen, and managers are able to make the transition to goal planning as they identify increasingly specific targets in the selected domain. Movement from domain planning to goal planning occurs as knowledge accumulates, preferences for a particular goal emerge, and action statements are created.

Consequences of Goal, Domain, and Hybrid Planning

Setting goals not only affects performance directly, but also encourages managers to plan more extensively. That is, once goals are set, people are more likely to think systematically about how they should proceed to realize the goals. 18 When people have vague goals, as in domain planning, they find it difficult to draw up detailed action plans and are therefore less likely to perform effectively. When studying the topic of motivation, you will learn about goal theory. Research suggests that goal planning results in higher levels of performance than does domain planning alone. 19

Step 3: Premising

In this step of the planning process, managers establish the premises, or assumptions, on which they will build their action statements. The quality and success of any plan depends on the quality of its underlying assumptions. Throughout the planning process, assumptions about future events must be brought to the surface, monitored, and updated. 20

Managers collect information by scanning their organization’s internal and external environments. They use this information to make assumptions about the likelihood of future events. As Kristin considers her four-year pursuit of her biochemistry major, she anticipates that in addition to her savings and funds supplied by her parents, she will need a full-time summer job for two summers in order to cover the cost of her undergraduate education. Thus, she includes finding full-time summer employment between her senior year of high school and her freshman year and between her freshman and sophomore years of college as part of her plan. The other two summers she will devote to an internship and finding postgraduate employment—much to mom and dad’s delight! Effective planning skills can be used throughout your life. The plan you develop to pay for and complete your education is an especially important one.

Step 4: Determining a Course of Action (Action Statements)

In this stage of the planning process, managers decide how to move from their current position toward their goal (or toward their domain). They develop an action statement that details what needs to be done, when, how, and by whom. The course of action determines how an organization will get from its current position to its desired future position. Choosing a course of action involves determining alternatives by drawing on research, experimentation, and experience; evaluating alternatives in light of how well each would help the organization reach its goals or approach its desired domain; and selecting a course of action after identifying and carefully considering the merits of each alternative.

Step 5: Formulating Supportive Plans

The planning process seldom stops with the adoption of a general plan. Managers often need to develop one or more supportive or derivative plans to bolster and explain their basic plan. Suppose an organization decides to switch from a 5-day, 40-hour workweek (5/40) to a 4-day, 40-hour workweek (4/40) in an attempt to reduce employee turnover. This major plan requires the creation of a number of supportive plans. Managers might need to develop personnel policies dealing with payment of daily overtime. New administrative plans will be needed for scheduling meetings, handling phone calls, and dealing with customers and suppliers.

Planning, Implementation, and Controlling

After managers have moved through the five steps of the planning process and have drawn up and implemented specific plans, they must monitor and maintain their plans. Through the controlling function (to be discussed in greater detail later in this chapter), managers observe ongoing human behavior and organizational activity, compare it to the outcome and action statements formulated during the planning process, and take corrective action if they observe unexpected and unwanted deviations. Thus, planning and controlling activities are closely interrelated (planning ➨ controlling ➨ planning . . .). Planning feeds controlling by establishing the standards against which behavior will be evaluated during the controlling process. Monitoring organizational behavior (the control activity) provides managers with input that helps them prepare for the upcoming planning period—it adds meaning to the awareness step of the planning process.

Influenced by total quality management (TQM) and the importance of achieving continuous improvement in the processes used, as well as the goods and services produced, organizations such as IBM-Rochester have linked their planning and controlling activities by adopting the Deming cycle (also known as the Shewhart cycle).

It has been noted on numerous occasions that many organizations that do plan fail to recognize the importance of continuous learning. Their plans are either placed on the shelf and collect dust or are created, implemented, and adhered to without a systematic review and modification process. Frequently, plans are implemented without first measuring where the organization currently stands so that future comparisons and evaluations of the plan’s effectiveness cannot be determined. The Deming cycle , shown in Exhibit 17.6 , helps managers assess the effects of planned action by integrating organizational learning into the planning process. The cycle consists of four key stages: (1) Plan—create the plan using the model discussed earlier. (2) Do—implement the plan. (3) Check—monitor the results of the planned course of action; organizational learning about the effectiveness of the plan occurs at this stage. (4) Act—act on what was learned, modify the plan, and return to the first stage in the cycle, and the cycle begins again as the organization strives for continuous learning and improvement.

Concept Check

• What are the five steps in the planning process?
• What is the difference between goal, domain, and hybrid planning?
• How are planning, implementation, and controlling related?

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The Planning Cycle

A planning process for medium-sized projects.

By the Mind Tools Content Team

The Planning Cycle brings together all the aspects of planning a one-off, medium-sized project into a single, coherent process.

For example, let’s say your business is growing so rapidly that you need to relocate to a larger office. Great news. But the job of planning and organizing the move has fallen to you. Maybe not such great news!

You will need to consider whether the move is viable, and think about criteria for suitable premises. You’ll have to factor in costs, timings, and how to minimize business downtime.

So, where do you start? Try the Planning Cycle.

What Is the Planning Cycle?

The Planning Cycle is an eight-step process that you can use to plan any small-to-medium sized project: moving to a new office, developing a new product, or planning a corporate event, for example.

The tool enables you to plan and implement fully considered, well-focused, robust, practical, and cost-effective projects. It also helps you to learn from any mistakes you make, and to feed this knowledge back into your future planning and decision making.

The Planning Cycle offers a framework for projects up to a certain level of complexity. For larger projects that involve many people over a long period of time, you may need to use a more formal approach.

These approaches have similar structures to the Planning Cycle, but they tend to require more documentation, and are often integrated within a wider organizational context. Our article, Project Management Phases and Processes , tells you more about them.

For shorter projects that need a fast turnaround, you should also consider Agile Project Management .

Figure 1: The Planning Cycle

Project Planning Steps

The Planning Cycle has eight steps, as outlined below.

1. Analyze Your Situation

First, clarify what you need to do. An office move, for example, would require you to find the right premises, with appropriate access and parking.

Gather as much information as possible at this stage. This will help you to formulate a more detailed and robust plan further down the line.

Start by examining your current position, and deciding how you can improve it. There are a number of techniques that can help you to do this.

One option is to carry out a SWOT Analysis . This will identify the strengths and weaknesses of your position, and the opportunities and threats that you face.

Another method is Risk Analysis , which will help you to spot potential pitfalls and weaknesses in your organization that may affect your plan, and identify any external risks. You can then use your findings to plan how you will neutralize or mitigate those risks.

For example, ask yourself whether your project is a response to pressure from customers, competitors, or new technology. Or perhaps your company is growing, and you need to make changes as a result. Pressures may arise from changes in the economy, new legislation, people's attitudes, or government.

You can also pick from a whole range of creativity tools to work out where you can make improvements Simplexity Thinking is a particularly powerful tool that helps to foster creativity and solve even the toughest problems.

2. Identify the Aim of Your Plan

When you've completed a realistic analysis of your situation, and the opportunities for change, the next step is to precisely define the aim of your plan. This sharpens your focus, and stops you from wasting effort on irrelevant issues.

Express your aim in one simple sentence, so that it's clear in your mind. If this proves difficult, try asking yourself questions like:

• What do I want the future to look like?
• What benefit do I want to give to our customers?
• What returns do I need?
• What standards do I want to achieve?
• What are my organization's core values?

You can present this aim as a Vision Statement or Mission Statement .

Vision statements express the benefit that an organization will provide to its customers. For example, Nike’s vision is to "Bring inspiration and innovation to every athlete* in the world. (*If you have a body, you are an athlete.)"

Mission statements explain how the vision will be achieved. For example, the mission statement for The Bristol Myers Squibb pharmaceutical company is "To discover, develop, and deliver innovative medicines that help patients prevail over serious diseases."

3. Explore Your Options

By this stage, you should have a good understanding of your situation and what you want your project to achieve. The next step is to work out how to do it!

At this stage, it's useful to generate as many ideas as possible. Again, creativity tools can help you with this. You may be tempted to grasp at the first idea that comes to mind, but if you spend some time weighing up your options you may come up with less obvious but better solutions. Or you may build on your best ideas by using elements of others.

4. Select the Best Option

When you've explored your ideas, you need to decide which one to pursue. If you have the necessary time and resources, you might decide to do detailed planning, costing, and risk assessment work for each one. But chances are you won't have this luxury.

Instead, use tools like Decision Matrix Analysis and Decision Trees to help you to make the final selection. Use Decision Matrix Analysis to decide between different options when you need to consider a range of different factors. Decision Trees enable you to think through the likely outcomes of following different courses of action.

5. Detailed Planning

With your final decision made, you need to establish the most efficient and effective way to achieve your aim. This determines who will do what, when, where, how, why, and at what cost.

Techniques like Gantt Charts and Critical Path Analysis can be useful when working out priorities, deadlines, and how to allocate resources.

Consider how you will monitor the progress and performance of your plan, too. When robust reporting, quality assurance, and cost controls are in place, you can quickly identify and correct potential deviations from the plan.

A good plan also identifies risks and suggests contingencies. This allows you to respond effectively to setbacks or crises. You should also consider transitional arrangements – how will you keep things going while you implement the plan?

6. Evaluate the Plan and Its Impact

The next stage is to review your plan and decide whether you should implement it. It’s crucial to be objective here – even if you've done a lot of work to reach this stage, it may still not be worth your while to pursue the project.

This can be frustrating, but it's better to reach this conclusion now rather than after you have invested valuable time and resources – and your reputation – in its success. The evaluation stage gives you the opportunity to either investigate better options, or to accept that no plan is needed.

Depending on the circumstances, there are several methods you can use to evaluate your plan.

• Quantitative Pros and Cons is a simple technique that involves listing the plus points in one column and the minus points in another. Each point can be allocated a positive or negative score.
• Use Cost/Benefit Analysis to decide whether the plan makes financial sense. Add up all the costs involved, and compare them with the expected benefits.
• Force Field Analysis gives you a "big picture" view of the factors for and against your plan. This enables you to see where you can make adjustments that will help your plan to succeed.
• A Cash Flow Forecast enables you to ensure that you have sufficient resources for your plan, and to assess whether the project is viable. A good cash flow forecast spreadsheet lets you vary your assumptions and investigate the effects.
• Finally, Six Thinking Hats helps you to get a rounded view of your plan and its implications by asking you to evaluate your plan from six different perspectives: rational, emotional, optimistic, pessimistic, practical, and creative.

If your analysis shows that the plan will not give sufficient benefit, or if the negatives outweigh the positives, return to an earlier stage in the planning cycle to explore other options. Alternatively, you may conclude that the project is impractical and abandon the process altogether.

7. Implement Change

Once you have finalized your proposal, and you're confident that it will deliver, it's time to put it into action.

If you've followed the previous steps closely then your plan should also explain how to implement it! It should also show how you will monitor its progress and execution.

8. Close the Plan and Review

All being well, your project is now complete and it was a huge success! Now it's time to close it down and assess what you've learned. Look back over the planning process and assess it carefully to see what could be improved or refined in the future.

If you'll likely carry out many similar projects, it may be worth developing a standard Post-Implementation Review . This is a list of points to consider during the planning review. It helps to ensure that you don't overlook any important aspects of the process.

The review should address key questions such as: did the project solve the original problem? Could it deliver even bigger benefits? And what lessons did you learn that you can apply to future projects?

The Planning Cycle enables you to make viable, robust plans, and to avoid making costly mistakes. It’s suitable for any small- to medium-sized project, in most business areas. It has eight steps:

1. Analyze your situation.

2. Identify the aim of your plan.

3. Explore your options.

4. Select the best option.

5. Detailed planning.

6: Evaluate your plan and its impact.

7. Implement change.

8. Close the plan.

Follow these steps carefully, and your project stands a good chance of success.

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Business Planning

Written by True Tamplin, BSc, CEPF®

Reviewed by subject matter experts.

Updated on June 08, 2023

Get Any Financial Question Answered

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.

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.

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.

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.

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
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• Change-In-Control Agreements
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• 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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The Easy Guide to the Strategic Planning Process

Updated on: 23 May 2023

Strategic planning is a process that may take months for some organizations, but its importance to the growth of the organization cannot be measured.

It helps guide company decisions, set measurable goals, and define the direction of the organization.  

In this guide we will discuss what is strategic planning process and describe in detail the strategic planning process steps along with some visual techniques you can use during each phase.

What is Strategic Planning?

Strategic planning is the process by which organizations make decisions about the goals they want to accomplish and the steps that need to be taken to get there.

The strategic planning process helps prioritize their objectives and effectively make use of the available resources to move from the current state to the desired state of things, or in other words accomplish their goals.

Importance of Strategic Planning

Strategic planning is crucial to the growth of any organization. Here’s why it is important to each and every small and large company out there.

• Helps with maintaining a company’s competitive advantage
• Gives insight into what may happen in the future and prepare accordingly
• Helps define the direction the organization should take
• Facilitates decision-making with regard to allocating resources and setting a budget
• Helps derive useful information on market trends, target audience, competitors etc.

Strategic Planning Steps

The strategic planning process helps an organization fill the gap between its current state and the desired state. Below, we have explained the different steps you need to take along with tools that can accelerate the process.

Conduct an Environmental Scan

To do an environmental scan, you need to gather a cross-functional team capable of providing information on different aspects of the organization. Get the input of relevant stakeholders, interviewing them to learn about the current strategic issues and situation.

In an environmental scan you need to take both internal and external factors that may affect the growth and performance of the organization into consideration.

Internal factors may include company resources, financial capabilities, employee skills etc. On the other hand, external factors include market trends, economic and political changes, technological advances etc.

You can make use of situational analysis tools such as SWOT and PESTLE analysis to gather and examine information relevant to these areas.

Perform a Gap Analysis

Using the data such as the available resources, financial situation etc. you have gathered through your environmental scan, you can effectively perform a gap analysis to determine whether you are getting the best out of the resources available to you.

It helps identify the gaps between the current performance of the organization and the desired performance and what you should do differently and what additional resources you may need to achieve your goals.  

To learn about the gap analysis tools you can make use of in detail, refer to our articles on

5 Gap Analysis Tools to Identify and Close the Gaps in Your Business  

Gap Analysis Templates to Edit Online, Download or Print

Define the Vision, Mission and Values

Clarify the vision (where are you headed?), mission (why do you exist?) and the core values of your organization.

Based on their definition, you can set specific, measurable, attainable, realistic and timely (SMART) goals and objectives.

Do a Competitive Analysis

Understanding the challenges posed by your competitors in the industry is essential to creating an effective strategic plan.

It can help you gather important insight necessary to identify market gaps and trends and develop new products and strategies.

Once you have a proper idea about the competitive landscape, you can tailor your strategies to overcome the challenges and increase the competitive advantage.   

Here are some handy visual techniques to conduct a competitive analysis .

Develop an Action Plan

Once you have identified your objectives and what you should prioritize, create your action plan .

Allocate your resources, time and budget, outline the action steps and assign tasks to the relevant employees.

Use the following action plan template to proceed.

Create Your Communication Plan

The purpose of a communication plan is to help guide the process of communicating your strategic plan and action plan to the relevant employees and other stakeholders.

Read our guide on Creating an Effective Communications Plan to learn how to create a consistent messaging strategy.

Once the strategic planning process is explained to everyone in the company, roll it out.

Evaluate Results

Monitor the progress of your goals and measure the performance on a monthly basis. You can inquire the responsible task owners for the status of their targets and hold them accountable.

Make use of Gantt chart to track progress on given targets.

Identify areas for improvements and take the necessary measures to fix them.

What’s Your Company’s Strategic Planning Process?

A proper strategic plan is key to keeping your business on track when reaching your goals. Follow the steps discussed above and make use of the visual tools provided to facilitate and accelerate your strategic planning process steps.

What are the strategic planning process steps your organization take. Share with us in the comment section below.

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The Strategic Planning Process in 4 Steps

To guide you through the strategic planning process, we created this 4 step process you can use with your team. we’ll cover the basic definition of strategic planning, what core elements you should include, and actionable steps to build your strategic plan..

Free Strategic Planning Guide

What is Strategic Planning?

Strategic Planning is when a process where organizations define a bold vision and create a plan with objectives and goals to reach that future. A great strategic plan defines where your organization is going, how you’ll win, who must do what, and how you’ll review and adapt your strategy development.

A strategic plan or a business strategic plan should include the following:

• Your organization’s vision organization’s vision of the future.
• A clearly Articulated mission and values statement.
• A current state assessment that evaluates your competitive environment, new opportunities, and new threats.
• What strategic challenges you face.
• A growth strategy and outlined market share.
• Long-term strategic goals.
• An annual plan with SMART goals or OKRs to support your strategic goals.
• Clear measures, key performance indicators, and data analytics to measure progress.
• A clear strategic planning cycle, including how you’ll review, refresh, and recast your plan every quarter.

Overview of the Strategic Planning Process:

The strategic management process involves taking your organization on a journey from point A (where you are today) to point B (your vision of the future).

Part of that journey is the strategy built during strategic planning, and part of it is execution during the strategic management process. A good strategic plan dictates “how” you travel the selected road.

Effective execution ensures you are reviewing, refreshing, and recalibrating your strategy to reach your destination. The planning process should take no longer than 90 days. But, move at a pace that works best for you and your team and leverage this as a resource.

To kick this process off, we recommend 1-2 weeks (1-hour meeting with the Owner/CEO, Strategy Director, and Facilitator (if necessary) to discuss the information collected and direction for continued planning.)

Questions to Ask:

• Who is on your Planning Team? What senior leadership members and key stakeholders are included? Checkout these links you need help finding a strategic planning consultant , someone to facilitate strategic planning , or expert AI strategy consulting .
• Who will be the business process owner (Strategy Director) of planning in your organization?
• Fast forward 12 months from now, what do you want to see differently in your organization as a result of your strategic plan and implementation?
• Planning team members are informed of their roles and responsibilities.
• A strategic planning schedule is established.
• Existing planning information and secondary data collected.

Action Grid:

Step 1: Determine Organizational Readiness

Set up your plan for success – questions to ask:

• Are the conditions and criteria for successful planning in place at the current time? Can certain pitfalls be avoided?
• Is this the appropriate time for your organization to initiate a planning process? Yes or no? If no, where do you go from here?

Step 2: Develop Your Team & Schedule

Who is going to be on your planning team? You need to choose someone to oversee the strategy implementation (Chief Strategy Officer or Strategy Director) and strategic management of your plan? You need some of the key individuals and decision makers for this team. It should be a small group of approximately 12-15 people.

OnStrategy is the leader in strategic planning and performance management. Our cloud-based software and hands-on services closes the gap between strategy and execution. Learn more about OnStrategy here .

Step 3: Collect Current Data

All strategic plans are developed using the following information:

• The last strategic plan, even if it is not current
• Mission statement, vision statement, values statement
• Past or current Business plan
• Financial records for the last few years
• Marketing plan
• Other information, such as last year’s SWOT, sales figures and projections

Step 4: Review Collected Data

Review the data collected in the last action with your strategy director and facilitator.

• What trends do you see?
• Are there areas of obvious weakness or strengths?
• Have you been following a plan or have you just been going along with the market?

Conclusion: A successful strategic plan must be adaptable to changing conditions. Organizations benefit from having a flexible plan that can evolve, as assumptions and goals may need adjustments. Preparing to adapt or restart the planning process is crucial, so we recommend updating actions quarterly and refreshing your plan annually.

Strategic Planning Phase 1: Determine Your Strategic Position

Want more? Dive into the “ Evaluate Your Strategic Position ” How-To Guide.

Action Grid

Step 1: identify strategic issues.

Strategic issues are critical unknowns driving you to embark on a robust strategic planning process. These issues can be problems, opportunities, market shifts, or anything else that keeps you awake at night and begging for a solution or decision. The best strategic plans address your strategic issues head-on.

• How will we grow, stabilize, or retrench in order to sustain our organization into the future?
• How will we diversify our revenue to reduce our dependence on a major customer?
• What must we do to improve our cost structure and stay competitive?
• How and where must we innovate our products and services?

Step 2: Conduct an Environmental Scan

Conducting an environmental scan will help you understand your operating environment. An environmental scan is called a PEST analysis, an acronym for Political, Economic, Social, and Technological trends. Sometimes, it is helpful to include Ecological and Legal trends as well. All of these trends play a part in determining the overall business environment.

Step 3: Conduct a Competitive Analysis

The reason to do a competitive analysis is to assess the opportunities and threats that may occur from those organizations competing for the same business you are. You need to understand what your competitors are or aren’t offering your potential customers. Here are a few other key ways a competitive analysis fits into strategic planning:

• To help you assess whether your competitive advantage is really an advantage.
• To understand what your competitors’ current and future strategies are so you can plan accordingly.
• To provide information that will help you evaluate your strategic decisions against what your competitors may or may not be doing.

Learn more on how to conduct a competitive analysis here .

Step 4: Identify Opportunities and Threats

Opportunities are situations that exist but must be acted on if the business is to benefit from them.

What do you want to capitalize on?

• What new needs of customers could you meet?
• What are the economic trends that benefit you?
• What are the emerging political and social opportunities?
• What niches have your competitors missed?

Threats refer to external conditions or barriers preventing a company from reaching its objectives.

What do you need to mitigate? What external driving force do you need to anticipate?

Questions to Answer:

• What are the negative economic trends?
• What are the negative political and social trends?
• Where are competitors about to bite you?
• Where are you vulnerable?

Step 5: Identify Strengths and Weaknesses

Strengths refer to what your company does well.

What do you want to build on?

• What do you do well (in sales, marketing, operations, management)?
• What are your core competencies?
• What differentiates you from your competitors?
• Why do your customers buy from you?

Weaknesses refer to any limitations a company faces in developing or implementing a strategy.

What do you need to shore up?

• Where do you lack resources?
• What can you do better?
• Where are you losing money?
• In what areas do your competitors have an edge?

Step 6: Customer Segments

Customer segmentation defines the different groups of people or organizations a company aims to reach or serve.

• What needs or wants define your ideal customer?
• What characteristics describe your typical customer?
• Can you sort your customers into different profiles using their needs, wants and characteristics?
• Can you reach this segment through clear communication channels?

Step 7: Develop Your SWOT

A SWOT analysis is a quick way of examining your organization by looking at the internal strengths and weaknesses in relation to the external opportunities and threats. Creating a SWOT analysis lets you see all the important factors affecting your organization together in one place.

It’s easy to read, easy to communicate, and easy to create. Take the Strengths, Weaknesses, Opportunities, and Threats you developed earlier, review, prioritize, and combine like terms. The SWOT analysis helps you ask and answer the following questions: “How do you….”

• Build on your strengths
• Shore up your weaknesses
• Capitalize on your opportunities
• Manage your threats

Strategic Planning Process Phase 2: Developing Strategy

Want More? Deep Dive Into the “Developing Your Strategy” How-To Guide.

Step 1: Develop Your Mission Statement

The mission statement describes an organization’s purpose or reason for existing.

What is our purpose? Why do we exist? What do we do?

• What are your organization’s goals? What does your organization intend to accomplish?
• Why do you work here? Why is it special to work here?
• What would happen if we were not here?

Outcome: A short, concise, concrete statement that clearly defines the scope of the organization.

Step 2: discover your values.

Your values statement clarifies what your organization stands for, believes in and the behaviors you expect to see as a result. Check our the post on great what are core values and examples of core values .

How will we behave?

• What are the key non-negotiables that are critical to the company’s success?
• What guiding principles are core to how we operate in this organization?
• What behaviors do you expect to see?
• If the circumstances changed and penalized us for holding this core value, would we still keep it?

Outcome: Short list of 5-7 core values.

Step 3: casting your vision statement.

A Vision Statement defines your desired future state and directs where we are going as an organization.

Where are we going?

• What will our organization look like 5–10 years from now?
• What does success look like?
• What are we aspiring to achieve?
• What mountain are you climbing and why?

Outcome: A picture of the future.

Step 4: identify your competitive advantages.

A competitive advantage is a characteristic of an organization that allows it to meet its customer’s need(s) better than its competition can. It’s important to consider your competitive advantages when creating your competitive strategy.

What are we best at?

• What are your unique strengths?
• What are you best at in your market?
• Do your customers still value what is being delivered? Ask them.
• How do your value propositions stack up in the marketplace?

Outcome: A list of 2 or 3 items that honestly express the organization’s foundation for winning.

Step 5: crafting your organization-wide strategies.

Your competitive strategy is the general methods you intend to use to reach your vision. Regardless of the level, a strategy answers the question “how.”

How will we succeed?

• Broad: market scope; a relatively wide market emphasis.
• Narrow: limited to only one or few segments in the market
• Does your competitive position focus on lowest total cost or product/service differentiation or both?

Outcome: Establish the general, umbrella methods you intend to use to reach your vision.

Phase 3: Strategic Plan Development

Want More? Deep Dive Into the “Build Your Plan” How-To Guide.

Strategic Planning Process Step 1: Use Your SWOT to Set Priorities

If your team wants to take the next step in the SWOT analysis, apply the TOWS Strategic Alternatives Matrix to your strategy map to help you think about the options you could pursue. To do this, match external opportunities and threats with your internal strengths and weaknesses, as illustrated in the matrix below:

TOWS Strategic Alternatives Matrix

Evaluate the options you’ve generated, and identify the ones that give the greatest benefit, and that best achieve the mission and vision of your organization. Add these to the other strategic options that you’re considering.

Step 2: Define Long-Term Strategic Objectives

Long-Term Strategic Objectives are long-term, broad, continuous statements that holistically address all areas of your organization. What must we focus on to achieve our vision? Check out examples of strategic objectives here. What are the “big rocks”?

Questions to ask:

• What are our shareholders or stakeholders expectations for our financial performance or social outcomes?
• To reach our outcomes, what value must we provide to our customers? What is our value proposition?
• To provide value, what process must we excel at to deliver our products and services?
• To drive our processes, what skills, capabilities and organizational structure must we have?

Outcome: Framework for your plan – no more than 6. You can use the balanced scorecard framework, OKRs, or whatever methodology works best for you. Just don’t exceed 6 long-term objectives.

Step 3: Setting Organization-Wide Goals and Measures

Once you have formulated your strategic objectives, you should translate them into goals and measures that can be communicated to your strategic planning team (team of business leaders and/or team members).

You want to set goals that convert the strategic objectives into specific performance targets. Effective strategic goals clearly state what, when, how, and who, and they are specifically measurable. They should address what you must do in the short term (think 1-3 years) to achieve your strategic objectives.

Organization-wide goals are annual statements that are SMART – specific, measurable, attainable, responsible, and time-bound. These are outcome statements expressing a result to achieve the desired outcomes expected in the organization.

What is most important right now to reach our long-term objectives?

Outcome: clear outcomes for the current year..

Step 4: Select KPIs

Key Performance Indicators (KPI) are the key measures that will have the most impact in moving your organization forward. We recommend you guide your organization with measures that matter. See examples of KPIs here.

How will we measure our success?

Outcome: 5-7 measures that help you keep the pulse on your performance. When selecting your Key Performance Indicators (KPIs), ask, “What are the key performance measures we need to track to monitor if we are achieving our goals?” These KPIs include the key goals you want to measure that will have the most impact on moving your organization forward.

Step 5: Cascade Your Strategies to Operations

To move from big ideas to action, creating action items and to-dos for short-term goals is crucial. This involves translating strategy from the organizational level to individuals. Functional area managers and contributors play a role in developing short-term goals to support the organization.

Before taking action, decide whether to create plans directly derived from the strategic plan or sync existing operational, business, or account plans with organizational goals. Avoid the pitfall of managing multiple sets of goals and actions, as this shifts from strategic planning to annual planning.

Questions to Ask

• How are we going to get there at a functional level?
• Who must do what by when to accomplish and drive the organizational goals?
• What strategic questions still remain and need to be solved?

Department/functional goals, actions, measures and targets for the next 12-24 months

Step 6: Cascading Goals to Departments and Team Members

Now in your Departments / Teams, you need to create goals to support the organization-wide goals. These goals should still be SMART and are generally (short-term) something to be done in the next 12-18 months. Finally, you should develop an action plan for each goal.

Keep the acronym SMART in mind again when setting action items, and make sure they include start and end dates and have someone assigned their responsibility. Since these action items support your previously established goals, it may be helpful to consider action items your immediate plans on the way to achieving your (short-term) goals. In other words, identify all the actions that need to occur in the next 90 days and continue this same process every 90 days until the goal is achieved.

Examples of Cascading Goals:

Phase 4: Executing Strategy and Managing Performance

Want more? Dive Into the “Managing Performance” How-To Guide.

Step 1: Strategic Plan Implementation Schedule

Implementation is the process that turns strategies and plans into actions in order to accomplish strategic objectives and goals.

How will we use the plan as a management tool?

• Communication Schedule: How and when will you roll-out your plan to your staff? How frequently will you send out updates?
• Process Leader: Who is your strategy director?
• Structure: What are the dates for your strategy reviews (we recommend at least quarterly)?
• System & Reports: What are you expecting each staff member to come prepared with to those strategy review sessions?

Outcome: Syncing your plan into the “rhythm of your business.”

Once your resources are in place, you can set your implementation schedule. Use the following steps as your base implementation plan:

• Establish your performance management and reward system.
• Set up monthly and quarterly strategy meetings with established reporting procedures.
• Set up annual strategic review dates including new assessments and a large group meeting for an annual plan review.

Now you’re ready to start plan roll-out. Below are sample implementation schedules, which double for a full strategic management process timeline.

Step 2: Tracking Goals & Actions

Monthly strategy meetings don’t need to take a lot of time – 30 to 60 minutes should suffice. But it is important that key team members report on their progress toward the goals they are responsible for – including reporting on metrics in the scorecard they have been assigned.

By using the measurements already established, it’s easy to make course corrections if necessary. You should also commit to reviewing your Key Performance Indicators (KPIs) during these regular meetings. Need help comparing strategic planning software ? Check out our guide.

Effective Strategic Planning: Your Bi-Annual Checklist

Never lose sight of the fact that strategic plans are guidelines, not rules. Every six months or so, you should evaluate your strategy execution and strategic plan implementation by asking these key questions:

• Will your goals be achieved within the time frame of the plan? If not, why?
• Should the deadlines be modified? (Before you modify deadlines, figure out why you’re behind schedule.)
• Are your goals and action items still realistic?
• Should the organization’s focus be changed to put more emphasis on achieving your goals?
• Should your goals be changed? (Be careful about making these changes – know why efforts aren’t achieving the goals before changing the goals.)
• What can be gathered from an adaptation to improve future planning activities?

Why Track Your Goals?

• Ownership: Having a stake and responsibility in the plan makes you feel part of it and leads you to drive your goals forward.
• Culture: Successful plans tie tracking and updating goals into organizational culture.
• Implementation: If you don’t review and update your strategic goals, they are just good intentions
• Accountability: Accountability and high visibility help drive change. This means that each measure, objective, data source and initiative must have an owner.
• Empowerment: Changing goals from In Progress to Complete just feels good!

Step 3: Review & Adapt

Guidelines for your strategy review.

The most important part of this meeting is a 70/30 review. 30% is about reviewing performance, and 70% should be spent on making decisions to move the company’s strategy forward in the next quarter.

The best strategic planners spend about 60-90 minutes in the sessions. Holding meetings helps focus your goals on accomplishing top priorities and accelerating the organization’s growth. Although the meeting structure is relatively simple, it does require a high degree of discipline.

Strategy Review Session Questions:

Strategic planning frequently asked questions, read our frequently asked questions about strategic planning to learn how to build a great strategic plan..

Strategic planning is when organizations define a bold vision and create a plan with objectives and goals to reach that future. A great strategic plan defines where your organization is going, how you’ll win, who must do what, and how you’ll review and adapt your strategy..

Your strategic plan needs to include an assessment of your current state, a SWOT analysis, mission, vision, values, competitive advantages, growth strategy, growth enablers, a 3-year roadmap, and annual plan with strategic goals, OKRs, and KPIs.

A strategic planning process should take no longer than 90 days to complete from start to finish! Any longer could fatigue your organization and team.

There are four overarching phases to the strategic planning process that include: determining position, developing your strategy, building your plan, and managing performance. Each phase plays a unique but distinctly crucial role in the strategic planning process.

Prior to starting your strategic plan, you must go through this pre-planning process to determine your organization’s readiness by following these steps:

Ask yourself these questions: Are the conditions and criteria for successful planning in place now? Can we foresee any pitfalls that we can avoid? Is there an appropriate time for our organization to initiate this process?

Develop your team and schedule. Who will oversee the implementation as Chief Strategy Officer or Director? Do we have at least 12-15 other key individuals on our team?

Research and Collect Current Data. Find the following resources that your organization may have used in the past to assist you with your new plan: last strategic plan, mission, vision, and values statement, business plan, financial records, marketing plan, SWOT, sales figures, or projections.

Finally, review the data with your strategy director and facilitator and ask these questions: What trends do we see? Any obvious strengths or weaknesses? Have we been following a plan or just going along with the market?

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8 Foundational Components that Drive Up Your Business’s Intrinsic Value

The Strategic Planning Process: Steps to Clarity and Direction

4 steps to help make your business planning process successful.

By nature, entrepreneurs are passionate, driven, and courageous , ready and willing to charge hell with a water pistol. Yet, many business owners are poor planners. Author and businessman John L. Beckley said it best: “Most people don’t plan to fail. They fail to plan.” Oftentimes, you’re so consumed with daily business operations that you don’t take time to plan for the future. Inevitably, you experience setbacks and failures that keep you in a hamster wheel of day-to-day worries. But there’s hope. By instituting these 4 stages of the business planning process within your company, you can disrupt your present weaknesses enough to make them tomorrow’s strengths.

Follow Along With The Financially Simple Experience!

Podcast Time Index for “Business Planning 101”

• Business Planning 101
• Buying a Car vs. Saving for Retirement
• Entrepreneurs Planning Habits
• Planning gets the least attention
• So what exactly is Business Planning?
• The Ultimate Definition
• Planning with Military Precision

This article is the first in a mini-series about Planning within a larger series about the 8 Foundational Components That Drive Up Your Business’s Value . 

“By instituting business planning processes within your company, you can disrupt your present weaknesses enough to make them tomorrow’s strengths.” – Justin Goodbread, CFP®, CEPA®, CVGA®

Making Plans

Everyone plans. What are you wearing today? What will you eat for dinner? Who’s watching the kids? Many times, you concentrate on your short-term plans more than your long-term plans. You prepare for life’s immediate concerns instead of preparing for future prosperity. But, as an American statesman, entrepreneur, inventor, and author, Benjamin Franklin said, “By failing to prepare, you are preparing to fail.”

As a small business owner, you tend to do the same thing. You fret about immediate needs and issues in your business more than you plan for the future of your business. In a press release about The Alternative Board’s (TAB) latest Business Pulse Survey , reporter Richard Carufel notes that “the average entrepreneur spends 68.1% of the time working ‘ in”  their business—tackling day-to-day tasks, putting out fires, etc.—and only 31.9% of the time working ‘ on’  their business—i.e. long-term goals, strategic planning.” Additionally, Corporate Value Metrics , a national corporate consulting company, says that business owners typically work harder on the other seven  fundamental components that drive up your business’s intrinsic value than they do on planning.

What is Business Planning?

Knowing that most business owners fail to plan properly, what exactly is business planning? According to the Business Dictionary, business planning is “ The process of determining a commercial enterprise’s objectives, strategies and projected actions in order to promote its survival and development within a given time frame .” I agree that business planning needs to be done within a time frame. I also agree that it’s a process. However, this definition fails to address available resources. Just because business owners layout plans doesn’t mean they can afford to act on them. Therefore, I would revise the definition of business planning as follows:

Business planning is a basic management function involving the design, steps, and quantified resources needed to achieve the optimum balance of needs or demands with available resources. So, what are the steps involved in the business planning process?

4 Basic Steps in the Business Planning Process

Ultimately, the definition of business planning can be seen in the business planning process . Whether you’re planning your business’ opening, growth, projects, risk mitigation, sale, closing, or anything else, all planning begins with a process . Although you can make the planning process as long or as complicated as you’d like, I tend to break the process into 4 Basic Steps.

Step #1 – Decide what you’re going to do.

Identify goals or objectives to be achieved. It has been said that if you aim at nothing, you will hit it every time. The same is true for your business plans. In order to create an effective, quantifiable, and measurable plan, you must clearly define your goals. A plan without a goal is like charting a course for nowhere. You will just continue working in perpetuity to reach a goal that doesn’t exist.

Step #2 – Determine how you will do it.

Formulate strategies to achieve the goals or objectives. Once you’ve defined your goals, create a set of tactics and action steps to reach them. It’s a good idea to include your team in this process, as they will likely be the boots on the ground that are working through your strategy. Likewise, they may be able to help you find the best way to achieve your goals because they will have first-hand knowledge of what tactics work within your existing operations.

Step #3 – Pick who will accomplish it.

Arrange the people required to work on the strategies to achieve the goals. Be clear in communicating who is responsible for what. Additionally, you need to set a timeframe that is both realistic and challenging. If you ask for the work to be done in an unrealistic amount of time, the group may not put any effort toward accomplishing it because they know that it can’t be done. Likewise, giving too much time could breed procrastination.

Step #4 – Take action.

Implement, direct, and monitor the steps of the action plan. Once your team is set and they understand what is expected of them and when it is expected to be done, then you need to be consistent in following up with them. Regular check-ins keep the task fresh on their minds and enable you to offer additional resources if things are falling behind. Similarly, these follow-up meetings will help you to identify and address any problem areas that may need to be adjusted.

Details to Include in the Business Planning Process

I think that’s the way any type of business planning works. Those are the actions business owners, managers, and employees must take to make a business plan. Yet, while you’re going through the business planning process, you must include the following items within your plans:

• Lists of who is involved in the planning process
• A current assessment of your business’s strengths and weaknesses
• The reasoning behind your plans
• Project start and end dates
• Measurements you will use to determine the success or failure of your plans
• Locations in which you will take action.
• How you will take action.
• A list of resources you will need to take action.

Remember, in order to affect the future, you must disrupt the present. You have to create some turmoil to make improvements. Think about a rocket ship. In order for a rocket ship to go upward into orbit, it must have combustion or “disruption.” Similarly, planning often disrupts business because it makes you stop and think about what you’re doing well or poorly, giving you a chance to improve upon and fix things.

Be sure to join me in my next article within this planning mini-series where I deal with, the Strategic Planning Process – the next step in business planning you must do to give your team direction and accomplish long-term goals!

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Business Planning Process and Strategy - Steps & Plan

Starting a business is one thing, but sustaining it requires planning. Business planning strategies and processes are crucial to get ahead of the competition. A business growth plan and strategic development for sustainable growth is significant for business expansion.

Developing a business plan is essential to the strategic management planning process. It helps you to set goals, establish priorities, and develop strategies for achieving them. Business planning involves many critical steps, including market analysis, competitive research, financial forecasting, and risk assessment. With the proper business planning process and business planning strategy, you can build a roadmap for the future and take your business to the next level.

This blog will explain business planning and explore the steps involved in creating a successful business planning process, appropriate business strategy for growth, and a business growth plan. As we explain business planning, we will also discuss business strategic development and how to develop a business development plan that aligns with your goals and objectives.

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What is a Business Plan?

How to explain business planning? All businesses require a business planning strategy. A business planning strategy is the basic step while setting up a business. A business planning process is like a map of a company's success that includes the process of achieving the objectives.

An attempt to understand and explain business planning or business development plans involves systematically analyzing an organization's current state, defining its goals and objectives, and developing a business plan and strategy well-suited to the company's specific needs and circumstances.

For successful business strategic planning, it is essential to follow the steps outlined in the business plan steps. For new entrepreneurs, the business planning process in entrepreneurship is critical. It is also crucial to consider trademark registration . It helps prevent competitors from using similar marks or confusing consumers about the origin of products or services.

Objectives of a Business Plan

When it comes to the business planning process, an entrepreneur must be concerned about every aspect of the business and have clear goals. Any business planning strategy must include the following:

How to Prepare for a Business Plan?

Preliminary investigation.

Businesses must review the available business planning process and look for threats and opportunities to create a new business planning process and business planning strategy.

Business Planning Process

While working on the business planning process, determine the essential goals for your business and create a business planning strategy. Identify the company's strengths and weaknesses and lay down all necessary steps to initiate the proposed business.

Key Components of a Business Plan

Executive Summary

An executive summary is a brief business plan overview highlighting its key points and objectives. It serves as an introduction to the plan and gives a clear understanding of the business, its goals, and how it plans to achieve them. An executive summary serves as a quick snapshot of the entire business plan.

It has a critical role in the business planning process and business level strategy in strategic management. It helps business owners and managers focus on their business plan's essential elements. It helps them to articulate their objectives of business , strategies, and tactics concisely and compellingly.

Company Description

A company description in a business plan is a section that provides an overview of a business. It should include information about the nature of the business, its products or services, target market, competition, management team, and financial outlook. This section aims to give investors or potential partners a clear understanding of what the business does and what sets it apart from competitors.

Strategic management planning and business strategic development require a clear understanding of the company's objectives, which should be outlined in the company description. The objectives of the business should be aligned with the customer acquisition strategies to ensure a successful business process outsourcing.

Market Analysis

Market analysis is a crucial aspect of a business plan that involves researching and understanding the target market for a product or service. It includes identifying the needs of potential customers, analyzing competitors, and evaluating industry trends to create a strategy for market development.

Market analysis helps businesses understand their customers, their requirements, and how to reach them best. A company can develop a more effective market development and growth strategy by conducting a thorough market analysis.

Financial Plan

A financial plan is a detailed projection of a business's economic activities and outcomes over a specific period. It helps business owners plan and manage their finances effectively.

Financial planning is an essential component of strategic planning for small business growth and development. A sound financial plan is critical to overall planning and strategic management for any business.

Steps to a Successful Business Planning Process

Idea Generation

Idea generation is an important step in strategic management planning, integral to planning in business management. Generating new ideas involves several steps in the business planning process for creating a successful business development plan. Idea generation can be a powerful tool for planning in business management and can help in developing a business plan that aligns with the company's vision and mission.

Sources of New Ideas

For generating new ideas for the business planning process, businesses can obtain insights from various sources:

• Market research and development
• Competitors
• Vendors and retailers

These sources can provide a wealth of information to be analyzed and used to develop business plan steps, new ideas, or solutions to existing problems.

Methods of Generating New Ideas

• Data obtained through surveys and questionnaires
• Market research
• Group discussion and brainstorming activities
• Social media research
• Mind Mapping
• Adding value to existing products and services

2. Environmental Scanning

Several internal and external factors impact the success of every business planning process. An environmental scan helps to understand the factors that affect your business directly or indirectly.

External Environment

The external environment can be competitors, customers, suppliers, demographics, socio-political situations, or economic conditions.

Internal Environment

These are factors that exist within the business:

• Raw Material : Identify the availability, quality, and cost of raw materials needed for production.
• Production/ Operation : Assess the production processes, machinery, equipment needed, manufacturing capacity, and production costs.
• Finance : Analyze the financial resources available, including startup capital, cash flow, and potential funding sources.
• Market : Understand the target market, including their demographics, preferences, and buying habits.
• Human Resource : Evaluate the personnel needs, including their skills, knowledge, and experience, as well as their availability and cost.

3. Feasibility Analysis

Feasibility Analysis is one of the most important business plan steps in the business planning process. It analyzes different alternatives to achieving a successful business planning process. A feasibility analysis identifies the best and the worst scenarios in which the company can be.

The different variables included in a feasibility analysis are:

Market analysis provides data on the niche that the business wants to explore. Making the ideal business planning process and business planning strategy is critical.

Technical/ Operational Analysis

It analyzes the operational aspects required to carry on the business successfully. For instance, an idea discussed might have great potential. Still, it may not be feasible when it comes to operational costs. The primary parameters examined during the operational analysis are:

• Material Availability : Evaluate the availability, quality, and cost of raw materials needed for production.
• Plant Location : Assess the location's suitability, including access to raw materials, labor, transportation, and infrastructure.
• Choice of Technology : Analyze the production processes, machinery, equipment needed, manufacturing capacity, and production costs.

Financial Feasibility

The financial feasibility assesses the business's financial issues, including monthly operating expenses, forecasted income statements, cash flow, balance sheet, and capital expenditure.

Functional Plans

The top executives must ensure that functional business strategic planning and process sync with the business goals in a business planning process. Once the feasibility analysis gives the go-ahead, you can draft a business plan.

4. Project Report Preparation

Project report preparation is a critical part of every business planning process. Experts prepare the project report. This report acts as a plan of action that describes the goals and objectives of the business.

Project reports allow the business idea to shape and become a productive venture with a clear-cut business planning strategy. It tracks the progress of the business planning process and compares it with the original plan. It also identifies any risks or challenges and to take corrective action whenever necessary.

5. Plan Your Marketing Strategy

A well-planned marketing strategy and business development plan will help the business reach its target audience.

6. Evaluation, Control, and Review

All the strategies prepared for a business are open to modifications due to internal and external factors. The critical evaluation, control, and review activities include measuring performance based on the current strategy and taking corrective action to enhance or improve the business goal.

What is Business Strategy Planning?

The business planning strategy outlines the goals, objectives, and actions needed to achieve success in a business. It involves analyzing the company's current state, identifying areas for improvement, setting targets, and developing strategies to achieve them.

As part of the business planning process, it is essential to consider the competitive landscape and market trends and the strengths and weaknesses of the business.

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When it comes to the business planning process and planning in business management, having a solid strategy for market development is critical. By identifying and targeting new markets, businesses can expand their customer base and increase revenue. Strategic planning for small businesses is essential, as these businesses often have limited resources and must make every dollar count. Small companies can overcome challenges and succeed by focusing on planning and strategic management.

What does Strategic Planning Involve?

Business planning strategy involves analyzing the company's strengths, weaknesses, opportunities, and threats and identifying the best methods for success.

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Essentials of Strategy Planning

In planning and strategic management, it is essential to consider the unique challenges facing small businesses. Strategic planning for small businesses should prioritize flexibility and adaptability, as these businesses often operate in highly dynamic environments.

Past and Present Data Analysis

Past and present data analysis is essential for the business planning process and the business planning strategy. By examining historical data and current performance metrics, businesses can gain insights and identify opportunities for growth and development.

For example, past and present data analysis can help to make informed decisions about inventory management techniques and the purchasing process . By analyzing past sales data and inventory levels, businesses can determine which products are most popular among customers and ensure sufficient inventory to meet demand.

Insightful Analysis of Market Dynamics

Insightful analysis of market dynamics is an important component of the business planning process, particularly in the supply chain management process . By analyzing past demand and supply fluctuations, businesses can identify trends and patterns in the market and develop effective strategies for managing their supply chain.

In addition, insightful analysis of market dynamics is also essential when developing a business plan.

Following a Unique Approach to Planning

Following a unique approach to planning is critical to the business planning process, particularly in business strategic development. With a unique strategy, businesses can create a competitive advantage in the market.

Business level strategy in strategic management also plays a key role in following a unique approach to planning. Focusing on a specific market niche or target audience, businesses can tailor their strategy for market development to meet customers' needs.

Scenario Analysis Based on Relevant Inputs

Scenario analysis is an important aspect of the business planning process and is particularly relevant in business strategic development and business level strategy in strategic management. As businesses develop their strategies, they must consider a range of possible future scenarios and their potential impact on the company's value.

This process is also important in the business planning process in entrepreneurship, as entrepreneurs develop their business plans and strategies. By conducting scenario analysis, entrepreneurs can identify potential risks and opportunities and focus on developing a business plan and strategy to mitigate risk and capitalize on opportunities.

Risk Mitigation Measures to Minimize Loss

Risk mitigation measures are crucial in minimizing the losses a company may face due to unforeseen events. These measures help to identify and evaluate potential risks that could negatively impact the company.

Strategic management planning plays a crucial role in identifying potential risks and creating a risk mitigation plan in the business planning process. A risk management plan should be part of the business plan steps.

Business strategic planning should incorporate risk assessment and mitigation as a part of the overall planning process. A comprehensive understanding of potential risks is necessary for a successful business planning process in entrepreneurship. 

BMGI's Approach to Strategy Planning

After working with different kinds of businesses, BMGI has developed a robust process for business strategy planning. It encompasses all the aspects required for the best business strategy planning.

For long-term goals, BMGI focuses on the following three aspects:

• Defining the strategy
• Establish how to implement the strategy
• Implementing the strategy and managing the changes

BMGI has a process in place for businesses to define how to implement their strategy as follows:

External Assessment

BMGI recommends the analysis of-

• Market and Customers
• Competition
• Probable Trends of the Future
• PESTEL (Political, Economic, Social, Technological, Environmental, Legal)

Internal Assessment

Discover your business's SWOT (Strengths, Weaknesses, Opportunities, Threats) and compare them against various scenarios to determine your position.

The assessments mentioned above, along with the understanding of its impact, in the long run, enable businesses to plan their business strategy efficiently.

Impact Areas of Strategic Planning

While the impact areas of strategic planning may vary depending on the organization and industry, here are some common areas where business strategic planning can have an impact:

Organic Growth Strategy

Organic growth strategy focuses on growing the organization's existing business lines.

Business Unit Strategy

This growth route focuses on analyzing and implementing strategies for each business unit.

Corporate Strategy

Corporate strategy requires knowledge of the business level strategy in strategic management. In this strategy, the senior management steers the direction of the entire organization based on its core principles and values.

Emerging Markets Strategy

In this strategy, businesses look out for opportunities in places with the potential for promising growth. Entrepreneurs must have a solid business planning process to successfully enter and expand in new and emerging markets. A well-defined business planning process in entrepreneurship can be the difference between success and failure.

Sustainable Growth Strategy

The sustainable growth strategy is a critical component of the business planning process. This strategy involves taking meaningful steps toward the future while considering the unpredictable changes that may arise.

Measuring the Success of Your Business Plan and Strategy

Here are some key steps you can take to measure the success of your business plan and strategy:

Setting Measurable Goals and Objectives

It is essential to set measurable goals and objectives to measure the success of your business plan and strategy.

• Determine your business goals: First, you need to identify your goals with your business growth plan. It could be increasing revenue, expanding market share, or improving customer satisfaction.
• Define your objectives: Once you have identified your business goals, break them down into specific, measurable, and achievable objectives that are relevant and time-bound.

By setting measurable goals, you can track your progress over time and measure the success of your strategy.

Tracking Key Performance Indicators (KPIs)

Here are some steps to follow to measure the success of your business plan and strategy by tracking KPIs:

• Identify the relevant KPIs: Once you have defined your objectives, identify the KPIs that are relevant to each objective.
• Set targets for each KPI: Once you have identified the KPIs, set targets for each one. These targets should be realistic and aligned with your business objectives.
• Track and analyze the KPIs: Once you have set targets for each KPI, start tracking them regularly.

Conducting Regular Performance Reviews

• Adjust your strategy: Based on your data analysis, adjust your business growth plan or planning in business management as necessary.
• Implement Business Process Outsourcing: Consider implementing business process outsourcing to help you achieve your strategic planning for small businesses. What is Business Process Outsourcing? It is a business practice where a company outsources non-core business functions or processes to a third-party provider.
• Review your performance against benchmarks regularly and adjust your strategy as necessary. This planning and strategic management process will help you stay on track and achieve your business goals.

Soliciting Customer Feedback

• Collect customer feedback: Collect customer feedback through surveys, focus groups, or social media platforms.
• Analyze the feedback: Once you have collected customer feedback, analyze it to identify areas for improvement.
• Implement changes: Use your collected feedback to change your business strategy.
• Measure the impact: Use the same KPIs you used to track your progress before to determine if the changes have positively or negatively impacted your business.
• Adjust your strategy: Based on the impact of your changes, adjust your business strategy as needed.

Examples of Successful Business Planning Process and Strategy

Toyota's US invasion in the '70s

Cars have had an enormous impact on Americans since the good old days. The three biggest American car companies ruled over the car market in the US. However, the Japanese car manufacturer, Toyota, did a market analysis and started selling cheaper and more efficient cars during the '70s.

The US car companies did not worry about Toyota at first. They thought Toyota must lose money exporting their vehicles to the US at such low prices. However, within a few years, Toyota started production in the US.

Toyota soon became the largest car company in the US. But what was their business strategy for growth?

Of course, Toyota was using the cost leadership strategy. However, Toyota's manufacturing process was so efficient that it cost them far less to produce cars than American companies. Besides, Toyota's supply chain management was their business strategy for growth, and it made a crucial difference in Toyota's survival. It was also a part of its business planning process.

The multi-billion-dollar idea began with the founders of Airbnb renting their mattresses to strangers. It was a business space no one had explored before.

They struggled to meet ends initially but saw potential in their idea. So, the founders created a website where people could rent their mattresses to travelers and strangers.

There were some scattered online bookings, but they needed to be more to be sustainable. The founders conducted an operational analysis and discovered the problem with poorly presented listings.

They visited all the nearby locations where people were renting out their mattresses. They moved things around to make them look more pleasing and clicked photos. After adding images to their website, the bookings started pouring in.

Then, they hired professional photographers to click photos of all the listings and their owners. The online orders kept skyrocketing. The founders of Airbnb analyzed data to discover the one problem keeping them from succeeding in their revolutionary idea. Airbnb is now valued at over 100 billion Dollars!

A clear understanding of the business planning process and a well-developed plan can help set the foundation for growth and profitability.

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What questions should be asked in a business plan?

The vital questions to ask in a business plan are as follows:

• What makes you different?
• Who is your audience?
• How will you make profits?
• How will you promote your business?
• How will you get started?

What is the most important part of your business plan?

The executive summary is the most important part of your business plan. It contains the overview of your entire business plan and everything it encompasses.

How many years should a business plan cover?

It is recommended to have a business plan of at least one year to 3 years to address your business goals and possible objections.

How do you overcome lack of planning?

• Automate repetitive tasks such as data entry
• Set up a network between all your software so that your position is constantly getting updated
• Improve the communication between all the departments in your company
• Deploy cloud-based technologies for effectively sharing information

What are the barriers to planning?

Here is a list of things that become barriers to planning:

• Incompetent leaders
• Continuous distractions
• Limited resources for task completion
• Impractical expectations in senior management

How to define companies Vision and Mission?

A company's vision statement lists what an organization wants to represent in society. A mission statement lists the things a company does to achieve its vision.

What financial projections should I include in my business plan?

Common financial projections that most business plans consist of are sales forecast, profit and loss statement, cash flow statement, balance sheet, break-even analysis, and capital expenditure budget.

How do I revise and update my business plan as my business evolves?

To revise and update your business plan:

• Set aside time for review
• Analyze your financial performance and other key performance indicators (KPIs).
• Identify new opportunities for growth and challenges that may require adjustments to your business plan.
• Use the insights you have gained from your evaluation to update your business plan.
• Communicate changes with stakeholders
• Set new targets and milestones for your business.

How do I identify my target audience and develop a marketing strategy?

·        Identify your target audience's demographics, preferences, behaviors, and needs through market research.

·        Use the insights from your market research to create detailed profiles of your target audience.

·        Determine your unique selling proposition (USP)

·        Define your marketing goals.

·        Choose your marketing channels.

·        Tailor your marketing content to your target audience and communicate your USP.

·        Test and refine your marketing strategy to optimize your results.

Who benefits from a good business strategy?

A good business strategy can benefit both the business and the consumers.

Product Updates

Strategic Planning Process: Why Is Strategic Planning Important for Organizations in 2024?

What to read next:

Playing chess without a strong opening is a guaranteed way to disadvantage yourself. Just like in chess, organizations without an adequate strategic planning process are unlikely to thrive and adapt long-term. 

The strategic planning process is essential for aligning your organization on key priorities, goals, and initiatives, making it crucial for organizational success.   

This article will empower you to craft and perfect your strategic planning process by exploring the following:  

• What is strategic planning
• Why strategic planning is important for your business  
• The seven steps of the strategic planning process   

Strategic planning frameworks

• Best practices supporting the strategic planning process  

By the end of this article, you’ll have the knowledge needed to perfect the key elements of strategic planning. Ready? Let’s begin.  

What is strategic planning?

Strategic planning charts your business's course toward success. Using your organization’s vision, mission statement , and values — with internal and external information — each step of the strategic planning process helps you craft long-term objectives and attain your goals with strategic management.  

The key elements of strategic planning includes a SWOT analysis, goal setting , stakeholder involvement, plus developing actionable strategies, approaches, and tactics aligned with primary objectives.  

In short, the strategic planning process bridges the gap between your organization’s current and desired state, providing a clear and actionable framework that answers:   Where are you now?   Where do you want to be?   How will you get there?

7 key elements of strategic planning 

The following strategic planning components work together to create cohesive strategic plans for your business goals. Let’s take a close look at each of these:  

• Vision : What your organization wants to achieve in the future, the long-term goal  
• Mission : The driving force behind why your company exists, who it serves, and how it creates value  
• Values : Fundamental beliefs guiding your company’s decision-making process  
• Goals : Measurable objectives in alignment with your business mission, vision, and values  
• Strategy : A long-term strategy map for achieving your objectives based on both internal and external factors  
• Approach : How you execute strategy and achieve objectives using actions and initiatives   
• Tactics : Granular short-term actions, programs, and activities  

Why is the strategic planning process important?

Just as a chess player needs a gameplan to reach checkmate, a company needs a solid strategic plan to achieve its goals.   

Without a strategic plan, your business will waste precious time, energy, and resources on endeavors that won’t get your company closer to where it needs to be.   

Your ideal plan should cover all key strategic planning areas, while allowing you to stay present by measuring success and course-correcting or redefining the strategic direction when necessary. Ultimately, enabling your company to stay future-proof through the creation of an always-on strategy that reflects your company's mission and vision.   

An always-on strategy involves continuous environmental scanning even after the strategic plan has been devised, ensuring readiness to adapt in response to quick, drastic changes in the environment.

Let’s dive deeper into the steps of the strategic planning process.  

What are the 7 stages of the strategic planning process?

You understand the overall value of implementing a strategic planning process — now let’s put it in practice. Here's our 7-step approach to strategic planning that ensures everyone is on the same page:  

• Clarify your vision, mission, and values  
• Conduct an environmental scan  
• Define strategic priorities  
• Develop goals and metrics  
• Derive a strategic plan  
• Write and communicate your strategic plan  
• Implement, monitor, and revise   

1. Clarify your vision, mission, and values 

The first step of the strategic planning process is understanding your organization’s core elements: vision, mission, and values. Clarifying these will align your strategic plan with your company’s definition of success. Once established, these are the foundation for the rest of the strategic planning process.   

Questions to ask:

• What do we aspire to achieve in the long term?
• What is our purpose or ultimate goal?
• What do we do to fulfill our vision?
• What key activities or services do we provide?
• What are our organization's ethics?
• What qualities or behaviors do we expect from employees?

Read more: What is Mission vs. Vision  

2. Conduct an environmental scan

Once everyone on the same page about vision, mission, and values, it's time to scan your internal and external environment. This involves a long-term SWOT analysis, evaluating your organization’s strengths, weaknesses, opportunities, and threats.  

Internal factors 

Internal strengths and weaknesses help you understand where your organization excels and what it could improve. Strengths and weaknesses awareness helps make more informed decisions with your capabilities and resource allocation in mind.  

External factors

Externally, opportunities and threats in the market help you understand the power of your industry’s customers, suppliers, and competitors. Additionally, consider how broader forces like technology, culture, politics, and regulation may impact your organization.   

• What are our organization's key strengths or competitive advantages?
• What areas or functions within our organization need improvement?
• What emerging trends or opportunities can we leverage?
• How do changes in technology, regulations, or consumer behavior impact us?

3. Define strategic priorities

Prioritization puts the “strategic” in strategic planning process. Your organization’s mission, vision, values, and environmental scan serve as a lens to identify top priorities. Limiting priorities ensures your organization intentionally allocates resources.  

These categories can help you rank your strategic priorities:  

• Critical : Urgent tasks whose failure to complete will have severe consequences — financial losses, reputation damage, or legal consequences  
• Important : Significant tasks which support organizational achievements and require timely completion  
• Desirable : Valuable tasks not essential in the short-term, but can contribute to long-term success and growth  
• How do these priorities align with our mission, vision, and values?
• Which tasks need to be completed quickly to ensure effective progress towards our desired outcomes?
• What resources and capabilities do we need to pursue these priorities effectively?

4. Develop goals and metrics

Next, you establish goals and metrics to reflect your strategic priorities. Purpose-driven, long-term, actionable strategic planning goals should flow down through the organization, with lower-level goals contributing to higher-level ones.  

One approach that can help you set and measure your aligned goals is objectives and key results (OKRs). OKRs consist of objectives, qualitative statements of what you want to achieve, and key results, 3-5 supporting metrics that track progress toward your objective.  

OKRs ensure alignment at every level of the organization, with tracking and accountability built into the framework to keep everyone engaged. With ambitious, intentional goals, OKRs can help you drive the strategic plan forward.  

• What metrics can we use to track progress toward each objective?
• How can we ensure that lower-level goals and metrics support and contribute to higher-level ones?
• How will we track and measure progress towards key results?
• How will we ensure accountability?

Get an in-depth look at OKRs with our Ultimate OKR Playbook

5. Derive a strategic plan

The next step of the strategic planning process gets down to the nitty-gritty “how” — developing a clear, practical strategic plan for bridging the gap between now and the future.   

To do this, you’ll need to brainstorm short- and long-term approaches to achieving the goals you’ve set, answering a couple of key questions along the way. You must evaluate ideas based on factors like:  

• Feasibility : How realistic and achievable is it?  
• Impact : How conducive is it to goal attainment?  
• Cost : Can we fund this approach, and is it worth the investment?  
• Alignment : Does it support our mission, vision, and values?  

From your approaches, you can devise a detailed action plan, which covers things like:  

• Timelines : When will we take each step, and what are the deadlines?  
• Milestones : What key achievements will ensure consistent progress?  
• Resource requirements : What’s needed to achieve each step?  
• Responsibilities : Who's accountable in each step?  
• Risks and challenges : What can affect our ability to execute our plan? How will we address these?  

With a detailed action plan like this, you can move from abstract goals to concrete steps, bringing you closer to achieving your strategic objectives.  

6. Write and communicate your strategic plan

Writing and communicating your strategic plan involves everyone, ensuring each team is on the same page. Here’s a clear, concise structure you can use to cover the most important strategic planning components:  

• Executive summary : Highlights and priorities in your strategic overview   
• Introduction : Background on your strategic plan  
• Connection : How your strategic plan aligns with your organization’s mission, vision, and values  
• Environmental scan : An overview of your SWOT analysis findings  
• Strategic priorities and goals : Informed short and long-term organizational goals  
• Strategic approach : An overview of your tactical plan   
• Resource needs : How you'll deploy technology, funding, and employees  
• Risk and challenges : How you’ll mitigate the unknowns if and when they arise  
• Implementation plan : A step-by-step resource deployment plan for achieving your strategy  
• Monitoring and evaluation : How you’ll keep your plan heading in the right direction  
• Conclusion : A summary of the strategic plan and everything it entails  
• What information or context do stakeholders need to understand the strategic plan?
• How can we emphasize the connection between the strategic plan and the overall purpose and direction of the organization?
• What initiatives or strategies will we implement to drive progress?
• How will we mitigate or address risks?
• What are the specific steps and actions we need to take to implement the strategic plan?
• Any additional information or next steps we need to communicate?

7. Implement, monitor, and revise performance 

Finally, it’s time to implement your strategic plan, making sure it's up to date, creating a persistent, always-on strategy that doesn't lag behind. As you get the ball rolling, keep a close eye on your timelines, milestones, and performance targets, and whether these align with your internal and external environment.   

Internally, indicators like completions, issues, and delays provide visibility into your process. If any bottlenecks, inefficiencies, or misalignment arises, take corrective action promptly — adjust the plan, reallocate resources, or provide additional training to employees.  

Externally, you should monitor changes such as customer preferences, competitive pressures, economic shifts , and regulatory changes. These impact the success of your strategic action plan and may require tweaks along the way.   

Remember, implementing a strategic plan isn’t a one-time task — continual evaluation is essential for an always-on strategy. It involves extending beyond planning stages and contextualizing the strategy in real-time, allowing for swift adaptations to changing circumstances to ensure your plan remains relevant.

• Are there any bottlenecks, inefficiencies, or misalignments we need to address?
• Are we monitoring and analyzing external factors?
• Are we prepared to make necessary tweaks or adaptations along the way?
• Are we agile enough to promptly correct deviations from our strategic plan while maintaining an "always-on" strategy for continual adjustments?

You can use several frameworks to guide you through the strategic planning process. Some of the most influential ones include:

• Balanced scorecard (BSC) : Takes an overarching approach to strategic planning, covering financial, customer, internal processes, and learning and growth, aligning short-term operational tasks with long-term strategic goals.
• SWOT analysis : Highlights your business's internal strengths and weaknesses alongside external opportunities and threats to enable informed decisions about your strategic direction.
• OKRs : Structures goals as a set of measurable objectives and key results. They cascade down from top-level organizational objectives to lower-level team goals, ensuring alignment across the entire organization. Get an in-depth look at OKRs here . 
• Scenario planning : Involves envisioning and planning for various possible future scenarios, allowing you to prepare for a range of potential outcomes. It's particularly useful in volatile environments rife with uncertainties.
• Porter's five forces : Evaluates the competitive forces within your industry — rivalry among existing competitors, bargaining power of buyers and suppliers, threat of new entrants, and threat of substitutes — to shape strategies that position the organization for success.

Common problems with strategic planning and how to overcome them

While strategic planning provides a roadmap for business success, it's not immune to challenges. Recognizing and addressing these is crucial for effective strategy implementation. Let's explore common issues encountered in strategic planning and strategies to overcome them.

Static nature

Traditional strategic planning models often follow a linear, annual, and inflexible process that doesn't accommodate quick changes in the business landscape. Strategies formulated this way may quickly become outdated in today's fast-paced environment.

To overcome the rigidity of traditional strategic planning, your organization should integrate continuous environmental scanning processes. This includes monitoring market changes, competitor actions, and technological advancements, ensuring real-time insights inform strategic decision-making. Additionally, adopting agile methodologies allows for iterative planning, breaking down strategies into smaller, manageable components reviewed and adjusted regularly, ensuring adaptability in today's fast-paced landscape.

Disconnect between strategic plan and execution

There's often a significant gap between the strategic objectives and their actual implementation, leading to misalignment, confusion, and inefficiency within the organization.

To bridge the gap, ensure accountability, alignment, and feedback-driven processes across the business. Linking team roles and responsibilities to lower-level objectives can fosters alignment and accountability, whereas aligning these with overarching strategic objectives ensure coherence in execution. To ensure goals are optimized on an ongoing basis, implement a feedback mechanism that continuously evaluates progress against goals, enabling regular adjustments based on market feedback and internal insights.

Lack of real-time insights

Traditional planning models rely on historical data and periodic reviews, which might not capture real-time changes or emerging trends accurately. This can result in misaligned strategies unsuitable for the current business landscape.

Leverage advanced analytics tools and AI-driven technologies. Invest in technologies that offer real-time tracking and reporting of key performance indicators, with dashboards and monitoring systems that provide up-to-date insights. These allow you to gather, process, and interpret real-time data for proactive decision-making that aligns with the current business landscape. 

Failure to close the feedback loop

The absence of a feedback loop between strategy formulation, execution, and evaluation can impact learning and improvement. Companies might therefore struggle to refine their strategies based on real-time performance insights.

Establish a structured feedback loop encompassing strategy formulation, execution, and evaluation stages. Encourage employees to actively contribute insights on strategy execution, fostering a culture of continuous improvement and adaptation.

Best practices during the strategic planning process

Navigating strategic planning goes beyond overcoming challenges. A successful strategic plan requires you to embrace a set of guiding best practices, helping you navigate the development and implementation of your strategic planning process.   

1. Keep the planning process flexible

With ever-changing business environments, a one-and-done approach to strategic planning is insufficient. Your strategic plan needs to be adaptable to ensure its relevancy and its ability to weather the effects of changing circumstances.  

2. Pull together a diverse group of stakeholders

By including voices from across the organization, you can account for varying thoughts, perspectives, and experiences at each step of the strategic planning process, ensuring cross-functional alignment .  

3. Document the process

Continuous documentation of the strategic management process is crucial in capturing and communicating the key elements of strategic planning. This keeps everyone on the same page and your strategic plan up-to-date and relevant.  

4. Make data-driven decisions

Root your decisions in evidence and facts rather than assumptions or opinions. This cultivates accurate insights, improves prioritization, and reduces biased (flawed) decisions.  

5. Align your company culture with the strategic plan 

Your strategic plan can only be successful if everyone is on board with it — company culture supports what you’re trying to achieve. Behaviors, rules, and attitudes optimize the execution of your strategic plan.  

6. Leverage AI 

Using AI in strategic planning supports the development of an always-on strategy — amplifying strategic agility, conducting comprehensive environmental scans, and expediting planning phases. It can streamline operations, facilitate data-driven decision-making, and provide transparent insights into progress to drive accountability, engagement, and alignment with the strategic plan.

The strategic planning process in a nutshell

Careful strategy mapping is crucial for any organization looking to achieve its long-term goals while staying true to its mission, vision, and values. The seven steps in the strategic planning process outlined in this article provide a solid framework your organization can follow — from clarifying your organization’s purpose and developing a strategic plan, to implementing, monitoring, and revising performance. These steps will help your company meet goal measurements and create an always-on strategy that's rooted in the present. 

It’s important to remember that strategic planning is not a one-time event. To stay effective and relevant, you must continuously monitor and adapt your strategy in response to changing circumstances. This ongoing process of improvement keeps your organization competitive and demonstrates your commitment to achieving your goals.  

Quantive empowers modern organizations to turn their ambitions into reality through strategic agility. It's where strategy, teams, and data come together to drive effective decision-making, streamline execution, and maximize performance.  

As your company navigates today’s competitive landscape, you need an Always-On Strategy to continuously bridge the gap between current and desired business outcomes. Quantive brings together the technology, expertise, and passion to transform your strategy from a static plan to a feedback-driven engine for growth.  

Whether you’re a visionary start-up, a mid-market business looking to conquer, or a large enterprise facing disruption, Quantive keeps you ahead — every step of the way. For more information, visit www.quantive.com . 

Additional resources

How top companies are closing the strategy execution gap, strategy execution in 4 steps: keys to successful strategy, 7 best practices for strategy execution, why your business needs strategy execution software, subscribe for our newsletter.

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Business planning is the collection of steps necessary for business success. 

Your business planning uses your business plan as a reference document. A business plan helps you stay the course. A business plan also increases your chances of getting investment , funding, debts, etc. 

Every business executives meeting is a part of business planning as they discuss the business’s current situation and make a plan on how to improve that situation. 

Three Types of Business Planning Necessary for Long-term Business Success

6 step business planning process.

• Do Research For Your Business Idea
• Develop Business Strategy
• Forecast Financials
• Create a Business Plan
• Revise Business Plan
• Create a Business Plan Presentation

Business success is a moving target and your business plan will need to change as the business circumstances change. A business plan will need to change for different goals too. 

Hit the moving target of business financial success with these three business planning tools. 

Sales Forecasting Plan 

The sales forecast gives an estimate of the good and product sales for a certain time and the estimated revenues. 

Sales forecasts tend to change with industry trends, changes in the economy, and changes in customer buying preferences. 

Cash Flow Analysis Plan 

If we can say it in one line, ‘never run out of cash’. 

Plan on how you will maintain business cash flow. Having large orders in line is not enough. If you have to spare resources for that project, you may run out of cash by the time you can invoice for that project. 

Make a schedule of refreshing cash flow projections and have a contingency plan for any cash shortages with a business financing or debt. 

Business Contingency Plan 

A business contingency plan is how you’ll handle crises and disasters like fire, flood, or building collapse. 

Your contingency plan protects you, your customers, and your employees against a disaster. It will also help you resume operations after a crisis as soon as possible 

In the following sections, we provide more detail on each key step.  

Access our free business plan examples now!

Do research for your business idea .

Your research for verifying your business idea starts with the target market research . 

For example, you are planning on starting a florist business. Start with doing a local survey and see how many florist shops are there in your locality.

Check how many new florist shops were opened or closed in the last year. You’ll understand some dynamics of your target market with only this data. 

Do you plan to go beyond the block and create a florist shop that will attract customers from every nook and corner of the city? Look into the products your competition offers and work on creating innovation. 

You can use market surveys, customer feedback, reviews, industry reports, or any credible source of information available for your industry. 

Further, document your research. You can use online tools like Google Docs, Dropbox Paper, Evernote, etc. This research will help you draft your business plan and will serve as the bases of your business strategy.

Pro Tip: Here is step by step guide on how to find the right business idea .

Get Market Research & Market Analysis Done by Professionals

Hire professional market researchers from WiseBusinessPlans and take a solid start. 

Develop Business Strategy 

What is business strategy? Here is how Harvard Business Review defines it.

“A business strategy is a set of guiding principles that, when communicated and adopted in the organization, generates a desired pattern of decision making”.

A simpler definition of business strategy can be that this is the way you should allocate resources to achieve your business goals. 

When developing a business strategy, consider your short-term goals and long-term goals. Your strategy will be different for each. 

To separate business strategy from business planning, a strategy is a direction, planning is the collection of steps you will take to move in that direction. Stay the course but you can change how you walk. 

Since this is your pre-launch phase, you can look into different business strategies and pick the most suitable one for your business. 

Forecast Financials 

Your business financial forecast includes the expected investments or expenses and expected revenues. 

The crux of a financial forecast for your business plan is to give a simple, straightforward financial growth plan. 

One big hallmark of your business growth is making breakeven. When your business is making a break-even, you have made progress. 

Here is how you can calculate breakeven . 

Put forecast numbers in your business financial model and prepare an income statement that will help you determine how much funding you’ll need in the first year to survive. 

Your projected financial statements give insight into business operations and performance. You can measure business performance for a quarter, a year, or any period you want. You can also see the details of assets and liabilities and business financial position. 

Create a Business Plan 

You have the knowledge and data to write a business plan . You have also created projected financial statements. Now is the time to draft your business plan. 

Start drafting your business plan from business overview to appendix (write an executive summary at the end). You have everything already, now you just have to put the pieces together. 

Creating a business plan seems like a hard task!

Get our business plan service now!

Revise Business Plan 

When you have written your business plan, make sure to proofread and revise it for any grammatical or factual errors. 

Also, revising a business plan gives you a chance to go over your business idea and its execution once again. You may come up with a new idea or a new way to do something. 

If you can, ask someone you trust with business experience to review your business plan. Many times, their insights are valuable and can help you improve your plan. 

Create a Business Plan Presentation 

Half of the work in securing funding for your business idea is a killer presentation. 

Simple ideas stick to our minds. Follow the K.I.S.S principle (K.I.S.S is ‘keep it simple, stupid).

One part of the business plan presentation is the graphics work. If your document or slides are designed by a professional designer, you’ll have a better shot at success. 

Use these five tips for improving your business plan presentation. 

• Know your audience and their backgrounds and tailor your presentation to that
• Keep your presentation simple, strip it to the most essential details only 
• Address weaknesses openly and give your contingency plan for them
• Know and verify numbers 
• Research your competitors to show you understand the market 

Recommended: If you want to design a cover page for a business plan by yourself you can follow business plan cover page . It has professional cover page examples to simply download and use. However, If you want to design it by a professional business plan designer then here is our business plan template design service. You can also hire our business plan writing services .

The business planning process is a systematic approach to developing a strategic plan for a business. It involves analyzing the current business environment, setting goals and objectives, identifying strategies, creating an action plan, and regularly reviewing and adjusting the plan as needed.

The business planning process is important because it provides a roadmap for the business’s success. It helps business owners and managers align their efforts, make informed decisions, identify potential risks and opportunities, and allocate resources effectively to achieve their goals.

The key steps in the business planning process typically include conducting a situational analysis, setting SMART goals and objectives, conducting market research, developing strategies, creating an action plan, implementing the plan, and regularly monitoring and evaluating progress.

The duration of the business planning process can vary depending on the size and complexity of the business and the scope of the plan. It can range from a few weeks for a simple plan to several months for a more comprehensive strategic plan.

Ideally, the business planning process should involve key stakeholders such as business owners, managers, department heads, and relevant employees. It can also be beneficial to seek external expertise or involve consultants, industry experts, or advisors to gain valuable insights and perspectives.

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Strategic Planning Process Definition, Steps and Examples

Published: 03 January, 2024

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Digital Strategy

Table of Contents

Organizations use Strategic Planning to gather all their stakeholders to evaluate the collection of current circumstances and decide upon their ongoing goals and benchmarks. They decide upon long-term objectives and establish a vision for the company’s future.

The efforts behind an organization’s Strategic Planning Processes are vital to its success, and yet, while many organizations acknowledge they need to do this kind of planning, they often don’t understand how to make it a reality. In this article, we explain the reasons behind Strategic Planning and how to make your Strategic Planning Process as powerful as possible.

What is a Strategic Plan

Strategic planning is a systematic process wherein the leaders of an organization articulate their vision for the future and delineate the goals and objectives that will guide the trajectory of the organization.

What is the Strategic Planning Process

Strategic planning is a process of defining an organization’s direction and making decisions on allocating its resources to pursue this direction . It involves creating a long-term plan that outlines the organization’s vision, mission, values, and objectives, as well as the strategies and tactics that will be used to achieve them.

Strategy is often misunderstood, which is surprising because fundamentally it’s a pretty basic concept. Strategy is a clearly expressed direction and a verified plan on how to get there. Your Strategic Planning Process formalizes the steps you’ll take to decide on your plan. The Strategic Planning Process facilitates using a Strategic Execution Framework that articulates where you’ll invest in innovation and where you can cut costs.

As far as business development planning is concerned, your Strategic Execution Framework is a vital tool for driving innovation, but first you must define the process you’ll undertake to determine how you and your team see the future of your organization. In this article, we discuss how to create your Strategic Plan and define its relationship to other concepts and documents that direct your business and its activities.

While it’s true that every business is different and must develop their own processes, we believe there are some process  of strategic planning stepsthat benefit all organizations.

Below are our recommendations for the steps to take when undergoing your Strategic Planning Process, along with the questions we suggest you answer during each specific step.

Step One: Analyze your Business Environment

• Who are your competitors?
• What relevant market data do you have, and what do you still need?
• What technology has emerged that impacts your business model?
• How have customer expectations changed since your last Strategic Plan?
• What advantages do you have over competitors?
• Where is your company weaker compared to competitors?
• What predictable complications are on the horizon?
• Which unpredictable complications seem most likely or most potentially impactful?

Step Two: Set your Strategic Direction

• What is your overall Business Purpose ?
• How have your operations reflected your Purpose and Goals recently?
• How should your operations reflect your Purpose and Goals?
• Where do you see your business going in the next year?
• In two years? In three years?
• What are the metrics you’ll use to measure success?
• What are your make-or-break necessities?

Step Three: Set and develop Strategic Goals and Strategic Objectives

• Have you considered short-, mid-, and long-term business goals , and what are they?
• How do your Strategic Goals reflect your Mission Statement?
• How do your Strategic Goals reflect your company values and vision?
• What daily operations must be completed to work toward your Strategic Objectives?
• How will you communicate your Strategic Goals and Strategic Objectives?
• Who is responsible for reporting on success?
• How will strategic data be collected?

Related: Strategic Goals: Examples, Importance, Definitions and How to Set Them

Step Four: Drill down to Department-Level Objectives

• What are specific department concerns?
• How will your budget influence and be influenced by your Strategic Goals and Objectives?
• Which departments have resources that could be shared to better advantage?
• What roles do individual departments play in your overall Strategic Goals?
• What ongoing projects become a priority because of your new Strategic Goals?
• Are Departmental Objectives complementing each other and the overall Business Model?

Step Five: Manage and Analyze Performance

• Who is on the Strategic Planning team?
• Are tasks and job descriptions properly aligned to ensure the right work is getting completed?
• What is the schedule for the meeting for Strategic Planning?
• What are your metrics for measuring performance and success?
• Have you clearly articulated and shared KPIs?
• Who is responsible for gathering data?
• How will data be collected?
• How will data be reported?
• What’s at stake for strategy success or failure?

Step Six: Review and develop your Strategic Plan

• How should your Strategic Plan look on paper?
• What is your Strategy Execution Framework —how will you guarantee the Strategic Plan Team’s decisions are respected and executed?
• What is the review process?
• How often do you evaluate your Strategic Plan?
• How will you communicate your final Strategic Plan?

Strategic Planning Process Examples

1) apple strategic plan process.

• Vision and Mission: Apple’s strategic planning begins with a clear vision and mission. Apple’s vision is to create innovative products that inspire and enrich people’s lives.
• Environmental Analysis: Apple conducts thorough environmental analyses, considering technological trends, market demands, and competitive landscapes. This includes staying at the forefront of cutting-edge technologies.
• SWOT Analysis: Apple evaluates its strengths, weaknesses, opportunities, and threats. For example, one of Apple’s strengths is its strong brand image, while a weakness might be dependence on a limited product line.
• Setting business Goals and Objectives: Apple sets specific, measurable, achievable, relevant, and time-bound (SMART) goals. This could include objectives like maintaining a certain market share, launching new products, or achieving specific financial targets.
• Strategies and Tactics: Apple develops strategies based on its goals. For instance, a strategic move might be expanding its ecosystem by integrating hardware, software, and services. Tactics could include aggressive marketing campaigns and product launches.
• Implementation and Execution: Apple’s strategic plans are meticulously executed. The launch of iconic products like the iPhone, iPad, and Mac series demonstrates effective implementation of their strategies.
• Monitoring and Adjusting: Apple constantly monitors its performance metrics, customer feedback, and market dynamics. If necessary, adjustments are made to the strategic plan to stay responsive to changing conditions.

2) Tesla Strategic Plan Process

• Vision and Mission: Tesla’s strategic planning revolves around its mission to accelerate the world’s transition to sustainable energy. The vision includes producing electric vehicles and renewable energy solutions.
• Market Analysis: Tesla analyzes global markets for electric vehicles, renewable energy, and energy storage. This involves understanding regulatory environments, consumer behaviours, and technological advancements.
• Risk Assessment: Tesla conducts risk assessments related to manufacturing, supply chain, and market volatility. For instance, it considers risks associated with battery production and global economic conditions.
• Setting Bold Objectives: Tesla is known for setting ambitious objectives, such as achieving mass-market electric vehicle adoption and establishing a robust network of charging stations worldwide.
• Innovative Strategies: Tesla’s strategic planning involves innovation in technology and business models . For instance, the “Gigafactories” for mass production of batteries and the “Autopilot” feature in vehicles reflect innovative strategies.
• Agile Adaptation: Due to the rapidly changing automotive and energy sectors, Tesla maintains an agile approach. The company adapts its plans swiftly to capitalize on emerging opportunities, as seen in the expansion of its energy products.
• Continuous Improvement: Tesla places emphasis on continuous improvement. The iterative development of electric vehicle models, software updates, and advancements in battery technology showcase a commitment to refinement.

These examples demonstrate how strategic planning is a dynamic and integral part of the business processes of leading companies. They highlight the importance of a well-defined vision, rigorous analysis, adaptability, and innovation in the strategic planning process.

Tactical vs. Strategic Planning Process

An easy way to distinguish your company’s Tactical Planning from your Strategic Planning is to separate your wants from your HOWs.

In your Strategic Planning, you identify what you WANT for the company. These are big-picture dreams (achievable, but big ) that are your definition of success. In your Tactical Planning, you identify the HOW for reaching those dreams, including the smaller necessary steps.

Each kind of planning is vital for securing the organization’s future, but they require different sorts of attention and philosophy, and teams that are good at planning one way may not necessarily be good at the other kind of planning.

Strategic Planning vs. Your Business Purpose

Your Strategic Planning Process will of course be deeply connected to your Business Purpose .

We like to think of Business Purpose in broad terms, choosing especially to think of a business’s role in massive transformation. Embedded within a Business Purpose is the Business Plan that directs operations and how a company delivers value to its customers.

What is the relationship between your Strategic Planning and your Business Purpose? One feeds into the other. Your Business Purpose must point to a larger impact you’ll have on the people who purchase your goods and services, and your Strategic Planning takes into account how you’ll grow and expand that Purpose as you reach more customers more successfully.

Strategic Planning vs Business Planning

Strategic planning and business planning are two distinct processes that are often used interchangeably, but they have some key differences.

Strategic planning is a top-level process that focuses on determining the direction of an organization over the long term. It involves setting goals, determining the key resources and actions necessary to achieve those goals, and allocating those resources in a way that best serves the organization’s future. The outcome of strategic planning is typically a long-term strategic plan that outlines the organization’s vision, mission, values, and objectives.

Business planning , on the other hand, is a more tactical process that focuses on the implementation of specific initiatives and projects to support the organization’s long-term goals. Business plans typically outline the steps necessary to launch a new product, enter a new market, or achieve a specific objective. They may also include budgets, marketing plans, and other operational details.

In short, strategic planning is about setting the direction for an organization, while business planning is about implementing specific initiatives to support that direction. Both processes are important for the success of an organization and should be used in conjunction to ensure that resources are allocated effectively and that the organization is moving in the right direction.

Why is Strategic Planning Important?

Imagine this scenario: A warehouse full of goods sits, unsold and unmoved. A collection of brilliant people languishes at desks all day. Outside, the world spins and changes. It’s ready for what these people could do, can do, and yet nothing happens. Needs remain unmet. Progress is halted. Everyday life takes several backwards steps. This is what your business will look like without proper Strategic Planning.

Strategic Planning forces you to consider your Strategic Objectives and critically compare them to the resources you have available. As you continuously evaluate the circumstances of your business and your customers, your Strategic Plan evolves to match your goals and business capabilities.

The process involved pushes decision-makers to practice Strategic Thinking . It limits wasteful spending, especially when upper-level managers are willing to forgo pet projects in favor of operations with a broader use and appeal.

Strategic Planning is important because it directs your resources to efficiently meet your overall Business Goals. Without Strategic Planning, you are likely to waste resources, make conflicting decisions, or fail to grow your business to its greatest potential.

When Do You Create a Strategic Plan?

Most businesses find value in reviewing their Strategic Plan every three years. This allows enough time to pass that you can evaluate the success of previous plans, reflect on the achievement of your Strategic Goals, consider developments outside your organization that affect your business, and begin formulating new goals that will become the next version of your plans.

When businesses first begin, they often have too many fires burning at once. They remain focused on existing today rather than planning for tomorrow. Most entrepreneurs remember those stressful early days of starting their businesses and can understand why formalities like Strategic Plans can fall by the wayside. We believe if your business lasts longer than a year it’s important to develop a plan for the future. Think of Strategic Planning as a celebration of a first anniversary—a sign that you’re poised to continue moving forward for years to come.

However, Strategic Planning is not a one-off event that is over once the cookies are all gone and the room clears. Your Strategic Planning team should meet regularly to measure how effective the plans are at helping you reach your Strategic Goals. Ad hoc subcommittees can play a role in gathering evidence to ensure that your plans remain appropriate, especially if conditions change.

For example, we recommended a close review of Strategic Plans and Strategic Goals once the COVID-19 pandemic made it clear that business was going to be affected at least short- to mid-term. We continue to recommend teams regularly revisit their Strategic Plans with global circumstances in mind to recognize opportunities and prepare for challenges.

The Benefits of Strategic Planning

As we’ve mentioned, there are many benefits of Strategic Planning . Some of those benefits include:

• Shared sense of power and importance
• United direction
• Clear path and purpose for decision-making and operations
• Boosted operational effectiveness
• Responsible, efficient use of available resources
• Meaningful work done on a daily basis
• Tracking of progress
• Ability to adjust to changing circumstances

What is a business without Strategic Planning? In most cases, it’s not much, nor is it long for the world. While it’s possible to accidentally find success without much planning, most successful businesses are a result of careful thought mixed with the urge to pounce on the opportunity.

What prepares you to pounce?

Your Strategic Planning and the processes that make it possible.

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Strategic Planning: Steps to Achieve Your Business Goals

The process of strategic planning is the core element of any business or other organization. In fact, strategic plans can even be applied to your own career and personal life. Despite being one of the most important elements of a business, strategic planning is often neglected by businesses, which tend to focus on a win-now approach. 

Each year, companies typically gather together a team to discuss strategy and plan for the next year. What comes out of that strategic planning meeting is key for what your company is going to be doing in the year to come and beyond and the goals that everyone will be working towards.

Strategic planning and management done right, can help lead you to success. On the other hand, weaker plans or those with less drive from the top can result in teams working at cross-purposes and significant market share losses…or worse. 

What is strategic planning?

Strategic planning is the process by which an organization establishes and revises its core long-term goals and creates a plan to achieve those goals. Strategic planning involves multiple review periods and continuous revisions to establish that the business is on the right strategic track. 

What is strategic management?

Strategic management is the overall control of the direction of your company based on current and planned capabilities to achieve a set of planned goals. In essence, this means that strategic planning is a part of the overall process of strategic management, which is a broader concept that includes implementation and review. For our purposes, we’ll look at strategic planning as encompassing the entire process of strategic management. Internally at your organization, you’ll also want to appoint some people to manage the strategy implementation, which is separate from the strategic planning process. 

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• Planning Process

Planning is the first primary function of management that precedes all other functions . The planning function involves the decision of what to do and how it is to be done? So managers focus a lot of their attention on planning and the planning process . Let us take a look at the eight important steps of the planning process.

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The planning function of management is one of the most crucial ones. It involves setting the goals of the company and then managing the resources to achieve such goals. As you can imagine it is a systematic process involving eight well thought out steps. Let us take a look at the planning process.

1] Recognizing Need for Action

An important part of the planning process is to be aware of the business opportunities in the firm’s external environment as well as within the firm.  Once such opportunities get recognized the managers can recognize the actions that need to be taken to realize them. A realistic look must be taken at the prospect of these new opportunities and SWOT analysis should be done.

Say for example the government plans on promoting cottage industries in semi-urban areas. A firm can look to explore this opportunity.

What are the Types of Plan?

2] Setting Objectives

This is the second and perhaps the most important step of the planning process. Here we establish the objectives for the whole organization and also individual departments . Organizational objectives provide a general direction, objectives of departments will be more planned and detailed.

Objectives can be long term and short term as well. They indicate the end result the company wishes to achieve. So objectives will percolate down from the managers and will also guide and push the employees in the correct direction.

Importance, Features, and Limitation of Planning here in detail .

3] Developing Premises

Planning is always done keeping the future in mind, however, the future is always uncertain. So in the function of management certain assumptions will have to be made. These assumptions are the premises. Such assumptions are made in the form of forecasts, existing plans, past policies, etc.

These planning premises are also of two types – internal and external. External assumptions deal with factors such as political environment, social environment , the advancement of technology , competition, government policies , etc. Internal assumptions deal with policies, availability of resources, quality of management , etc.

These assumptions being made should be uniform across the organization. All managers should be aware of these premises and should agree with them.

4] Identifying Alternatives

The fourth step of the planning process is to identify the alternatives available to the managers. There is no one way to achieve the objectives of the firm, there is a multitude of choices. All of these alternative courses should be identified. There must be options available to the manager.

Maybe he chooses an innovative alternative hoping for more efficient results. If he does not want to experiment he will stick to the more routine course of action. The problem with this step is not finding the alternatives but narrowing them down to a reasonable amount of choices so all of them can be thoroughly evaluated.

5] Examining Alternate Course of Action

The next step of the planning process is to evaluate and closely examine each of the alternative plans. Every option will go through an examination where all there pros and cons will be weighed. The alternative plans need to be evaluated in light of the organizational objectives.

For example, if it is a financial plan. Then it that case its risk-return evaluation will be done. Detailed calculation and analysis are done to ensure that the plan is capable of achieving the objectives in the best and most efficient manner possible.

6] Selecting the Alternative

Finally, we reach the decision making stage of the planning process. Now the best and most feasible plan will be chosen to be implemented. The ideal plan is the most profitable one with the least amount of negative consequences and is also adaptable to dynamic situations.

The choice is obviously based on scientific analysis and mathematical equations. But a managers intuition and experience should also play a big part in this decision. Sometimes a few different aspects of different plans are combined to come up with the one ideal plan.

7] Formulating Supporting Plan

Once you have chosen the plan to be implemented, managers will have to come up with one or more supporting plans. These secondary plans help with the implementation of the main plan. For example plans to hire more people, train personnel, expand the office etc are supporting plans for the main plan of launching a new product. So all these secondary plans are in fact part of the main plan.

8] Implementation of the Plan

And finally, we come to the last step of the planning process, implementation of the plan. This is when all the other functions of management come into play and the plan is put into action to achieve the objectives of the organization. The tools required for such implementation involve the types of plans- procedures, policies, budgets, rules, standards etc.

Solved Question for You

Q: _______ involves scientific analysis of the decision process

• Linear Programming
• Risk Analysis
• Operations Research
• None of the above

Ans: The correct option is C. Operation research is the application of scientific and mathematical methods to study and analyse problems involving complex systems. It is a powerful tool for decision making.

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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 Process Management

What is a business process? A complete guide

Whether you’re a line manager or individual contributor, you’ve undoubtedly heard the term business process thrown around in meetings and emails. Chances are you have a pretty good idea of what the term refers to, but this guide will ensure you have a definitive, clear understanding of its meaning.

We’ll go beyond simply defining what a business process is (and is not) to explore related terms and give examples of how each concept plays out in real life.

You’ll also hear from two business leaders, Aaron Alpeter and Stephen Roethe, on how they regularly create, refine, and implement processes at their companies to keep work on track, employees on task, and customers happy. Alpeter is the founder of izba , a supply-chain consulting, outsourcing, and technology firm. Roe is the founder and head of digital strategy at Grow Atom , an SEO agency for e-commerce stores.

Here’s an in-depth look at five key business-process terms and how to apply business-process concepts to your organization.

1. Business process

A business process is a set of connected tasks that an organization performs to achieve a specific goal, such as manufacturing a product or delivering a service.

“Business processes require you to create workflows and systemic methods to handle recurring tasks that give you a desired result,” says Roe. Consider what it takes to write an article or deliver an invoice to a customer. To produce those results, you have to take certain steps.

“When creating or refining a process, I recommend working backward,” says Roe. “Define the end result you want and walk through what it takes to get there.”

A process may be formal or informal. Organizations often record formal processes and perform them in the same manner every time. Informal processes are rarely codified, and their exact steps tend to vary depending on who’s performing them.

“Many people don’t realize that the work they do, even if it’s not formalized, is part of a process,” says Alpeter. “If there’s a defined outcome the person is trying to achieve, how they achieve that outcome is the process, regardless of whether it’s written down or performed differently by a coworker.”

Sometimes, informal processes may become formalized after a manager, external consultant, or other authority reviews them. For example, let’s say two employees, Janet and David, both have the same job and create the same work outputs every day. However, Janet routinely completes her work more quickly than David, making her more productive.

Their manager takes note of this discrepancy and calls for a review of how both employees complete their work. The review reveals that the set of steps Janet takes — her informal process — is more efficient than David’s.

Subsequently, the manager asks Janet to record her process and walk through it with David and the rest of the team. Janet’s informal process then becomes the team’s formal business process.

Types of business processes

The term business process is broad and encompasses many kinds of outcomes, so it can be helpful to categorize processes into these three types.

This type of process is tied directly to how you generate value for customers (and income for your company). Consider the products and services your customers purchase. How you create and deliver these items and experiences are your core processes.

For example, Alpeter’s company provides consulting expertise on matters related to supply chains. Clients pay for this expertise in the form of consultations, negotiations, strategic planning, forecasting, and other services. The activities that go into developing and delivering these services to clients are core processes.

“Clients buy our experience and problem-solving capabilities — our ability to resolve their issues and educate them on the why and how to avoid the same types of pitfalls as they scale,” Alpeter explains. “Each process that results in generating value for our clients is core to our business.”

Consider another example. Let’s say your company produces a software as a service (SaaS) product. After customers make a purchase, you need to onboard them so they know how to use the product effectively — which ensures they’ll maintain their subscription. “This is a core process because it’s generating value for customers and aiding in continued revenue generation,” Alpeter explains.

You can also find core processes in fast-casual restaurants, like those offering burritos or sandwiches. There’s a clear production line — a process — for making these food items that you can watch take place. “The steps for making the burrito or sandwich are a clear-cut core process, as customers will purchase the food item immediately after it’s created,” says Alpeter.

Unlike core processes, support processes do not generate income or direct value for customers — though that’s not to say they don’t have value. Most support processes are internal and tied to areas that are cost centers, such as HR and IT. The activities of these departments may not make money, but they’re important for supporting the company’s ability to do so — that is, they support core processes.

For example, talent management is an important aspect of any successful organization, and HR typically leads these efforts. They have to find the right people to fill the roles you’ve identified as necessary for sales, operations, and other key functional areas.

They accomplish this by posting job openings, asking current employees to refer friends and professional connections, reviewing applicants, and eventually hiring and training approved candidates. All these actions are considered support processes.

Similarly, IT provides technical leadership and support to all areas of the organization. They help implement and maintain software that employees use in their work, fix these tools when they break, and troubleshoot when employees have technical difficulties. Again, the internal nature of these actions means they don’t directly generate client value or revenue — hence, they’re support processes.

3. Management

Like support processes, management processes don’t generate revenue for the company or direct value for customers, but they’re necessary. These processes are high-level activities that set the direction of the company and focus on planning, monitoring, and controlling core and support processes.

For example, company executives regularly perform strategic planning and goal-setting, which helps guide the organization down the desired path. They also keep track of company results and report to a board or shareholders. These activities are management processes.

Consider also how an organization improves processes over time. There’s typically a process in place for identifying and addressing activities that aren’t generating revenue, result in poor customer perception, lead to errors, or negatively affect employees performance. This type of process controls core and support activities, which makes it a management process.

2. Business process management

Business process management (BPM) is the practice of reviewing, analyzing, measuring, and identifying opportunities to automate and optimize business processes. You can think of it as the discipline behind management-type processes.

“With BPM, you’re taking a high-level view of processes, considering how they work both independently and together,” Roe explains. Instead of allowing employees to haphazardly accomplish tasks in whatever way they deem fit, practicing this management discipline ensures your organization is creating and maintaining processes that consistently deliver desired outcomes.

Alpeter recommends a few ways to ensure effective BPM:

• Define clear success criteria for each business process.
• Ensure core and support processes tie together well.
• Formalize processes whenever possible by creating templates and standard operating procedures (SOPs).

Roe notes that many small business owners forgo practicing BPM, mostly because it takes time away from other priorities. But he says it’s important for any organization, regardless of size, to ensure its processes are in order. For busy owners, his recommendation is to loop in other employees and assign them process areas to manage.

“Too many business owners abdicate when they need to delegate,” Roe explains. “Someone needs to be accountable for keeping processes in line and up to date. But you don’t have to do it all yourself. Lean on your workforce to lighten the load and ensure your company’s processes are working as intended.”

How often to review business processes

While organizations should certainly review their business processes regularly, the exact time frame will vary based on several factors: the importance and complexity of the process, available time and resources, and so on.

“For example, we review some of our core processes — such as writing articles — every week to ensure our customers are receiving the value we promise,” says Roe. “However, nonessential processes like vacation requests don’t get nearly the same level of attention.”

Clearly, Roe takes BPM seriously. In fact, he blocks out time every business day to review one or more processes, depending on the priority level he’s assigned to them and what his schedule will allow.

“I keep a tight schedule,” he says, “so I like to batch tasks to limit mental fatigue from switching back and forth between dissimilar to-do items. So I do all my process reviews at once.”

Revising a process

Keep an eye out for indications that your business may need to review and revise a process. For example, a particular process might be prone to human error. A review may find that a step of the process is ambiguous and leads to different interpretations, depending on the person using the process.

“If a problem happens once, it’s most likely a people issue,” says Roe. “However, if a problem rears its head consistently, chances are it’s a process issue that needs to be addressed. Even a few occurrences of a problem may indicate the process should be thoroughly reviewed.”

3. Business process modeling

Business process modeling is a structured approach to recording a set of expected activities, including who is responsible for performing them. It’s a map of what’s happening in a company — a set of living documents that define how work gets done.

Modeling is essentially how you create or develop your processes from beginning to end. “It helps you see the big picture,” says Roe.

“In business process modeling, you’re figuring out and recording interdependencies — the inputs and outputs needed to move from step to step,” Alpeter explains. “It’s a value stream map that shows how something is created. For example, you could produce a product flow that illustrates how a product goes from the factory to the warehouse to the customer.”

There are a number of techniques you can use for business process modeling. Roe likes to use kanban boards because they allow him and his team to quickly grasp the order of steps from a visual representation of tasks.

“The boards tie nicely to our writing phases,” he says, “and we can easily add columns and cards to represent new phases in the process. For example, we recently reviewed our process and determined that having the writer review their article a second time helped improve output quality. So we added an extra column to the board to capture the new step.”

Returning to the burrito-making example, Alpeter notes how fast-casual restaurants have created processes that reflect the need for efficiency. After all, speed is important in these businesses.

“For example,” he says, “you often see that employees will start with a tortilla, move to proteins, then vegetables, and pass off the finished product to the cashier. There’s obviously solid reasoning for this specific set of steps because many burrito places model their building process in the same order.”

4. Business process improvement

Business process improvement is the practice of using different methods to analyze, redesign, and optimize existing processes to reduce task completion time, improve quality, reduce friction, or some combination of these.

“It’s about determining how you can complete a process faster, cheaper, and better,” says Roe. “Just keep in mind you need someone leading the improvement effort, or it won’t get done.”

Process improvement falls under the umbrella of business process management, with the focus on optimization being the key differentiator. BPM says which processes need review and optimization. Business process improvement says how to optimize them.

“What you optimize for depends on what’s important to your company,” says Alpeter. “We try to optimize for client value because that’s one of our primary focuses. We want to ensure we’re doing something better — not just different — than competitors.”

By comparison, Alpeter notes that other consulting companies may optimize processes for profit, which may result in companies billing as much as possible without delivering as much value in their work. “Clients may still achieve their goals,” he says, “but with some drawbacks. The work may take longer, they may not be as informed, the experience may be less than ideal, and so on.”

He cites another example: “Everyone knows Chick-fil-A and Popeyes — they both sell chicken, but the customer experience is different. Chick-fil-A regularly has long lines, but customers happily wait because the restaurant has clearly reviewed its processes and determined that ‘improvement’ for them means optimizing around the customer experience. In contrast, Popeyes tends to be quicker, but the experience can be less than ideal because they’re optimizing for something else.”

5. Business process automation

Business process automation is the practice of using technology to automate repeatable tasks to save time and effort, increase scalability, minimize human error, and reduce costs.

While many have lauded automation in recent years as a beneficial practice, especially for larger organizations where scale is important, Alpeter cautions against automating every part of a business process just because you can.

“Too many business leaders get caught up in automation because of the promised benefits — which are often very real — but neglect to first identify whether automation is even necessary,” Alpeter explains. “You may find there are parts of your process that need to be changed or eliminated altogether, rendering automation an unnecessary task.”

Alpeter provides three examples where business process automation often occurs.

• Meeting scheduling

Everyone knows the headache of trying to wrangle schedules to see what time works for a meeting. SaaS products such as Calendly, ScheduleOnce, and Jotform provide the tools to automate how organizations schedule meetings .

“Instead of emailing back and forth, you can just provide a link for someone to find a time that works for them,” Alpeter explains. “These solutions automatically sync with your calendar to ensure that invitees can only choose times when you’re available.”

• Email drip campaigns

Automation also comes in handy in the marketing realm, where marketers value the ability to connect with a large number of customers automatically. Take email drip campaigns — software solutions can automatically send emails to customers based on certain events. “For example, you may want to send customers a thank-you email immediately after they make a purchase or an exclusive offer X days later,” says Alpeter.

• Ridesharing

The rideshare space has been transformed by automation. Previously, the manual process of calling a taxi led to long wait times and ambiguous fares. Popular apps like Uber and Lyft brought automation into the picture, remedying these inconvenient aspects of the rideshare experience.

“Now you can simply request a ride on your smartphone and be notified when it arrives,” Alpeter explains. “Plus, fares are presented up front so you have a clear estimate of how much you’ll pay.”

Organizational success depends heavily on your business processes. Refining those processes requires taking a multifaceted, thoughtful approach. For best results, your organization should evaluate its processes on an ongoing basis to truly reap the benefits.

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How to Start an Event Planning Business: Your Comprehensive Guide Not sure how to become an event planner? Use this step-by-step guide to launch your event planning business from scratch.

By Laura Tiffany Edited by Brittany Robins May 21, 2024

Key Takeaways

• Event planning can be a great business if you have the right skills.
• People need help executing personal and professional events of all sizes.
• Based on how you structure your business, your startup costs will vary.

Opinions expressed by Entrepreneur contributors are their own.

Some people have a special ability to plan parties — whether they be weddings, large corporate events or smaller gatherings. If you have a knack for tackling complex problems and making big days run smoothly, you might have a future as a professional event planner. Whether you choose to work alone or with a team, starting an event planning service is no small task. Here are some important questions to consider before launching an event planning business, and a step-by-step guide to starting and scaling your business.

Related: Find Your Event-Planning Niche

What is an event planning business?

Event planning is the art and science of ideation, planning, coordination and operation. When a major event needs to run smoothly — whether it's a trade show, nonprofit gala or a major anniversary — people will enlist an event planning service or coordinator. Event planners are key service providers who ensure event production and execution goes off without a hitch , most often used for purposes like:

• Corporate events, like after-work cocktail hours and galas.
• Educational conventions, like graduations or conferences.
• Major promotional events including product launches and fashion shows.
• Celebrations and social events including parades, weddings, birthdays and reunions.

The primary duties of full-time or part-time on-site event planners include:

• Researching venues and vendors prior to the event.
• Selecting the appropriate site for the event.
• Event design and team-building for project management.
• Creating budgets and running fundraisers if necessary.
• Coordinating decor, entertainment and food for the event.
• Sending invitations to attendees.
• Coordinating transportation for attendees to and from the event.
• Arranging accommodations, including seating charts and place settings.
• Coordinating tasks for onsite event personnel, including caterers or entertainers.
• Being on call for any questions or problems that arise in the event-planning process.
• Supervising activities at the event site.

Why do people hire event planning services?

People primarily hire event planning services for two reasons: So that hosts and guests don't have to focus on the inner workings of the event, and so that the event runs smoothly from beginning to end.

Consider a wedding. Many engaged couples hire event planners or event planning services to coordinate, organize and carry out their wedding plans. This helps the couple enjoy their special day and gives them the freedom to focus on getting married rather than worrying about details like catering, parking or the timeline.

Some events are so complex — particularly those with hundreds of guests or more — that it's almost impossible to properly plan and organize them without the help of a specialist. Knowledgeable, experienced event planners know how to organize groups of people, how much food to provide and other details that can make or break an important event.

Related: The Price Is Right: Turning a Profit in the Event Planning Business

Who should become an event planner?

You might consider becoming an event planner if you're organized, love hosting parties and find the challenge of coordinating large events to be thrilling. Planners handle many moving parts at once, some of which require overseeing chaotic work and competing agendas. Event planners also often work weekends and holidays since these are the days when most people schedule events.

Many event planners have backgrounds as managers or coordinators in other industries. The events industry, both for wedding planning and other events, requires excellent communication skills. Obtaining a bachelor's degree in public relations , marketing or related fields can be helpful but is not required. You should also consider acquiring certification for your event planning service, as it can help you cultivate relevant professional skills and attract more job opportunities. Meeting Professionals International (MPI) offers a list of degrees and certificates from various colleges and universities.

You can also become a Certified Special Events Professional or Certified Meeting Planner , both of which are offered by the MPI or the International Live Events Association (ILEA). By earning these certifications , potential clients will know you have the training and experience necessary to take on a complex event.

How to start an event planning business

Step 1: form your company.

To get your event planning business off the ground, you must first form a company, file the right paperwork and create a business plan — which should include the following details:

• The business's name.
• The business's tax structure (Sole proprietorship, LLC, S corp etc.).
• What services you'll provide.
• Market research .
• A management plan.
• Financial factors, including how you'll turn a profit.

Related: Check out these business plan templates to get started.

You'll also want to apply for an employer identification number (EIN), which is essentially a social security number for your business assigned to you by the Internal Revenue Service (IRS). This will allow you to operate your business independently of your personal affairs, help you hire employees and make it easier to file taxes quarterly.

Step 2: Choose your target market

Building on the research you performed to create your business plan, it's essential to find the right market for your services. For instance, if you want to primarily work with weddings, you need to determine how many other planners are in your area, how much you should charge for your services and what offerings you'll need to be competitive.

By doing enough research ahead of time, you'll know exactly what kind of clients to target and what their expectations will be. This will help you advertise your event planning service to be competitive relative to other local planners.

Step 3: Make a financial plan

When you start an event planning business, you'll have to consider not only startup costs but also how the enterprise will grow and how many clients you'll need in order to be profitable. For instance, working from home and primarily by yourself will keep costs low. But if you hire employees, rent office space, or expand to new markets, your monthly expenses will significantly increase – all of these things can add up.

You can always scale your business after acquiring steady work. You may start off as a one-person event planning service that only takes on small events. As you earn money from successful jobs, you can hire employees and rent a warehouse for your equipment, like cameras, chairs and more. You don't have to have all of the growth questions answered when you launch your business, but you should at least have them in mind.

Step 4: Understand the work involved and consider hiring employees

For your event planning service to be successful , you need to fully grasp the nature of each job and determine if — or when — it's time to hire employees. This will vary event to event, so you'll need to determine how much work each event will require. Even the smallest event demands careful attention to detail and advance planning, but as you acquire experience you'll become more adept at forecasting how much help you'll need, if any. For instance, you might hire two or three people to be on-site for a specific event, just to make sure things run smoothly.

Related: The Event Planning Recipe for Success

Step 5: Settle on a price structure and fee basis

How you price your event planning offerings will impact how much business you attract. You can determine your pricing structure and fee basis by things like:

• The market segment you serve: For instance, nonprofit events may have different fee structures than weddings or corporate events. By understanding your event type, you'll know how much to charge and how to structure your fees.
• Your location: If you live in a place with a higher cost of living or a competitive events market, you'll need to price your services accordingly.
• Your reputation: As your business gains a reputation for success — and especially if you're so busy clients are competing for your services — you'll be able to charge a higher premium.

Step 6: Start marketing your event planning service

Once you know how much to charge your clients, it's time to start marketing your event planning service. Consider using tools like Google ads, social media profiles and other digital marketing efforts like email to get the word out about your business. You may even consider newspaper ads, flyers in public buildings or other traditional low-cost marketing tactics . As your business grows, so too will your reputation, meaning you'll likely have to spend less on marketing once you're known. Before you get there, though, it's important to dedicate significant time and resources to marketing your services (learn more here about the tools and strategies that should be part of creating your marketing plan).

Related: 8 Savvy Ways to Promote Your Event Planning Business

Costs of starting an event planning business

The costs of launching your business will vary greatly based on where you live, what kind of clients you work with and how large you intend to scale your operation. At a minimum, you'll need to pay fees to incorporate your business , purchase basic technology like a computer, buy business insurance and spend money advertising. But there are many other potential costs, including certification programs, hiring additional employees , renting office space and more. Here's a breakdown of common expenses associated with event planning, as well as a range of what it might take to get your enterprise off the ground.

Consider Startup Costs

As with any business, the startup costs for event planning vary by the region, the size of your operation and the type of clients you attract. Below are estimates that will help you determine what you can expect to spend in your first year.

*All figures are estimates and subject to change based on factors including location, business size and clientele.

Check out Entrepreneur's other guides and resources today.

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Employee Onboarding Guide

Onboarding definition & overview.

Last updated: May 15th, 2024

Quality onboarding is crucial for new employees' long-term success and organizational productivity. Learn why a solid employee onboarding process can make a significant impact on employee experience and retention, plus innovative ideas to approaching welcoming new staff.

Onboarding Guide Navigation

> Definition & Overview

What Is Onboarding?

Onboarding is the process of integrating new employees into an organization. It includes the orientation process and opportunities for new hires to learn about the organization's structure, culture, vision, mission and values. Onboarding can span one or two days of activities at some companies; others offer a more extensive series of activities spanning months. 

Onboarding is often confused with orientation. While orientation is necessary for completing paperwork and other routine tasks, onboarding is a comprehensive process involving management and other employees and can last up to 12 months. 

Why Is It Important to Get Onboarding Right?

All new employees are onboarded—but the quality of the onboarding makes a difference. Too often, onboarding consists of handing a new employee a pile of forms and having a supervisor or HR professional walk the employee around the premises, making introductions on an ad hoc basis. When onboarding is done well, however, it lays a foundation for long-term success for the employee and the employer. It can improve productivity, build loyalty and engagement, and help employees become successful early in their careers with the new organization.

A study by  Gallup  showed that while only 12 percent of employees felt their company did a great job with onboarding, those employees were nearly three times as likely to say they have the best possible job. Overall, only 29 percent of new hires felt they were prepared and supported to excel in their new role. This leaves a lot of room for improvement.

Other studies consistently show a positive correlation between engaged employees and a company's profitability, turnover rate, safety record, absenteeism, product quality and customer ratings. An effective onboarding plan offers an ideal opportunity to boost employee engagement by, for example, fostering a supportive relationship between new hires and management, reinforcing the company's commitment to helping employees' professional growth and proving that management recognizes the employees' talent.   For further reading learn  how to optimize the onboarding process  and the importance of good onboarding . 

Relatedly, an  employee value proposition  (EVP) defines the value employees will get from working for a particular organization. It embodies the promises made during recruitment and is lived out every day through company culture. Onboarding gives employees their first look at how an organization's EVP may or may not be realized.

Onboarding Process Summary

While there are many ways to design an onboarding program, some components are integral to the process:

1. Preboarding

Consider inviting new employees to tour the facility, sending informational material, providing care packages, and assigning a buddy to help them integrate before their official start date.

2. Orientation

Introduce employees to the organization's structure, vision, mission, and values; review employee handbook and major policies; complete paperwork; cover administrative procedures; and provide other mandatory training.

3. Foundation Building

Ensure the onboarding process consistently embodies an organization's culture, mission, employee value proposition, brand, and other foundational elements, recognizing that assimilating these values takes time.

4. Mentoring and Buddy Systems

In partnership with hiring managers, enlist mentors or buddies to provide new employees with guidance, assistance, and insights into organizational nuances.

View our full guide on onboarding process steps.

Innovative Approaches to Onboarding

Various components of an onboarding program can be delivered using different approaches and methodologies combined to suit the organization and available resources.

Some employers are using innovative practices, such as games, video, and team-building exercises, to get new hires excited about joining the company. They're also working to make sure people can hit the ground running with functional workstations and equipment. Some examples of this include: 

Facebook has its "45-minute rule," which means all new employees can begin to work within 45 minutes of arriving because all of their systems and devices have been set up before they report for their first day.

Leaders at Suffolk Construction, a national construction firm based in Boston, invite entry-level hires to participate in a variety of team-building exercises, including rowing the Charles River. 

New employees at Bedgear, a Farmingdale, N.Y.-based manufacturer of performance bedding, take a walking tour of downtown Manhattan to visit other retailers that sell customized products, including Warby Parker and Samsung.

View more  original onboarding options, shared from 4 HR leaders . 

Continue Learning About Onboarding

Additional resources:.

• Checklist for Developing Onboarding/New Hire Practices
• New Hire Orientation Checklist
• New-Hire Orientation Process
• New Hire Survey
• New Hire Survey – Remote Employee
• Onboarding Companies and Vendors in the SHRM Vendor Directory  
• SHRM Store resources on  Onboarding

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What is the RFP Process? A 5-Step Guide + Checklist

Table of Contents

What is a Request for Proposal (RFP)?

The 5-step rfp process, rfp tips & best practices, rfp process checklist, rfp automation.

• December 12, 2023

Emily Bonnie

Senior Content Marketing Manager at Secureframe

Anna Fitzgerald

Requests for Proposals (RFPs) help organizations make informed, transparent, and strategic decisions when selecting vendors, ultimately leading to better project outcomes, cost savings, and stronger vendor relationships.

A good RFP process is clear, collaborative, and organized. We’ve broken the RFP process down into five steps to ensure that you attract the best vendors as well as manage the entire process efficiently and effectively, and we’ve provided a simple checklist you can use as a guide.

An RFP, or Request for Proposal, is a formal document issued by an organization to solicit proposals from potential suppliers, contractors, or service providers. It’s part of a formal selection process that helps organizations learn about multiple service providers and select the one that best meets their needs. Many organizations and government agencies use RFPs as part of the vendor procurement process.

RFx: Types of vendor assessments

Vendor assessments are an essential step for businesses in evaluating and selecting the right service providers. Several types of vendor assessments are available to evaluate different aspects of a vendor's capabilities and suitability.

• Request for Proposal (RFP): Used when an organization needs to buy a product or service and wants to invite various bidders to propose what they can offer. Allows the company to compare options and select the best fit based on their organization’s needs and budget.
• Request for Information (RFI): Used when an organization wants to understand what options are available in the market. Gathers general information from prospective vendors or suppliers about their products, services, or capabilities.
• Request for Quotation (RFQ): Used when an organization already knows the specific product or service it needs and is seeking detailed pricing information from potential suppliers.
• Due Diligence Questionnaire (DDQ): Used to evaluate a potential vendor’s financial health, business practices, security posture, regulatory compliance, and other risk factors.
• Security Questionnaire: Used to assess a third-party vendor’s data protection practices, including access controls, network security, compliance with relevant regulations, and incident response capabilities.

Recommended reading

What is a Request for Proposal? + Template

5 steps of an effective RFP process

An effective RFP process can both streamline the vendor procurement process and ensure you find the best service provider for your needs. Below, we’ve broken the process down into five steps, shared some tips and best practices, and provided a simple checklist to follow.

Step 1: Define the project plan and scope

This is arguably the most important step in the RFP process. Clarity and alignment around your organization’s needs and project goals are essential for drafting complete and effective RFP requirements.

Start by clearly identifying the primary objectives of the project. Consult with stakeholders across the organization to understand requirements from different perspectives. What are the key outcomes you expect to achieve? How will you measure success? This helps align the project scope with your organization's top-level goals.

With a clear sense of what you’re hoping to achieve, you can outline specific requirements. This might include software specifications, hardware needs, system integrations, data requirements, and compliance requirements. Provide a realistic budget and timeline for the project, including key milestones, deadlines, and dependencies. This helps vendors assess their ability to meet your timeline and stay within budget.

During this stage, it’s also important to identify potential third-party risks and consider how these risks should be managed. What data security standards will you require? Identify any compliance or regulatory requirements that the project must adhere to, and be sure to involve information security, compliance, or IT team members in this part of the process.

Next, draft the scope of work. This will be included in the RFP document and should detail what the project will include and what it won’t (referred to as "in-scope" and "out-of-scope" activities). Be specific about the deliverables, tasks, services, or products required. It’s just as important to be upfront about what won’t be included in scope — specify any limitations, constraints, or exclusions that vendors should be aware of.

Step 2: Write the RFP document

What constitutes a good RFP? An effective RFP should outline the specifics of the project and the organization's requirements:

• Overview and Introduction : This portion offers an overview of the organization issuing the RFP and its objectives. It typically comprises the company's name and contextual details regarding the project or need the RFP seeks to address.
• Project Description and Work Scope : In this section, the issuer elaborates on the specific project they are soliciting proposals for. It covers the project goals, expected deliverables, and the scope of work. It might also include the anticipated duration of the project, any significant milestones, limitations, or necessary prerequisites.
• Specifications and Requirements : This segment lays out the technical, functional, and performance criteria of the product or service. It often contains comprehensive descriptions of the tasks, desired attributes, and the standards that need to be met.
• Guidelines for Proposal Submission : Here, instructions for preparing and submitting proposals are provided, including format, necessary components, and specific queries that respondents must address. This segment also states the deadline for submission and contact details for proposal submission.
• Evaluation Metrics : The RFP should clarify the standards for assessing proposals. Criteria may involve aspects like cost, vendor experience, technical capabilities, project approach, and adherence to the stipulated requirements.
• Budget and Costs: Although not always included, some RFPs might specify a budget range for the project or ask for detailed pricing in the proposal. This helps vendors offer realistic and competitive rates.
• Terms and Legal Conditions : This section covers the legal and contractual terms of the project, encompassing payment conditions, duration of the contract, confidentiality clauses, and other legal requirements.
• Timeline for Responses : The RFP outlines crucial dates such as the proposal submission deadline, schedules for pre-proposal meetings or Q&A sessions, and a timeline for the review process and final decision-making. It also usually provides contact information for further inquiries.
• Supplementary Information/Attachments: The issuer may add extra details pertinent to the RFP, like supporting documents, data, or specific templates that respondents should utilize in their proposals.

Step 3: Issue the RFP

When it comes time to issue RFPs, organizations can post the document on their website or send the RFP directly to qualified vendors. Organizations with specific needs such as government agencies may use a procurement network like DemandStar to access the appropriate suppliers and service providers.  

Step 4: Build a shortlist

Evaluating RFP responses effectively and selecting the right vendor requires an organized and objective approach. Here are some key tips for evaluating RFP responses :

• Establish clear evaluation criteria : Before reviewing the proposals, define clear, specific criteria against which each response will be evaluated. This could include cost, compliance with technical requirements, vendor experience and qualifications, project approach and methodology, and timeline feasibility. Evaluate each proposal systematically against the predefined criteria to maintain consistency and fairness in the evaluation process.
• Assemble a diverse evaluation team : Involve a team with diverse expertise relevant to the project. This could include members from different departments such as finance, IT, operations, and procurement. A diverse team ensures a well-rounded evaluation from multiple perspectives.
• Check references and case studies : Review customer case studies for each vendor, and request references for organizations with similar requirements or use cases. This will give you insights into what it’s like to work with each vendor — their reliability, quality of work, ability to meet deadlines, and how they handle challenges.
• Consider total cost of ownership (TCO) : Don’t just focus on the initial cost. Consider the total cost of ownership, which includes ongoing maintenance, support costs, and any other long-term expenses associated with the product or service.
• Look for innovation and added value : Evaluate if the vendor brings innovative solutions or added value that could benefit your organization. This could be innovative technology, additional services, level of expertise, or a unique approach.
• Assess for cultural fit : Evaluate how well the vendor's culture and values align with your organization. A good cultural fit can lead to better communication and collaboration throughout the vendor relationship.
• Conduct a risk assessment : Evaluate the risks associated with each vendor. Types of vendor risk to consider include financial, operational, reputational, strategic, cybersecurity, and compliance risk.
• Consider multiple vendors : Sometimes the best approach may be to choose multiple vendors for different aspects of the project, especially if it's large and multifaceted.

Step 5: Select a vendor & finalize the contract

Once you’ve decided on the best vendor for your needs, you’ll need to negotiate contract terms.

Here are some tips to help you navigate the negotiation process:

• Clarify and prioritize needs: This includes services and functionality, delivery timelines, quality standards, and any other specific requirements. Know what you're willing to compromise on and what is non-negotiable.
• Negotiate total cost : Look beyond the initial price and consider factors that contribute to the total cost, such as delivery charges, implementation or maintenance costs, and any potential penalties for late delivery or poor quality.
• Assess and treat risk : Discuss and negotiate how risks will be shared. This includes what happens in the event of unforeseen circumstances, delays, data security, or quality issues. If relevant, negotiate terms regarding confidentiality and intellectual property rights. This is crucial if the vendor will be handling sensitive information or if there is potential for co-developed intellectual property.
• Define an exit strategy : Discuss and agree on the terms under which either party can terminate the contract. This should include notice periods, termination fees (if any), and the process for winding down the engagement.
• Complete legal review : Have a legal expert review the contract before signing. This ensures that your interests are protected and that the contract is compliant with any relevant laws. Ensure that all agreed-upon terms are clearly documented in the contract.

Remember that the negotiation process is the start of a long-term relationship with the vendor. A strong relationship can lead to better service, favorable terms in the future, and a reliable partner in your business network.

After you’ve made a purchasing decision and agreed on the final offer, you can proceed to implementation or project kickoff.

RFP best practices

Above all, an effective RFP process is efficient, transparent, competitive, and fair. These RFP best practices will help your organization easily compare vendors and select the best solution for your needs.

• Clearly define needs : Before drafting the RFP, have a clear understanding of what you need, including the project's scope, objectives, and specific requirements. This clarity helps in creating a more targeted and focused RFP.
• Involve key stakeholders from the beginning : This includes anyone who will be affected by the outcome of the RFP, including end users, technical experts, and finance and procurement professionals. Their insights can help shape a more effective RFP.
• Conduct market research: This will help you understand current market trends, potential vendors, and typical costs associated with your requirements. This will help in setting realistic expectations and understanding what to look for in proposals.
• Use tools to manage the RFP process: Various automation tools can streamline the time-consuming RFP process, from creation and response to evaluation.

After each RFP process, review what worked well and what could be improved. Continuous improvement helps refine future RFPs and procurement processes.

RFP Process Checklist

Define project plan and scope, write the rfp document, issue the rfp, collect vendor responses and create a shortlist, select a vendor and begin work, respond to rfps faster and easier with automation .

RFPs are an incredibly useful tool for assessing service providers and understanding third-party risk. But they can be incredibly cumbersome and resource-intensive to both answer and review.

Secureframe’s Questionnaire Automation can streamline the tedious and time-consuming process of answering lengthy RFPs and security questionnaires, with built-in AI functionality that pulls responses from your Knowledge Base. Simply upload a completed RFP or security questionnaire, verify and store answers to specific questions in your Knowledge Base, and Secureframe will pull answers to automatically complete future RFPs and questionnaires.

Pair questionnaire automation with the Secureframe Trust Center to demonstrate the strength of your security posture. Publish a Trust Center that pulls in data from the Secureframe platform – highlight your key security metrics and certifications, enable customers to self-serve or request access to security documents like SOC 2 reports, and review, approve, and deny document requests from the platform. Learn more about Secureframe Trust , or schedule a demo with a product expert to see it in action.

What are the steps in an RFP?

Step 1: Define the project plan and scope by consulting with key stakeholders

Step 2: Write the RFP document, including the scope of work and submission guidelines. 

Step 3: Issue the RFP to qualified vendors or through a procurement network

Step 4: Evaluate responses and build a shortlist of potential vendors

Step 5: Select a vendor and finalize the contract following legal review

What is an RFP checklist?

RFP checklists simplify the project management aspect of writing, issuing, and evaluating RFPs. They break down each phase of the process into concrete tasks, improving organization, accountability, and visibility. 

What is an RFP template?

Requests for proposals (RFPs) are commonly used by businesses and government organizations to announce a project and solicit bids from vendors and service providers. Many organizations use an RFP template to draft new requests. 

Understanding loan forgiveness options

How to qualify for student loan forgiveness, your guide to student loan forgiveness.

Affiliate links for the products on this page are from partners that compensate us (see our advertiser disclosure with our list of partners for more details). However, our opinions are our own. See how we rate student loans to write unbiased product reviews.

• You can't get forgiveness with private student loans, unlike with federal ones.
• Certain federal student loan holders are eligible for forgiveness, such as nurses and teachers who meet specific requirements.
• Income-driven repayment plans offer forgiveness for a remaining balance after the payment term is up.

Public Service Loan Forgiveness (PSLF)  

Public Service Loan Forgiveness is a loan forgiveness program meant for those working in certain government or not-for-profit organizations. PSLF will be applied to the remaining balance that eligible borrowers have on their Direct Loans. Eligibility kicks in if you're working full-time for an eligible employer, and after the equivalent of 120 qualifying monthly payments have been made.

Teacher Loan Forgiveness (TLF)

The Teacher Loan Forgiveness program is designed for educators who don't have an outstanding balance on Direct Loans or Federal Family Education Loan Program (FFELP) loans, have been employed full-time for five consecutive academic years, have been employed at an elementary or secondary school, or educational agency serving low-income students, and lastly, the loans you're seeking forgiveness for must be from your minimum of five years of teaching.

Income-Driven Repayment (IDR) Forgiveness

An IDR plan restructures and bases your monthly student loan payment on your income and the size of your family, with the goal of setting up lower monthly payments. Under an IDR plan, at the end of your repayment term, any remaining balance will be forgiven.

Nurse Corps Loan Repayment Program

The Nurse Corps Loan Repayment Program (NCLRP) forgives educational debt for registered nurses, advanced practice registered nurses, and nurse faculty members.

Those who receive an award must have worked for at least two years in a critical shortage facility, or an eligible nursing school as a faculty member.

Perkins Loan cancellation and discharge

If you're an educator with a Federal Perkins Loan, it's possible to get 100% of your loan canceled incrementally. The following jobs are eligible for loan cancellation, under certain conditions:

• Elementary or secondary school teachers
• Special education teachers
• Preschool or Pre-K teachers
• Other educators
• Law enforcement
• First responders
• Nonprofit workers
• Those in the Military
• Health care workers
• Those who work with people with disabilities.

You may be eligible to get your Perkins Loan discharged if you've gone through any of the following life events:

• Certain types of bankruptcy
• School closure before you completing your program of study
• Total and permanent disability

Understand the specific requirements of each program

Every loan forgiveness program is different, and set up for different borrowers in different situations. Compare your options to identify your strongest chance for loan forgiveness.

Verify your loan eligibility

Even if you are in an eligible role for any of these forgiveness program, that doesn't mean the type of loan you have is eligible for loan forgiveness. 

Stay on top of your payments

For certain programs, such as IDR and PSLF, you are only eligible for loan forgiveness if you're up to date on your payments and your account is in good standing. 

Keep accurate records

To prepare your application and any questions the lenders may have, be sure to have all important documents on hand. That includes your employment verification, social security information, and other personal credentials. It also means keeping a record of your paystubs, payment history, and other relevant documents.

No, not all student loans are eligible for all programs. Be sure to check program details carefully.

The limit on how much student loan debt can be forgiven is entirely dependent on the program. PSLF, for example, may forgive the entire remaining balance.

Generally speaking, you have to pay taxes on forgiven student loans. Consult a tax advisor for specific details.

Private student loans are rarely forgiven, unless otherwise handled through specific employer programs. Most forgiveness is for federal loans.

Editorial Note: Any opinions, analyses, reviews, or recommendations expressed in this article are the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any card issuer. Read our editorial standards .

Please note: While the offers mentioned above are accurate at the time of publication, they're subject to change at any time and may have changed, or may no longer be available.

**Enrollment required.

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