role of a business planning

Table of Contents

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

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

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

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

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

This isn’t surprising at all. 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Here are the key elements of a good business plan:

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

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

• Business Sorter

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

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

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

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

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

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

What Is Meant by Business Planning?

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

What Are the 4 Types of Business Plans?

The following are the four types of business plans:

Operational Planning

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

Strategic Planning

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

Tactical Planning

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

Contingency Planning

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

What Are the 7 Steps of a Business Plan?

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

Conduct Research

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

Have a Goal

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

Create a Company Profile

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

Describe the Company in Detail

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

Create a marketing plan ahead of time.

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

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

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

Incorporate Your Motivation

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

What Are the Basic Steps in Business Planning?

These are the basic steps in business planning:

Summary and Objectives

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

Services and Products

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

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

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

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

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

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

Published: June 28, 2024

Years ago, I had an idea to launch a line of region-specific board games. I knew there was a market for games that celebrated local culture and heritage. I was so excited about the concept and couldn't wait to get started.

But my idea never took off. Why? Because I didn‘t have a plan. I lacked direction, missed opportunities, and ultimately, the venture never got off the ground.

And that’s exactly why a business plan is important. It cements your vision, gives you clarity, and outlines your next step.

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

Table of Contents

What is a business plan?

What is a business plan used for.

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Purposes of a Business Plan

What does a business plan need to include, types of business plans.

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A business plan is a comprehensive document that outlines a company's goals, strategies, and financial projections. It provides a detailed description of the business, including its products or services, target market, competitive landscape, and marketing and sales strategies. The plan also includes a financial section that forecasts revenue, expenses, and cash flow, as well as a funding request if the business is seeking investment.

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

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

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14 Reasons Why You Need a Business Plan

10 min. read

Updated May 10, 2024

There’s no question that starting and running a business is hard work. But it’s also incredibly rewarding. And, one of the most important things you can do to increase your chances of success is to have a business plan.

A business plan is a foundational document that is essential for any company, no matter the size or age. From attracting potential investors to keeping your business on track—a business plan helps you achieve important milestones and grow in the right direction.

A business plan isn’t just a document you put together once when starting your business. It’s a living, breathing guide for existing businesses – one that business owners should revisit and update regularly.

Unfortunately, writing a business plan is often a daunting task for potential entrepreneurs. So, do you really need a business plan? Is it really worth the investment of time and resources? Can’t you just wing it and skip the whole planning process?

Good questions. Here’s every reason why you need a business plan.

• 1. Business planning is proven to help you grow 30 percent faster

Writing a business plan isn’t about producing a document that accurately predicts the future of your company. The  process  of writing your plan is what’s important. Writing your plan and reviewing it regularly gives you a better window into what you need to do to achieve your goals and succeed. 

You don’t have to just take our word for it. Studies have  proven that companies that plan  and review their results regularly grow 30 percent faster. Beyond faster growth, research also shows that companies that plan actually perform better. They’re less likely to become one of those woeful failure statistics, or experience  cash flow crises  that threaten to close them down. 

• 2. Planning is a necessary part of the fundraising process

One of the top reasons to have a business plan is to make it easier to raise money for your business. Without a business plan, it’s difficult to know how much money you need to raise, how you will spend the money once you raise it, and what your budget should be.

Investors want to know that you have a solid plan in place – that your business is headed in the right direction and that there is long-term potential in your venture. 

A business plan shows that your business is serious and that there are clearly defined steps on how it aims to become successful. It also demonstrates that you have the necessary competence to make that vision a reality. 

Investors, partners, and creditors will want to see detailed financial forecasts for your business that shows how you plan to grow and how you plan on spending their money. 

• 3. Having a business plan minimizes your risk

When you’re just starting out, there’s so much you don’t know—about your customers, your competition, and even about operations. 

As a business owner, you signed up for some of that uncertainty when you started your business, but there’s a lot you can  do to reduce your risk . Creating and reviewing your business plan regularly is a great way to uncover your weak spots—the flaws, gaps, and assumptions you’ve made—and develop contingency plans. 

Your business plan will also help you define budgets and revenue goals. And, if you’re not meeting your goals, you can quickly adjust spending plans and create more realistic budgets to keep your business healthy.

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• 4. Crafts a roadmap to achieve important milestones

A business plan is like a roadmap for your business. It helps you set, track and reach business milestones. 

For your plan to function in this way, your business plan should first outline your company’s short- and long-term goals. You can then fill in the specific steps necessary to reach those goals. This ensures that you measure your progress (or lack thereof) and make necessary adjustments along the way to stay on track while avoiding costly detours.

In fact, one of the top reasons why new businesses fail is due to bad business planning. Combine this with inflexibility and you have a recipe for disaster.

And planning is not just for startups. Established businesses benefit greatly from revisiting their business plan. It keeps them on track, even when the global market rapidly shifts as we’ve seen in recent years.

• 5. A plan helps you figure out if your idea can become a business

To turn your idea into reality, you need to accurately assess the feasibility of your business idea.

You need to verify:

• If there is a market for your product or service
• Who your target audience is
• How you will gain an edge over the current competition
• If your business can run profitably

A business plan forces you to take a step back and look at your business objectively, which makes it far easier to make tough decisions down the road. Additionally, a business plan helps you to identify risks and opportunities early on, providing you with the necessary time to come up with strategies to address them properly.

Finally, a business plan helps you work through the nuts and bolts of how your business will work financially and if it can become sustainable over time.

6. You’ll make big spending decisions with confidence

As your business grows, you’ll have to figure out when to hire new employees, when to expand to a new location, or whether you can afford a major purchase. 

These are always major spending decisions, and if you’re regularly reviewing the forecasts you mapped out in your business plan, you’re going to have better information to use to make your decisions.

7. You’re more likely to catch critical cash flow challenges early

The other side of those major spending decisions is understanding and monitoring your business’s cash flow. Your  cash flow statement  is one of the three key financial statements you’ll put together for your business plan. (The other two are your  balance sheet  and your  income statement  (P&L). 

Reviewing your cash flow statement regularly as part of your regular business plan review will help you see potential cash flow challenges earlier so you can take action to avoid a cash crisis where you can’t pay your bills. 

• 8. Position your brand against the competition

Competitors are one of the factors that you need to take into account when starting a business. Luckily, competitive research is an integral part of writing a business plan. It encourages you to ask questions like:

• What is your competition doing well? What are they doing poorly?
• What can you do to set yourself apart?
• What can you learn from them?
• How can you make your business stand out?
• What key business areas can you outcompete?
• How can you identify your target market?

Finding answers to these questions helps you solidify a strategic market position and identify ways to differentiate yourself. It also proves to potential investors that you’ve done your homework and understand how to compete. 

• 9. Determines financial needs and revenue models

A vital part of starting a business is understanding what your expenses will be and how you will generate revenue to cover those expenses. Creating a business plan helps you do just that while also defining ongoing financial needs to keep in mind. 

Without a business model, it’s difficult to know whether your business idea will generate revenue. By detailing how you plan to make money, you can effectively assess the viability and scalability of your business. 

Understanding this early on can help you avoid unnecessary risks and start with the confidence that your business is set up to succeed.

• 10. Helps you think through your marketing strategy

A business plan is a great way to document your marketing plan. This will ensure that all of your marketing activities are aligned with your overall goals. After all, a business can’t grow without customers and you’ll need a strategy for acquiring those customers. 

Your business plan should include information about your target market, your marketing strategy, and your marketing budget. Detail things like how you plan to attract and retain customers, acquire new leads, how the digital marketing funnel will work, etc. 

Having a documented marketing plan will help you to automate business operations, stay on track and ensure that you’re making the most of your marketing dollars.

• 11. Clarifies your vision and ensures everyone is on the same page

In order to create a successful business, you need a clear vision and a plan for how you’re going to achieve it. This is all detailed with your mission statement, which defines the purpose of your business, and your personnel plan, which outlines the roles and responsibilities of current and future employees. Together, they establish the long-term vision you have in mind and who will need to be involved to get there. 

Additionally, your business plan is a great tool for getting your team in sync. Through consistent plan reviews, you can easily get everyone in your company on the same page and direct your workforce toward tasks that truly move the needle.

• 12. Future-proof your business

A business plan helps you to evaluate your current situation and make realistic projections for the future.

This is an essential step in growing your business, and it’s one that’s often overlooked. When you have a business plan in place, it’s easier to identify opportunities and make informed decisions based on data.

Therefore, it requires you to outline goals, strategies, and tactics to help the organization stay focused on what’s important.

By regularly revisiting your business plan, especially when the global market changes, you’ll be better equipped to handle whatever challenges come your way, and pivot faster.

You’ll also be in a better position to seize opportunities as they arise.

Further Reading: 5 fundamental principles of business planning

• 13. Tracks your progress and measures success

An often overlooked purpose of a business plan is as a tool to define success metrics. A key part of writing your plan involves pulling together a viable financial plan. This includes financial statements such as your profit and loss, cash flow, balance sheet, and sales forecast.

By housing these financial metrics within your business plan, you suddenly have an easy way to relate your strategy to actual performance. You can track progress, measure results, and follow up on how the company is progressing. Without a plan, it’s almost impossible to gauge whether you’re on track or not.  

Additionally, by evaluating your successes and failures, you learn what works and what doesn’t and you can make necessary changes to your plan. In short, having a business plan gives you a framework for measuring your success. It also helps with building up a “lessons learned” knowledge database to avoid costly mistakes in the future.

• 14. Your business plan is an asset if you ever want to sell

Down the road, you might decide that you want to sell your business or position yourself for acquisition. Having a solid business plan is going to help you make the case for a higher valuation. Your business is likely to be worth more to a buyer if it’s easy for them to understand your business model, your target market, and your overall potential to grow and scale. 

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• Writing your business plan

By taking the time to create a business plan, you ensure that your business is heading in the right direction and that you have a roadmap to get there. We hope that this post has shown you just how important and valuable a business plan can be. While it may still seem daunting, the benefits far outweigh the time investment and learning curve for writing one. 

Luckily, you can write a plan in as little as 30 minutes. And there are plenty of excellent planning tools and business plan templates out there if you’re looking for more step-by-step guidance. Whatever it takes, write your plan and you’ll quickly see how useful it can be.

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

Table of Contents

• 6. You’ll make big spending decisions with confidence
• 7. You’re more likely to catch critical cash flow challenges early

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Do you REALLY need a business plan?

The top three questions that I get asked most frequently as a professional business plan writer will probably not surprise you:

• What is the purpose of a business plan – why is it really required?
• How is it going to benefit my business if I write a business plan?
• Is a business plan really that important – how can I actually use it?

Keep reading to get my take on what the most essential advantages of preparing a business plan are—and why you may (not) need to prepare one.

The importance, purpose and benefit of a business plan is in that it enables you to validate a business idea, secure funding, set strategic goals – and then take organized action on those goals by making decisions, managing resources, risk and change, while effectively communicating with stakeholders.

Let’s take a closer look at how each of the important business planning benefits can catapult your business forward:

1. Validate Your Business Idea

The process of writing your business plan will force you to ask the difficult questions about the major components of your business, including:

• External: industry, target market of prospective customers, competitive landscape
• Internal: business model, unique selling proposition, operations, marketing, finance

Business planning connects the dots to draw a big picture of the entire business.

And imagine how much time and money you would save if working through a business plan revealed that your business idea is untenable. You would be surprised how often that happens – an idea that once sounded so very promising may easily fall apart after you actually write down all the facts, details and numbers.

While you may be tempted to jump directly into start-up mode, writing a business plan is an essential first step to check the feasibility of a business before investing too much time and money into it. Business plans help to confirm that the idea you are so passionate and convinced about is solid from business point of view.

Take the time to do the necessary research and work through a proper business plan. The more you know, the higher the likelihood that your business will succeed.

2. Set and Track Goals

Successful businesses are dynamic and continuously evolve. And so are good business plans that allow you to:

• Priorities: Regularly set goals, targets (e.g., sales revenues reached), milestones (e.g. number of employees hired), performance indicators and metrics for short, mid and long term
• Accountability: Track your progress toward goals and benchmarks
• Course-correction: make changes to your business as you learn more about your market and what works and what does not
• Mission: Refer to a clear set of values to help steer your business through any times of trouble

Essentially, business plan is a blueprint and an important strategic tool that keeps you focused, motivated and accountable to keep your business on track. When used properly and consulted regularly, it can help you measure and manage what you are working so hard to create – your long-term vision.

As humans, we work better when we have clear goals we can work towards. The everyday business hustle makes it challenging to keep an eye on the strategic priorities. The business planning process serves as a useful reminder.

3. Take Action

A business plan is also a plan of action . At its core, your plan identifies where you are now, where you want your business to go, and how you will get there.

Planning out exactly how you are going to turn your vision into a successful business is perhaps the most important step between an idea and reality. Success comes not only from having a vision but working towards that vision in a systematic and organized way.

A good business plan clearly outlines specific steps necessary to turn the business objectives into reality. Think of it as a roadmap to success. The strategy and tactics need to be in alignment to make sure that your day-to-day activities lead to the achievement of your business goals.

4. Manage Resources

A business plan also provides insight on how resources required for achieving your business goals will be structured and allocated according to their strategic priority. For example:

Large Spending Decisions

• Assets: When and in what amount will the business commit resources to buy/lease new assets, such as computers or vehicles.
• Human Resources: Objectives for hiring new employees, including not only their pay but how they will help the business grow and flourish.
• Business Space: Information on costs of renting/buying space for offices, retail, manufacturing or other operations, for example when expanding to a new location.

Cash Flow It is essential that a business carefully plans and manages cash flows to ensure that there are optimal levels of cash in the bank at all times and avoid situations where the business could run out of cash and could not afford to pay its bills.

Revenues v. Expenses In addition, your business plan will compare your revenue forecasts to the budgeted costs to make sure that your financials are healthy and the business is set up for success.

5. Make Decisions

Whether you are starting a small business or expanding an existing one, a business plan is an important tool to help guide your decisions:

Sound decisions Gathering information for the business plan boosts your knowledge across many important areas of the business:

• Industry, market, customers and competitors
• Financial projections (e.g., revenue, expenses, assets, cash flow)
• Operations, technology and logistics
• Human resources (management and staff)
• Creating value for your customer through products and services

Decision-making skills The business planning process involves thorough research and critical thinking about many intertwined and complex business issues. As a result, it solidifies the decision-making skills of the business owner and builds a solid foundation for strategic planning , prioritization and sound decision making in your business. The more you understand, the better your decisions will be.

Planning Thorough planning allows you to determine the answer to some of the most critical business decisions ahead of time , prepare for anticipate problems before they arise, and ensure that any tactical solutions are in line with the overall strategy and goals.

If you do not take time to plan, you risk becoming overwhelmed by countless options and conflicting directions because you are not unclear about the mission , vision and strategy for your business.

6. Manage Risk

Some level of uncertainty is inherent in every business, but there is a lot you can do to reduce and manage the risk, starting with a business plan to uncover your weak spots.

You will need to take a realistic and pragmatic look at the hard facts and identify:

• Major risks , challenges and obstacles that you can expect on the way – so you can prepare to deal with them.
• Weaknesses in your business idea, business model and strategy – so you can fix them.
• Critical mistakes before they arise – so you can avoid them.

Essentially, the business plan is your safety net . Naturally, business plan cannot entirely eliminate risk, but it can significantly reduce it and prepare you for any challenges you may encounter.

7. Communicate Internally

Attract talent For a business to succeed, attracting talented workers and partners is of vital importance.

A business plan can be used as a communication tool to attract the right talent at all levels, from skilled staff to executive management, to work for your business by explaining the direction and growth potential of the business in a presentable format.

Align performance Sharing your business plan with all team members helps to ensure that everyone is on the same page when it comes to the long-term vision and strategy.

You need their buy-in from the beginning, because aligning your team with your priorities will increase the efficiency of your business as everyone is working towards a common goal .

If everyone on your team understands that their piece of work matters and how it fits into the big picture, they are more invested in achieving the objectives of the business.

It also makes it easier to track and communicate on your progress.

Share and explain business objectives with your management team, employees and new hires. Make selected portions of your business plan part of your new employee training.

8. Communicate Externally

Alliances If you are interested in partnerships or joint ventures, you may share selected sections of your plan with the potential business partners in order to develop new alliances.

Suppliers A business plan can play a part in attracting reliable suppliers and getting approved for business credit from suppliers. Suppliers who feel confident that your business will succeed (e.g., sales projections) will be much more likely to extend credit.

In addition, suppliers may want to ensure their products are being represented in the right way .

Professional Services Having a business plan in place allows you to easily share relevant sections with those you rely on to support the organization, including attorneys, accountants, and other professional consultants as needed, to make sure that everyone is on the same page.

Advisors Share the plan with experts and professionals who are in a position to give you valuable advice.

Landlord Some landlords and property managers require businesses to submit a business plan to be considered for a lease to prove that your business will have sufficient cash flows to pay the rent.

Customers The business plan may also function as a prospectus for potential customers, especially when it comes to large corporate accounts and exclusive customer relationships.

9. Secure Funding

If you intend to seek outside financing for your business, you are likely going to need a business plan.

Whether you are seeking debt financing (e.g. loan or credit line) from a lender (e.g., bank or financial institution) or equity capital financing from investors (e.g., venture or angel capital), a business plan can make the difference between whether or not – and how much – someone decides to invest.

Investors and financiers are always looking at the risk of default and the earning potential based on facts and figures. Understandably, anyone who is interested in supporting your business will want to check that you know what you are doing, that their money is in good hands, and that the venture is viable in the long run.

Business plans tend to be the most effective ways of proving that. A presentation may pique their interest , but they will most probably request a well-written document they can study in detail before they will be prepared to make any financial commitment.

That is why a business plan can often be the single most important document you can present to potential investors/financiers that will provide the structure and confidence that they need to make decisions about funding and supporting your company.

Be prepared to have your business plan scrutinized . Investors and financiers will conduct extensive checks and analyses to be certain that what is written in your business plan faithful representation of the truth.

10. Grow and Change

It is a very common misconception that a business plan is a static document that a new business prepares once in the start-up phase and then happily forgets about.

But businesses are not static. And neither are business plans. The business plan for any business will change over time as the company evolves and expands .

In the growth phase, an updated business plan is particularly useful for:

Raising additional capital for expansion

• Seeking financing for new assets , such as equipment or property
• Securing financing to support steady cash flows (e.g., seasonality, market downturns, timing of sale/purchase invoices)
• Forecasting to allocate resources according to strategic priority and operational needs
• Valuation (e.g., mergers & acquisitions, tax issues, transactions related to divorce, inheritance, estate planning)

Keeping the business plan updated gives established businesses better chance of getting the money they need to grow or even keep operating.

Business plan is also an excellent tool for planning an exit as it would include the strategy and timelines for a transfer to new ownership or dissolution of the company.

Also, if you ever make the decision to sell your business or position yourself for a merger or an acquisition , a strong business plan in hand is going to help you to maximize the business valuation.

Valuation is the process of establishing the worth of a business by a valuation expert who will draw on professional experience as well as a business plan that will outline what you have, what it’s worth now and how much will it likely produce in the future.

Your business is likely to be worth more to a buyer if they clearly understand your business model, your market, your assets and your overall potential to grow and scale .

Related Questions

Business plan purpose: what is the purpose of a business plan.

The purpose of a business plan is to articulate a strategy for starting a new business or growing an existing one by identifying where the business is going and how it will get there to test the viability of a business idea and maximize the chances of securing funding and achieving business goals and success.

Business Plan Benefits: What are the benefits of a business plan?

A business plan benefits businesses by serving as a strategic tool outlining the steps and resources required to achieve goals and make business ideas succeed, as well as a communication tool allowing businesses to articulate their strategy to stakeholders that support the business.

Business Plan Importance: Why is business plan important?

The importance of a business plan lies in it being a roadmap that guides the decisions of a business on the road to success, providing clarity on all aspects of its operations. This blueprint outlines the goals of the business and what exactly is needed to achieve them through effective management.

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What Is A Business Plan (& Do I Really Need One?)

The term "business plan" is a familiar one, often bandied about in entrepreneurial circles. Yet, despite its ubiquity, it's remarkable how much mystery and confusion can surround this essential business tool.

What exactly is a business plan? What purpose does it serve? How is it structured? This article aims to lift the veil, demystifying the business plan and revealing its multifaceted nature.

Business Plan Definition

A business plan is a document that describes a company's objectives and its marketing, financial, and operational strategies for achieving them. It's more than a mere document; it's a structured communication tool designed to articulate the vision of the business, allowing stakeholders to easily find the information they seek.

The business plan is a tangible reflection of the strategic planning that has gone into the business's future. While the plan is a static document, the planning is a dynamic process, capturing the strategic thinking and decision-making that shape the business's direction.

Purposes of a Business Plan

1. attracting funding opportunities.

A well-crafted business plan illustrates the company's potential for growth and profitability. It outlines the company's vision, mission, and strategies, providing a clear roadmap for success. A potential investor, whether venture capitalists or angel investors, can see how capital will be utilized, fostering trust and confidence in the business venture. A bank or financial institution can assess your company's ability to meet debt service obligations and compliance with strict financial accounting to meet underwriting requirements.

2. Aligning Organizational Objectives

A business plan acts as a unifying document that aligns the team with the company's goals and strategies. It ensures that everyone is on the same page, working towards common objectives. This alignment fosters collaboration and efficiency, driving the business towards its targets.

3. Validating the Business Concept

Before launching, a business plan helps in validating the feasibility of the business idea. It's a rigorous process that tests the concept against real-world scenarios, ensuring that the idea is not only innovative but also practical and sustainable. This validation builds credibility and prepares the business for the challenges ahead. For an existing business, a business plan can help address a possible merger and acquisition (M&A), rolling out a new business product or location, or expanding the target market.

4. Facilitating Legal and Regulatory Compliance

Whether it's securing a visa for international operations or meeting other regulatory requirements, a business plan can be an essential tool. It provides the necessary information in a structured format, demonstrating compliance with legal and regulatory standards. This can streamline processes and prevent potential legal hurdles.

5. Articulating and Formalizing the Business Vision

The business plan is more than a set of numbers and projections; it's the embodiment of the business vision. It communicates the essence of the business to stakeholders, turning abstract ideas into a concrete operational plan. It's a vital tool for leadership to articulate and formalize the vision, setting the stage for strategic execution.

Identifying the Right Type of Business Plan

Once you understand who your business plan is for and what specific needs it must address, you can identify the type of plan that best suits your situation. Business plans can be categorized into two main types: traditional and lean, each serveing its own unique purpose.

Traditional Business Plan

The Traditional Business Plan is a detailed and comprehensive document, often used by a new business, especially those seeking significant funding. It provides a complete picture of the company's vision, strategies, and operations. A traditional business plan leaves no stone unturned, offering a robust tool that communicates the business's entire vision and plan to stakeholders.

Lean Business Plan

In contrast, the Lean Business Plan is an abbreviated structure that still emphasizes the key elements of a Traditional Business Plan, but in less detail. It's suitable for early-stage startups, small businesses, or situations where agility and speed are essential. The Lean Business Plan focuses on the essentials, providing a quick overview without overwhelming details. It's a flexible and adaptable tool that can evolve with the business. One of the primary distinctions between it and a Traditional Business Plan is that a Lean Business Plan does not typically include financial planning, or if it does, it's a simple financial forecast or cash burn.

Components of a Business Plan

There are many places online where you can buy a business plan template. Often, those documents are just an outline of the sections of the business plan and what is included in each. If that's what you're looking for, here's a good business plan outline:

Executive Summary

The Executive Summary is the first section read but often the last written, as it encapsulates the entire plan. If the company has a mission statement, it's typically included here. When used for funding, it includes the ask or uses of funds, and for investment, it may contain an investor proposition. It's a concise overview that sets the tone, summarizing each section that follows.

Company Overview

The Company Overview is the foundation of the business, articulating how it operates, generates revenue, and delivers unique value to its customers. This section defines products and/or service the business sells, as well as the company’s business model and unique value proposition. It covers key partners, pricing strategy, revenue model, and other essential business activities. 

Market Analysis Summary

The Market Analysis is the business intelligence portion of the plan. It comprises an industry analysis, market segments, target customers, competitive analysis, competitive advantage. This section provides insights into the market landscape, identifying opportunities, challenges, and how the business positions itself uniquely within the industry.

Strategy & Implementation Summary

Here, the business plan should outline the short-term and long-term objectives, marketing strategy and sales approach. It's a roadmap that details how the business will achieve its goals, including tactical steps, timelines, and resources. In a business plan for investors, the inclusion of an exit strategy can provide a vision for the future, considering various potential outcomes.

Management Summary

The Management Summary offers profiles of key personnel, their qualifications, roles, and plans to fill talent gaps. It's a snapshot of the leadership team, providing assurance that the right people are in place to execute the business plan successfully.

Financial Projections

This section includes standard financial statements like the profit & loss statement (P&L), the balance sheet, and the cash flow statement. It offers a detailed financial blueprint, illustrating the company’s revenue drivers and unit assumptions, income statement, a break-even analysis, and a sensitivity analysis to examine how changes in variables affect outcomes. For businesses with complex structures, framing the revenue in terms of market share can offer additional insight into the viability and feasibility of the financial projections.

The Appendices often include year 1 and year 2 monthly financial statements, intellectual property like patents and trademarks, construction blueprints, and other essential documentation. It's a repository for supporting information that adds depth and context to the main sections of the plan.

Do I Need a Business Plan?

The question "Do I need a business plan?" is one that many entrepreneurs and business leaders grapple with. The answer, however, is not as straightforward as it might seem. While not every business requires a traditional business plan, the strategic planning process is essential for all. 

In some cases, a traditional business plan is required. Applying for a Small Business Administration (SBA) loan , obtaining a entrepreneurship visa , or meeting specific investor requirements may mandate a comprehensive business plan.

However a traditional business plan isn’t always necessary. For example, in early-stage investor funding, particularly in industries like SaaS, a lean business plan accompanied by a pitch deck presentation will often suffice. The focus here is on agility and essential information rather than exhaustive detail.

Every Business Needs Business Planning

Unlike the traditional business plan, which may or may not be required depending on the situation, business planning as a process is indispensable for every business, regardless of size or stage.

Business planning is a dynamic, continuous process. It's not confined to a single document but evolves with the business, adapting to changes, challenges, and opportunities. Effective strategic planning ensures internal alignment with both long-term vision and short-term objectives. It's a holistic approach that guides business goal-setting decision-making, resource allocation, and strategic direction. It often serves as the basis for a fully developed marketing plan.

Every business, from a small startup to a large corporation, benefits from strategic planning. It's a practice that fosters growth, innovation, and resilience, providing a roadmap for success.

Not every business needs a traditional business plan as a document, but all businesses need to engage in business planning as a process. While the traditional business plan serves specific purposes and audiences, business planning is a universal practice that guides and grows the business.

Entrepreneurs and business leaders must assess their specific needs, recognizing that the traditional business plan is just one tool among many. The true value of the business plan lies in continuous planning, adapting, and aligning with the unique vision and goals of the business.

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Business Planning

Written by True Tamplin, BSc, CEPF®

Reviewed by subject matter experts.

Updated on June 08, 2023

Are You Retirement Ready?

Table of contents, what is business planning.

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

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

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

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

Importance of Business Planning

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

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

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

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

Business Planning Process

Step 1: defining your business purpose and goals.

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

Step 2: Conducting Market Research and Analysis

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

Step 3: Creating a Business Model and Strategy

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

Step 4: Developing a Marketing Plan

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

Step 5: Establishing Operational and Financial Plans

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

Step 6: Reviewing and Revising the Business Plan

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

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

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The importance of a business plan

Business plans are like road maps: it’s possible to travel without one, but that will only increase the odds of getting lost along the way.

Owners with a business plan see growth 30% faster than those without one, and 71% of the fast-growing companies have business plans . Before we get into the thick of it, let’s define and go over what a business plan actually is.

What is a business plan?

A business plan is a 15-20 page document that outlines how you will achieve your business objectives and includes information about your product, marketing strategies, and finances. You should create one when you’re starting a new business and keep updating it as your business grows.

Rather than putting yourself in a position where you may have to stop and ask for directions or even circle back and start over, small business owners often use business plans to help guide them. That’s because they help them see the bigger picture, plan ahead, make important decisions, and improve the overall likelihood of success. ‍

Why is a business plan important?

A well-written business plan is an important tool because it gives entrepreneurs and small business owners, as well as their employees, the ability to lay out their goals and track their progress as their business begins to grow. Business planning should be the first thing done when starting a new business. Business plans are also important for attracting investors so they can determine if your business is on the right path and worth putting money into.

Business plans typically include detailed information that can help improve your business’s chances of success, like:

• A market analysis : gathering information about factors and conditions that affect your industry
• Competitive analysis : evaluating the strengths and weaknesses of your competitors
• Customer segmentation : divide your customers into different groups based on specific characteristics to improve your marketing
• Marketing: using your research to advertise your business
• Logistics and operations plans : planning and executing the most efficient production process
• Cash flow projection : being prepared for how much money is going into and out of your business
• An overall path to long-term growth

What is the purpose of a business plan?

A business plan is like a map for small business owners, showing them where to go and how to get there. Its main purposes are to help you avoid risks, keep everyone on the same page, plan finances, check if your business idea is good, make operations smoother, and adapt to changes. It's a way for small business owners to plan, communicate, and stay on track toward their goals.

10 reasons why you need a business plan

I know what you’re thinking: “Do I really need a business plan? It sounds like a lot of work, plus I heard they’re outdated and I like figuring things out as I go...”.

The answer is: yes, you really do need a business plan! As entrepreneur Kevin J. Donaldson said, “Going into business without a business plan is like going on a mountain trek without a map or GPS support—you’ll eventually get lost and starve! Though it may sound tedious and time-consuming, business plans are critical to starting your business and setting yourself up for success.

To outline the importance of business plans and make the process sound less daunting, here are 10 reasons why you need one for your small business.

1. To help you with critical decisions

The primary importance of a business plan is that they help you make better decisions. Entrepreneurship is often an endless exercise in decision making and crisis management. Sitting down and considering all the ramifications of any given decision is a luxury that small businesses can’t always afford. That’s where a business plan comes in.

Building a business plan allows you to determine the answer to some of the most critical business decisions ahead of time.

Creating a robust business plan is a forcing function—you have to sit down and think about major components of your business before you get started, like your marketing strategy and what products you’ll sell. You answer many tough questions before they arise. And thinking deeply about your core strategies can also help you understand how those decisions will impact your broader strategy.

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2. To iron out the kinks

Putting together a business plan requires entrepreneurs to ask themselves a lot of hard questions and take the time to come up with well-researched and insightful answers. Even if the document itself were to disappear as soon as it’s completed, the practice of writing it helps to articulate your vision in realistic terms and better determine if there are any gaps in your strategy.

3. To avoid the big mistakes

Only about half of small businesses are still around to celebrate their fifth birthday . While there are many reasons why small businesses fail, many of the most common are purposefully addressed in business plans.

According to data from CB Insights , some of the most common reasons businesses fail include:

• No market need : No one wants what you’re selling.
• Lack of capital : Cash flow issues or businesses simply run out of money.
• Inadequate team : This underscores the importance of hiring the right people to help you run your business.
• Stiff competition : It’s tough to generate a steady profit when you have a lot of competitors in your space.
• Pricing : Some entrepreneurs price their products or services too high or too low—both scenarios can be a recipe for disaster.

The exercise of creating a business plan can help you avoid these major mistakes. Whether it’s cash flow forecasts or a product-market fit analysis , every piece of a business plan can help spot some of those potentially critical mistakes before they arise. For example, don’t be afraid to scrap an idea you really loved if it turns out there’s no market need. Be honest with yourself!

Get a jumpstart on your business plan by creating your own cash flow projection .

4. To prove the viability of the business

Many businesses are created out of passion, and while passion can be a great motivator, it’s not a great proof point.

Planning out exactly how you’re going to turn that vision into a successful business is perhaps the most important step between concept and reality. Business plans can help you confirm that your grand idea makes sound business sense.

A critical component of your business plan is the market research section. Market research can offer deep insight into your customers, your competitors, and your chosen industry. Not only can it enlighten entrepreneurs who are starting up a new business, but it can also better inform existing businesses on activities like marketing, advertising, and releasing new products or services.

Want to prove there’s a market gap? Here’s how you can get started with market research.

5. To set better objectives and benchmarks

Without a business plan, objectives often become arbitrary, without much rhyme or reason behind them. Having a business plan can help make those benchmarks more intentional and consequential. They can also help keep you accountable to your long-term vision and strategy, and gain insights into how your strategy is (or isn’t) coming together over time.

6. To communicate objectives and benchmarks

Whether you’re managing a team of 100 or a team of two, you can’t always be there to make every decision yourself. Think of the business plan like a substitute teacher, ready to answer questions any time there’s an absence. Let your staff know that when in doubt, they can always consult the business plan to understand the next steps in the event that they can’t get an answer from you directly.

Sharing your business plan with team members also helps ensure that all members are aligned with what you’re doing, why, and share the same understanding of long-term objectives.

7. To provide a guide for service providers

Small businesses typically employ contractors , freelancers, and other professionals to help them with tasks like accounting , marketing, legal assistance, and as consultants. Having a business plan in place allows you to easily share relevant sections with those you rely on to support the organization, while ensuring everyone is on the same page.

8. To secure financing

Did you know you’re 2.5x more likely to get funded if you have a business plan?If you’re planning on pitching to venture capitalists, borrowing from a bank, or are considering selling your company in the future, you’re likely going to need a business plan. After all, anyone that’s interested in putting money into your company is going to want to know it’s in good hands and that it’s viable in the long run. Business plans are the most effective ways of proving that and are typically a requirement for anyone seeking outside financing.

Learn what you need to get a small business loan.

9. To better understand the broader landscape

No business is an island, and while you might have a strong handle on everything happening under your own roof, it’s equally important to understand the market terrain as well. Writing a business plan can go a long way in helping you better understand your competition and the market you’re operating in more broadly, illuminate consumer trends and preferences, potential disruptions and other insights that aren’t always plainly visible.

10. To reduce risk

Entrepreneurship is a risky business, but that risk becomes significantly more manageable once tested against a well-crafted business plan. Drawing up revenue and expense projections, devising logistics and operational plans, and understanding the market and competitive landscape can all help reduce the risk factor from an inherently precarious way to make a living. Having a business plan allows you to leave less up to chance, make better decisions, and enjoy the clearest possible view of the future of your company.

Business plan FAQs

How does having a business plan help small business owners make better decisions.

Having a business plan supports small business owners in making smarter decisions by providing a structured framework to assess all parts of their businesses. It helps you foresee potential challenges, identify opportunities, and set clear objectives. Business plans help you make decisions across the board, including market strategies, financial management, resource allocation, and growth planning.

What industry-specific issues can business plans help tackle?

Business plans can address industry-specific challenges like regulatory compliance, technological advancements, market trends, and competitive landscape. For instance, in highly regulated industries like healthcare or finance, a comprehensive business plan can outline compliance measures and risk management strategies.

How can small business owners use their business plans to pitch investors or apply for loans?

In addition to attracting investors and securing financing, small business owners can leverage their business plans during pitches or loan applications by focusing on key elements that resonate with potential stakeholders. This includes highlighting market analysis, competitive advantages, revenue projections, and scalability plans. Presenting a well-researched and data-driven business plan demonstrates credibility and makes investors or lenders feel confident about your business’s potential health and growth.

Understanding the importance of a business plan

Now that you have a solid grasp on the “why” behind business plans, you can confidently move forward with creating your own.

Remember that a business plan will grow and evolve along with your business, so it’s an important part of your whole journey—not just the beginning.

Related Posts

Now that you’ve read up on the purpose of a business plan, check out our guide to help you get started.

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The Undeniable Importance of a Business Plan

We often hear about business plans in the context of early-stage companies; however, constructing excellent business plans is difficult and time-consuming, so many entrepreneurs avoid them. But, is this a mistake?

While most people may be aware of the “soft” arguments for and against writing a business plan, in this article, a Toptal Finance Expert takes a data-driven approach to addressing the debate. In it, he finds strong evidence to support the notion that writing an excellent business plan is time well spent.

By Sean Heberling

Sean has analyzed 10,000+ companies, built complex models, and helped facilitate $1+ billion in investment transactions.

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Executive Summary

• Individuals who write business plans are 2.5x as likely to start businesses.
• Business planning improves corporate executive satisfaction with corporate strategy development.
• Angels and venture capitalists value business plans and their [financial models](https://www.toptal.com/finance/tutorials/what-is-a-financial-model).
• Companies who complete business plans are 2.5x as likely to get funded.
• Even if a small-scale early-stage venture seeking just $250,000 in capital spent almost $40,000 on business planning and another almost $40,000 on capital raising, it should still expect to "break even" on a probability-weighted basis.
• Larger early-stage ventures enjoy extraordinary probability-weighted returns on investment from business planning. Because the target net capital so greatly exceeds the money spent on business planning, the prospective ROI is huge.
• Company Overview: An explanation of why your company is relevant and the need you are addressing.
• Market Overview: A description of the state of your market and its important trends, a detailed description of your customers, and a description of your current competitors and their advantages.
• Product/Service Overview: A description of your product(s), how they compete with other brands, why they are needed, and why customers will pay a fair economic value for it.
• Financial Projections: Three thorough financial plans with conservative, moderate, and optimistic assumptions.
• The process of writing forces the author to ask introspectively how they reached their conclusions and each of the sub-conclusions along the way because they must explain their logic to a cynical reader.
• The written author needs to support all conclusions with facts and logic to prove that they are not "making it up" or relying upon popular "myths."
• Outlined reports and outlined business plans are not generally subject to the same level of reader scrutiny.

We often hear about business plans in the context of early-stage companies , but constructing excellent business plans is difficult and time-consuming, so many entrepreneurs avoid them. That’s a mistake, as there is strong evidence demonstrating that business plans generate positive returns on time and money invested .

The business world has long debated the importance of business plans, and most involved understand the “soft” arguments. However, this article delves into the data to conclude that writing an excellent business plan is time well spent. I developed a similar view over my 20+ year financial career , during which I have analyzed well over 10,000 different types of companies. I have noticed that while a business plan may not be required for a venture to become successful, having one does seem to greatly improve the probability of successful outcomes.

Expert Opinions Support the Value of Business Planning

Expert opinions support the four following conclusions:

• Angels and venture capitalists value business plans and their financial models.

Individuals Who Write Business Plans Are 2.5x More Likely to Become Entrepreneurs

Many people have business ideas over the course of their careers, but often, these ideas never come to fruition, or they get lost amidst our daily obligations. Interestingly, studies support the notion that those who write business plans are far more likely to launch their companies. Data from the Panal Study of Entrepreneurial Dynamics in fact suggests that business planners were 2.5x as likely to get into business . The study, which surveyed more than 800 people across the United States who were in the process of starting businesses, therefore concluded that “writing a plan greatly increased the chances that a person would actually go into business.”

Of course, causation of this phenomenon is hard to pin down. There are several different possible reasons why this correlation between writing business plans and actually starting a business may exist. But William Gartner, Clemson University Entrepreneurship Professor and author of the Panal Study, believes that “‘research shows that business plans are all about walking the walk. People who write business plans also do more stuff.’ And doing more stuff, such as researching markets and preparing projections, increases the chances an entrepreneur will follow through.”

Research shows that business plans are all about walking the walk. People who write business plans also do more stuff. And doing more stuff, such as researching markets and preparing projections, increases the chances an entrepreneur will follow through.

William Bygrave, a professor emeritus at Babson College, reached a similar conclusion despite having previously shown “that entrepreneurs who began with formal plans had no greater success than those who started without them.” Bygrave does admit, however, that “40% of Babson students who have taken the college’s business plan writing course go on to start businesses after graduation, twice the rate of those who didn’t study plan writing.”

Business Planning Improves Corporate Executive Satisfaction

Another important way in which business plans can provide tangible help is by aligning everyone in an organization with the vision and strategy going forward. And this, in turn, has important ramifications on corporate executive satisfaction. A study by McKinsey & Company which surveyed nearly 800 corporate executives across a range of industries confirms this conclusion. In it, McKinsey found that “formal strategic-planning processes play an important role in improving overall satisfaction with strategy development. That role can be seen in the responses of the 79 percent of managers who claimed that the formal planning process played a significant role in developing strategies and were satisfied with the approach of their companies, compared with only 21 percent of the respondents who felt that the process did not play a significant role. Looked at another way, 51% of the respondents whose companies had no formal process were dissatisfied with their approach to the development of strategy, against only 20% of those at companies with a formal process.”

Of course, not all planning is equal. Planning just for the sake of planning doesn’t have the desired effects. As McKinsey itself noted in their study, “Just 45% of the respondents said they were satisfied with the strategic planning process. Moreover, only 23% indicated that major strategic decisions were made within its confines. Given these results, managers might well be tempted to jettison the planning process altogether.” As such, entrepreneurs and business managers should take the time and effort required to put together a well-written and well-researched business plan. Later in the article, I outline some of the elements of a well-written plan.

Business Plans and Their Financial Models Are Valuable to Angels and Venture Capitalists

Many entrepreneurs will eventually need to raise outside capital to grow and develop their businesses. In my experience, a business plan is a crucial tool in maximizing the chances of raising money from external investors. A well-written plan not only helps investors understand your business and your vision, but also shows them that you’ve taken the time to carefully assess and think through the issues your business will face, as well as the more detailed questions surrounding the economics and fundamentals of your business model.

Nathan Beckford, CFA, is the CEO of FounderSuite, the funding stack used by startups in Y Combinator, TechStars, 500s, and more to raise over $750 million. Nathan illustrates the above point nicely in an email he wrote to me recently: “Prior to starting Foundersuite.com, I ran a startup consulting business called VentureArchetypes.com. For the first few years, our primary business was cranking out bold, bullish, beautifully-written business plans for startups to present to investors. Around the mid-2000s, business plans started to go out of favor as the ‘Lean Startup’ methodology became popular. Instead of a written plan, we saw a huge uptick in demand for detailed financial models. Bottom line, I still see value in taking time to be contemplative and strategic before launching a startup. Does that need to be in the form of a 40-page written document? No. But if that’s the format that best works for you, and it can help you model scenarios and ‘see around the corner’ then that’s valuable.”

Nathan and I have frequently interacted, as I maintain a subscription to FounderSuite, software I use when running capital campaigns for early-stage companies on whose boards I sit, or when raising capital for my own firm’s investment projects. Nathan’s feedback is helpful, as he frequently interacts with thousands of entrepreneurs simultaneously running capital campaigns, providing him with a great perspective on which approaches work and which don’t. Clearly, he sees that financial models and business plans in some form help entrepreneurs raise capital.

Companies Who Complete Business Plans Are 2.5x as Likely to Get Funded

Following the section above, naturally, if business plans are useful to outside investors, these are therefore likely to also increase one’s chances of successfully raising capital. A study by Palo Alto Software confirms this hypothesis. The study showed that although 65% of entrepreneurs had NOT completed business plans, the ones who had were twice as likely to have secured funding for their businesses.

This study surveyed 2,877 entrepreneurs. Of those, 995 had completed business plans, with 297 of them (30%) having secured loans, 280 of them (28%) having secured investment capital, and 499 of them (50%) having grown their businesses. Contrast these percentages with the results for the 1,882 entrepreneurs who had not completed business plans, where just 222 of them (12%) had secured loans, 219 of them (12%) had secured investment capital, and 501 of them (27%) had grown their businesses. (Note that the percentages among the business plan population sum to over 100% because of some overlap between each of the sub-categories.) These results led the study authors to conclude that “Except in a small number of cases, business planning appeared to be positively correlated with business success as measured by our variables. While our analysis cannot say that completing a business plan will lead to success, it does indicate that the type of entrepreneur who completes a business plan is also more likely to run a successful business.”

Calculating the Return on Investment for Business Planning

The data and studies outlined above all serve to prove something that I have come to understand very clearly throughout my career. Nevertheless, I still often find that startups struggle with the idea of having to put together a business plan, and in particular with the option of hiring an outside professional to help them do that. As such, I quantified the ROI of such an activity, using data and numbers based on my many years of business consulting. The results of the exercise are summarized in the table at the end of the section, but there are two overarching conclusions:

• Even a small-scale early-stage company can “afford” to pay a finance expert $191 per hour both to create a business plan and to guide the capital raising process, at worst “breaking even” on the investment.
• Larger early-stage companies can expect significant returns on investments in business planning, perhaps as much as 6,700% (67x the amount of money invested).

Diving into the analysis, my inputs included:

• My professional experience with writing business plans. I have spent 25 - 200 hours apiece creating business plans I feel comfortable sharing with founders, advisors, and investors.
• Data from the Palo Alto study discussed earlier in this article. This study showed that 30% of early-stage ventures with business plans had secured funding, 2.5x as great as the 12% of early-stage ventures without business plans who managed to secure funding despite the absence of such plans.
• The hourly rate for a finance expert x (150 to 200 hours) for one round of financing, OR
• 10% of the amount of capital targeted

My analysis illustrates the following:

• Early-stage companies should expect to spend $4,000 - $40,000 on business planning, including the financial modeling associated with it.
• Early-stage companies should expect to spend $30,000 - $200,000 for an initial round of financing between $250,000 and $2 million in size, resulting in net financing of $200,000 - $1.8 million.
• Even if a small-scale early-stage venture seeking just $250,000 in capital spent almost $40,000 on business planning and another almost $40,000 on capital raising, it should still expect to “break even” on a probability-weighted basis. In other words, because the odds of success with a professional business plan are 2.5x greater than without one, small-scale early-stage ventures can justify such a significant investment. This also assumes NO additional odds for success from engaging a professional to coordinate the fundraising effort. I suspect that doing so may push the odds of success from 12% without a business plan and 30% with a business plan to above 50%. It is also likely that a smaller-scale venture may require significantly fewer hours for business planning and capital raising that what is outlined in the “worst case” below.
• Larger early-stage ventures enjoy extraordinary probability-weighted returns on investment from business planning. Because the target net capital so greatly exceeds the money spent on business planning, the prospective ROI is huge, and this analysis just assumes ONE round of equity financing. Most successful startups will experience several rounds of financing.

Thoughts on Writing an Excellent Business Plan

An extensive overview of how to write an excellent business plan is beyond the scope of this article. However, here are two key thoughts that have emerged from my years of experience with startups.

First, there are four common elements to an excellent business plan. In Alan Hall’s Forbes article, “ How to Build a Billion Dollar Business Plan: 10 Top Points ,” he interviews Thomas Harrison, Chairman of Diversified Agency Services, an Omnicom division that has purchased “a vast number of firms,” to share his views on the key elements of a great business plan. Although each of these ten elements is essential, I reorganized the list into four broad categories:

1. Company Overview

• An explanation of why your company is relevant and the need are you addressing
• A description of corporate priorities and the processes to achieve them.
• An overview of the various resources, including the people that will be needed, to deliver what’s expected by the customer.

2. Market Overview

• A description of the state of your market and its important trends.
• A detailed description of your customers.
• A description of your current competitors and their advantages. Which ones will you displace?

3. Product/Service Overview

• A description of your products, how they compete with other brands, and why they are needed.
• An explanation of why customers will pay a fair economic value for your product or service. This element is conspicuously absent from some of today’s most expensive unicorns. Companies such as Uber and Tesla are losing massive amounts of money on rapidly growing sales because these companies may not be selling their services/products for fair economic value. Of course, sales grow rapidly when customers can buy your services/products for far less than their fair economic values!

4. Financial Projections

• Conservative
• Each scenario should have realistic and achievable sales, margins, expenses, and profits on monthly, quarterly, and annual bases. Again, these elements appear to be conspicuously absent from some of today’s most expensive unicorns.

Second, written business plans are superior to those just “outlined.” As an adjunct professor of finance for Villanova University, I require my students to write research reports prior to developing slide decks to present their findings from a full semester of industry research. The process of writing forces the authors to ask themselves how they reached their conclusions and each of the sub-conclusions along the way because they must explain their logic to cynical readers. The written authors need to support their conclusions with facts and logic to prove that they are not “making it up” or relying upon popular “myths.” Outlined reports and outlined business plans are not generally subject to the same level of reader scrutiny. Therefore, written business plans are superior to those just “outlined.” Outlined plans are often kept on 10-12 slide decks, and the slide deck is an important tool in the capital raising process, but the written business plan that stands behind it will differentiate an entrepreneur from their seemingly infinite competition.

Parting Thoughts

Some argue that many public multi-billion-dollar companies such as Apple or Google never had formal business plans before they started, but this argument is flawed because most of these companies likely developed business plans either during the solicitation of venture capital or during the process of going public. Apple and Google were both funded with venture capital, and soliciting venture capital involves business planning. The founders of Apple and Google likely created financial projections and outlined strategic paths.

Moreover, Apple and Google are both public companies, and going public involves business planning. Underwriters employ research analysts creating financial forecasts based on business plans projected by management at the companies going public. Buy-side firms purchasing and holding shares in newly public companies create forecasts based upon the business plans projected by public company management teams.

Admittedly, you don’t need a written business plan to have a successful company. You may not even need a business plan at all to have a successful company. However, the probability of success without a business plan is much lower. Angels and venture capitalists like to know about your business plan, and public companies need to project business plans to persuade underwriters and investors to purchase their securities.

Further Reading on the Toptal Blog:

• Creating a Narrative from Numbers
• Business Plan Consultants: Who They Are and How They Create Value
• Building a Business Continuity Plan
• Building the Next Big Thing: A Guide to Business Idea Development
• Mission Statements: How Effectively Used Intangible Assets Create Corporate Value

Understanding the basics

Why it is important to have a business plan.

Expert opinions and numerous studies show that business plans improve corporate satisfaction, are useful for angel investors and venture capitalists, and increase a company’s chances of raising capital by 2.5x.

What are the benefits of a business plan?

Individuals who write business plans are 2.5x as likely to start businesses. Moreover, business planning improves corporate executive satisfaction with corporate strategy development. Finally, investors value business plans, making the chances of raising capital 2.5x greater.

What does an investor look for in a business plan?

The four key sections of a business plan are: the company overview, a market overview, your product/service overview, and the financial projections.

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The Importance Of Business Planning: A Beginner’s Guide

by Mike Vestil  

Business planning is the process of determining the goals and objectives of a business and developing a roadmap to achieve them.

It involves the analysis of current and future market conditions, operational capabilities, financial resources, and other factors that impact business success.

Effective business planning helps entrepreneurs and organizations navigate the complexities of the market and make strategic decisions that increase profitability and longevity.

Whether you are starting a new business or looking to expand an existing one, a well-crafted business plan is critical to your success.

In this article, we will explore the key components of business planning and provide insights on how to create a plan that meets your specific needs.

Introduction To Business Planning

What is business planning.

A business plan can be described as a document that outlines and describes the goals of a business and the strategies that will be employed to achieve these goals.

It typically includes detailed information about the company, such as the products, services, and customers that it intends to target, as well as an analysis of the market and the competition.

A business plan also describes the financial projections and resources needed to achieve these goals, such as the amount of money that will be invested, the sales projections, and the operational costs.

The purpose of a business plan is to provide a roadmap for the business owner and all stakeholders, including investors, employees, and management teams.

The importance of a business plan cannot be overstated as it serves as a guide to identify and address potential challenges that a business owner may encounter along the way.

Starting and running a business can be a daunting task, but having a well-crafted business plan can help alleviate some of the stress associated with the unknowns of business ownership.

A business plan helps to define and communicate the vision of the business, which can be invaluable to gaining traction with potential investors or partners who can assist in the growth and development of the company.

It also serves as a tool for measuring success as it provides specific goals and objectives that can be compared to actual results.

In conclusion, a well-written business plan is essential to the overall success of a business.

It provides a clear road map of what the business hopes to achieve and how it intends to do so. It serves as a guide for all stakeholders and helps to communicate the vision of the business to potential investors, employees, and partners.

Ultimately, a business plan helps to mitigate potential risks and set the business up for success.

Importance Of Business Planning

Business planning is an essential activity that every organization must engage in irrespective of its nature or size. It helps organizations in setting goals, staying focused, and measuring progress.

There are several reasons why business planning is of great importance, such as guiding decision-making, allocating resources, and identifying potential risks and opportunities.

First and foremost, business planning helps organizations in setting realistic goals and determining the best strategies to achieve them. It provides a roadmap for the future that enables executives and managers to make informed decisions based on available data and market trends.

Additionally, business planning is a critical tool for allocating resources and ensuring that they are used efficiently.

By analyzing financial data and identifying areas of potential wastage, organizations can reduce costs and increase profitability.

Furthermore, business planning is an effective means of identifying potential risks and opportunities that an organization may face.

By conducting a thorough analysis of internal and external factors that may impact the business, organizations can develop contingency plans to mitigate risks and capitalize on opportunities.

Another essential aspect of business planning is that it enables organizations to monitor and measure their progress.

Through the use of key performance indicators (KPIs), organizations can track their performance against set objectives and make adjustments where necessary.

This helps to ensure that the organization is on track towards achieving its goals and that everyone within the organization is working towards the same objectives.

Moreover, business planning is a critical tool for securing external funding. Investors and lenders are more likely to invest in organizations that have a well-defined strategy and a clear understanding of their market and industry.

In conclusion, business planning is a critical activity for any organization that wants to thrive in a competitive marketplace.

It provides a framework for decision-making, resource allocation, risk management, and measuring progress. Without a solid business plan, organizations are likely to struggle to achieve their goals, make efficient use of their resources, and identify potential risks and opportunities.

Therefore, it is crucial for organizations to invest time and resources into developing a comprehensive and realistic business plan that reflects their unique strengths, weaknesses, and objectives.

Purpose Of Business Planning

Business planning is a critical aspect of establishing a successful business. The purpose of business planning is to outline the objectives, strategies, and steps necessary to achieve those objectives.

This process involves creating a roadmap for the future of the business, identifying potential obstacles and opportunities, and developing tactics to overcome or leverage them.

Business planning is essential for potential investors, as it provides an overview of the company’s goals and how they plan to achieve them. It also allows for more effective decision-making, as it provides a framework for assessing whether or not certain decisions align with the company’s overall goals.

Similarly, business planning is critical for internal stakeholders, as it helps to establish a shared vision and objective for the company, as well as the roadmap for achieving it.

Ultimately, business planning is a vital tool for any business owner or entrepreneur looking to establish a thriving enterprise in today’s complex and competitive market.

Key Elements Of Business Planning

Executive summary.

The executive summary is a critical component of any business plan, providing a concise yet comprehensive summary of the key elements of the plan.

It should provide a clear and compelling overview of the business, highlighting its unique value proposition, target market, competitive advantages, and key strategies for success.

Key financial projections should also be included, providing investors and other stakeholders with a clear understanding of the anticipated risks and rewards associated with the venture.

The executive summary should be written in a clear and concise manner, using language that is both easy to understand and engaging to the reader.

It should be designed to capture the attention of potential investors, lenders, or other stakeholders, providing them with a clear understanding of the business and its potential for success.

Market Analysis Of Business Planning

The Market Analysis section of a business plan is a crucial component that provides a thorough analysis of the target market, industry trends, competition, and customer base.

This subsection should focus on the target market’s size, demographics, and psychographics, including their purchasing habits, preferences, and behaviors.

The assessment of industry trends involves investigating the direction of the market, identifying opportunities, and assessing the impact of external factors such as economic conditions and government regulations.

The section on competition analysis must provide a detailed analysis of direct and indirect competitors, including their strengths, weaknesses, and market share.

This information can be obtained through the use of surveys, online research, and networking. The subsection should also assess the customer base, including market segmentation, potential growth, and loyalty.

Moreover, the subsection should include a SWOT analysis that examines the strengths, weaknesses, opportunities, and threats of the company.

The analysis should focus on the potential challenges faced by the company as well as the opportunities that can be leveraged to achieve success.

This analysis provides an insight into the company’s competitive position and helps identify areas where the company can improve.

Overall, the Market Analysis section is critical for any business plan as it provides a well-rounded understanding of the target market, industry trends, and competitive landscape.

The information provided in this section can be used to develop a sound business strategy and make informed decisions that drive the company’s success.

Company Description Of A Business Plan

The Company Description subsection of a business plan provides an overview of the company and its history, current status, and future prospects.

It should detail what the company does, what sets it apart from competitors, and how it intends to achieve success. A well-crafted company description should also communicate the company’s core values, mission statement, and vision for the future.

It is important to include any relevant company history and milestones as well as any notable achievements, partnerships, or industry awards.

Additionally, a clear explanation of the management team’s experience and qualifications, including their education, certifications, and industry experience, is essential to demonstrate the company’s capacity to succeed.

Furthermore, the products or services offered by the company and how they meet the needs and desires of customers should also be emphasized.

Overall, a concise and compelling company description sets the foundation for the rest of the business plan and conveys a sense of confidence and expertise to potential investors and stakeholders.

Organization And Management

The Organization and Management subsection is crucial in any business plan as it highlights the structure, roles, and responsibilities of the key personnel who will be at the helm of the organization.

The success of any business is largely dependent on the capabilities of the people managing it.

Therefore, it is essential to outline the experience and expertise of each member of the management team. This subsection should also provide clear information on the ownership structure of the organization, including the distribution of shares or ownership percentages.

It is important to highlight any legal or regulatory requirements that the management needs to fulfill to operate the business effectively.

Additionally, the subsection should explain the key operational and administrative functions, as well as any external professional services that will be necessary to ensure the smooth running of the business.

Service Or Product Line

Service or Product Line is a crucial section of a business plan that outlines the products or services a company intends to offer.

This section must describe the key attributes of the product or service, including its unique features, the target market, and what sets it apart from competitors.

Additionally, this section must touch on the production process and costs, as well as the pricing strategy the company will use to ensure that the product or service is profitable.

A successful business plan must ensure that its offerings add value to the target market and adapt accordingly by conducting market research, understanding the competition, and leveraging innovation to create new and improved products.

Marketing And Sales Of A Business Plan

The Marketing and Sales subsection of a business planning document is designed to outline the strategies that will be used to promote and sell a company’s product or service.

This section should include a market analysis and an explanation of how the company plans to differentiate itself from competitors. The marketing plan should identify target customers, their needs, and the benefits that the product or service will provide.

The sales plan should identify the distribution channels that will be used, as well as the pricing model and the sales team structure.

Additionally, this section should identify any marketing and sales metrics that will be used to measure success, such as conversion rates and lead generation.

It is crucial for companies to have a comprehensive marketing and sales plan in place to ensure that they are able to effectively reach their target audience and drive revenue growth.

Funding Request Of A Business Plan

The Funding Request subsection of a business plan is where the entrepreneur explains their financial needs to potential investors or lenders. This section starts with the amount of money required and how it will be utilized, such as for inventory, facilities, or equipment.

The business owner must provide an accurate estimate of the total costs involved, including monthly expenses and projected revenues.

It is also essential to explain how the funding request will affect the company’s financial position and how it will help achieve the specified goals.

Sometimes, entrepreneurs may need to explain their willingness to give up a portion of their company’s ownership to secure financing.

The funding request should be provided with detailed financial statements and projections to support the proposal.

Moreover, entrepreneurs should also specify the repayment schedule and interest rates if they are looking for loans.

The objective is to persuade potential investors or lenders that the proposed investment is feasible, and the revenue from the company is likely to provide a satisfactory return on investment within an acceptable time frame.

A well-written and researched funding request inspires confidence in potential investors or lenders and increases the entrepreneur’s chance of securing the necessary funds.

Importance Of Financial Projections In Business Plan

The subsection Financial Projections is a crucial aspect of any business plan. It entails forecasting the financial outcomes of the proposed business operations.

Financial projections encompass several critical elements, including income statements, cash flow statements, and balance sheets.

Accurately projecting financial outcomes is vital for securing funding from investors and financial institutions.

Furthermore, it is a critical tool for managing resources, making critical financial decisions, and monitoring day-to-day financial activities.

When preparing financial projections, it is essential to consider various factors that might influence the outcomes, such as market trends, competition, industry regulations, and other economic indicators.

One critical element that should not be overlooked is setting realistic goals and timelines for achieving the forecasted outcomes.

Additionally, it is essential to prepare alternative scenarios to gauge the impact of unforeseen events on the business’s financial health.

Overall, the Financial Projection subsection provides insights into the potential financial performance of the business and enables entrepreneurs to develop a well-informed roadmap for success.

Appendix Section In A Business Plan

The Appendix section is an optional section that can be included in a business plan. This section provides space to include any additional information that investors or lenders may find useful in evaluating the business plan.

The Appendix can be used to include resumes of key personnel, product or service brochures, legal documents, and any other relevant information that supports the business plan.

It is important to remember that the Appendix should not be used to include information that should be in other sections, but rather to include supplementary information that adds value to the overall plan.

Steps In Business Planning

Step 1: research and analysis.

A crucial step in creating a successful business plan is conducting thorough research and analysis. This step involves collecting and analyzing relevant data from various sources, such as industry reports, customer surveys, and competitor analysis.

The purpose of this research is to gain a deep understanding of the market, identify potential customers, and evaluate market trends and changes.

Analyzing the data collected enables entrepreneurs to identify opportunities and potential threats that their business may face.

Additionally, this step involves evaluating the resources required to establish and run the business, including understanding the costs associated with acquiring and retaining customers, product development, and distribution.

One of the essential factors to consider during the research and analysis stage is the target market. It is important to identify the audience who would be interested in the product or service offered by the business.

Identifying the target market helps entrepreneurs to evaluate the size of the market, the preferences of their potential customers, and the most effective marketing strategies.

Moreover, research provides entrepreneurs with an understanding of customer spending habits and the overall demand for the product.

This knowledge enables entrepreneurs to tailor their business plan to meet the needs of the target market and increase the likelihood of success.

Another critical aspect of the research and analysis stage is evaluating the competition. An analysis of the existing businesses in the industry helps entrepreneurs identify potential rivals.

It also provides insights into the strengths and weaknesses of competitors, their marketing strategies, and the types of products or services they offer.

This information empowers entrepreneurs to develop unique value propositions and competitive advantages that will differentiate their business from others in the market.In summary, research and analysis are the foundation of a successful business plan.

It provides entrepreneurs with a clear understanding of the market, target audience, and competition.

This information enables entrepreneurs to create a comprehensive plan that outlines the steps required to establish and run a profitable business.

Conducting thorough research and analysis is essential to increase the chances of success and minimize the risks associated with starting a new business.

Step 2: Develop A Strategic Plan

The second step in the business planning process is to develop a strategic plan. This is a critical step that involves identifying goals and objectives for the company, as well as the strategies and tactics that will be used to achieve them.

A strategic plan should include a detailed analysis of the company’s strengths, weaknesses, opportunities, and threats. This information can be obtained through market research, customer surveys, and other methods.

Once this analysis is complete, the company can begin to develop a plan for achieving its goals. This should include a detailed description of the company’s products or services, its target market, and its competitors.

It should also include a plan for marketing and sales, as well as financial projections for the next few years.

An important component of the strategic plan is the identification of key performance indicators (KPIs) that will be used to measure the success of the plan.

These KPIs should be specific and measurable, and should be reviewed regularly to ensure that the plan is on track.

The strategic plan should also consider the company’s resources, including its human capital, financial resources, and technological infrastructure. It should identify any gaps in these resources and make recommendations for how they can be filled.

Ultimately, the strategic plan should be a living document that is reviewed and updated regularly. As the company grows and changes, the plan should be adjusted accordingly to ensure that it remains relevant and effective.

Step 3: Create A Business Plan

Step 4: implement the plan.

The actual implementation of a business plan involves executing each step of the strategy. The effectiveness of the plan heavily relies on the satisfaction of the plan’s objectives, the use of realistic timelines, and the deployment of adequate resources.

The business’ management will need to generate functional plans to ensure that resources are allocated optimally. Timelines must also be established for every step of the process to monitor progress and adjust the plan if necessary.

Good communication with all stakeholders is essential to successful implementation. The plan must be communicated to all employees, contractors, and vendors.

The resources, including personnel and funding, must be aligned with the plan. Efficient coordination is necessary to ensure that everyone is working towards the same end goal.

Performance measurement is crucial, as adjustment to the plan may be necessary to achieve the intended outcomes.

Technology and software may also be necessary in executing specific strategies, which should be included in the plan.

Addressing challenges and roadblocks along the way may also require flexible thinking and adapting the plan accordingly.

Therefore, the process of implementing a business plan involves evaluating the plan’s success and adaption of the plan to current business operations.

By successfully implementing the plan, the business can achieve its desired outcome and ultimately achieve its end goal.

Step 5: Monitor And Review

After implementing a business plan, monitoring and reviewing are crucial steps to ensure success. This stage is vital because it allows a business owner to determine if their strategies are working effectively or if changes need to be made.

It is an opportunity to observe the strengths and weaknesses of a business, discover any financial or operational problems, and measure progress toward established goals.

Monitoring includes tracking financial performance, sales figures, production levels, and customer satisfaction rates.

Reviewing involves analyzing the data gathered from monitoring activities and implementing changes to improve the business.

Monitoring and reviewing also help with business planning, providing entrepreneurs with a basis for decision-making.

Ongoing tracking and analysis can identify potential areas of growth, new opportunities, and potential risks.

Keeping current with industry trends, competitive analysis, and customer feedback can be included in the monitoring and review process.

By identifying and addressing challenges, a business can stay ahead of the competition and improve operations, products, and services.

Regular reviews act as a preventative measure for changes in the market or industry. Real-time optimization can be applied to marketing campaigns, cost structures, sales techniques, and more.

By consistently monitoring and reviewing, a business owner can take immediate corrective action instead of waiting until it’s too late.

Additionally, reviewing allows for continual improvement by providing insight into potential opportunities for growth and increased profitability.

A monitoring and review system should be established as part of the overall plan. This should include setting benchmarks and metrics, as well as scheduling regular reviews of progress toward established goals.

Once the system is in place, the focus should shift towards utilizing data gathered from monitoring and review activities.

This data should be analyzed, identifying areas that require changes and taking action to implement those changes.

In conclusion, monitoring and reviewing are important elements to ensure the continued success of a business.

Through monitoring and reviewing activities, entrepreneurs can gain a better understanding of their business operations and optimize accordingly.

By utilizing data and implementing changes, businesses can ensure long-term profitability and sustainable growth.

Types Of Business Plans

Startup business plan.

A startup business plan is an essential document that outlines the road map for a new business venture.

It is a comprehensive document that typically includes an executive summary, market analysis, company description, product or service offerings, marketing and sales strategies, financials, and a timeline.

The purpose of the business plan is to help entrepreneurs map out their goals and objectives, identify potential roadblocks, and develop strategies to overcome them.

By creating a startup business plan, entrepreneurs can gain a better understanding of their customers, competitors, and market trends.

In addition, they can use the plan to secure funding from investors or financial institutions, to communicate their vision to potential employees, and to develop a clear and concise strategy for scaling the business.

A well-crafted startup business plan is a crucial component of launching a successful new business venture.

Internal Business Plan

The Internal Business Plan is a critical component of the overall business plan. It outlines the internal strategies and tactics that a company will use to achieve its objectives.

This plan is developed by the management team and guides the day-to-day operations of the company. The Internal Business Plan addresses the company’s marketing, operations, financial, and human resources objectives.

A key part of the plan is developing a clear understanding of the company’s competitive advantage and how it will use this advantage to successfully compete within the marketplace.

The Internal Business Plan is also used to assess the company’s progress toward its goals and to make adjustments to the plan as needed.

This plan is different from the Strategic Business Plan which addresses the direction and overall vision of the company, while the Internal Business Plan is focused on the day-to-day operations.

A successful Internal Business Plan is critical to any start-up business as it provides a roadmap for the company to follow and helps create a culture of accountability and focus on achieving the company’s objectives.

Strategic Business Plan

A strategic business plan is a vital component of any successful business. It outlines a company’s overall direction, goals, and objectives over the long term.

A strategic business plan is not just a document, but rather a roadmap that guides a company’s decision-making processes.

It involves conducting a thorough analysis of a company’s market, competition, resources, and capabilities to create a unique value proposition.

The strategic business plan enables a company to position itself in the market and differentiate itself from competitors. The plan should also outline specific actions that need to be taken to achieve the desired objectives.

The strategic business plan typically includes the mission statement, which defines the company’s purpose, values, and culture.

It should also identify the target market and customer segments, as well as the channels and strategies used to reach them.

The plan should also analyze the competitive landscape, identifying strengths, weaknesses, opportunities, and threats (SWOT) to the business.

One of the critical components of a strategic business plan is setting clear and measurable goals and objectives over the long term.

These should be specific, measurable, achievable, relevant, and time-bound (SMART). The goals and objectives should align with the company’s mission statement and vision, and support the overall strategy.

The strategic plan should also outline the tactics and actions that will be taken to achieve these goals, as well as the timeline and resources required.

Another important element of a strategic business plan is the financial plan. This should include a detailed budget, sales forecast, cost of goods sold, cash flow projection, and profit and loss statement.

The financial plan should also consider contingencies and risk management strategies.

A well-executed strategic business plan can significantly benefit a company’s growth and success.

It provides a clear roadmap for decision-making, enabling a company to make informed and strategic choices.

It also helps to align all stakeholders around a common vision and direction, which can improve employee engagement and motivation.

Finally, a strategic business plan enhances a company’s credibility and reputation, which can attract investors, customers, and partners.

Operations Business Plan

The Operations Business Plan is a crucial component of any business plan, as it details the necessary steps to achieve operational efficiency and success.

This subsection focuses on the day-to-day running of the business, outlining the processes and procedures that will be followed, including production, logistics, inventory management, customer service, and more.

A well-crafted Operations Business Plan should provide clear guidance on how the company will meet its goals, reduce costs, and optimize processes.

One of the key elements of an Operations Business Plan is the production plan, which outlines the processes and resources needed to manufacture products or deliver services to customers.

This plan should include production schedules, quality control measures, and contingency plans in case of unexpected delays or problems.

Additionally, inventory management is crucial to ensure that the business has the appropriate amount of goods on hand, minimizing waste and avoiding shortages.

Another important aspect of an Operations Business Plan is logistics, covering the transport of goods and services from the company to the customers.

Logistics might include shipping, delivery, or other transportation-related activities that can affect the efficiency and effectiveness of the business.

Customer service is also a critical component, ensuring that customers feel valued and satisfied with their interactions with the company.

Efficient operation requires effective management, and an Operations Business Plan should outline the organizational structure of the company, including roles and responsibilities of staff members.

Clear communication and collaboration among team members are essential to ensuring that the business runs smoothly and effectively.

Overall, a well-conceived Operations Business Plan is a fundamental component of an effective business plan.

By addressing the day-to-day operations and processes needed for a business to function, this plan helps ensure that the company can operate effectively, minimize waste, and achieve its goals.

Feasibility Business Plan

One of the most critical components of a successful business launch is creating a feasibility business plan.

This type of plan focuses on determining whether a business idea is practical and worth pursuing.

At its core, a feasibility plan looks at the market demand for a product or service, analyzes the competition, examines potential revenue streams, and evaluates the resources required to bring the idea to fruition.

The plan should also outline the risks and challenges associated with the business, as well as any legal and regulatory considerations that may impact its viability.

During the feasibility analysis, entrepreneurs should identify their target audience and understand their behavior and needs.

This analysis is crucial in determining the market demand for the product or service. At the same time, businesses must determine how they will differentiate themselves from the competition.

It’s important to analyze your competition’s strengths and weaknesses, identify opportunities, and determine how to leverage them to create a competitive advantage.

Another critical aspect of the feasibility analysis is identifying potential revenue streams. Businesses need to consider the various ways they can generate income and determine which ones are the most viable.

They should also consider potential expenses, such as marketing and advertising, rent, utilities, and employee salaries.

Once revenue and expenses have been identified, businesses can create financial projections to determine their profitability and whether their business idea is economically sound.

Resource allocation is another essential consideration in a feasibility business plan. Entrepreneurs need to determine what resources they will require to launch and sustain their business.

This includes financial resources, such as startup capital and ongoing funding, as well as human resources, such as employees and contractors.

Businesses must also consider the resources required for production, such as equipment, raw materials, and supplies.

Finally, it’s essential to identify and understand the risks and challenges associated with launching and running a business.

This includes legal and regulatory concerns, such as permits and licenses, as well as other challenges, such as technological advancements or changes in the market.

By identifying and evaluating these risks, businesses can create contingency plans and ensure they have the resources and expertise needed to overcome potential obstacles.

In conclusion, creating a feasibility business plan is an essential first step in launching a successful business.

It provides a comprehensive overview of the business idea, evaluating its potential and risks, and determines whether it is a sound investment.

By conducting a thorough analysis of the market demand, competition, potential revenue streams, resource allocation, and risk and challenges, entrepreneurs can make an informed decision and pursue their business idea with a greater level of confidence and success.

Growth Business Plan

Growth Business Plan is a vital component for businesses that have survived their initial stages and are looking to scale up their operations.

This type of plan focuses on strategies that can be implemented to facilitate growth and increased profitability.

One of the primary concerns of a Growth Business Plan is identifying new areas for expansion, such as new products, markets, or services.

It also involves assessing current operations to determine how they can be optimized and scaled efficiently.

The first step to creating a Growth Business Plan is conducting a market analysis to gain a comprehensive understanding of industry trends, consumer demands, and emerging opportunities.

This involves collecting and analyzing data from various sources such as industry reports, competitor analysis, and consumer feedback.

The goal is to identify untapped markets, potential partnerships, and new revenue streams that can be leveraged to facilitate growth.

The second step is to assess the existing organizational structure to determine if changes need to be made to support growth.

This includes hiring additional staff, expanding the physical infrastructure, or investing in new technology.

A comprehensive growth strategy must also address potential risks and challenges that may arise during the scaling process, such as changes in consumer behavior, supply chain disruptions, or regulatory changes.

Another critical aspect of a Growth Business Plan is financial planning. This involves conducting a financial analysis of the company’s operations to identify areas where cost savings can be realized and new revenue streams can be generated.

The plan must also include a detailed financial forecast that outlines revenue projections, cash flow forecasts, and budgets for capital expenditures.

Ultimately, a successful Growth Business Plan must articulate a clear and comprehensive strategy that establishes a roadmap for scaling up operations while maintaining profitability.

The plan must be flexible enough to adapt to changes in the market, consumer behavior, or the regulatory environment while also being prudent in managing risks associated with growth.

Clear communication of the plan to all the stakeholders of the business is necessary for flawless execution of the expansion efforts.

Exit Business Plan

One important aspect of business planning that is often overlooked is the Exit Business Plan. This subsection of a business plan outlines the steps that the company will take in the event that it needs to close down or be sold.

This can be an important consideration for investors and stakeholders, as it can help them understand the potential risks and rewards associated with their investment.

The Exit Business Plan should include a thorough analysis of the company’s financials, including any outstanding debts or liabilities, as well as projections for future revenue and expenses.

It should also outline the company’s strategy for selling its assets or winding down its operations, including any legal or regulatory considerations that may come into play.

Another important aspect of the Exit Business Plan is succession planning. This involves identifying key personnel who will be responsible for ensuring a smooth transition in the event of an exit, and outlining their roles and responsibilities.

It may also involve identifying potential buyers or partners who could take over the company, and developing a strategy for negotiating a sale or merger.

Ultimately, the purpose of the Exit Business Plan is to minimize risk and maximize value for all stakeholders involved.

By planning for the possibility of an exit from the outset, companies can be better prepared to handle unforeseen circumstances and minimize the potential impact on their investors and employees.

Summary Of Business Planning

Business planning is an essential component of any successful enterprise. It serves as a roadmap for achieving business objectives, providing a framework for decision-making, and establishing accountability.

Through the process of business planning, a company can identify its strengths and weaknesses, capitalize on opportunities, and mitigate risks.

When developing a business plan, it is essential to consider a variety of factors, such as market trends, competitive analysis, financial projections, and growth strategies.

Although it can be challenging to predict the future, a comprehensive business plan can help a company navigate the uncertainties of the marketplace, establish credibility with stakeholders, and secure funding.

The process of creating a business plan can also reveal gaps in knowledge or resources, providing an opportunity for further research or collaboration.

As businesses continue to evolve and adapt to changing market conditions, a robust business plan can serve as a foundation for future growth and success.

Future Outlook Of Business Planning

The future of business planning is promising and exciting. As technology continues to advance, businesses are able to gather more data and better understand their customers, which can inform their strategic planning.

With the increasing use of artificial intelligence and machine learning, businesses can gather insights faster and with greater accuracy. This allows for more precise forecasting and strategic decision-making.

Another relevant trend is the growing popularity of sustainability-focused business planning. Many companies are recognizing the importance of sustainability, given the impact of climate change and the increasing demand for sustainable products and services.

This approach to planning involves looking beyond short-term profits and considering the long-term impact of a business’s actions on the environment and society.

Moreover, the trend toward remote work and decentralized teams is changing how businesses approach planning. Virtual collaboration tools, such as video conferencing and online project management platforms, have made it easier for teams to work effectively from anywhere in the world.

This allows businesses to tap into talent pools globally, which can lead to more diverse and innovative ideas.

Finally, the future of business planning involves adapting to the changing needs of customers, who are increasingly looking for personalized and convenient experiences. Businesses that can offer this are likely to thrive, while those that fail to adapt may fall behind.

This means incorporating customer feedback into planning and investing in technologies, such as chatbots and personalization engines, that can help businesses provide more targeted and relevant experiences to their customers.

Implementing Recommendations

After conducting a thorough examination of Business Planning, it is clear that several recommendations must be made to ensure successful implementation of a business plan.

Firstly, businesses must ensure that every employee is included in the planning process. All departments within the company must have clear communication channels, as collaboration is essential to the success of the plan.

Secondly, businesses should regularly collect and analyze data relevant to their operations. This data can be used to improve and adjust plans as necessary.

Thirdly, businesses must regularly review their business plans and make necessary alterations to keep their plan relevant and up-to-date.

Finally, businesses should always have contingency plans in place. This will help them prepare for unexpected circumstances and better navigate potential risks.

In conclusion, businesses must remain flexible and adaptable in their planning to achieve success, and implementation of the above recommendations will enable them to do so.

Business Planning: FAQs

1. what is business planning.

Business Planning is the process of creating a roadmap for a business’s future. It comprises various steps, including identifying company objectives, conducting a market analysis, determining financial projections, and outlining strategies to achieve goals.

2. Who Needs A Business Plan?

Business planning is essential for any business, irrespective of its size, stage of operations, or industry. Entrepreneurs, startups, and established businesses that want to scale their operations and increase their profitability require a comprehensive and well-structured business plan.

3. Why Is Business Planning Important?

It ensures that a business has a clear direction and vision, helps identify potential opportunities, mitigates challenges, and reduces risks. Furthermore, it plays a crucial role in securing financing, attracting investors, and keeping the organization focused and accountable for its actions.

4. What Should My Business Plan Include?

A comprehensive business plan should include an executive summary, company overview, market analysis, products and services description, marketing and sales strategy, financial projections, organization structure, and operational plan.

5. How Often Should I Update My Business Plan?

Business plans aren’t static documents and should be updated regularly to reflect changes in the market, business evolution, and goals. A business plan should be reviewed annually and updated as needed to ensure that it remains effective and relevant.

6. Can I Write My Own Business Plan?

Yes, although it may be challenging to develop a comprehensive and effective business plan without prior experience. However, there are several resources and tools available, including templates, guides, software, or seeking the services of a business consultant.

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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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More Like this

Who’s responsible for what structuring your strategic plan..

Creating a structured strategic plan is essential to the success of a planning process. But, creating responsibility at each level of the plan is absolutely pivotal to the success of a plan.

One of the most frequent questions we coach our clients through is, “how do I structure my plan and who should be responsible for what?” While the answer is usually unique to each organization, we’ve broken down the planning elements and organization structure to give you a handy visual to help guide you to structure your plan and create accountability for plan creation and execution throughout your organization.

Now that you have the overall view, let’s take a deeper dive into the elements.

CEO and Executive Team

The CEO and executive team play a big role in setting the foundation of a strategic plan by creating guiding organizational principles, articulating the strategic areas of focus, and creating the long-term goals that guide the organization to create aligned goals and actions to achieve its vision of success. The executive team is responsible for:

Mission, Vision, & Guiding Principles – These are the core foundational elements to your plan that tell your organization who you are, where you’re going, and how you’re going to operate. These principles encompass your organization’s ethos and help serve as the foundation to your long-term strategy to achieve your vision of success. These are updated every 5 years and reviewed by the executive team annually.

Strategic Priorities – These are the long-term areas of strategic focus that are designed to achieve your vision of long-term success. These create the different pillars of your plan and articulate the focus for each area. These are updated every 5 years and reviewed by the executive team annually.

Organization-Wide Goals and Performance Indicators – These are the long-term goals and performance indicators that begin to put action to paper to help achieve strategic priorities. These goals and actions have a lifespan of 3-5 years, but are reviewed and adapted annually.

Managers/Department Leaders

Managers and department leaders don’t have as much responsibility during the plan creation process, but drive your organization to create the annual department goals that support the organization’s goals and performance indicators. Managers and department leaders are responsible for:

Annual Goals – Department leaders and managers create and execute the annual department goals that align and support the organization-wide goals and performance indicators. These goals are established annually.

Get the Free Guide for Writing Better SMART Goals

Individual contributors.

Individual contributors are your soldiers on the ground tasked with helping drive your strategy from the ground up. They play an essential role in your day-to-day operations, but also in the creation and execution of your strategy. Individual contributors are responsible for:

Supporting Action Items with Milestones – Individual contributors create the supporting action plans with milestones that drive the day-to-day focus on strategy. Each of these action plan milestones tally up to achieve your annual goals. These action plans are completed annually.

Final Thoughts

As you work through building your strategic plan at every level of your organization, it’s important to remember that every player at the table is a key puzzle piece to your plan. Individual contributors play just as big a role as someone on the executive team – and the cascaded responsibility and execution of a plan is what makes strategy execution possible.

Thank you for the highly useful information.

Thank you guys it’s good staff I am getting

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What Is Business Development?

• Business Development Basics
• Areas of Development
• Business Development Process
• Creating a Plan
• Skills Needed

The Bottom Line

• Small Business
• How to Start a Business

Business Development: Definition, Strategies, Steps, and Skills

Why more and more companies worldwide are embracing this planning process

• How to Start a Business: A Comprehensive Guide and Essential Steps
• How to Do Market Research, Types, and Example
• Marketing Strategy: What It Is, How It Works, How To Create One
• Marketing in Business: Strategies and Types Explained
• What Is a Marketing Plan? Types and How to Write One
• Business Development: Definition, Strategies, Steps & Skills CURRENT ARTICLE
• Business Plan: What It Is, What's Included, and How to Write One
• Small Business Development Center (SBDC): Meaning, Types, Impact
• How to Write a Business Plan for a Loan
• Business Startup Costs: It’s in the Details
• Startup Capital Definition, Types, and Risks
• Bootstrapping Definition, Strategies, and Pros/Cons
• Crowdfunding: What It Is, How It Works, and Popular Websites
• Starting a Business with No Money: How to Begin
• A Comprehensive Guide to Establishing Business Credit
• Equity Financing: What It Is, How It Works, Pros and Cons
• Best Startup Business Loans
• Sole Proprietorship: What It Is, Pros & Cons, and Differences From an LLC
• Partnership: Definition, How It Works, Taxation, and Types
• What is an LLC? Limited Liability Company Structure and Benefits Defined
• Corporation: What It Is and How to Form One
• Starting a Small Business: Your Complete How-to Guide
• Starting an Online Business: A Step-by-Step Guide
• How to Start Your Own Bookkeeping Business: Essential Tips
• How to Start a Successful Dropshipping Business: A Comprehensive Guide

10'000 Hours / Getty Images

Business development is the process of planning for future growth by identifying new opportunities, forming partnerships, and adding value to a company. It involves understanding the target audience, market opportunities, and effective outreach channels to drive success.

Business development may involve objectives around sales growth, business expansion, strategic partnerships, and increased profitability. The process impacts every department, including sales, marketing, manufacturing, human resources, accounting, finance, product development, and vendor management.

Key Takeaways

• The overarching goal of business development is to make a company more successful.
• It can involve many objectives, such as sales growth, business expansion, the formation of strategic partnerships, and increased profitability.
• The process impacts every department, including sales, marketing, manufacturing, human resources, accounting, finance, product development, and vendor management.
• Business development leaders and team members need a diverse range of both soft and hard skills to meet these objectives.

How Business Development Works

Business development strives to increase an organization’s capabilities and expand its reach to achieve financial and strategic goals. This process can significantly impact various departments within the organization, utilizing their specialized skills to drive growth.

Business development serves as the thread connecting all of a company’s functions or departments. It helps a business grow and improve in areas such as sales, revenue, product offerings, talent acquisition, customer service, and brand awareness.

Business development encourages teamwork and strategic planning across all departments, ensuring that the organization grows cohesively and sustainably.

Sales and Marketing

Sales personnel often concentrate on specific markets or clients, aiming to achieve targeted revenue numbers. For example, a business development team might assess the Brazilian market and determine that $1.5 billion in sales is achievable within three years. With this goal, the sales department develops strategies to target the new market’s customer base .

Business development often requires a longer-term approach than traditional sales strategies. The Society for Marketing Professional Services describes sales as akin to hunting, while business development is more like farming—a long-term investment of time and energy without immediate payoff.

Marketing supports sales by promoting and advertising the company’s products and services. A business development leader and their team can help set appropriate budgets based on the opportunities involved.

Higher budgets enable aggressive strategies like cold calling , personal visits, roadshows, and free sample distribution. Lower budgets tend to focus on more passive strategies, such as online, print, and social media ads, as well as billboard advertising.

Legal and Finance

To enter a new market, a business development team must decide whether to go solo by navigating all required legal formalities or to form a strategic alliance or partnership with firms already operating in that market. Assisted by legal and finance teams, the business development group weighs the pros and cons of each option and chooses the one that best serves the business.

Finance may also become involved in cost-cutting initiatives. Business development is not just about increasing market reach and sales, but also about improving the bottom line.

For example, suppose an internal assessment reveals high spending on corporate business travel. In that case, the team may change travel policies such as hosting videoconference calls instead of on-site meetings or opting for less expensive transportation modes. The outsourcing of noncore work, such as billing, technology operations, or customer service, may also be part of a development plan.

Project Management/Business Planning

International business expansion involves critical decisions about whether to establish a new facility in the target market or manufacture products in the base country and import them. If opting for the latter, it may also require assessing the need for an additional facility in the base country.

The business development team evaluates and finalizes such decisions based on cost and time assessments. Once a decision is made, the project management and implementation team can begin working on the desired goal.

Product Management and Manufacturing

Regulatory standards and market requirements can vary across regions and countries. For example, a medication permitted in India may not be allowed in the United Kingdom. This can necessitate a customized or entirely new product for the new market.

Almost all countries require specific documentation and have regulations that must be met to ensure the safety, quality, and conformity of imported products.

These requirements drive the work of product management and manufacturing departments, which are influenced by the business strategy. Cost considerations, legal approvals, and regulatory compliance are all critical aspects assessed during the development process.

Vendor Management

Will the new business need external vendors ? For example, will shipping require a dedicated courier service, or will the company partner with an established retail chain for sales? What are the costs associated with these partnerships?

The business development team collaborates with relevant internal departments to address these questions and determine the best strategies for external engagements.

10 Potential Areas for Business Development

Business development often requires employees from various departments to collaborate, facilitating information flow, strategic planning, and informed decision making. Here is a summary of potential areas where business development may be involved, depending on the organization:

• Market research and analysis : Identifying new market opportunities and developing effective strategies
• Sales and lead generation : Prospecting, qualifying leads, and coordinating with the sales team to convert leads into customers
• Strategic partnerships and alliances : Forming strategic alliances, joint ventures, or collaborations that create mutually beneficial opportunities
• Product development and innovation : Conducting market research, gathering customer feedback, and collaborating with internal teams to drive innovation
• Customer relationship management : Implementing customer retention initiatives and loyalty programs, and gathering customer feedback, to enhance satisfaction and drive repeat business
• Strategic planning and business modeling : Identifying growth opportunities, setting targets, and implementing strategies to achieve sustainable growth
• Mergers and acquisitions : Evaluating potential synergies, conducting due diligence , and negotiating and executing deals
• Brand management and marketing : Creating effective marketing campaigns, managing online and offline channels, and leveraging digital marketing techniques
• Financial analysis and funding : Exploring funding options, securing investments, or identifying grant opportunities
• Innovation and emerging technologies : Assessing the potential impact of disruptive technologies and integrating them into the organization’s growth strategies

The Business Development Process in 6 Steps

While the specific steps in the business development process will depend on the particular company, its needs and capabilities, its leadership, and its available capital, some common steps include:

Step 1: Market Research/Analysis

Begin by conducting comprehensive market research to gain insights into market trends, customer needs, and the competitive landscape. Analyze data and gather additional information to identify potential growth opportunities and understand market dynamics.

Step 2: Establish Clear Goals and Objectives

Leveraging that research, define specific objectives and goals for business development efforts. These goals could include revenue targets, market expansion goals, customer acquisition targets, and product or service development. Setting clear goals provides a focus and direction for the business development process.

Step 3: Generate and Qualify Leads

Use various sources, such as industry databases, networking , referrals, or online platforms, to generate a pool of potential leads. Identify individuals or companies that fit the target market criteria and evaluate them based on predetermined criteria to determine their suitability and potential value.

Step 4: Build Relationships and Present Solutions

Initiate contact with qualified leads and establish relationships through effective communication and engagement. Utilize networking events, industry conferences, personalized emails, or social media interactions to build trust and credibility.

As your relationship forms, develop and present tailored solutions that align with the client’s needs. Demonstrate the value proposition of the organization’s offerings and highlight key benefits and competitive advantages.

Step 5: Negotiate and Expand

Prepare and deliver proposals that outline the scope of work, pricing, deliverables, and timelines. Once the client agrees, collaborate with legal and other relevant internal teams to finalize and execute the contract to ensure all terms are clear and agreed upon. Maintain communication with the client throughout this process to address any questions or concerns.

Step 6: Continuously Evaluate

Continuously monitor and evaluate the effectiveness of business development efforts. Analyze performance metrics , gather feedback from clients and internal stakeholders, and identify areas for improvement. Regularly refine strategies and processes to adapt to market changes and optimize outcomes.

While it’s common for startup companies to seek outside assistance in developing the business, as a company matures, it should aim to build its business development expertise internally.

How to Create a Business Development Plan

To effectively create and implement a business development plan, the team needs to set clear objectives and goals—ones that are specific, measurable, achievable, relevant, and time-bound (SMART). You can align these objectives with the overall business goals of the company.

Companies often start by analyzing their current state through a  SWOT analysis , evaluating their strengths, weaknesses, opportunities, and threats. This helps identify target markets and customer segments and define a unique value proposition.

The external-facing stages of a business development plan are crucial. These stages should outline sales and marketing strategies to generate leads and convert them into customers. They should also explore potential strategic partnerships and alliances to expand reach, access new markets, or enhance offerings.

Teams should also conduct a financial analysis and resource planning to determine the resources needed for implementing the plan. Once implemented, progress should be tracked against the key performance indicators (KPIs) you’ve chosen to ensure the plan’s effectiveness.

Skills Needed for Business Development Jobs

Business development requires a wide range of hard and soft skills.

Leaders and team members in business development need well-honed sales and negotiation skills to interact with clients, understand their needs, and influence their decisions. They must build rapport, handle challenges, and close deals. Effective communication, both verbal and written, with customers and internal stakeholders, is crucial.

Business development specialists should be thoroughly aware of the market in which they operate and keep up with market dynamics, competitive activities, and industry developments. They need to identify potential opportunities, make informed decisions, and adjust strategies as necessary, requiring strong analytical skills.

Internally, business development practitioners must clarify priorities, set realistic deadlines, manage resources efficiently, and monitor progress to guarantee the timely completion of tasks.

Finally, business development professionals should conduct themselves with high ethical standards. They must maintain confidentiality, act legally and ethically, and build trust with customers and stakeholders.

Why Is Business Development Important?

In addition to its benefits to individual companies, business development is important for generating jobs, developing key industries, and keeping the economy moving forward.

What Are the Most Important Skills for Business Development Executives?

Development executives need to have leadership skills, vision, drive, and a willingness to work with a variety of people to get to a common goal.

How Can I Be Successful in Business Development?

Having a vision and putting together a good team are among the factors that help predict success in business development. A successful developer also knows how to write a good business plan, which becomes the blueprint to build from.

What, in Brief, Should a Business Development Plan Include?

A business development plan, or business plan , should describe the organization’s objectives and how it intends to achieve them, including financial goals, expected costs, and targeted milestones.

Business development is key to companies’ growth and achievement of their goals. It involves setting clear objectives, leveraging market research, forming strategic partnerships, and aligning efforts across all departments to drive success.

A well-executed business development plan not only supports short-term revenue growth but also ensures long-term sustainability. As companies across various industries increasingly recognize its importance, the role of business development continues to grow.

Society for Marketing Professional Services. “ What Is Business Development? ”

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A better way to drive your business

Managing the availability of supply to meet volatile demand has never been easy. Even before the unprecedented challenges created by the COVID-19 pandemic and the war in Ukraine, synchronizing supply and demand was a perennial struggle for most businesses. In a survey of 54 senior executives, only about one in four believed that the processes of their companies balanced cross-functional trade-offs effectively or facilitated decision making to help the P&L of the full business.

That’s not because of a lack of effort. Most companies have made strides to strengthen their planning capabilities in recent years. Many have replaced their processes for sales and operations planning (S&OP) with the more sophisticated approach of integrated business planning (IBP), which shows great promise, a conclusion based on an in-depth view of the processes used by many leading companies around the world (see sidebar “Understanding IBP”). Assessments of more than 170 companies, collected over five years, provide insights into the value created by IBP implementations that work well—and the reasons many IBP implementations don’t.

Understanding IBP

Integrated business planning is a powerful process that could become central to how a company runs its business. It is one generation beyond sales and operations planning. Three essential differentiators add up to a unique business-steering capability:

• Full business scope. Beyond balancing sales and operations planning, integrated business planning (IBP) synchronizes all of a company’s mid- and long-term plans, including the management of revenues, product pipelines and portfolios, strategic projects and capital investments, inventory policies and deployment, procurement strategies, and joint capacity plans with external partners. It does this in all relevant parts of the organization, from the site level through regions and business units and often up to a corporate-level plan for the full business.
• Risk management, alongside strategy and performance reviews. Best-practice IBP uses scenario planning to drive decisions. In every stage of the process, there are varying degrees of confidence about how the future will play out—how much revenue is reasonably certain as a result of consistent consumption patterns, how much additional demand might emerge if certain events happen, and how much unusual or extreme occurrences might affect that additional demand. These layers are assessed against business targets, and options for mitigating actions and potential gap closures are evaluated and chosen.
• Real-time financials. To ensure consistency between volume-based planning and financial projections (that is, value-based planning), IBP promotes strong links between operational and financial planning. This helps to eliminate surprises that may otherwise become apparent only in quarterly or year-end reviews.

An effective IBP process consists of five essential building blocks: a business-backed design; high-quality process management, including inputs and outputs; accountability and performance management; the effective use of data, analytics, and technology; and specialized organizational roles and capabilities (Exhibit 1). Our research finds that mature IBP processes can significantly improve coordination and reduce the number of surprises. Compared with companies that lack a well-functioning IBP process, the average mature IBP practitioner realizes one or two additional percentage points in EBIT. Service levels are five to 20 percentage points higher. Freight costs and capital intensity are 10 to 15 percent lower—and customer delivery penalties and missed sales are 40 to 50 percent lower. IBP technology and process discipline can also make planners 10 to 20 percent more productive.

When IBP processes are set up correctly, they help companies to make and execute plans and to monitor, simulate, and adapt their strategic assumptions and choices to succeed in their markets. However, leaders must treat IBP not just as a planning-process upgrade but also as a company-wide business initiative (see sidebar “IBP in action” for a best-in-class example).

IBP in action

One global manufacturer set up its integrated business planning (IBP) system as the sole way it ran its entire business, creating a standardized, integrated process for strategic, tactical, and operational planning. Although the company had previously had a sales and operations planning (S&OP) process, it had been owned and led solely by the supply chain function. Beyond S&OP, the sales function forecast demand in aggregate dollar value at the category level and over short time horizons. Finance did its own projections of the quarterly P&L, and data from day-by-day execution fed back into S&OP only at the start of a new monthly cycle.

The CEO endorsed a new way of running regional P&Ls and rolling up plans to the global level. The company designed its IBP process so that all regional general managers owned the regional IBP by sponsoring the integrated decision cycles (following a global design) and by ensuring functional ownership of the decision meetings. At the global level, the COO served as tiebreaker whenever decisions—such as procurement strategies for global commodities, investments in new facilities for global product launches, or the reconfiguration of a product’s supply chain—cut across regional interests.

To enable IBP to deliver its impact, the company conducted a structured process assessment to evaluate the maturity of all inputs into IBP. It then set out to redesign, in detail, its processes for planning demand and supply, inventory strategies, parametrization, and target setting, so that IBP would work with best-practice inputs. To encourage collaboration, leaders also started to redefine the performance management system so that it included clear accountability for not only the metrics that each function controlled but also shared metrics. Finally, digital dashboards were developed to track and monitor the realization of benefits for individual functions, regional leaders, and the global IBP team.

A critical component of the IBP rollout was creating a company-wide awareness of its benefits and the leaders’ expectations for the quality of managers’ contributions and decision-making discipline. To educate and show commitment from the CEO down, this information was rolled out in a campaign of town halls and media communications to all employees. The company also set up a formal capability-building program for the leaders and participants in the IBP decision cycle.

Rolled out in every region, the new training helps people learn how to run an effective IBP cycle, to recognize the signs of good process management, and to internalize decision authority, thresholds, and escalation paths. Within a few months, the new process, led by a confident and motivated leadership team, enabled closer company-wide collaboration during tumultuous market conditions. That offset price inflation for materials (which adversely affected peers) and maintained the company’s EBITDA performance.

Our research shows that these high-maturity IBP examples are in the minority. In practice, few companies use the IBP process to support effective decision making (Exhibit 2). For two-thirds of the organizations in our data set, IBP meetings are periodic business reviews rather than an integral part of the continuous cycle of decisions and adjustments needed to keep organizations aligned with their strategic and tactical goals. Some companies delegate IBP to junior staff. The frequency of meetings averages one a month. That can make these processes especially ineffective—lacking either the senior-level participation for making consequential strategic decisions or the frequency for timely operational reactions.

Finally, most companies struggle to turn their plans into effective actions: critical metrics and responsibilities are not aligned across functions, so it’s hard to steer the business in a collaborative way. Who is responsible for the accuracy of forecasts? What steps will be taken to improve it? How about adherence to the plan? Are functions incentivized to hold excess inventory? Less than 10 percent of all companies have a performance management system that encourages the right behavior across the organization.

By contrast, at the most effective organizations, IBP meetings are all about decisions and their impact on the P&L—an impact enabled by focused metrics and incentives for collaboration. Relevant inputs (data, insights, and decision scenarios) are diligently prepared and syndicated before meetings to help decision makers make the right choices quickly and effectively. These companies support IBP by managing their short-term planning decisions prescriptively, specifying thresholds to distinguish changes immediately integrated into existing plans from day-to-day noise. Within such boundaries, real-time daily decisions are made in accordance with the objectives of the entire business, not siloed frontline functions. This responsive execution is tightly linked with the IBP process, so that the fact base is always up-to-date for the next planning iteration.

A better plan for IBP

In our experience, integrated business planning can help a business succeed in a sustainable way if three conditions are met. First, the process must be designed for the P&L owner, not individual functions in the business. Second, processes are built for purpose, not from generic best-practice templates. Finally, the people involved in the process have the authority, skills, and confidence to make relevant, consequential decisions.

Design for the P&L owner

IBP gives leaders a systematic opportunity to unlock P&L performance by coordinating strategies and tactics across traditional business functions. This doesn’t mean that IBP won’t function as a business review process, but it is more effective when focused on decisions in the interest of the whole business. An IBP process designed to help P&L owners make effective decisions as they run the company creates requirements different from those of a process owned by individual functions, such as supply chain or manufacturing.

One fundamental requirement is senior-level participation from all stakeholder functions and business areas, so that decisions can be made in every meeting. The design of the IBP cycle, including preparatory work preceding decision-making meetings, should help leaders make general decisions or resolve minor issues outside of formal milestone meetings. It should also focus the attention of P&L leaders on the most important and pressing issues. These goals can be achieved with disciplined approaches to evaluating the impact of decisions and with financial thresholds that determine what is brought to the attention of the P&L leader.

The aggregated output of the IBP process would be a full, risk-evaluated business plan covering a midterm planning horizon. This plan then becomes the only accepted and executed plan across the organization. The objective isn’t a single hard number. It is an accepted, unified view of which new products will come online and when, and how they will affect the performance of the overall portfolio. The plan will also take into account the variabilities and uncertainties of the business: demand expectations, how the company will respond to supply constraints, and so on. Layered risks and opportunities and aligned actions across stakeholders indicate how to execute the plan.

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Trade-offs arising from risks and opportunities in realizing revenues, margins, or cost objectives are determined by the P&L owner at the level where those trade-offs arise—local for local, global for global. To make this possible, data visible in real time and support for decision making in meetings are essential. This approach works best in companies with strong data governance processes and tools, which increase confidence in the objectivity of the IBP process and support for implementing the resulting decisions. In addition, senior leaders can demonstrate their commitment to the value and the standards of IBP by participating in the process, sponsoring capability-building efforts for the teams that contribute inputs to the IBP, and owning decisions and outcomes.

Fit-for-purpose process design and frequency

To make IBP a value-adding capability, the business will probably need to redesign its planning processes from a clean sheet.

First, clean sheeting IBP means that it should be considered and designed from the decision maker’s perspective. What information does a P&L owner need to make a decision on a given topic? What possible scenarios should that leader consider, and what would be their monetary and nonmonetary impact? The IBP process can standardize this information—for example, by summarizing it in templates so that the responsible parties know, up front, which data, analytics, and impact information to provide.

Second, essential inputs into IBP determine its quality. These inputs include consistency in the way planners use data, methods, and systems to make accurate forecasts, manage constraints, simulate scenarios, and close the loop from planning to the production shopfloor by optimizing schedules, monitoring adherence, and using incentives to manufacture according to plan.

Determining the frequency of the IBP cycle, and its timely integration with tactical execution processes, would also be part of this redesign. Big items—such as capacity investments and divestments, new-product introductions, and line extensions—should be reviewed regularly. Monthly reviews are typical, but a quarterly cadence may also be appropriate in situations with less frequent changes. Weekly iterations then optimize the plan in response to confirmed orders, short-term capacity constraints, or other unpredictable events. The bidirectional link between planning and execution must be strong, and investments in technology may be required to better connect them, so that they use the same data repository and have continuous-feedback loops.

Authorize consequential decision making

Finally, every IBP process step needs autonomous decision making for the problems in its scope, as well as a clear path to escalate, if necessary. The design of the process must therefore include decision-type authority, decision thresholds, and escalation paths. Capability-building interventions should support teams to ensure disciplined and effective decision making—and that means enforcing participation discipline, as well. The failure of a few key stakeholders to prioritize participation can undermine the whole process.

Decision-making autonomy is also relevant for short-term planning and execution. Success in tactical execution depends on how early a problem is identified and how quickly and effectively it is resolved. A good execution framework includes, for example, a classification of possible events, along with resolution guidelines based on root cause methodology. It should also specify the thresholds, in scope and scale of impact, for operational decision making and the escalation path if those thresholds are met.

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In addition to guidelines for decision making, the cross-functional team in charge of executing the plan needs autonomy to decide on a course of action for events outside the original plan, as well as the authority to see those actions implemented. Clear integration points between tactical execution and the IBP process protect the latter’s focus on midterm decision making and help tactical teams execute in response to immediate market needs.

An opportunity, but no ‘silver bullet’

With all the elements described above, IBP has a solid foundation to create value for a business. But IBP is no silver bullet. To achieve a top-performing supply chain combining timely and complete customer service with optimal cost and capital expenditures, companies also need mature planning and fulfillment processes using advanced systems and tools. That would include robust planning discipline and a collaboration culture covering all time horizons with appropriate processes while integrating commercial, planning, manufacturing, logistics, and sourcing organizations at all relevant levels.

As more companies implement advanced planning systems and nerve centers , the typical monthly IBP frequency might no longer be appropriate. Some companies may need to spend more time on short-term execution by increasing the frequency of planning and replanning. Others may be able to retain a quarterly IBP process, along with a robust autonomous-planning or exception engine. Already, advanced planning systems not only direct the valuable time of experts to the most critical demand and supply imbalances but also aggregate and disaggregate large volumes of data on the back end. These targeted reactions are part of a critical learning mechanism for the supply chain.

Over time, with root cause analyses and cross-functional collaboration on systemic fixes, the supply chain’s nerve center can get smarter at executing plans, separating noise from real issues, and proactively managing deviations. All this can eventually shorten IBP cycles, without the risk of overreacting to noise, and give P&L owners real-time transparency into how their decisions might affect performance.

P&L owners thinking about upgrading their S&OP or IBP processes can’t rely on textbook checklists. Instead, they can assume leadership of IBP and help their organizations turn strategies and plans into effective actions. To do so, they must sponsor IBP as a cross-functional driver of business decisions, fed by thoughtfully designed processes and aligned decision rights, as well as a performance management and capability-building system that encourages the right behavior and learning mechanisms across the organization. As integrated planning matures, supported by appropriate technology and maturing supply chain–management practices, it could shorten decision times and accelerate its impact on the business.

Elena Dumitrescu is a senior knowledge expert in McKinsey’s Toronto office, Matt Jochim is a partner in the London office, and Ali Sankur is a senior expert and associate partner in the Chicago office, where Ketan Shah is a partner.

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Business Planning Job Description

Business planning duties & responsibilities.

To write an effective business planning job description, begin by listing detailed duties, responsibilities and expectations. We have included business planning job description templates that you can modify and use.

Sample responsibilities for this position include:

Business Planning Qualifications

Qualifications for a job description may include education, certification, and experience.

Licensing or Certifications for Business Planning

List any licenses or certifications required by the position: APICS, CPIM, PMP, CSCP, COO, CE, SAP, CSCMP, CPA, APIC

Education for Business Planning

Typically a job would require a certain level of education.

Employers hiring for the business planning job most commonly would prefer for their future employee to have a relevant degree such as Bachelor's and University Degree in Finance, Business, MBA, Accounting, Engineering, Economics, Business/Administration, Marketing, Communication, Management

Skills for Business Planning

Desired skills for business planning include:

Desired experience for business planning includes:

Business Planning Examples

• Microsoft Word (.docx) .DOCX
• PDF Document (.pdf) .PDF
• Image File (.png) .PNG
• Support other legal entity and business planning work streams as needed
• Business decision support for key management reporting & business planning cycles (month-end, forecast, long range plan, & budget)
• Accrual management experience should include supporting business partners to ensure a sound internal control environment
• Maintaining organization budgets/forecasts, tracking monthly actuals
• Assisting with month-to-month, forecast-to-forecast, & full year variance performance reporting for management
• Providing budget process information to supervisors to ensure forecasts are realistic, expenses are calendarized properly and plans are within forecasted levels
• Tracking of system allocations and subsequent interaction between the Sales, Customer Marketing, Marketing, and Forecasting Team
• Work closely with Sales Teams to ensure timely updates to allocations are provided, orders are placed and in line with projections, or providing direction for changes to stay within the program allocation limits
• Data Sync coordination between the Sales teams and 3rd party
• EPIC Analysis including root cause reports identifying what errors were corrected and presenting the information to Sales Operation Management
• Ability to extract large amounts of data (database mining skills) from Genesys and summarize that data into useful trend information
• Familiar with MS tools and other finance application SAP
• Extremely strong analytical skill set
• Passion for consumer technology & execution
• Commitment to excellence and sense of humor
• Building Value-Based Relationships (Proficient)
• Work to ensure expectations and demands are met working while balancing resources and working through logistical and technical obstacles
• The Business Planning Editor will work closely with our business teams in the U.S. and EMEA to make sure that we are collaborating as one global business unit, in addition to working with our Business Correspondents
• Dealing with the coverage planning, responding quickly to priorities to coordinate coverage desires to meet the newsgathering needs, both live and in taped form
• Ensuring coverage plans are well defined and full details are outlined in documented fashion (via iNews, email, coverage notes), including planned packages and anticipated live coverage
• Providing full support in regard to essential coordination and logistical planning decisions as needed by newsgathering and programming needs
• Staying fiscally responsible, and planning coverage that is within budget constraints
• Work on confirming emerging stories for reporting on our air, and looking for elements to help visually enhance the story telling
• Look to service our digital platforms, namely the CNN Money vertical, to which TV is closely aligned
• Full knowledge of Company policies and practices and their effective oversight are also part of the duties
• Build budget models for expenses and capital for assigned business unit, and once reviewed load into corporate budget application
• Experience in developing, maintaining and delivering metrics
• Ability to develop and implement detailed work plans that support key deliverables
• Experience with Microsoft Office suite and Adobe
• Experience analyzing business operations and identifying areas for financial performance (based on return on investment (ROI), compounded annual growth rates, payback, internal rate of return (IRR), pretax and after tax earnings, targeted profit margins, FCF, present value)
• Openness to tackling projects of varying size and complexity with evolving requirements
• Undergraduate degree is required and Post Graduate degree is an asset
• Provide business case, ROI and payback analysis (e.g., total cost of ownership, lease vs
• Manage the processing and scheduling of customer orders
• Scheduling and procurement of materials
• Manage and control of WIP / finished goods inventory
• Arrange for shipment of orders
• Interact with salary and union-represented personnel
• Orchestrate impact analysis and recommendations across business strategy, engineering, legal, research, finance, sales teams
• Track progress of the operating plan against the targets (operational scorecards) on a weekly basis, communicate gaps and impacts to the leadership & recommend approach for getting back on track gap
• Orchestrate the Planning Playbooks (value prop, brand, product experience, channel strategy, customer experience) for large program launches
• Key team member on business strategic projects
• Bachelor’s Degree and up to 2 years (or MBA) of business experience, Sales, Category Management
• Manager, Business Planning
• Demand Planning Team
• A minimum of 5 years in an editorial and business newsgathering environment Full knowledge of TV news logistics, technical requirements
• Ability to handle multiple tasks under stressful contentions
• Organized, exceptional interest in world news with strong communication skills
• Support projects and programs with relevant information and data
• Track the implementation of New Product Introduction (NPI’s)
• Work across business operations functions to optimize order and shipment management
• End to end responsibility for specific projects and programs
• Define project/ program KPI’s
• Follow up with channel, region, country and GBU teams on the implementation
• Define in- country needs for support
• Support the countries with the required help to achieve their business objectives
• Assisting with business cases
• Coordinate and manage “(HIAMS)AM OD meeting” with other department members (mainly DE and/or S&M) which involves many other corporate department of the organization (Executive management, DE, S&M, Procurement, F&A, PM, PE) and manufacturing locations in Americas region
• Prior newsgathering and field experience desired
• Be willing to work unpredictable hours and quick to adapt to changes that affect each show, and be ready to travel with short notice
• Pricing Schemes & Trade Spend o Analyse and review actual net pricing against approved scheme on monthly basis
• Preferably Degree-educated in Finance, Economics or Business Administration
• Some professional experience in an analytics role preferred
• Excellent communication, presentational and partnering skills
• Monitor and update any change in regards to company standards and rules where applicable
• Support various management meetings by coordinating the meeting schedule, creating required documents and presentations including analyzing the information and/or data, and issuing the meeting note and follow up open items
• Create and maintain database which will be utilized for analysis
• Support to establish regional business strategy by preparing Regional Business Plan documents with cooperation of other related corporate department of organization
• Perform BPC System support such as researching, documenting or updating basic functionality such as input schedules, master data, data flow and calculation logic
• Support development, implementation and testing of BPC system enhancements
• Coordinate and analyze the data and assumptions that drive forecast/plan results
• Create/Maintain presentations, spreadsheets, reports, or other metric-driven tools
• Communicate and support the forecast/planning process analytical results effectively in both verbal and written form to Planning leadership and other functional teams
• Role may be globally-focused, or oriented
• Bachelors’ or Masters’ degree or equivalent in business or finance
• Bachelor's degree in business administration or a quantitative field
• Previous experience with planning tools, Anaplan, Hyperion Planning, is preferred
• Experience in relational database systems/data warehousing systems such as SQL Server, PostgreSQL, Redshift, Oracle, MySQL preferred
• Work experience in electronic repair/ depot services /reverse logistics services
• Customer negotiations and pricing

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Succession Planning Guide: 8 Steps To Plan for Succession 2024

Succession planning is a crucial component of strategic management, especially for corporations preparing for long-term growth and sustainability. Effective succession planning ensures your business operations continue smoothly even when key personnel leave, retire, or pass away.

In this guide, we outline eight essential steps to create a strong succession planning strategy for 2024 and beyond.

What Is Succession Planning?

Succession in a corporation refers to preparing for and managing the transition of key leadership within the organization. The process involves identifying and developing internal talent to fill important positions when they become vacant due to retirement, resignation, or other reasons.

Succession planning aims to ensure your corporation maintains operational continuity and stability, even in the face of leadership changes. Corporations without a succession plan will face challenges if something unexpected occurs, and adequate planning allows for seamless operations when changes occur.

Now that you know what succession planning is and why it’s important, let’s discuss the eight steps you should take to develop an effective succession plan of your own.

1. Assess Current and Future Business Needs

Before fully diving into succession planning, evaluate your corporation’s current and future needs.

Understanding your business’s strategic goals, critical roles, and key positions will help you identify which areas require attention:

Critical Roles: Identify positions crucial to your business operations, such as C-suite executives, senior leadership, and other high-impact roles.

Future Roles: Try to predict upcoming vacancies due to retirements, expansions, or organizational changes.

Competencies and Skill Sets: Determine the core competencies and skill sets necessary for these roles.

Every role, skill set, and competency needs an official description. Detailed lists of duties and expectations are necessary for the continued operation of your corporation and to ensure that the people assigned to new roles understand the shifts in their responsibilities.

However, writing detailed descriptions of critical roles, future roles, and competencies is a must for more than just succession planning. You need this information to keep your corporation organized, productive, and functioning under everyday circumstances.

2. Identify High-Potential Employees

Pinpoint high-potential employees who can fill leadership roles and other key positions in the future.

Internal talent is often the best source for potential successors due to their familiarity with company culture and operations. Develop a clear understanding of their potential through performance management and regular assessments.

Look for candidates with high potential or employees who can grow and excel in more challenging roles. Consider the core competencies and essential attributes required for leadership roles and create development opportunities for high-performing members of your organization to prepare for future needs.

3. Develop a Succession Planning Strategy

A well-defined succession planning strategy helps ensure business continuity. When developing this strategy, a three-pronged list of considerations should be made:

Use Succession Planning Templates

Use a succession planning template to develop a structured plan that outlines the steps and timelines for transitioning leadership. Numerous templates are available online to suit organizations with different needs. Choose a template that best mirrors your organization’s succession goals.

Build a Succession Planning Toolkit

Equip yourself with tools to assess and develop potential successors. Performance evaluations, talent development workshops, educational initiatives, and internal data can all prove useful for talent and HR managers alike.

Additionally, when one person moves up or moves on at your organization, everyone on the team should be prepared to ease themselves into cascading new roles.

Build Your Talent Pool

Cultivate a talent pool of internal candidates who are ready for advancement. Assuring these candidates are ready for additional duties is a shared responsibility.

Internal candidates must demonstrate the ambition to make vertical moves within your corporation. Your business is responsible for talent management — identifying talent, nurturing it, and providing growth opportunities for it.

Align your succession planning strategy with your overall business strategy to ensure it supports your long-term goals and competitiveness.

4. Create Development Plans and Programs

Design development plans and programs tailored to the needs of potential successors.

Offer opportunities to members of your organization who demonstrate a desire to improve their competencies, such as:

Leadership Development: Implement programs to cultivate leadership skills and prepare employees for future roles.

Career Development: Offer career paths and growth opportunities that align with employees’ aspirations and business needs.

Mentoring and Professional Development: Establish mentorships and provide development opportunities to nurture future leaders.

Mentoring is one of the most important development programs your organization can implement. It’s the closest thing to on-the-job training candidates can receive before moving up the ladder. The opportunity to shadow someone above them in the hierarchy will provide a realistic view of what to expect if they move up.

Most importantly, it allows candidates to assess their comfort level when assuming new responsibilities.

When the time comes, they will know what they’re stepping into. They should also be able to decline succession if they don’t feel suited for the position, which may prevent unexpected departures.

If they believe they’re ready for their new responsibilities, they’ll easily be able to assume the role you’ve offered them.

5. Engage Stakeholders and Team Members

Engaging stakeholders and team members is vital to successful succession planning. Many voices hold significant value in the succession process, so everyone must agree on the next steps in a succession event.

Include senior leaders and key stakeholders in the succession planning process to gain their insight and support. Communicate the succession plan and its benefits to team members to foster a sense of inclusion and commitment.

Transparency in succession planning helps build trust and ensures everyone understands the plan and its impact on the organization. Succession is your organization’s future, and a successful future requires unity.

6. Develop Action Plans for Critical Positions

Create detailed action plans to address vacancies in critical positions. Action plans and bench strength go hand in hand and are equally essential components of your readiness.

Draw Up Action Plans

Outline the steps to fill key roles, including interim solutions and long-term strategies. The goal is to make the transition as seamless as possible, but things won’t always work out. It helps to have a plan to keep things steady in the meantime.

Evaluate Bench Strength

Assess and enhance bench strength to ensure capable candidates are ready to step into critical positions. If you feel most internal candidates lack the necessary competencies, it’s time to implement stronger training initiatives. It’s never too early to prepare your team for greater success.

Action plans should be dynamic and adaptable to changes in your business environment and workforce, and bench-strengthening measures should be utilized around the clock.

7 . Monitor and Evaluate Succession Planning Metrics

Monitor and evaluate the effectiveness of your succession planning efforts. Checking in ensures significant developments don’t slip through the cracks. Additionally, rising stars within an organization can change, and training needs may shift and evolve with a corporation’s goals.

Prioritize Employee Retention

Measure how well your succession planning strategy retains top talent. Top performers committed to your organization often want to assume greater responsibility. Employee relations can make or break a company — if they feel undervalued, they may be drawn elsewhere.

Development Progress

Assess the progress of potential successors in their development plans. Do you feel your training initiatives and preparedness programs adequately serve their purposes? Is your top talent performing better now than they were six months ago? Make sure your plan is demonstrably effective.

Succession Performance Management

Evaluate the performance of successors in their new roles. Did you anticipate your organization’s needs correctly? Are you using the right markers to identify and elevate top talent? Would you have done things differently if given another chance?

If your succession plan isn’t functioning as you initially envisioned it, you may need to change the priorities and metrics that defined your original strategy. It may be time to modernize your performance review process .

Using metrics helps identify areas for improvement and ensures your succession planning efforts are aligned with business goals. There’s always room for improvement.

8. Update Succession Plans Regularly

Succession planning is an ongoing process. Regular updates are necessary as your organization grows, evolves, and welcomes new talent.

Your plan should reflect changes in business strategy, market conditions, and workforce dynamics. Include new leadership roles and emerging competencies as your business evolves. Update your competency models and continuously assess and update your talent pool to confirm it aligns with your business needs.

Regular updates make sure your succession plans remain relevant and effective in addressing future challenges. Although there’s no set schedule for updating succession plans, reviewing and updating them quarterly when they’re new and bi-annually when they’re older can help you stay prepared.

Succession Planning Is an Ongoing Process

Succession planning is crucial for keeping your corporation resilient and adaptable in the face of leadership changes and evolving needs. Following these eight steps, you can create a comprehensive succession planning strategy that prepares your organization for future success.

Remember to review and update your plans regularly, engage key stakeholders, and invest in the development of your high-potential employees. With effective succession planning, you can secure the future of your business and maintain a strong, capable leadership team.

Some states have highly specific compliance requirements that may impact your succession planning efforts. Mosey’s compliance management system is designed to help corporations track and meet state and local business requirements. Schedule a demo with Mosey to learn how we can optimize compliance for you.

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Mexican cartel leader's son convicted of violent role in drug trafficking plot.

Michael Kunzelman

Associated Press

WASHINGTON – The son of a Mexican drug cartel leader was convicted Friday of charges that he used violence, including the deadly downing of a military helicopter, to help his father operate one of the country's largest and most dangerous narcotics trafficking organizations.

Rubén Oseguera, known as “El Menchito,” is the son of fugitive Jalisco New Generation cartel boss Nemesio Oseguera and served as the “CJNG” cartel's second-in-command before his extradition to the U.S. in February 2020.

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A federal jury in Washington, D.C., deliberated for several hours over two days before finding the younger Oseguera guilty of both counts in his indictment: conspiring to distribute cocaine and methamphetamine for U.S. importation and using a firearm in a drug conspiracy.

“El Menchito now joins the growing list of high-ranking Cartel leaders that the Justice Department has convicted in an American courtroom," Attorney General Merrick Garland said in an emailed statement. "We are grateful to our Mexican law enforcement partners for their extensive cooperation and sacrifice in holding accountable leaders of the Jalisco Cartel.”

The younger Oseguera, who was born in California and holds dual U.S.-Mexican citizenship, is scheduled to be sentenced Jan. 10 by U.S. District Judge Beryl Howell. He faces a maximum sentence of life in prison and a mandatory minimum of 40 years in prison.

Oseguera didn't have an obvious reaction to the jury's verdict. One of his lawyers patted him on his shoulder before he was led out of the courtroom.

The U.S. government has offered a reward of up $10 million for information leading to the arrest of the elder Oseguera, whose alias, “El Mencho,” is a play on his first name.

Prosecutors showed jurors a rifle bearing Oseguera’s nicknames, “Menchito” and “JR,” along with the cartel’s acronym. The gun was in his possession when he was arrested.

“JR” also was etched on a belt found at the site where a Mexican military helicopter crashed after cartel members shot the aircraft down with a rocket-propelled grenade in 2015. Prosecutors said the younger Oseguera, now 34, ordered subordinates to shoot down the helicopter in Jalisco, Mexico, so that he and his father could avoid capture. At least nine people on board the helicopter were killed in the attack, according to prosecutors.

Oseguera ordered the killings of at least 100 people and frequently bragged about murders and kidnappings, according to prosecutors. They said he personally shot and killed at least two people, including a rival drug trafficker and a disobedient subordinate.

During the trial’s closing arguments Thursday, Justice Department prosecutor Kaitlin Sahni described Oseguera as “a prince, an heir to an empire.”

“But this wasn’t a fairytale,” she said. “This was the story of the defendant’s drugs, guns and murder, told to you by the people who saw it firsthand.”

Jurors heard testimony from six cooperating witnesses who tied Oseguera to drug trafficking.

Defense attorney Anthony Colombo tried to attack the witnesses’ credibility and motives, calling them “sociopaths” who told self-serving lies about his client.

“They’re all pathological liars,” he said.

Jurors also saw coded BlackBerry messages that Oseguera exchanged with other cartel leaders and underlings. One exchange showed that Oseguera was offended when his uncle mocked his cocaine’s purity, Sahni said.

“The defendant was proud of the cocaine he was distributing,” she added.

Columbo argued that prosecutors didn’t present sufficient evidence that the CJNG cartel trafficked drugs in the U.S.

“Ten years and not one seizure,” he said. “There’s no proof that it was coming to the U.S.”

But prosecutors said Oseguera used increasingly extreme acts of violence to maintain his family’s power over a global drug trafficking operation, including in the U.S.

“The defendant decided who he worked with and who worked for him,” another prosecutor, Kate Naseef, told jurors.

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