the planning process in business

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

The Business Planning Process 6 Steps to Create a New Plan

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

What is Business Planning?

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

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

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

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The Better Business Planning Process

The business plan process includes 6 steps as follows:

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

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

1. Do Your Research

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

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

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

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

2. Strategize

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

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

3. Calculate Your Financial Forecast

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

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

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

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

4. Draft Your Plan

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

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

5. Revise & Proofread

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

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

6. Nail the Business Plan Presentation

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

Business Planning Process Conclusion

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

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

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

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

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

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17.2: The Planning Process

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Learning Objectives

Outline the planning and controlling processes.

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

A flowchart shows the five steps in the planning process.

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

Step 1: Developing an Awareness of the Present State

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

Step 2: Establishing Outcome Statements

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

An illustration shows an example of a network of organizations plans.

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

Goal vs. Domain Planning

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

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

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

A photo shot directly from the above shows a set of stationery items including, papers, highlighters, pens, and sticky labels.

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

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

Hybrid Planning

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

Consequences of Goal, Domain, and Hybrid Planning

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

Step 3: Premising

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

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

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

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

Step 5: Formulating Supportive Plans

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

Planning, Implementation, and Controlling

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

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

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

An illustration depicts the Deming cycle.

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

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

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What is strategic planning? A 5-step guide

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

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

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

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

How to build an organizational strategy

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What is strategic planning?

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

What is a strategic plan?

[inline illustration] Strategic plan elements (infographic)

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

Typically, your strategic plan should include:

Your company’s mission statement

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

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

What are the benefits of strategic planning?

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

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

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

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

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

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

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

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

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

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

What are the 5 steps in strategic planning?

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

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

Step 1: Assess your current business strategy and business environment

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

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

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

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

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

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

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

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

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

What does your organization currently do well?

What separates you from your competitors?

What are your most valuable internal resources?

What tangible assets do you have?

What is your biggest strength?

Weaknesses:

What does your organization do poorly?

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

What do your competitors do better than you?

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

What processes or products need improvement?

Opportunities:

What opportunities does your organization have?

How can you leverage your unique company strengths?

Are there any trends that you can take advantage of?

How can you capitalize on marketing or press opportunities?

Is there an emerging need for your product or service?

What emerging competitors should you keep an eye on?

Are there any weaknesses that expose your organization to risk?

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

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

Step 2: Identify your company’s goals and objectives

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

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

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

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

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

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

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

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

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

Step 3: Develop your strategic plan and determine performance metrics

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

As you build your strategic plan, you should define:

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

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

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

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

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

Step 4: Implement and share your plan

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

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

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

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

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

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

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

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

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

Step 5: Revise and restructure as needed

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

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

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

Build a smarter strategic plan with a work management platform

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

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

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

Strategic planning FAQs

Still have questions about strategic planning? We have answers.

Why do I need a strategic plan?

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

When should I create a strategic plan?

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

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

What is a strategic planning template?

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

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

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

You should create a business plan when you’re:

Just starting your business

Significantly restructuring your business

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

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

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

Simply put:

A mission statement summarizes your company’s purpose.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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17.2 The Planning Process

Outline the planning and controlling processes.

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

Step 1: Developing an Awareness of the Present State

Step 2: Establishing Outcome Statements

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

Goal vs. Domain Planning

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

Hybrid Planning

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

Consequences of Goal, Domain, and Hybrid Planning

Step 3: Premising

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

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

Step 5: Formulating Supportive Plans

Planning, Implementation, and Controlling

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

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

Concept Check

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

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Module 3: Planning and Mission

The planning cycle, learning outcomes.

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

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

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

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

Stages in the Planning Cycle

The stages in the planning cycle

Define objectives

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

Develop premises

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

Evaluate alternatives

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

Identify resources

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

Plan and implement tasks

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

Determine tracking and evaluation methods

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

Practice Question

The planning cycle: essential part of running a business.

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

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

PRactice Question

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

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

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.

![Quantum Business Consulting Template - Strikingly]( https://user-images.strikinglycdn.com/res/hrscywv4p/image/upload/blog_service/2023-04-16-prl-quantum-business-consulting-strikingly (1).jpg)Image taken from Strikingly Templates

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

What is a Financial Plan?

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

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

Importance of Creating a Financial Plan in Business Planning

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

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

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

Examples of Financial Statements and Projections

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

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

Step 7: Writing Your Business Plan

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

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

Importance of Writing a Business Plan

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

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

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

Tips on How to Write a Successful Business Plan

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

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

Role of Strikingly Website Builder in Creating a Professional Business Plan

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

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

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

Let’s Sum Up!

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

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

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Business Planning Process: Everything You Need to Know

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

Why Is it Important to Develop a Business Plan?

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

How to Begin the Business Planning Process

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

Develop a Pitch

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

Your pitch should include:

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

Research Your Market and Products

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

Create a Company Bio

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

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

Outline Your Business Model

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

This section should outline the following:

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

Create a Basic Marketing Plan

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

Prepare Your Business's Financial Projections

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

Draft a Document

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

Set Goals, Track Progress, and Make Adjustments

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

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

Develop Your Executive Summary

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

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

Edit and Proof Your Final Document

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

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

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

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

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

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The Strategic Planning Process in 4 Steps

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

Free Strategic Planning Guide

What is Strategic Planning?

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

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

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

Strategic Planning Video - What is Strategic Planning?

Overview of the Strategic Planning Process:

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

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

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

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

Questions to Ask:

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

Action Grid:

Overview of the Strategic Planning Process

Step 1: Determine Organizational Readiness

Set up your plan for success – questions to ask:

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

Step 2: Develop Your Team & Schedule

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

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

Step 3: Collect Current Data

All strategic plans are developed using the following information:

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

Step 4: Review Collected Data

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

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

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

Strategic Planning Phase 1: Determine Your Strategic Position

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

Action Grid

Step 1: identify strategic issues.

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

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

Step 2: Conduct an Environmental Scan

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

Step 3: Conduct a Competitive Analysis

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

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

Learn more on how to conduct a competitive analysis here .

Step 4: Identify Opportunities and Threats

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

What do you want to capitalize on?

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

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

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

Questions to Answer:

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

Step 5: Identify Strengths and Weaknesses

Strengths refer to what your company does well.

What do you want to build on?

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

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

What do you need to shore up?

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

Step 6: Customer Segments

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

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

Step 7: Develop Your SWOT

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

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

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

Strategic Planning Process Phase 2: Developing Strategy

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

Step 1: Develop Your Mission Statement

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

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

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

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

Step 2: discover your values.

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

How will we behave?

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

Outcome: Short list of 5-7 core values.

Step 3: casting your vision statement.

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

Where are we going?

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

Outcome: A picture of the future.

Step 4: identify your competitive advantages.

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

What are we best at?

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

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

Step 5: crafting your organization-wide strategies.

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

How will we succeed?

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

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

Phase 3: Strategic Plan Development

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

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

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

TOWS Strategic Alternatives Matrix

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

Step 2: Define Long-Term Strategic Objectives

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

Questions to ask:

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

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

Step 3: Setting Organization-Wide Goals and Measures

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

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

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

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

Outcome: clear outcomes for the current year..

Step 4: Select KPIs

How to Develop KPIs for Strategic Planning

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

How will we measure our success?

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

Step 5: Cascade Your Strategies to Operations

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

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

Questions to Ask

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

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

Step 6: Cascading Goals to Departments and Team Members

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

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

Examples of Cascading Goals:

Build a Strategic Plan You Can Implement

Phase 4: Executing Strategy and Managing Performance

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

Step 1: Strategic Plan Implementation Schedule

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

How will we use the plan as a management tool?

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

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

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

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

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

Step 2: Tracking Goals & Actions

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

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

Effective Strategic Planning: Your Bi-Annual Checklist

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

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

Why Track Your Goals?

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

Step 3: Review & Adapt

Guidelines for your strategy review.

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

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

Strategy Review Session Questions:

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

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

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

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

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

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

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

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

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

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

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Business Planning Process: Create a Business Plan That Works

Free Business Startup Checklist

Radhika Agarwal

December 15, 2023

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

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

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

What is Business Planning?

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

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

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

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

Steps of the Business Planning Process

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

1. Carry out your research

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

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

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

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

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

2. Make a Framework

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

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

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

3. Formulate your Financial Forecasts

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

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

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

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

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

4. Draft a Plan

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

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

5. Recheck and Improvise

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

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

6. Create an Impressive Business Plan Presentation

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

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

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

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

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

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

Build your Business Plan Faster

with step-by-step Guidance & AI Assistance.

About the Author

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

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Business Planning

Written by True Tamplin, BSc, CEPF®

Reviewed by subject matter experts.

Updated on June 08, 2023

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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.

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

Determined female African-American entrepreneur scaling a mountain while wearing a large backpack. Represents the journey to starting and growing a business and needi

Noah Parsons

24 min. read

Updated May 7, 2024

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

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

The basics of business planning

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

You understand that planning helps you:

Raise money
Grow strategically
Keep your business on the right track

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

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

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

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

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

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

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

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

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

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What to include in your business plan

Executive summary

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

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

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

Your executive summary should include:

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

Dig Deeper: How to write an effective executive summary

Products and services description

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

This is usually called a problem and solution statement .

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

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

Market analysis

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

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

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

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

Related: Target market examples

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

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

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

Dig Deeper: Learn how to write a market analysis

Competitive analysis

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

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

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

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

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

Marketing and sales plan

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

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

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

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

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

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

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

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

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

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

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

Business operations

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

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

Supply chain management
Manufacturing processes
Equipment and technology
Distribution

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

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

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

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

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

Key milestones and metrics

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

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

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

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

Possible milestones might be:

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

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

Conversion rates
Customer acquisition costs
Profit per customer
Repeat purchases

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

Dig Deeper: How to use milestones in your business plan

Organization and management team

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

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

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

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

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

Sole proprietor
Partnership

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

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

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

Financial plan

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

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

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

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

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

Dig Deeper: How to create financial forecasts and budgets

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

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

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

Dig Deeper : What to include in your business plan appendix

Optional: Business plan cover page

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

Your cover page should be simple and include:

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

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

Dig Deeper: How to create a business plan cover page

How to use AI to help write your business plan

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

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

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

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

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

Writing tips and strategies

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

Determine why you are writing a business plan

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

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

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

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

Keep things concise

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

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

Have someone review your business plan

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

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

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

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

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

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

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

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

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

Common pitfalls and how to avoid them

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

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

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

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

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

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

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

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

Use your business plan to manage your business

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

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

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

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

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

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

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

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

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

Learn More: How to run a regular plan review

Free business plan templates and examples

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

Free business plan template

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Download a free one-page plan template to write a useful business plan in as little as 30-minutes.

Sample business plan library

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How to write a business plan FAQ

What is a business plan?

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

What are the benefits of a business plan?

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

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

What are the 7 steps of a business plan?

The seven steps to writing a business plan include:

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

What are the 5 most common business plan mistakes?

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

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

What questions should be answered in a business plan?

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

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

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

How long should a business plan be?

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

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

What are the different types of business plans?

While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. Here are a few common business plan types worth considering.

Traditional business plan: The tried-and-true traditional business plan is a formal document meant to be used when applying for funding or pitching to investors. This type of business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix.

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

One-page business plan: This format is a simplified version of the traditional plan that focuses on the core aspects of your business. You’ll typically stick with bullet points and single sentences. It’s most useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business.

Lean Plan: The Lean Plan is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance. It’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.

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

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

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

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

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

Start your business plan with the #1 plan writing software. Create your plan with Liveplan today.

Table of Contents

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Common planning mistakes
Manage with your business plan
Templates and examples

Overlapping files, folders, charts, graphs, and documents. Represents the information included in a business plan appendix.

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The 5 steps of the strategic planning process

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

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

What is strategic planning?

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

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

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

Related: Learn how to hold an effective strategic planning meeting

Why do I need a strategic plan?

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

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

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

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

Before you begin: Pick a brainstorming method

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

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

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

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

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

Related: Brainstorming and ideation template

1. Define your vision

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

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

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

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

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

Related: Vision board template

2. Assess where you are

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

What is SWOT analysis?

SWOT analysis is an exercise where you define:

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

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

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

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

Related: SWOT analysis template

3. Determine your priorities and objectives

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

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

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

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

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

Related: Project kickoff template

4. Define tactics and responsibilities

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

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

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

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

Related: OKR planning template

5. Manage, measure, and evaluate

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

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

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

Related: Retrospective radar template

Retrospectives are typically divided into three parts:

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

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

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

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

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

Related: Quarterly business review template

Conclusions

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

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

Related: 5 Tips for Holding Effective Post-mortems

Why Mural for strategic planning

Mural unlocks collaborative strategic planning through a shared digital space with an intuitive interface, a library of pre-fab templates, and methodologies based on design thinking principles.

Outline goals, identify key metrics, and track progress with a platform built for any enterprise.

Learn more about strategic planning with Mural.

About the authors

Bryan Kitch

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Strategic Planning Process Definition, Steps and Examples

Published: 03 January, 2024

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Digital Strategy

Table of Contents

Organizations use Strategic Planning to gather all their stakeholders to evaluate the collection of current circumstances and decide upon their ongoing goals and benchmarks. They decide upon long-term objectives and establish a vision for the company’s future.

The efforts behind an organization’s Strategic Planning Processes are vital to its success, and yet, while many organizations acknowledge they need to do this kind of planning, they often don’t understand how to make it a reality. In this article, we explain the reasons behind Strategic Planning and how to make your Strategic Planning Process as powerful as possible.

What is a Strategic Plan

Strategic planning is a systematic process wherein the leaders of an organization articulate their vision for the future and delineate the goals and objectives that will guide the trajectory of the organization.

What is the Strategic Planning Process

Strategic planning is a process of defining an organization’s direction and making decisions on allocating its resources to pursue this direction . It involves creating a long-term plan that outlines the organization’s vision, mission, values, and objectives, as well as the strategies and tactics that will be used to achieve them.

Strategy is often misunderstood, which is surprising because fundamentally it’s a pretty basic concept. Strategy is a clearly expressed direction and a verified plan on how to get there. Your Strategic Planning Process formalizes the steps you’ll take to decide on your plan. The Strategic Planning Process facilitates using a Strategic Execution Framework that articulates where you’ll invest in innovation and where you can cut costs.

As far as business development planning is concerned, your Strategic Execution Framework is a vital tool for driving innovation, but first you must define the process you’ll undertake to determine how you and your team see the future of your organization. In this article, we discuss how to create your Strategic Plan and define its relationship to other concepts and documents that direct your business and its activities.

While it’s true that every business is different and must develop their own processes, we believe there are some process of strategic planning stepsthat benefit all organizations.

Below are our recommendations for the steps to take when undergoing your Strategic Planning Process, along with the questions we suggest you answer during each specific step.

Step One: Analyze your Business Environment

Who are your competitors?
What relevant market data do you have, and what do you still need?
What technology has emerged that impacts your business model?
How have customer expectations changed since your last Strategic Plan?
What advantages do you have over competitors?
Where is your company weaker compared to competitors?
What predictable complications are on the horizon?
Which unpredictable complications seem most likely or most potentially impactful?

Step Two: Set your Strategic Direction

What is your overall Business Purpose ?
How have your operations reflected your Purpose and Goals recently?
How should your operations reflect your Purpose and Goals?
Where do you see your business going in the next year?
In two years? In three years?
What are the metrics you’ll use to measure success?
What are your make-or-break necessities?

Step Three: Set and develop Strategic Goals and Strategic Objectives

Have you considered short-, mid-, and long-term business goals , and what are they?
How do your Strategic Goals reflect your Mission Statement?
How do your Strategic Goals reflect your company values and vision?
What daily operations must be completed to work toward your Strategic Objectives?
How will you communicate your Strategic Goals and Strategic Objectives?
Who is responsible for reporting on success?
How will strategic data be collected?

Related: Strategic Goals: Examples, Importance, Definitions and How to Set Them

Step Four: Drill down to Department-Level Objectives

What are specific department concerns?
How will your budget influence and be influenced by your Strategic Goals and Objectives?
Which departments have resources that could be shared to better advantage?
What roles do individual departments play in your overall Strategic Goals?
What ongoing projects become a priority because of your new Strategic Goals?
Are Departmental Objectives complementing each other and the overall Business Model?

Step Five: Manage and Analyze Performance

Who is on the Strategic Planning team?
Are tasks and job descriptions properly aligned to ensure the right work is getting completed?
What is the schedule for the meeting for Strategic Planning?
What are your metrics for measuring performance and success?
Have you clearly articulated and shared KPIs?
Who is responsible for gathering data?
How will data be collected?
How will data be reported?
What’s at stake for strategy success or failure?

Step Six: Review and develop your Strategic Plan

How should your Strategic Plan look on paper?
What is your Strategy Execution Framework —how will you guarantee the Strategic Plan Team’s decisions are respected and executed?
What is the review process?
How often do you evaluate your Strategic Plan?
How will you communicate your final Strategic Plan?

Strategic Planning Process Examples

1) apple strategic plan process.

Vision and Mission: Apple’s strategic planning begins with a clear vision and mission. Apple’s vision is to create innovative products that inspire and enrich people’s lives.
Environmental Analysis: Apple conducts thorough environmental analyses, considering technological trends, market demands, and competitive landscapes. This includes staying at the forefront of cutting-edge technologies.
SWOT Analysis: Apple evaluates its strengths, weaknesses, opportunities, and threats. For example, one of Apple’s strengths is its strong brand image, while a weakness might be dependence on a limited product line.
Setting business Goals and Objectives: Apple sets specific, measurable, achievable, relevant, and time-bound (SMART) goals. This could include objectives like maintaining a certain market share, launching new products, or achieving specific financial targets.
Strategies and Tactics: Apple develops strategies based on its goals. For instance, a strategic move might be expanding its ecosystem by integrating hardware, software, and services. Tactics could include aggressive marketing campaigns and product launches.
Implementation and Execution: Apple’s strategic plans are meticulously executed. The launch of iconic products like the iPhone, iPad, and Mac series demonstrates effective implementation of their strategies.
Monitoring and Adjusting: Apple constantly monitors its performance metrics, customer feedback, and market dynamics. If necessary, adjustments are made to the strategic plan to stay responsive to changing conditions.

2) Tesla Strategic Plan Process

Vision and Mission: Tesla’s strategic planning revolves around its mission to accelerate the world’s transition to sustainable energy. The vision includes producing electric vehicles and renewable energy solutions.
Market Analysis: Tesla analyzes global markets for electric vehicles, renewable energy, and energy storage. This involves understanding regulatory environments, consumer behaviours, and technological advancements.
Risk Assessment: Tesla conducts risk assessments related to manufacturing, supply chain, and market volatility. For instance, it considers risks associated with battery production and global economic conditions.
Setting Bold Objectives: Tesla is known for setting ambitious objectives, such as achieving mass-market electric vehicle adoption and establishing a robust network of charging stations worldwide.
Innovative Strategies: Tesla’s strategic planning involves innovation in technology and business models . For instance, the “Gigafactories” for mass production of batteries and the “Autopilot” feature in vehicles reflect innovative strategies.
Agile Adaptation: Due to the rapidly changing automotive and energy sectors, Tesla maintains an agile approach. The company adapts its plans swiftly to capitalize on emerging opportunities, as seen in the expansion of its energy products.
Continuous Improvement: Tesla places emphasis on continuous improvement. The iterative development of electric vehicle models, software updates, and advancements in battery technology showcase a commitment to refinement.

These examples demonstrate how strategic planning is a dynamic and integral part of the business processes of leading companies. They highlight the importance of a well-defined vision, rigorous analysis, adaptability, and innovation in the strategic planning process.

Tactical vs. Strategic Planning Process

An easy way to distinguish your company’s Tactical Planning from your Strategic Planning is to separate your wants from your HOWs.

In your Strategic Planning, you identify what you WANT for the company. These are big-picture dreams (achievable, but big ) that are your definition of success. In your Tactical Planning, you identify the HOW for reaching those dreams, including the smaller necessary steps.

Each kind of planning is vital for securing the organization’s future, but they require different sorts of attention and philosophy, and teams that are good at planning one way may not necessarily be good at the other kind of planning.

Strategic Planning vs. Your Business Purpose

Your Strategic Planning Process will of course be deeply connected to your Business Purpose .

We like to think of Business Purpose in broad terms, choosing especially to think of a business’s role in massive transformation. Embedded within a Business Purpose is the Business Plan that directs operations and how a company delivers value to its customers.

What is the relationship between your Strategic Planning and your Business Purpose? One feeds into the other. Your Business Purpose must point to a larger impact you’ll have on the people who purchase your goods and services, and your Strategic Planning takes into account how you’ll grow and expand that Purpose as you reach more customers more successfully.

Strategic Planning vs Business Planning

Strategic planning and business planning are two distinct processes that are often used interchangeably, but they have some key differences.

Strategic planning is a top-level process that focuses on determining the direction of an organization over the long term. It involves setting goals, determining the key resources and actions necessary to achieve those goals, and allocating those resources in a way that best serves the organization’s future. The outcome of strategic planning is typically a long-term strategic plan that outlines the organization’s vision, mission, values, and objectives.

Business planning , on the other hand, is a more tactical process that focuses on the implementation of specific initiatives and projects to support the organization’s long-term goals. Business plans typically outline the steps necessary to launch a new product, enter a new market, or achieve a specific objective. They may also include budgets, marketing plans, and other operational details.

In short, strategic planning is about setting the direction for an organization, while business planning is about implementing specific initiatives to support that direction. Both processes are important for the success of an organization and should be used in conjunction to ensure that resources are allocated effectively and that the organization is moving in the right direction.

Why is Strategic Planning Important?

Imagine this scenario: A warehouse full of goods sits, unsold and unmoved. A collection of brilliant people languishes at desks all day. Outside, the world spins and changes. It’s ready for what these people could do, can do, and yet nothing happens. Needs remain unmet. Progress is halted. Everyday life takes several backwards steps. This is what your business will look like without proper Strategic Planning.

Strategic Planning forces you to consider your Strategic Objectives and critically compare them to the resources you have available. As you continuously evaluate the circumstances of your business and your customers, your Strategic Plan evolves to match your goals and business capabilities.

The process involved pushes decision-makers to practice Strategic Thinking . It limits wasteful spending, especially when upper-level managers are willing to forgo pet projects in favor of operations with a broader use and appeal.

Strategic Planning is important because it directs your resources to efficiently meet your overall Business Goals. Without Strategic Planning, you are likely to waste resources, make conflicting decisions, or fail to grow your business to its greatest potential.

When Do You Create a Strategic Plan?

Most businesses find value in reviewing their Strategic Plan every three years. This allows enough time to pass that you can evaluate the success of previous plans, reflect on the achievement of your Strategic Goals, consider developments outside your organization that affect your business, and begin formulating new goals that will become the next version of your plans.

When businesses first begin, they often have too many fires burning at once. They remain focused on existing today rather than planning for tomorrow. Most entrepreneurs remember those stressful early days of starting their businesses and can understand why formalities like Strategic Plans can fall by the wayside. We believe if your business lasts longer than a year it’s important to develop a plan for the future. Think of Strategic Planning as a celebration of a first anniversary—a sign that you’re poised to continue moving forward for years to come.

However, Strategic Planning is not a one-off event that is over once the cookies are all gone and the room clears. Your Strategic Planning team should meet regularly to measure how effective the plans are at helping you reach your Strategic Goals. Ad hoc subcommittees can play a role in gathering evidence to ensure that your plans remain appropriate, especially if conditions change.

For example, we recommended a close review of Strategic Plans and Strategic Goals once the COVID-19 pandemic made it clear that business was going to be affected at least short- to mid-term. We continue to recommend teams regularly revisit their Strategic Plans with global circumstances in mind to recognize opportunities and prepare for challenges.

The Benefits of Strategic Planning

As we’ve mentioned, there are many benefits of Strategic Planning . Some of those benefits include:

Shared sense of power and importance
United direction
Clear path and purpose for decision-making and operations
Boosted operational effectiveness
Responsible, efficient use of available resources
Meaningful work done on a daily basis
Tracking of progress
Ability to adjust to changing circumstances

What is a business without Strategic Planning? In most cases, it’s not much, nor is it long for the world. While it’s possible to accidentally find success without much planning, most successful businesses are a result of careful thought mixed with the urge to pounce on the opportunity.

What prepares you to pounce?

Your Strategic Planning and the processes that make it possible.

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What Is the Business Planning Process?

Small Business
Business Planning & Strategy
Business Planning Process
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The Role of Finance in Formulating Business Strategies

How to understand a business plan, the best practices in strategic implementation.

What Is Manufacturing Operations Management?
After Sales Service SWOT Analysis

The business planning process is designed to answer two questions: Where are we now? Where do we want to go? The result of this process is a business plan that serves as a guide for management to run the company. Describing the most critical tasks that must be completed and the time frame for completion, a business plan allows companies to allocate resources to accomplish goals.

Where Are We Now?

Companies begin the planning process by taking a critical look at the business' current state. The management team evaluates what the company is doing well and where it is falling short. Objectives could be revenue targets or ascertaining the company’s reputation for reliability in the marketplace. The planning process provides a blueprint for improvement in all areas.

What's the Competition Doing?

Keeping track of competitors is an ongoing process in business, but in the planning cycle this information is used to evaluate the strengths and weaknesses of each competitor. This analysis shows management how to position the company’s products or services to compete more effectively. It may be that the best way to contend with a competitor is by offering better customer service rather than lower prices.

What's the Opportunity?

Success in business is the result of providing products and services that meet customers’ needs in a significantly better way than competitors. Before launching a product or entering a new market, management must determine a strong customer need to solve a problem. Solving the customer's problem must be important and urgent. Because no company has unlimited resources, these decisions about which opportunities are best to exploit are critical to the company’s success.

How Will We Attract and Keep Customers?

The marketing plan details which customer groups will be targeted and how these customers will be convinced to make a purchase. The planning process must produce specific and detailed tactics, not vague generalities. Instead of saying the company will employ Internet marketing, the plan must detail which categories of Internet marketing will be emphasized, which websites will be used, and the cost of advertising. Also included in the plan must be reasons why these strategies are likely to result in success.

How Will We Allocate Budget?

The planning process determines how all the assets of the company will be marshaled to achieve the goals and objectives. Thorough planning allows financial resources to be used wisely, and for the human resources of the company to be as productive as possible. Planning helps avoid problems such as cash shortages, inability to deliver products on schedule, or inadequate staff levels.

What's the Financial Forecast?

A financial forecast, sometimes referred to as a company budget, is produced during the planning process. The forecast numbers are compared to actual results during the year. Discrepancies are analyzed to determine if a change of course is required, or if shifting expenses may be necessary due to a changing economic environment.

Growthink: The Business Planning Process: 5 Steps To Creating a New Plan
SME Strategy: What is the Strategic Planning Process?

Brian Hill is the author of four popular business and finance books: "The Making of a Bestseller," "Inside Secrets to Venture Capital," "Attracting Capital from Angels" and his latest book, published in 2013, "The Pocket Small Business Owner's Guide to Business Plans."

What is the meaning of corporate planning, the impact of planning on business growth, business enterprise planning, strategic marketing plan strategy evaluation, the definitions of total asset turnover and profit margin, why are major risks in the business plan, principles of marketing management, definition of a successful strategic business plan, why create a business plan, most popular.

1 What Is the Meaning of Corporate Planning?
2 The Impact of Planning on Business Growth
3 Business Enterprise Planning
4 Strategic Marketing Plan Strategy Evaluation

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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Why Is Strategic Planning Important?

Above view of team creating a strategic plan

06 Oct 2020

Do you know what your organization’s strategy is? How much time do you dedicate to developing that strategy each month?

If your answers are on the low side, you’re not alone. According to research from Bridges Business Consultancy , 48 percent of leaders spend less than one day per month discussing strategy.

It’s no wonder, then, that 48 percent of all organizations fail to meet at least half of their strategic targets. Before an organization can reap the rewards of its business strategy, planning must take place to ensure its strategy remains agile and executable .

Here’s a look at what strategic planning is and how it can benefit your organization.

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What Is Strategic Planning?

Strategic planning is the ongoing organizational process of using available knowledge to document a business's intended direction. This process is used to prioritize efforts, effectively allocate resources, align shareholders and employees on the organization’s goals, and ensure those goals are backed by data and sound reasoning.

It’s important to highlight that strategic planning is an ongoing process—not a one-time meeting. In the online course Disruptive Strategy , Harvard Business School Professor Clayton Christensen notes that in a study of HBS graduates who started businesses, 93 percent of those with successful strategies evolved and pivoted away from their original strategic plans.

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

Strategic planning requires time, effort, and continual reassessment. Given the proper attention, it can set your business on the right track. Here are three benefits of strategic planning.

Related: 4 Ways to Develop Your Strategic Thinking Skills

Benefits of Strategic Planning

1. create one, forward-focused vision.

Strategy touches every employee and serves as an actionable way to reach your company’s goals.

One significant benefit of strategic planning is that it creates a single, forward-focused vision that can align your company and its shareholders. By making everyone aware of your company’s goals, how and why those goals were chosen, and what they can do to help reach them, you can create an increased sense of responsibility throughout your organization.

This can also have trickle-down effects. For instance, if a manager isn’t clear on your organization’s strategy or the reasoning used to craft it, they could make decisions on a team level that counteract its efforts. With one vision to unite around, everyone at your organization can act with a broader strategy in mind.

2. Draw Attention to Biases and Flaws in Reasoning

The decisions you make come with inherent bias. Taking part in the strategic planning process forces you to examine and explain why you’re making each decision and back it up with data, projections, or case studies, thus combatting your cognitive biases.

A few examples of cognitive biases are:

The recency effect: The tendency to select the option presented most recently because it’s fresh in your mind
Occam’s razor bias: The tendency to assume the most obvious decision to be the best decision
Inertia bias: The tendency to select options that allow you to think, feel, and act in familiar ways

One cognitive bias that may be more difficult to catch in the act is confirmation bias . When seeking to validate a particular viewpoint, it's the tendency to only pay attention to information that supports that viewpoint.

If you’re crafting a strategic plan for your organization and know which strategy you prefer, enlist others with differing views and opinions to help look for information that either proves or disproves the idea.

Combating biases in strategic decision-making requires effort and dedication from your entire team, and it can make your organization’s strategy that much stronger.

Related: 3 Group Decision-Making Techniques for Success

3. Track Progress Based on Strategic Goals

Having a strategic plan in place can enable you to track progress toward goals. When each department and team understands your company’s larger strategy, their progress can directly impact its success, creating a top-down approach to tracking key performance indicators (KPIs) .

By planning your company’s strategy and defining its goals, KPIs can be determined at the organizational level. These goals can then be extended to business units, departments, teams, and individuals. This ensures that every level of your organization is aligned and can positively impact your business’s KPIs and performance.

It’s important to remember that even though your strategy might be far-reaching and structured, it must remain agile. As Christensen asserts in Disruptive Strategy , a business’s strategy needs to evolve with the challenges and opportunities it encounters. Be prepared to pivot your KPIs as goals shift and communicate the reasons for change to your organization.

Which HBS Online Strategy Course is Right for You? | Download Your Free Flowchart

Improve Your Strategic Planning Skills

Strategic planning can benefit your organization’s vision, execution, and progress toward goals. If strategic planning is a skill you’d like to improve, online courses can provide the knowledge and techniques needed to lead your team and organization.

Strategy courses can range from primers on key concepts (such as Economics for Managers ), to deep-dives on strategy frameworks (such as Disruptive Strategy ), to coursework designed to help you strategize for a specific organizational goal (such as Sustainable Business Strategy ).

Learning how to craft an effective, compelling strategic plan can enable you to not only invest in your career but provide lasting value to your organization.

Do you want to formulate winning strategies for your organization? Explore our portfolio of online strategy courses and download the free flowchart to determine which is the best fit for you and your goals.

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Business Planning Process and Strategy - Steps & Plan

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

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

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

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What is a Business Plan?

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

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

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

Objectives of a Business Plan

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

How to Prepare for a Business Plan?

Preliminary investigation.

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

Business Planning Process

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

Key Components of a Business Plan

Executive Summary

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

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

Company Description

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

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

Market Analysis

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

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

Financial Plan

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

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

Steps to a Successful Business Planning Process

Idea Generation

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

Sources of New Ideas

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

Market research and development
Competitors
Vendors and retailers

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

Methods of Generating New Ideas

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

2. Environmental Scanning

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

External Environment

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

Internal Environment

These are factors that exist within the business:

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

3. Feasibility Analysis

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

The different variables included in a feasibility analysis are:

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

Technical/ Operational Analysis

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

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

Financial Feasibility

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

Functional Plans

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

4. Project Report Preparation

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

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

5. Plan Your Marketing Strategy

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

6. Evaluation, Control, and Review

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

What is Business Strategy Planning?

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

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

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

What does Strategic Planning Involve?

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

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Essentials of Strategy Planning

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

Past and Present Data Analysis

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

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

Insightful Analysis of Market Dynamics

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

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

Following a Unique Approach to Planning

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

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

Scenario Analysis Based on Relevant Inputs

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

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

Risk Mitigation Measures to Minimize Loss

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

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

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

BMGI's Approach to Strategy Planning

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

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

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

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

External Assessment

BMGI recommends the analysis of-

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

Internal Assessment

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

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

Impact Areas of Strategic Planning

Examples of Successful Business Planning Process and Strategy

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

Organic Growth Strategy

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

Business Unit Strategy

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

Corporate Strategy

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

Emerging Markets Strategy

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

Sustainable Growth Strategy

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

Measuring the Success of Your Business Plan and Strategy

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

Setting Measurable Goals and Objectives

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

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

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

Tracking Key Performance Indicators (KPIs)

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

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

Conducting Regular Performance Reviews

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

Soliciting Customer Feedback

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

Examples of Successful Business Planning Process and Strategy

Toyota's US invasion in the '70s

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

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

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

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

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

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

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

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

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

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

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What questions should be asked in a business plan?

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

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

What is the most important part of your business plan?

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

How many years should a business plan cover?

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

How do you overcome lack of planning?

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

What are the barriers to planning?

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

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

How to define companies Vision and Mission?

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

What financial projections should I include in my business plan?

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

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

To revise and update your business plan:

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

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

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

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

· Determine your unique selling proposition (USP)

· Define your marketing goals.

· Choose your marketing channels.

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

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

Who benefits from a good business strategy?

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

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Planning Process

Planning is the first primary function of management that precedes all other functions . The planning function involves the decision of what to do and how it is to be done? So managers focus a lot of their attention on planning and the planning process . Let us take a look at the eight important steps of the planning process.

1] Recognizing Need for Action

An important part of the planning process is to be aware of the business opportunities in the firm’s external environment as well as within the firm. Once such opportunities get recognized the managers can recognize the actions that need to be taken to realize them. A realistic look must be taken at the prospect of these new opportunities and SWOT analysis should be done.

Say for example the government plans on promoting cottage industries in semi-urban areas. A firm can look to explore this opportunity.

What are the Types of Plan?

2] Setting Objectives

This is the second and perhaps the most important step of the planning process. Here we establish the objectives for the whole organization and also individual departments . Organizational objectives provide a general direction, objectives of departments will be more planned and detailed.

Objectives can be long term and short term as well. They indicate the end result the company wishes to achieve. So objectives will percolate down from the managers and will also guide and push the employees in the correct direction.

Importance, Features, and Limitation of Planning here in detail .

3] Developing Premises

Planning is always done keeping the future in mind, however, the future is always uncertain. So in the function of management certain assumptions will have to be made. These assumptions are the premises. Such assumptions are made in the form of forecasts, existing plans, past policies, etc.

These planning premises are also of two types – internal and external. External assumptions deal with factors such as political environment, social environment , the advancement of technology , competition, government policies , etc. Internal assumptions deal with policies, availability of resources, quality of management , etc.

These assumptions being made should be uniform across the organization. All managers should be aware of these premises and should agree with them.

4] Identifying Alternatives

The fourth step of the planning process is to identify the alternatives available to the managers. There is no one way to achieve the objectives of the firm, there is a multitude of choices. All of these alternative courses should be identified. There must be options available to the manager.

Maybe he chooses an innovative alternative hoping for more efficient results. If he does not want to experiment he will stick to the more routine course of action. The problem with this step is not finding the alternatives but narrowing them down to a reasonable amount of choices so all of them can be thoroughly evaluated.

5] Examining Alternate Course of Action

The next step of the planning process is to evaluate and closely examine each of the alternative plans. Every option will go through an examination where all there pros and cons will be weighed. The alternative plans need to be evaluated in light of the organizational objectives.

For example, if it is a financial plan. Then it that case its risk-return evaluation will be done. Detailed calculation and analysis are done to ensure that the plan is capable of achieving the objectives in the best and most efficient manner possible.

6] Selecting the Alternative

Finally, we reach the decision making stage of the planning process. Now the best and most feasible plan will be chosen to be implemented. The ideal plan is the most profitable one with the least amount of negative consequences and is also adaptable to dynamic situations.

The choice is obviously based on scientific analysis and mathematical equations. But a managers intuition and experience should also play a big part in this decision. Sometimes a few different aspects of different plans are combined to come up with the one ideal plan.

7] Formulating Supporting Plan

Once you have chosen the plan to be implemented, managers will have to come up with one or more supporting plans. These secondary plans help with the implementation of the main plan. For example plans to hire more people, train personnel, expand the office etc are supporting plans for the main plan of launching a new product. So all these secondary plans are in fact part of the main plan.

8] Implementation of the Plan

And finally, we come to the last step of the planning process, implementation of the plan. This is when all the other functions of management come into play and the plan is put into action to achieve the objectives of the organization. The tools required for such implementation involve the types of plans- procedures, policies, budgets, rules, standards etc.

Solved Question for You

Q: _______ involves scientific analysis of the decision process

Linear Programming
Risk Analysis
Operations Research
None of the above

Ans: The correct option is C. Operation research is the application of scientific and mathematical methods to study and analyse problems involving complex systems. It is a powerful tool for decision making.

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Types of Plan
Introduction, Meaning, Importance, Features and Limitations of Planning

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

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

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The role of strategic planning in business success.

Strategic planning is the cornerstone of building any profitable business. This process involves carefully outlining a company’s goals over the coming years while allocating resources efficiently toward attaining them. With today’s ever-evolving markets characterized by rapid technological progress and shifting consumer tastes, being able to strategically plan with precision has never been more essential; not only does this practice clarify the future trajectory for a business but it also aligns organizational efforts toward common goals for enhanced cohesion and focus.

Key Components of Strategic Planning

At the core of strategic planning lies several crucial components that ensure its efficacy. This process begins with creating vision and mission statements to outline your company’s purpose and values as a starting point for all future strategic decisions. Implementing specific, measurable, attainable, relevant, and time-bound (SMART) objectives provides organizations with clear targets they can aim for. Conducting a comprehensive SWOT analysis — in which your company identifies both internal and external strengths, weaknesses, opportunities, and threats — is indispensable to understanding how its landscape functions. Strategy formulation involves synthesizing these components into an action plan with prioritized projects designed to leverage its strengths, opportunities, and weaknesses as well as any threats it might face.

The Process of Strategic Planning

Strategic planning is not simply an academic exercise but an ongoing process that adapts as your business and its environment change. Initial steps involve setting clear yet realistic business goals, followed by an in-depth examination of both internal resources and market forces affecting your business. At this stage, strategies that not only are innovative but also meet both the company’s core competencies and market requirements must be devised. Once strategies have been created, their implementation requires careful consideration, resource allocation, and oftentimes significant organizational restructuring . Once implemented successfully, monitoring and evaluation are employed as measures of performance to assess whether strategies are meeting objectives while any necessary modifications must be made accordingly.

Benefits of Strategic Planning

Strategic planning has far-reaching advantages that extend throughout an organization. It significantly boosts organizational performance by aligning all departmental actions with larger strategic goals, thus eliminating redundant efforts and allocating resources where they will have maximum value-creation potential. An effective strategic planning program also enhances a company’s adaptability to rapidly fluctuating market conditions by helping it respond swiftly and effectively to opportunities and threats emerging within its environment. Furthermore, strategic planning aids resource allocation by more effectively outlining key priorities across an organization more efficiently; finally enabling proactive rather than reactive management by anticipating change with well-considered plans rather than quick reactions.

Strategic Use of Insurance in Business Planning

Insurance should be included as an essential element of strategic planning to reduce risks and ensure long-term business resilience and continuity. Insurance offers financial protection against losses such as liability claims or property damage claims that might otherwise incur. Strategic planning necessitates choosing insurance policies–such as liability, property, and professional indemnity–that cover risks specific to a business’s industry and operation. Good insurance coverage not only gives companies peace of mind but also supports their stability and growth by protecting against potentially catastrophic financial losses. Therefore, understanding and using insurance for business owners strategically are both integral parts of any comprehensive business strategy, acting both as shields against potentially devastating financial losses while helping operations run more smoothly.

Common Challenges in Strategic Planning

Implementing strategic planning effectively presents numerous obstacles. One such hindrance is resistance to change that may be deeply embedded within an organization’s culture. Employees and managers accustomed to routines may be reluctant to change, especially if this means significant alterations to workflows or roles. Without an engaging vision in place, efforts can become disjointed and their impacts diminished. Communication breakdown between strategists and other members of an organization may lead to misalignments between objectives and means for meeting them, leading to mistrust about goals and means. Furthermore, even well-thought-out plans may fail due to poor implementation due to ineffective leadership, inadequate resources or a lack of commitment at different levels within an organization.

Strategic Planning and Risk Management

Risk management is an integral element of strategic planning that involves the identification, assessment, and mitigation of any threats that might inhibit an organization from meeting its goals. Companies incorporating risk management as part of their planning processes not only protect assets while assuring continuity but can also gain an edge against uncertainty or emergencies more efficiently.

Businesses use strategic planning as their roadmap; using its blueprints to navigate through challenges effectively while allocating resources effectively and capitalizing on opportunities proactively. By cultivating an organization-wide culture focused on clear objectives, risk mitigation and continuous adaptation – strategic planning ensures businesses not only prepare themselves for tomorrow but are shaping it according to their interests!

Strategic planning has become ever more essential to businesses due to global markets’ constant shift and evolution, acting as a guide during moments of doubt or volatility; providing guidance for growth; and modernizing processes so as to guarantee ongoing survival and expansion. For companies hoping to thrive rather than just survive, undertaking an inclusive strategic planning process should not just benefit but be mandatory for success.

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Artificial intelligence in strategy

Can machines automate strategy development? The short answer is no. However, there are numerous aspects of strategists’ work where AI and advanced analytics tools can already bring enormous value. Yuval Atsmon is a senior partner who leads the new McKinsey Center for Strategy Innovation, which studies ways new technologies can augment the timeless principles of strategy. In this episode of the Inside the Strategy Room podcast, he explains how artificial intelligence is already transforming strategy and what’s on the horizon. This is an edited transcript of the discussion. For more conversations on the strategy issues that matter, follow the series on your preferred podcast platform .

Joanna Pachner: What does artificial intelligence mean in the context of strategy?

Yuval Atsmon: When people talk about artificial intelligence, they include everything to do with analytics, automation, and data analysis. Marvin Minsky, the pioneer of artificial intelligence research in the 1960s, talked about AI as a “suitcase word”—a term into which you can stuff whatever you want—and that still seems to be the case. We are comfortable with that because we think companies should use all the capabilities of more traditional analysis while increasing automation in strategy that can free up management or analyst time and, gradually, introducing tools that can augment human thinking.

Joanna Pachner: AI has been embraced by many business functions, but strategy seems to be largely immune to its charms. Why do you think that is?

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Yuval Atsmon: You’re right about the limited adoption. Only 7 percent of respondents to our survey about the use of AI say they use it in strategy or even financial planning, whereas in areas like marketing, supply chain, and service operations, it’s 25 or 30 percent. One reason adoption is lagging is that strategy is one of the most integrative conceptual practices. When executives think about strategy automation, many are looking too far ahead—at AI capabilities that would decide, in place of the business leader, what the right strategy is. They are missing opportunities to use AI in the building blocks of strategy that could significantly improve outcomes.

I like to use the analogy to virtual assistants. Many of us use Alexa or Siri but very few people use these tools to do more than dictate a text message or shut off the lights. We don’t feel comfortable with the technology’s ability to understand the context in more sophisticated applications. AI in strategy is similar: it’s hard for AI to know everything an executive knows, but it can help executives with certain tasks.

When executives think about strategy automation, many are looking too far ahead—at AI deciding the right strategy. They are missing opportunities to use AI in the building blocks of strategy.

Joanna Pachner: What kind of tasks can AI help strategists execute today?

Yuval Atsmon: We talk about six stages of AI development. The earliest is simple analytics, which we refer to as descriptive intelligence. Companies use dashboards for competitive analysis or to study performance in different parts of the business that are automatically updated. Some have interactive capabilities for refinement and testing.

The second level is diagnostic intelligence, which is the ability to look backward at the business and understand root causes and drivers of performance. The level after that is predictive intelligence: being able to anticipate certain scenarios or options and the value of things in the future based on momentum from the past as well as signals picked in the market. Both diagnostics and prediction are areas that AI can greatly improve today. The tools can augment executives’ analysis and become areas where you develop capabilities. For example, on diagnostic intelligence, you can organize your portfolio into segments to understand granularly where performance is coming from and do it in a much more continuous way than analysts could. You can try 20 different ways in an hour versus deploying one hundred analysts to tackle the problem.

Predictive AI is both more difficult and more risky. Executives shouldn’t fully rely on predictive AI, but it provides another systematic viewpoint in the room. Because strategic decisions have significant consequences, a key consideration is to use AI transparently in the sense of understanding why it is making a certain prediction and what extrapolations it is making from which information. You can then assess if you trust the prediction or not. You can even use AI to track the evolution of the assumptions for that prediction.

Those are the levels available today. The next three levels will take time to develop. There are some early examples of AI advising actions for executives’ consideration that would be value-creating based on the analysis. From there, you go to delegating certain decision authority to AI, with constraints and supervision. Eventually, there is the point where fully autonomous AI analyzes and decides with no human interaction.

Because strategic decisions have significant consequences, you need to understand why AI is making a certain prediction and what extrapolations it’s making from which information.

Joanna Pachner: What kind of businesses or industries could gain the greatest benefits from embracing AI at its current level of sophistication?

Yuval Atsmon: Every business probably has some opportunity to use AI more than it does today. The first thing to look at is the availability of data. Do you have performance data that can be organized in a systematic way? Companies that have deep data on their portfolios down to business line, SKU, inventory, and raw ingredients have the biggest opportunities to use machines to gain granular insights that humans could not.

Companies whose strategies rely on a few big decisions with limited data would get less from AI. Likewise, those facing a lot of volatility and vulnerability to external events would benefit less than companies with controlled and systematic portfolios, although they could deploy AI to better predict those external events and identify what they can and cannot control.

Third, the velocity of decisions matters. Most companies develop strategies every three to five years, which then become annual budgets. If you think about strategy in that way, the role of AI is relatively limited other than potentially accelerating analyses that are inputs into the strategy. However, some companies regularly revisit big decisions they made based on assumptions about the world that may have since changed, affecting the projected ROI of initiatives. Such shifts would affect how you deploy talent and executive time, how you spend money and focus sales efforts, and AI can be valuable in guiding that. The value of AI is even bigger when you can make decisions close to the time of deploying resources, because AI can signal that your previous assumptions have changed from when you made your plan.

Joanna Pachner: Can you provide any examples of companies employing AI to address specific strategic challenges?

Yuval Atsmon: Some of the most innovative users of AI, not coincidentally, are AI- and digital-native companies. Some of these companies have seen massive benefits from AI and have increased its usage in other areas of the business. One mobility player adjusts its financial planning based on pricing patterns it observes in the market. Its business has relatively high flexibility to demand but less so to supply, so the company uses AI to continuously signal back when pricing dynamics are trending in a way that would affect profitability or where demand is rising. This allows the company to quickly react to create more capacity because its profitability is highly sensitive to keeping demand and supply in equilibrium.

Joanna Pachner: Given how quickly things change today, doesn’t AI seem to be more a tactical than a strategic tool, providing time-sensitive input on isolated elements of strategy?

Yuval Atsmon: It’s interesting that you make the distinction between strategic and tactical. Of course, every decision can be broken down into smaller ones, and where AI can be affordably used in strategy today is for building blocks of the strategy. It might feel tactical, but it can make a massive difference. One of the world’s leading investment firms, for example, has started to use AI to scan for certain patterns rather than scanning individual companies directly. AI looks for consumer mobile usage that suggests a company’s technology is catching on quickly, giving the firm an opportunity to invest in that company before others do. That created a significant strategic edge for them, even though the tool itself may be relatively tactical.

Joanna Pachner: McKinsey has written a lot about cognitive biases and social dynamics that can skew decision making. Can AI help with these challenges?

Yuval Atsmon: When we talk to executives about using AI in strategy development, the first reaction we get is, “Those are really big decisions; what if AI gets them wrong?” The first answer is that humans also get them wrong—a lot. [Amos] Tversky, [Daniel] Kahneman, and others have proven that some of those errors are systemic, observable, and predictable. The first thing AI can do is spot situations likely to give rise to biases. For example, imagine that AI is listening in on a strategy session where the CEO proposes something and everyone says “Aye” without debate and discussion. AI could inform the room, “We might have a sunflower bias here,” which could trigger more conversation and remind the CEO that it’s in their own interest to encourage some devil’s advocacy.

We also often see confirmation bias, where people focus their analysis on proving the wisdom of what they already want to do, as opposed to looking for a fact-based reality. Just having AI perform a default analysis that doesn’t aim to satisfy the boss is useful, and the team can then try to understand why that is different than the management hypothesis, triggering a much richer debate.

In terms of social dynamics, agency problems can create conflicts of interest. Every business unit [BU] leader thinks that their BU should get the most resources and will deliver the most value, or at least they feel they should advocate for their business. AI provides a neutral way based on systematic data to manage those debates. It’s also useful for executives with decision authority, since we all know that short-term pressures and the need to make the quarterly and annual numbers lead people to make different decisions on the 31st of December than they do on January 1st or October 1st. Like the story of Ulysses and the sirens, you can use AI to remind you that you wanted something different three months earlier. The CEO still decides; AI can just provide that extra nudge.

Joanna Pachner: It’s like you have Spock next to you, who is dispassionate and purely analytical.

Yuval Atsmon: That is not a bad analogy—for Star Trek fans anyway.

Joanna Pachner: Do you have a favorite application of AI in strategy?

Yuval Atsmon: I have worked a lot on resource allocation, and one of the challenges, which we call the hockey stick phenomenon, is that executives are always overly optimistic about what will happen. They know that resource allocation will inevitably be defined by what you believe about the future, not necessarily by past performance. AI can provide an objective prediction of performance starting from a default momentum case: based on everything that happened in the past and some indicators about the future, what is the forecast of performance if we do nothing? This is before we say, “But I will hire these people and develop this new product and improve my marketing”— things that every executive thinks will help them overdeliver relative to the past. The neutral momentum case, which AI can calculate in a cold, Spock-like manner, can change the dynamics of the resource allocation discussion. It’s a form of predictive intelligence accessible today and while it’s not meant to be definitive, it provides a basis for better decisions.

Joanna Pachner: Do you see access to technology talent as one of the obstacles to the adoption of AI in strategy, especially at large companies?

Yuval Atsmon: I would make a distinction. If you mean machine-learning and data science talent or software engineers who build the digital tools, they are definitely not easy to get. However, companies can increasingly use platforms that provide access to AI tools and require less from individual companies. Also, this domain of strategy is exciting—it’s cutting-edge, so it’s probably easier to get technology talent for that than it might be for manufacturing work.

The bigger challenge, ironically, is finding strategists or people with business expertise to contribute to the effort. You will not solve strategy problems with AI without the involvement of people who understand the customer experience and what you are trying to achieve. Those who know best, like senior executives, don’t have time to be product managers for the AI team. An even bigger constraint is that, in some cases, you are asking people to get involved in an initiative that may make their jobs less important. There could be plenty of opportunities for incorporating AI into existing jobs, but it’s something companies need to reflect on. The best approach may be to create a digital factory where a different team tests and builds AI applications, with oversight from senior stakeholders.

The big challenge is finding strategists to contribute to the AI effort. You are asking people to get involved in an initiative that may make their jobs less important.

Joanna Pachner: Do you think this worry about job security and the potential that AI will automate strategy is realistic?

Yuval Atsmon: The question of whether AI will replace human judgment and put humanity out of its job is a big one that I would leave for other experts.

The pertinent question is shorter-term automation. Because of its complexity, strategy would be one of the later domains to be affected by automation, but we are seeing it in many other domains. However, the trend for more than two hundred years has been that automation creates new jobs, although ones requiring different skills. That doesn’t take away the fear some people have of a machine exposing their mistakes or doing their job better than they do it.

Joanna Pachner: We recently published an article about strategic courage in an age of volatility that talked about three types of edge business leaders need to develop. One of them is an edge in insights. Do you think AI has a role to play in furnishing a proprietary insight edge?

Yuval Atsmon: One of the challenges most strategists face is the overwhelming complexity of the world we operate in—the number of unknowns, the information overload. At one level, it may seem that AI will provide another layer of complexity. In reality, it can be a sharp knife that cuts through some of the clutter. The question to ask is, Can AI simplify my life by giving me sharper, more timely insights more easily?

Joanna Pachner: You have been working in strategy for a long time. What sparked your interest in exploring this intersection of strategy and new technology?

Yuval Atsmon: I have always been intrigued by things at the boundaries of what seems possible. Science fiction writer Arthur C. Clarke’s second law is that to discover the limits of the possible, you have to venture a little past them into the impossible, and I find that particularly alluring in this arena.

AI in strategy is in very nascent stages but could be very consequential for companies and for the profession. For a top executive, strategic decisions are the biggest way to influence the business, other than maybe building the top team, and it is amazing how little technology is leveraged in that process today. It’s conceivable that competitive advantage will increasingly rest in having executives who know how to apply AI well. In some domains, like investment, that is already happening, and the difference in returns can be staggering. I find helping companies be part of that evolution very exciting.

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Estate Planning for the Business Owner Series, Part 5: Estate Planning and the M&A Process

Once the business owner is ready to sell the business, there will be considerable time and energy focused on that goal. The client may engage an investment banker or business broker to assist in the sale, along with dedicated legal counsel specializing in mergers and acquisitions (“M&A”) for the transaction. The business’ accountant will play an important role as will the personal financial advisers. It is possible that these roles may change from the individuals currently serving in these roles given the complexity and dollars involved, which is a natural progression during a business sale.

The business owner may be an existing client who has already done some estate planning with the business interests. In this case, the estate planner will likely need to be involved to educate the M&A counsel on the trusts that have been put into place and provide documentation to be shared during the due diligence process. The client generally does not have to share the full terms of the trust with anyone. For many states, a certificate of trust can be provided in lieu of providing the full trust, which provides key details about the trust without disclosing the dispositive provisions. The buyer’s counsel may require a legal opinion from the estate planner as to certain aspects of the trust, or the client may agree to provide a full copy of the trust as long as there are strict limitations on how it can be shared among buyer’s counsel and advisers.

To read the full post, please visit our Future Wealth Navigator blog.

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Employee Onboarding Guide

Onboarding definition & overview.

Last updated: May 15th, 2024

Quality onboarding is crucial for new employees' long-term success and organizational productivity. Learn why a solid employee onboarding process can make a significant impact on employee experience and retention, plus innovative ideas to approaching welcoming new staff.

Onboarding Guide Navigation

> Definition & Overview

colleagues welcoming new coworker shaking hands and smiling

What Is Onboarding?

Onboarding is the process of integrating new employees into an organization. It includes the orientation process and opportunities for new hires to learn about the organization's structure, culture, vision, mission and values. Onboarding can span one or two days of activities at some companies; others offer a more extensive series of activities spanning months.

Onboarding is often confused with orientation. While orientation is necessary for completing paperwork and other routine tasks, onboarding is a comprehensive process involving management and other employees and can last up to 12 months.

Why Is It Important to Get Onboarding Right?

All new employees are onboarded—but the quality of the onboarding makes a difference. Too often, onboarding consists of handing a new employee a pile of forms and having a supervisor or HR professional walk the employee around the premises, making introductions on an ad hoc basis. When onboarding is done well, however, it lays a foundation for long-term success for the employee and the employer. It can improve productivity, build loyalty and engagement, and help employees become successful early in their careers with the new organization.

A study by Gallup showed that while only 12 percent of employees felt their company did a great job with onboarding, those employees were nearly three times as likely to say they have the best possible job. Overall, only 29 percent of new hires felt they were prepared and supported to excel in their new role. This leaves a lot of room for improvement.

Other studies consistently show a positive correlation between engaged employees and a company's profitability, turnover rate, safety record, absenteeism, product quality and customer ratings. An effective onboarding plan offers an ideal opportunity to boost employee engagement by, for example, fostering a supportive relationship between new hires and management, reinforcing the company's commitment to helping employees' professional growth and proving that management recognizes the employees' talent. For further reading learn how to optimize the onboarding process and the importance of good onboarding .

Relatedly, an employee value proposition (EVP) defines the value employees will get from working for a particular organization. It embodies the promises made during recruitment and is lived out every day through company culture. Onboarding gives employees their first look at how an organization's EVP may or may not be realized.

Onboarding Process Summary

While there are many ways to design an onboarding program, some components are integral to the process:

1. Preboarding

Consider inviting new employees to tour the facility, sending informational material, providing care packages, and assigning a buddy to help them integrate before their official start date.

2. Orientation

Introduce employees to the organization's structure, vision, mission, and values; review employee handbook and major policies; complete paperwork; cover administrative procedures; and provide other mandatory training.

3. Foundation Building

Ensure the onboarding process consistently embodies an organization's culture, mission, employee value proposition, brand, and other foundational elements, recognizing that assimilating these values takes time.

4. Mentoring and Buddy Systems

In partnership with hiring managers, enlist mentors or buddies to provide new employees with guidance, assistance, and insights into organizational nuances.

View our full guide on onboarding process steps.

Innovative Approaches to Onboarding

Various components of an onboarding program can be delivered using different approaches and methodologies combined to suit the organization and available resources.

Some employers are using innovative practices, such as games, video, and team-building exercises, to get new hires excited about joining the company. They're also working to make sure people can hit the ground running with functional workstations and equipment. Some examples of this include:

Facebook has its "45-minute rule," which means all new employees can begin to work within 45 minutes of arriving because all of their systems and devices have been set up before they report for their first day.

Leaders at Suffolk Construction, a national construction firm based in Boston, invite entry-level hires to participate in a variety of team-building exercises, including rowing the Charles River.

New employees at Bedgear, a Farmingdale, N.Y.-based manufacturer of performance bedding, take a walking tour of downtown Manhattan to visit other retailers that sell customized products, including Warby Parker and Samsung.

View more original onboarding options, shared from 4 HR leaders .

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Continue Learning About Onboarding

Additional resources:.

Checklist for Developing Onboarding/New Hire Practices
New Hire Orientation Checklist
New-Hire Orientation Process
New Hire Survey
New Hire Survey – Remote Employee
Onboarding Companies and Vendors in the SHRM Vendor Directory
SHRM Store resources on Onboarding

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New, trends and analysis, as well as breaking news alerts, to help HR professionals do their jobs better each business day.

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#FA Success Ep 385: Unblocking Clients That Won’t Implement With A Journey Of Financial Health, With Danielle Howard

May 14, 2024 07:02 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Executive Summary

Danielle Howard Podcast Featured Image FAS

My guest on today's podcast is Danielle Howard. Danielle is the owner of Wealth By Design, a hybrid advisory firm based in Glenwood Springs, Colorado, that oversees about $35 million in assets under advisement for 35 client households.

What's unique about Danielle, though, is how she has created a process she calls "Financial Fingerprints To Footprints ", where she helps clients who are struggling to implement their financial planning recommendations by working with them to unlock their money memories and help them understand how the financial lessons of their past may be creating a financial identity that's preventing them from taking the actions necessary to achieve their goals of the future.

In this episode, we talk in-depth about how Danielle structures her financial planning engagements, which includes a 5-meeting sequence during their first year that explores both the client's financial situation and the "why" behind how they view money, how Danielle uses tools such as Money Quotient and George Kinder's 3 Life Planning questions to dig deeper into clients' money memories and money identities, and how Danielle positions these conversations to occur after she presents her initial financial planning recommendations, at a point where clients are engaged enough with and buy-in to the process that they're willing to explore these more sensitive topics that can lead to real breakthroughs.

We also discuss how Danielle's transition from having an insurance-focused practice to a planning-centric business was influenced by her and her husband working through Kinder's 3 Life Planning questions themselves, how Danielle has increased and reduced her client headcount to meet lifestyle goals during different stages of her life, and how building a financial planning business has fit Danielle's personality as a 'cook' who is able to make changes and 'season to taste' in the moment, rather than as a 'baker' who has to follow a certain fixed path to the letter.

And be certain to listen to the end, where Danielle shares why she thinks women can make important contributions in the financial planning industry, particularly when it comes to listening deeply to clients and bringing integrity and authenticity to the table, how Danielle's own definition of success over time has shifted from gathering clients and assets to feeling that she is helping her clients succeed, and why Danielle thinks the financial planning industry offers advisors a unique opportunity to blaze a career path for oneself that meets our own individual needs and interests while being aligned to helping clients achieve theirs.

So, whether you're interested in learning about Danielle's transition from an insurance-focused practice to a planning-centric business, how to strategically schedule deeper discussions about money identities, and why Danielle believes women have a unique role in deep listening and authenticity in financial planning, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Danielle Howard.

Author: Michael Kitces

Michael Kitces is Head of Planning Strategy at Buckingham Strategic Wealth , which provides an evidence-based approach to private wealth management for near- and current retirees, and Buckingham Strategic Partners , a turnkey wealth management services provider supporting thousands of independent financial advisors through the scaling phase of growth.

In addition, he is a co-founder of the XY Planning Network , AdvicePay , fpPathfinder , and New Planner Recruiting , the former Practitioner Editor of the Journal of Financial Planning, the host of the Financial Advisor Success podcast, and the publisher of the popular financial planning industry blog Nerd’s Eye View through his website Kitces.com , dedicated to advancing knowledge in financial planning. In 2010, Michael was recognized with one of the FPA’s “Heart of Financial Planning” awards for his dedication and work in advancing the profession.

Read all of Michael’s articles here .

Resources Featured In This Episode:

Wealth By Design
#FASuccess Ep 015: Why Life Planning Is Simply Financial Planning Done Right, With George Kinder
Finding Your Own Money Story To Better Communicate With Clients
How Do You Nudge Clients Towards Their Financial Planning Goals?
The Soul of Money by Lynne Twist
The 7 Stages of Money Maturity by George Kinder
Atomic Habits: An Easy & Proven Way to Build Good Habits & Break Bad Ones by James Clear
Kinder Institute
Money Quotient
Klontz Consulting – Dr Ted Klontz
Dr Brad Klontz
Thinking, Fast and Slow by Daniel Kahneman
MoneyGuidePro
Wealth Studios
Mitch Anthony

Looking for sample client service calendars, marketing plans, and more? Check out our FAS resource page !

Are you a successful financial advisor, or do you know of one that would be a great fit for the Financial Advisor Success podcast? Fill out this form to be considered!

Full Transcript:

Michael: Welcome, Danielle Howard, to the "Financial Advisor Success" Podcast.

Danielle: Thank you for having me, Michael.

Michael: I really appreciate you joining us today. And I'm looking forward to a conversation, at least I say from my end, how I feel like financial planning starts to evolve for us as we go through our careers. When I started, at least, maybe this is me over-projecting, but I was very into the numbers. I studied the things on the books, and I loved my software, and my spreadsheets, and running the numbers, you tell me your goal and I'm going to analyze the heck out of this and make you an awesome financial plan that has all the right recommendations that optimize your path to achieve this goal. And then I kind of found this phenomenon, I guess for me it was probably 7 or 8 years in my career because I learned these things slowly, that I suddenly started to notice, after I got a few years in, my client's goals turned out not to be the goals that they had actually said were goals originally. They said they were goals, and then we got to them, and then they started changing their minds and said they wanted to do different things. I'm like, "Well, if you'd told me that this was the real plan, I would've made you a different plan originally."

And then I realized, well, maybe I need to actually be asking some of these questions a little differently. Nobody told me in financial planning classes, "When you ask the clients what their goals are and they tell you their goals, those might actually be wrong, and you have to dig into that further." And I felt like I had no tools in the toolbox about how to have those conversations and how to explore that part of the planning process. And I know that you have built much of your practice around going very deeply into this, probably far better than I ever did, and figured out how to do it. And so, I'm excited to talk about what that financial planning process looks like for you and how it's evolved over the years.

The Influences That Led To Danielle’s Life Planning Approach [4:50]

Danielle: Well, I'm excited to share it with you. I think that I started out maybe not as numbers-focused because I was on the product side 30 years ago where every "financial plan" led to a product, primarily insurance sales. And there's nothing wrong with a good insurance product, but there seemed to me to be needing something behind it, something more, and starting to ask those questions about the why, "Why are we doing this money thing?"

Michael: So, did you start out in the insurance side of the industry? Was that your initial entry path into this world?

Danielle: That was my introduction. My former husband was in the insurance world, very successful in it. And I was supporting him in the marketing area and trying to bring folks in the door. And as we would meet with people and the industry was shifting more into “Ooh, you can do a financial plan.” And I was introduced to new concepts from some innovators in the industry way back when. It just kept impressing upon me that there's got to be more to this. And like you said, it was like, okay, it's about the goals. Well, you tell us what your goal is and we'll give you the set path in getting there. And as this industry is showing, that just because you launch from the launchpad towards the moon, that destination is always going to be shifting. And it's how we help clients deal with life that's important, how do we help them create healthy financial lives that include goals?

Michael: So, I'm fascinated by some of this early, early journey for you. Can you share with us a little bit more, just, where did you start? How did this get going for you before you got to the point that you met some people who introduced some new concepts and changed your path?

Danielle: I read the book by Lynne Twist, "The Soul of Money," and was also involved in some Christian financial conversations with Larry Burkett and the folks at the time. And it just got me thinking that this thing called money, it's just a tool, and it's a tool that we use as a flow of our intention. It's a tool to help us understand and support us in accomplishing what's important in our lives. And so, whether it's how we earn it, how we bring it into our lives, how we give and share it, how we invest it, how we nurture and grow it, how we spend it, there's something that needs to be questioned about all of that. And if we can help clients to understand who they are in those areas and show them how they might want to show up a little bit differently, they're more likely to accomplish their goals.

But if we don't help clients understand who they are around their money and what a healthy financial life is really about, those goals are probably going to be less impactful for them, less fulfilling for them.

Michael: So, you're taking all this in while working in a practice that's primarily selling insurance?

Danielle: Yeah. We started to shift to what it would mean to do comprehensive financial planning for a fee way back when. It was like, "Okay, I'll charge $200 for a financial plan." And that just felt like, "How can I really ask somebody to do that? It's a big step."

Michael: So, where are we timewise? How far back is this?

Danielle: Yeah. This was about 2000. Oh my goodness. That was a long time ago.

Michael: So, what happened next? What did you do when you wanted to start going down this road and reading Lynne Twist and feeling this urge to explore further?

Danielle: George Kinder, "The 7 Stages of Money Maturity," all of those way-back-when. We decided to go independent, so to leave the insurance track and move into the independent space and start looking at what...charging for a plan and looking at what it would look like to do AUM, and really shifting from that product model to more the process. And it's been evolving ever since. My former husband then decided to pursue his next life dream and teaching school. And so, I was able to shift past pretty easily because we were able to say, "All right. We no longer sell product." I moved to a hybrid model and went through a couple broker-dealers way back when. We did have product available. I carried forward his policies and some of the trails that followed with that to get me up and going.

It had a little basis. I made this trajectory change, but it was like a 10%, 15%, 20%, and then completely in a different direction as I started creating our processes to look at what true financial life planning was about.

Michael: And was that the goal and vision at this point to create a life-planning offering? Because At this point, George Kinder is out there talking about life planning. Was that the vision and goal for you?

Danielle: For me, it was. We had looked at, okay, you can continue on the insurance track, you can continue on the sales area, and I'm going to head off in this other way. And I'd actually done the Money Quotient training back in, I think, 2000, or it was shortly thereafter, to say, "All right, what kind of processes are out there? Because I am doing this all on my own. I'm trying to create the wheel." And at that point, you were creating your own wheel. What kind of questions do you ask people? How do we dig deeper into all of this? And so, with some of the folks out there that were starting to put these processes together, again, I found additional family members to start exploring, "Okay, what part of this can I take from them? And how do I imbue my own voice into all of this?"

So, it's been a continuous...I tell people I am a cook, I like to cook. I'm not a baker where everything needs to be exactly measured, and you have to use the exact same formula. It's constantly, what does it need? It needs a little bit of this, it needs a dash of that, it needs a little bit more of this, we need to expand that. And that's what I love about this business, is that it's a continuous evolution and creative outlet for every advisor that feels called to doing this type of work to really get to know themselves, to understand their why of being in this business, and know that why is going to change over time. And because of that, their business model may change, it will continue to unfold or evolve, and you need to be okay with that constant evolution.

Michael: So, as you start preparing your first dish, as it were, can you take us back, what did the process look like when you started down this road? What was version 1.0 when you were like, "Okay, my husband's transitioning to teaching, I'm going in this life planning direction, I'm hanging my shingle with my hybrid broker-dealer, and I need to start doing a thing for my clients to get paid?" What was 1.0?

Danielle's Transition From Selling Insurance To Charging A Fee For Planning [13:52]

Danielle: 1.0 was deciding to charge for a plan. And that was really scary to be able to sit in front of a client and go, "All right, I'm going to charge you $500."

Michael: It's a fascinating thing when you have to say it out loud with words in front of another human being. I used to tell a lot of newer advisors when they were getting started, "Practice just actually saying your fee in front of other human beings." Start with your family and significant others. You're not even selling them, just right practice actually saying it, the words coming out of your mouth, and not doing what you just did, what we all do, "My fee is $500, unless you're not happy with that, and then I'll do it for $400, possibly $300." I can cut my fee in half before the client even objects.

Danielle: Exactly. Exactly. Or I'll do it for free because you're friend and family. I know, it's like you have to battle all of that. And especially, I don't know, this is something that maybe women, may resonate a little bit more with. And again, I don't want to completely put people in boxes, but I know women, we can sometimes have a harder time standing up for what we're worth, and calling it the way it is, and knowing our value, and saying, "These are the services that we provide. This is what we're going to look at. And this is what we charge for it." So, creating that scope of service, "What all are we going to look at?" "We're going to look at your tax return. We're going to look at your estate plans. We're not CPAs, we are not attorneys, but we will look at them to be able to come back and tell you, 'Wow, you haven't looked at your estate planning documents in 15 years, and your kids are up and out of the house, and want to make a few changes in this, that, and the other.” Or, “Let's have you sit down with an attorney and talk about how this trust is lined out."

So, making sure that we're just doing it in a comprehensive way, that we know what value we're bringing to the table, and it's more than just managing the investments or finding you the right insurance policy.

Michael: So, what did it take for you to find your fee-confidence, your say-it-out-loud, and be able to charge what you're worth?

Danielle: I'm still struggling. I still struggle with it. We have a base fee of $3,000, and when you're going to conferences, they're saying you're not charging enough. So, I still wrestle with it, and I think we probably always will. But we also feel we get fairly compensated. Could we charge a little bit more because the industry is getting that these days? Again, this is where everybody has to figure out what fits for themselves. And we start at $3,000. We go up to I think $8,000. And there have been definitely times on that $8,000 plan that it was like, "Oh my goodness, we should have charged more for this because it's quite a bit of work."

Michael: And what defines where someone falls in that $3,000 to $8,000 scope?

Danielle: The $3,000 is somebody coming in with really basic planning needs. It might be a couple just getting started in their life, they've both got good career tracks, they're making some money, they need to put an intentional spending plan together. They may need some basic estate planning. They may have a kid on the way. It's pretty basic. Or a pre-retiree that has 1 or 2 401(k)s or an IRA out there, but it's not overly complex. You start getting real estate involved and commercial properties or businesses and complex trust stuff and all the dynamics that more high-net-worth clients have and are bringing to the table, and you're going to be talking to their CPAs, and you're going to be talking to their attorneys. And then, again, $8,000 is not enough to probably cover the amount of time you're going to be spending on this.

Michael: So, when you were getting started with this, as I think you're figuring out how to start having these life-planning conversations and creating meetings or a process around it, where did you start? Were you just jump right in with George Kinder's 3 Questions and off it went? What did that planning process actually look like, that first life planning process look like?

Danielle: That was actually right on. In fact, I had to go through it ourselves. And that's how Mark at the time ended up going into teaching. We sat around a dinner table with some friends one night, and we went through George Kinder's 3 Questions, and we got to the end of it, and Mark had said, "I would regret not having taught school." And it's like, "Okay, we need to make some changes."

Michael: Wait, wait. So, your training for George Kinder was what made your ex-husband leave the business and go become a teacher?

Danielle: Yep.

Michael: All right. So, beware when you go down the learning path, it can hit close to home as well. By definition, that was the thing he wanted to do and make sure he didn't miss without regrets, so apparently a very positive change for him.

Danielle: Yeah. And I think that's something that's really important and what I really appreciated about the Money Quotient training too, was that you have to do your own work first. You have to look at your own life transitions. You have to look at what's important in life for you. And then, are you willing to walk before you talk. So, in our personal journey, it was like, "Oh my goodness, well, if you want to leave this business and pursue a teaching career, we have some pretty major life decisions to make." And I supported him in doing that. And it worked for both of us because I wanted to be in this business, and the way we were shifting out of the product side, it worked fine. But to take that… that was a big risk to say, "Okay, are we willing to do this work ourselves?"

Michael: So, you've mentioned Money Quotient a few times. Just for folks who aren't familiar, can you explain who Money Quotient is and what they do, how they fit into this?

Danielle: Yeah. Carol Anderson and Amy Mullen, they're a nonprofit, but they basically provide processes for financial advisors to walk their clients through the financial planning process. And they hit all the areas that a good CFP is, our ethics, and we adhere to the standards of true financial planning. I start with, there's 3 worksheets that they start with, a life transition survey, a financial satisfaction survey, and a simple financial statement. And what I appreciated about that was it gave us a tool to start conversations with clients. Before that, I was coming up with my own conversation starters, "Tell me about yourself. And what's important about money? And what was your earliest money memory?"

Michael: And so, they were giving you, I guess, alternative questions or conversation starters to use, just you didn't have to figure out for yourself which ones would get the conversation going?

Danielle: Right. And there's lots of folks out there that are walking alongside advisors to do this. And it's, again, we don't have to do this on our own. There are resources out there… a plethora of them. And finding one that fits and you resonate with, or that you can glean from, pull pieces out and make your own. My hope with some of the work that I've been doing is that I've put my own creative spirit into it, but whatever people want to take away from it and create their own, fantastic. Another person that I stole an idea from was the Klontzes, Dr. Ted and Dr. Brad, the Money Egg, and the Money Memories. And that's what got me started on thinking about, "Wow, having people talk about their early money memories and looking how those memories then opened up their mindsets around money, and then mindsets lead to behaviors, and that plays out over the long run in your financial life."

Michael: So, can you explain more what some of these tools and instruments are, Money Egg, Money Memories? What are these? How do they work?

Danielle: So, the Money Egg is circle on a piece of paper, you close your eyes and think, then you open your eyes. And with your non-dominant hand, you either draw pictures or write down phrases, and you just let your mind go back and think about early money memories. So, that can have a whole conversation in and of itself. What I did with it was, I've taken it a few steps further in creating what I call Financial Fingerprints to Footprints. And this is just, it's a framework that I created in order to walk along either my financial planning clients, and then we're also doing it in group formats. I'm doing it for nonprofit organizations, and in a workshop format. And it's a way for people to connect with early memories around money. Then I will have them, again, based on the work of Brad and Ted, write down with their non-dominant hand those early money memories.

Then they might share either as a group or as a couple what those memories are. Then we'll talk about what mindsets, what belief systems came out of those memories. And it might be, money is fun. It might be, money is bad. People can be raised in the same family and have entirely different belief systems around money. So, we then take that belief system and we question it. Is it serving you? Is it not serving you? Do you want to possibly look at something different? And then we go through what would you to step into? So, we're moving from, this is my money memory. Because of that memory, this is my belief system about money. And then my behavior might follow that. So, for example, if I had the early money memory of, I bought my first bicycle with the money I earned from babysitting. So, my mindset around it was, I need to work in order to have money to buy the things that I want to have. And then my behaviors, I've always worked. I've always earned money to do the things I want to do.

Somebody else came up with a money memory of, my parents always argued. They were always arguing about money. And my belief system is, money is bad, it's ugly, it's nasty, I never want to deal with it. So, the behavior, it wrecked a relationship, it wreaked havoc on his family life because of how his past created his trajectory and how he handled money. So, then we ask ourselves the question, "What do we want to do with this? Do we want to question it? Do we want to peel it apart a little bit? Do you want to see where it sits in your body?" There's the whole somatic, we won't go in into that today, but the idea that, what do we want to do with this? Do we want to look at financial forgiveness? Are there people that we need to forgive? Do we want to forgive ourselves for making mistakes around money?

And then what do we want to do moving forward? What do we want to step forward with? What might be a new identity that we would like to try on, that we would like to consider or change, a financial affirmation, "I am financially healthy. I am a good saver. I am a wise investor. I am a generous giver. I am an intentional spender." So, creating this identity and helping people understand who they are with their money. In my work with goal setting and with helping people understand how they want to move forward, you have to have a positive identity. When you talked about the elephant and the rider, what I like to think about with the Financial Fingerprints to Footprints, it is widening the path for the elephant, you're going to folks what the elephant and the rider is now.

Michael: Oh, yeah. So, elephant and rider analogy is, if you look at how our brains operate there, there's kind of 2 systems that run in parallel. This comes from Daniel Kahneman's work, he calls them system one and system 2, but the analogy “System One” is like the elephant. It just moves where it's going to move, it does what it needs to get through its day and cover its essentials. And the other part of our brain, what Kahneman calls “System 2” is kind of the rider on top of the elephant. This is the logical, rational, lookout-in-the-world, and try-to-make-appropriate-decisions part of the brain. And if the elephant is calm and not emotionally aroused or stampeding or anything, and the rider is fresh, and well-rested, and ready to go, maybe the rider can kind of steer where the elephant is going to go.

And if the elephant is angry and stampeding, or the rider is exhausted from doing too much for the day already, then the elephant just goes on autopilot and does what it wants to do. And the interesting phenomenon around this is, the general view that a lot of us kind of take in the financial planning world is, "Well, if I'm going to help my clients, I'm trying to engage this little logical rider in the hopes that I can get the rider to steer the elephant to where we're trying to get it to go." We're trying to help clients overcome their irrational behaviors, which is a nice way of saying where the elephant goes when the rider's not steering. We're trying to engage the rider to get the elephant to go the right place. But the fascinating thing about both how this works with elephants and the meta-level analogy is, one of the things we discovered long ago in humanity in parts of the world where elephants stampeding through the village is an actual risk is that if you really want to make your village safe, the best thing you could do is you make a giant wide open path that goes to the left of your village, that goes around your village. And you make your entrance into the village a small opening in the brush that human beings can go through.

And so, if the elephant happens to be stomping through, it just follows the path, and it'll go completely clear of your village, and keep everyone safe, and do what you need it to do. You don't have to hunt the elephant or try to climb up on top of the elephant and steer the elephant, you just change the path in front of the elephant, then it goes where you wanted it to go anyways in a much safer, simpler manner. And so, in the psychology world, this has kind of led to all this body of research around, the technical label is choice architecture, how we frame and serve up choices to clients. Because it turns out how you put those choices in front of clients, kind of how you shape the path of the elephant really matters and steers them. This is why the retirement world got so excited about defaulting people into retirement plans with automatic enrollment because auto-enrollment was a version of, well, just change the path so if they are going to be their lazy elephant that just stomps along, they're going to stomp the right way right into participating in their 401(k) plan. So, that's the elephant and the rider and the path analogy.

Danielle: So, in my mind, helping people understand who they are with their money, their identity around their money is another way of looking at how do we clear the path for the elephant. Because if we can help people understand what their unique version of true wealth is, what their unique version of success is, what a healthy financial identity means to them, then they'll be more likely to follow suit with our recommendations. And this was all brought about with James Clear and "Atomic Habits." And he talks about that healthy change is identity, processes, and outcomes. And we, in the financial world, we've primarily focused on processes and outcomes, "What are your goals? Oh, you need to save this much at this rate of return for da, da, da, da, da, and you'll get to your goal."

And that leads to shame and guilt because people come back to you and go, "Well, I didn't do it, but I really should." Or they run into you in the grocery store and they go, "Yeah, I've been meaning to call you because I really know I should really come in and see you." But getting that identity component in place. So, James Clear talks about if you have that identity, and then you have the processes, and you have the outcomes, people are going to be more likely to change their habits. And we have missed that opportunity to walk alongside our clients in creating those healthy financial identities. I think we need to get creative in this industry on how we're talking to clients, how we're helping them explore their identities, and whether they want to change them or not. Because we can't force anybody to save so much per month for so long at this rate of return.

Identifying Clients' Money Identities [34:58]

Michael: So, I'm still trying to visualize what are financial identities in this framework that I'm trying to get them to then change their processes and outcomes. Can you share a little bit more of, what does that mean, or how does that, I guess, show up in not-healthy ways in our traditional planning world? What are the not-good identities?

Danielle: Yeah. So, I think for what I've experienced in doing this in different workshops and conversations that I've overheard, or stories that people have shared with me, there's plenty of positive ones. And the positive ones around earning, giving, building, growing, saving, spending, great, we want to build on those, what's working, how do we want to continue that trajectory? But I would say the majority of people out there, we have financial issues along with other issues. So, some of the stories that I've heard, one gal shared a memory that her mom would always be putting money into a little jar in a can and put it up on the shelf in the cabinet in the kitchen. And this is our “someday money”, this is our someday money. So, she remembered her mom, she remembered her mom saving dollars and taking them to bank and saving. And then she remembered that her parents were tragically killed in a car accident. And the message she got out of that was, live life now, you don't know what's going to happen.

So, when she participated in this workshop, she was deeply in debt. She had no savings because she just pretty much lived for the moment. And so, in questioning that, to ask her, how is that...because if something's working for somebody, I can't sit there and say, "Well, you really need to save for this elusive line called retirement," that is a whole another topic of what our financial industry has done. I'm not going to change her way if she thinks this is a great way to live. But she wasn't, she didn't being in debt, and she didn't the fact that she didn't have anything saved. And in talking to her about, "Well, what might need to happen for you to look at trying on a different identity?” Trying on “I am a good saver, I have a healthy financial life,” what would that look like? And “What would be some baby steps for you to start testing that water?"

She thought, "Well, I might need to start hanging out with different people because I go out with people and we just go out to eat all the time." "Wow, changing your friend group, that's a really big step. That's going to be really scary. What else might need to happen?" "Well, I might need to sign up for my 401(k) auto deposit, and that might mean I have less." So there are things that she saw, and it was going to be a lot of hard work. But what would be a baby step for her to move in that direction and to try on that new identity of, "I am a good saver," and good saving means she's going to pay down the debt. "All right. Well, would you be willing to come up with a debt-reduction strategy? And what would do on ... " Kind of walking her through what her options were and trying on little bits and pieces. So, that was one situation. Again, this was in a workshop, so she was not a client of mine.

But hearing stories like that and then knowing that in my work with my clients, we will do that as part of our journey of financial health. So, this Fingerprints to Footprints is an hour-and-a-half long session that I do with our clients that enter into what we now call...it's a yearlong engagement of “A Journey of Financial Health.”

Michael: So, that really helps of trying to visualise to me where the identity layers create problems. I get it. Someone had to watch saving behavior coupled with the tragic events where those people never got to use their savings, and to say, "Well, I don't want to have that happen to me. I don't want that to be my life." So, off this person goes in a live-the-moment, you-only-live-once kind of spending behavior, and then get into all the problems that often comes from that. It resonates to me as well in the context of, when you start with something that's that deep and personally traumatic, I would imagine basically every possible bit of advice of, "Well, you should probably spend less and save more," is not going to make any possible dent in this person's behavior. Just saying, "Well, don't how to open a 401(k) plan? You should save more," finger wagging. "Start here." That advice has no prayer given the prior life experiences that that person has had.

Danielle: Right. And it can be a lot. Again, what I've seen is just the stories, they're heart-wrenching, they're heart-endearing. There's so much out there. It can be everything from how people earn a living. "I remember my first job was this, and, I remember a conversation. My first job was working for this accountant and stapling tax returns during tax season, and I was working with another high school student, and we were just stapling tax returns. And I was having a conversation with this other person that we were from different high schools, and this guy yelled at us that we were talking too much, and he just told us to work." And that had an impression on this person, and it changed... "I would never go into that line of business because everybody who was in that line of business is mean and just money-grubbing." It was like, "Well, is that true? Is it always true? Was there a time that might not be true?"

So, being able to pose questions and just kind of explore it with people, and, would you be willing to try on something else around that? If you're wanting to get into a new career path but you're so set against an industry that would possibly avail yourself of making more money, you might be shooting yourself in the foot over the long run. So, again, there's this fine line in our industry, it's like, well, we're not psychologists and we're not supposed to figure everybody's mental health out. But to me, it was a way to at least open the door, have additional conversations with clients to get them to think about who they are with money, and what it would mean to possibly do it a little bit differently. And I know Ted Klontz talks about when you look at a belief system and you talk about changing it, it's like going to a foreign country. Again, are you going to have to speak a new language? Are you going to have to learn a new language? Are you going to dress differently, and talk differently, and hang out with different people? Your whole life can change sometimes if you want to head down a different path.

Why Clients' Money Identities Are Hard To Change [43:33]

Michael: So, now take us back again to how do we start getting clients to change some of these deep-seated identities that are so driving their behavior because of sometimes fairly dramatic or traumatic experiences that put them there? How do we get them to change?

Danielle: Well, that is the question. I don't know that we do get them to change. If they want to change, if they're uncomfortable enough, they may want to change. I honestly, I've gotten to a point in life where I'm not going to change anybody. I have a hard enough time changing myself. But if I can create an awareness, if I can help them look in a mirror and see how their belief systems lead them to certain behaviors, and that behavior is something they either want to build on, and I am a cheerleader, and helping them create agency when they have wins, like, "Yeah, let's build on those wins." Or if they see something that's not working for them, “I may want to try something different on,” yes, the majority of clients that financial advisors are engaged with, have been doing enough things right, that they're usually headed in the right direction.

If they can afford to hire us, if they're working with us, they've usually gotten to a place of "financial success" in their lives. But there's always going to be slight trajectory shifts. So, how are we talking to your adult children about money? Do you have parents in your life that you are going to have some financial implications of walking alongside them in the aging process? So, there's always going to be these opportunities to walk alongside clients in a way that requires us to ask good questions and to dig deeper, and to find ways to lift them up and encourage them to have a healthy financial identity.

Michael: Well, now it strikes me, or it helps connect the dots for me to what you were saying earlier, that part of this is simply talking about what are some of those memories that are sticking out in your mind, which probably means they were particularly formative experiences. How is that showing up in your life today? Which helps people articulate what some of these belief sets may have turned into. And what I'm kind of realizing is sort of the key question around it that, I forget exactly how you would worded it, but I think something to the effect of this, is that working for you right now? Because if it is, my client of the time who didn't want to buy anything international, she had a very sizable portfolio, like, "Buy U.S. starting in the 1950s." Still worked out quite well for her.

So, very much to that vein, I didn't have the language to ask the question then, but I'm quite confident that if I said, "Is that working for you?" She would say, "Have you seen my portfolio?" So, it was good to finally understand why she was so adamantly against it, but I can also now see that in retrospect. And she would've had no interest in changing that behavior, which means anything, even trying would've just been wasted effort.

Danielle: So, then, what do you do with that? In alignment with her goals, if she's on path to accomplish her goals, then maybe you're sitting okay, maybe we might need to do some more loss or gain harvesting along the way to make sure you stay on track for this. So, there's always a hundred different ways to get to the same place. Then people don't change many times because something is working for them in that uncomfortable situation. There's a reason why people stay stuck. So, something's working for them or something's not working for them, to just have the conversations and get them to a place where either they want to change or not. And it's not our job to get them to change.

Danielle's Year-Long Client Onboarding Process [48:31]

Michael: So, now take us back. You said in the context of your firm, this is now culminated into, it is a year-long journey of financial health process. So, can you walk us through that planning process? If I say, "Danielle, this sounds great. I definitely need this help because I got a few things that I know are not working for me. So, I want to sign up and become a client." Can you just walk us through the process? How does this work? What happens when and where in this year-long process for you?

Danielle: What I found wasn't working was you create this financial plan… you'd give them their financial plan, you'd walk them through the plan, you'd tell them, okay, here's the things you need to do, and you'd close the plan, and they'd walk out the door and put it on a shelf and never look at it again.

And so, I was like, "Why aren't people taking the advice?" So, my attempt to get to help guide people and to get them to either take advice or to take steps towards forward movement, was to say, "All right. We're going to walk alongside you a little bit longer.” We're going to put this process, this journey of financial health. We are going to get all of your data. We are going to use some of our own proprietary tools and some of the tools we have from Money Quotient from my years and years and years of getting ideas from all these amazing people that are out there. And we're going to put together a really good plan.

We use MoneyGuidePro, Wealth Studios, we use a lot of the great software that's out there. And we're going to meet with you initially, get to know you, explain our process, decide if it's a fit for you with what you've shared with us so far, about what your assets look like, what you've got for us to work with. We'll come up with a scope of service, what we're going to be doing. And then we'll enter into the financial planning engagement. You have up to a year to complete this because we know everybody's busy, but we also want to commit to you that you will have our attention.

So, we're only going to take on a certain number of clients because this process is something you will have our full attention. So, then we've got the nice portals where we securely upload all of their data, we send them a data gatherer that again, depending on the scope of service, we get all of the bits and pieces and the additional questionnaires, and we get to know them. We get to know their money history, we get to know their...

Michael: So, share with us more what tools, what things are you using at this point? As you said, you're the cook that has iterated. So, I'm sure you've been through a lot of the tools over time. So, what's actually in the process now? What am I getting asked to do or fill out as I've gotten through our initial fit meeting, like I'm getting ready for, I guess, the first planning meeting?

Danielle: Some of the tools we use are from Money Quotient, what are you looking forward to during retirement? What are you concerned about? Tell us who is impacted by your financial decisions. Again, they have some questionnaires that we utilize that are more extensive than that, but that's some of the things that are on the questionnaires. And then we have a data gatherer that we created. It's just asking for all the basics, the Social Security, all of your 401(k)s, your insurance policies, all the data gatherers that are out there. That's just our version of that. And then we have the secure portals for everybody to be able to upload that. My office goddess, Molly, will get that all put into MoneyGuidePro.

We'll go over all of the data, kind of pick everything apart. If I need to get insurance illustrations, we'll go back and forth with the client a little bit, getting more data, fine-tuning of that data, more clarification, etc. Then we'll sit down with them, with the MoneyGuidePro software, and have a Zoom meeting and start talking about what are the goals, the numbers behind those goals, because a lot of people, again, they don't know, "We just want to retire at age 65 and go sit on a beach with a cocktail in our hand." "Yeah. That's what you think, but that's not really what you want."

Michael: So, I want to make sure I understand this flow. So, you are getting mostly the quantitative data, the numbers data stuff that they're sending in after they've agreed to become a client. But before the first planning meeting, you're loading all the underlying data into MoneyGuide. But we haven't had any questions about goals that we're shooting for yet. It's like you're getting the input data but there's no goals projections yet, because the goals conversation comes in the next meeting.

Danielle: Right. We've played with it back and forth where they could go actually go into the software themselves and upload their own goals, and people go, "We don't know. We don't know." I mean, the one you get is just what they've been told they think they want. There might be, "Oh, there's a boat or there's a house in Phoenix." It's so interesting that you wrap this back around from the very beginning to the very beginning of our conversation. People think they have goals, but when it comes down to it, it's...yeah. So, it's a deeper conversation.

Michael: So, what do you do or ask in that meeting to try to get to the actual goals, the goaly goals, not the, "This seems like it's supposed to be the goals?"

Danielle: Well, this again, is where some of the qualitative questioning comes in. And again, whether it is from Money Quotient or from the plethora of resources out there, it's organic, it's intuitive. It's the back to the chef standing over a stove, it's like, "Well, that question leads to this question, and then let's unpack that a little bit. And tell me the why." Here's an example, "So, you want a boat? Well, tell me why you want a boat." "Well, because when I was growing up, we always spent our summers on a lake on a boat." "So, is what you want a boat or is what you want to be able to create family memories?" "Oh, well, maybe I really just...because the boat was really a pain, it was a lot of maintenance and it was always broken. So, maybe I want to create family memories."

"Well, what would be the family memories that are important to you?" "Well, maybe spending time at the cabin we already own but we never have time to go." So, it just starts pulling apart and you get to an entirely different place with these conversations. And sometimes there might be a physical goal that we need to set a number to. And other times it's just a lifestyle that we need to figure out how do we want to create a sustainable income stream to have you accomplish that?

Michael: So, it sounds like much of this stems from, "Tell me your goal." And then I give you a goal, and then you say, "Why?"

Danielle: Sometimes.

Michael: And then you have like, "What are your goals?" "I want a boat." "Why do you want a boat?" And here we go.

Danielle: Yeah. Again, every single client is a little bit different, but the goals that people never talk about is, "Oh, I'm going to get divorced." Or, "Somebody important to me is going to die." Or, "I may need to spend the last 4 years of my life in a long-term care facility that Medicare doesn't pay for." So, how do we help prepare people for, Mitch Anthony calls them life quakes? How do we help people prepare for life? Goals are great and yes, I want to send... If you want to send your kids to college or whatever form of education is out there in 3 years, because it's all changing so fast, that's fantastic. Let's create a trajectory that you're saving something for your future education because education is important to you and your family.

And it might but not be, we used to have the software, okay, this is this college and it's going to cost this, and you need to save this, this, and this in order to send your kid to that school. What percentage do you want to pay for? And here's how you need to go. So, it might be just expanding the goals and creating a little softness around them to where they're not hard and fast, but they're based on your values, what's important to you and your family, and how do we get you on that trajectory knowing that your destination is probably going to change based on “life happens”.

Michael: So, this second meeting, or I guess first once they've said they want to move forward is, is this goals exploration process, "Tell me your goal. Okay, now tell me really why you've got that goal," until you get down to what I'm presuming is just a more concrete, deeper underlying level of goals. And now we're feeling these are probably really the “goal goals” and not just the first stated goal that wasn't really a serious goal?

Danielle: Yeah. And there's going to be the replacement vehicle. I mean, there's some pretty easy ones that as people look down the road, what you need to do, it just needs to be incorporated into. You have to have some good savings in order to be able to do that. So, yes, there are going to be quantitative goals and they're going to have qualitative aspects to them. And so, we'll crunch the numbers, we'll look at all the tools they have, we'll help clients understand what type of tools. The big one is cash-value life insurance, "Well, you bought this 20 years ago, let's take a look at this and look at how it's still serving you, what you might want to change about it. And how do you want to utilize this tool to move you towards what's important to you?"

So, we'll come up with some advice based on a lot of things, whether it's, "Let's talk with your attorney and get that estate plan updated that you haven't looked at in 20 years." Or, "Let's consolidate these 401(k)s and put them into something that reflects where you're at in life right now." Or, "Let's look at putting together an intentional spending plan where you know where your money is going instead of asking where it went. So, here's the advice. We know that you're not going to take this advice unless you decide it's important to you. So, why don't you decide which one of these would be your priority over the next one month? How would you like to line this up? 2 months?"

And this is where the accountability piece that you talk about comes in. So, they've got a, "Here's the advice." But it's based on, "Why is this advice important to you? How does it reflect your values?" And then, "When do you want to have this done by?" And so, we've got a year to at least head you in this direction, and then we'll talk. Because at this point they may or may not be assets under management. We may not want to manage their assets.

Michael: So, you talked earlier about $3,000 to $8,000 planning fees. So, you're a planning fee, and you also do assets under management, but it's separate because this process is an active year-long process. You get a planning fee to do this journey of financial health planning process and then if they decide to implement with you ongoing, then that's a separate AUM fee for those services when they get there?

Danielle: Right. And then we have service models based on the complexity and how much advice is warranted from year to year. And this, again just helps people to say, "Yeah, that one's been bugging me. I know I need to get that estate planning done." "All right. Well, next time you come talk to us, we’ll get it done.”

Michael: So, are we still in the second meeting here as we're...?

Danielle: No, no, no.

Michael: So, sequences. So, meeting number 2, we're getting the goals, and then we're drilling deeper on the goals. So, I guess, what's the end of that meeting? When are you done with that meeting and then what comes next in the process?

Danielle: Each of our planning meetings are going to be about an hour and a half. Some of them are in person, some of them are by Zoom. But once we gather everything, then we have it, it's called a work meeting. And this is going back and forth on the goals. This is kind of setting the quantitative side. Then there's time in between us and the plan delivery. So, the plan delivery, we still...people are actually not wanting the hard binder anymore, it's like, "Just send it all over, we'll put it all in a nice e-file." And that's fantastic. So, then we will do the plan delivery and we will go over what is all included in that, "Here's the advice. Here is what we...based on all of the work sessions. And here's the roadmap that's going to take you down that journey."

We use Advisys educational stuff. So, if we're recommending that they do a charitable remainder trust or we're recommending especially more complex planning. I love Advisys backroom technician.

Michael: So, like pre-printed pages that are explainers of what the offering is?

Danielle: Yeah. Very user-client-facing friendly. If we're suggesting a SEP over a SIMPLE, why are we suggesting this? How do these tools work? What's the difference between cash value life insurance policy and a term policy? So, if we're recommending something, this is going to help and it's very personalized. So, we're able to give them some education. So, we will do the plan delivery and then, "Here, take this home, go marinate, talk about it. Look through this, come back, we'll do a follow-up and implementation. This is where the what, why, how, who, when, what are you stepping into, what do you want to move forward with?"

The fifth meeting is the financial fingerprints to footprints. So, that's my process of helping people understand their mindsets and belief systems, because we felt that sometimes people get stuck they'll say, "Yeah. I want to do this, but why am I not able to follow through with it?"

Michael: So, the questions that we were talking about earlier around money memories and how they've impacted our beliefs and now that's showing up behaviors and whether we want to do anything about that, so that's coming here in the 4th or 5th meeting for you now?

Danielle: Fifth meeting. Yep.

Michael: Okay. So, this isn't the lead-in of, like, we're starting with these questions out of the gate, this comes much later in the process for you?

Danielle: It's a deeper dive. I mean, we might touch on it surface-wise right at the beginning, but people when they come in for financial planning, they want, "You're going to look at my numbers and you're going to tell me what to do."

Michael: Yeah.

Danielle: Like, "Yes, and. Yes and you're going to get a little bit more."

Michael: Interesting. Because I'd been wondering a little bit as you were describing the process of just what clients come in and say like, "Hey, I would love to spend time with you getting into my deep, early money memories," and just how that works. So, I'm struck by this, that no, no, no, you start off with sort of the place that most people come to us with, which is she says like, "Here's my numbers. Tell me what to do." But then when it's time to start implementing and moving forward... So, I guess, help me understand how you set up this meeting. So, this is meeting number 5, because meeting number 4, you're going to set this up. So, talk to us a little bit more about what actually happens in meeting number 4 and how do you set them up for, "This is what's coming in meeting number 5?"

Danielle: We have it all laid out. When I meet with a prospect, we'll go through, "This is what you're going to experience with us, and this is the journey of financial health. It's on our website. And we will dig into this." I won't tell them exactly what it's about, but, "As we go through our time of working together, we're going to dig a little bit deeper. That's just because it's who we are and what we add value to our experience. And we think it will help you be successful in your financial life, in creating financial health." So, they will know right up front that we're going to get a little bit deeper, but they don't know the intricacies and the depth of it.

And then the final meeting is me cheering them on going, "Wow, this was fantastic that you got your estate planning documents put together. And wow, we decided to work with you on the AUM side and you consolidated these 401(k)s and we've asset allocated them. We've done all of this stuff, and this is what we're going to move forward with from year to year." And then from there, it moves into our different service levels depending on how complex…are we going to be meeting with your CPA every year? Are we going to be talking with your kids about helping you lend them money to buy a house? Or, what does it look moving forward?

Danielle's Service And Fee Models [1:09:22]

Michael: And so, how does that ongoing service levels and fee work with, I'm presuming by now, if they were transitioning assets, they've moved assets and they're an AUM client? Do you have like an AUM fee and a planning fee or minimums or tiers? How do you actually differentiate service levels if clients converge into an assets model?

Danielle: So, the financial planning comes first. I drew the line in the sand back in, probably about 2010, 2011. To me, the plan has to come first. And even though it isn't a plan set in stone, it's just, I can't know my client, I can't give good advice unless I have her do this planning process. So, the service level that we work with assets under management, I've got it. I live in the Rocky Mountains. I'm very focused on the outdoors. I love being outdoors. It's who I am. It's how I've done a lot of my branding. So, our 3 different service levels are Creek, River, and Ocean. And each of those service levels provides a little bit different...

Again, I'm the cook, I'm not the baker. So, I end up giving people probably more than usually fits into a service level just because that's who we are. But our Ocean clients are the complex ones. They're the ones that have 2 or 3 different trusts. They may have a charitable trust, they may have different revocable trusts or irrevocable trusts. They have different tools and they're complex. They're usually retired. They will have family members that we're bringing into conversations.

Michael: So, are these defined by asset minimums, like, you have to be a $2 million client to get Ocean? You can get River at $1 million?

Danielle: Not necessarily, but we do have, I don't want to say we have minimums for our River. We have some smaller clients, but there is a minimum fee to make it viable. And then at Ocean, there's a maximum fee, maximum of $60,000 because I don't feel that if I'm managing somebody's complex life and they've got $15 million, I'm probably not going to be providing them a whole lot more than the $5 million client. Again, I'm learning as we go with this. We're all just trying to figure it out and bring a level of service that fits for clients and is going to serve them in a way that's beneficial and meaningful.

Michael: And what's the minimum fee on River? how does that span?

Danielle: So, our River is going...well, our bottom level is Creek. We used to have another one below that, Stream. Then it was like, "Is a creek bigger than a stream or is a stream bigger than a creek? So, let's just combine them as a Creek." So, our minimum annual cost on that is $5,000. And I've got some older clients that I've got in, but any new client we're taking on, we have a minimum annual AUM [fee] of $5,000. And so, it's at 1.15%. So, it's a little less than $500,000. And there's always exceptions too, but for the most part, that's what we try to...because we want to feel that, again, we're bringing value and the amount of work that goes in behind the scenes on all of this is as we know, a lot more than any client will ever see.

What Danielle's Business Looks Like Today [1:13:55]

Michael: Right. So, what does the business look like now overall? How many clients do you serve? What's overall scope of the practice? I don't know if you measure by AUM or revenue. So, help us understand what the current state of affairs is.

Danielle: All right. This is where I wanted to talk about defining success because our industry is very AUM-focused and how many clients do you have? And what is your...? That's how much of our industry defines success. I love talking about success with some different metrics. Part of my definition for success is am I able to spend time with my family and doing the things I love and being here in the Roaring Fork Valley and being outdoors. And yes, I've created a lifestyle practice. And that has changed over different seasons. And this is something else that's really important about Wealth By Design is and about who I am, is there are seasons of life and success to me meant something different in my younger years than it does now.

So, where we are at, where are at about with assets under advisement and under investment, we've got about $35 million. We've got 35 families that we're working with and one profit-sharing plan that we're involved with. So, we're a smaller practice. It's my office goddess, Molly, primary client service guru. And she does everything paperwork. And I thank God for her every day.

Michael: Have you scaled the number of clients up and down as the practice evolved, as seasons have changed?

Danielle: Yeah. When I inherited the life insurance practice, when I absorbed that way back when Mark wanted to go teach school, we had a couple hundred clients and all with life insurance products and annuities and reaching out to everybody and say, "Okay, this is looking very different moving forward." I still get calls from clients who bought a life insurance policy from him 30 years ago. And I will still service that, but they're not part of my service model. I will still, if my name is on an old insurance policy, I will help you figure out what needs to do with it. But they do not get a call every year going, "It's time to review that insurance policy." And I've tried doing the, I don't like the term firing clients, but we scaled back quite a bit on the number of clients we've had over the years.

Michael: So how did you move them on if you don't like firing them?

Danielle: Well, that's just the terminology? And it was hard because you want to, but if they're not into it, then again, you can't force a horse to drink. So, it would just be asking them to change the rep of record on their account. It would be asking an old broker-dealer. Some of my old broker-dealers just wanted to take on, they would just absorb it and...

Michael: Oh, like it's house accounts kind of thing?

Danielle: Yep. Just move it to a house account and you're good to go. So, over time, we've gone from probably upward of 200-plus households down to 35.

What Surprised Danielle The Most On Her Journey [1:18:11]

Michael: So, what surprised you the most on this journey of building an advisory business?

Danielle: Maybe how fun and creative it is, I enjoy that. I enjoy coming up with... I think I've been surprised at my resourcefulness, my creativity, maybe my fortitude, and sometimes my stubbornness. There's times when if I compare myself to the rest of the industry, I can get down on myself. you go to conferences and you sit in and you talk to people and you go, "Am I really successful at this? Is this really what it's supposed to be about?" But when I look at what's important to me and what I have created and that I get to speak with Michael Kitces and have a podcast, that's pretty darn cool. And so, defining success for yourself is so important. And not looking at that fear of missing out or that FOMO of what else is going on with everybody. We need to just keep our own head on straight and... Oh, actually, Ralph Waldo Emerson, can I read his idea of success?

Michael: Sure.

Danielle: So, "To laugh often and much, to win the respect of intelligent people and the affection of children, to earn the appreciation of honest critics, and to endure the betrayal of false friends. To appreciate beauty, to find the best in others, to leave the world a little bit better, whether by a healthy child, a garden patch, or a redeemed social condition. To know even one life has breathed easier because you have lived, this is to have succeeded."

The Low Point For Danielle On Her Journey [1:20:33]

Michael: So, what was the low point for you on this journey?

Danielle: Very, very, very, very, early on when I had just started supporting my husband in the insurance side of it, I got the news that my daughter's biological father had been killed in a motorcycle accident. And that was a pivotal point in saying, "Why am I in this business?" I made a lot of mistakes. I got a call from his attorney representing his estate. I thought he was going to do right by my daughter, who was due a lot of back child support. And I didn't get the proper advice. I didn't seek the proper advice. I thought this guy was going to represent her and that she was going to get some money out of the deal. And she didn't.

And I beat myself up a long time for not doing right by my daughter. And it's a big reason why I decided to pursue the career path with the planning and the digging deeper because I just felt that I did a big disservice to her and had to look at what it meant to let go of that and what it meant to learn from it and what it meant to move on, and how I could show up in the world better for having experienced that. So, that was a painful time. I know it doesn't really have to do with the business itself, but more of my “why” for being in this business.

The Advice Danielle Would Give Her Younger Self [1:22:38]

Michael: So, what do you know now about the business itself that you wish you could go back and tell you from 15, 20 years ago as you were transitioning in this direction?

Danielle: Just seek wisdom from others. Again, the beautiful thing with technology and what you're doing, Michael, is really just having the conversations with people about how they're doing it, what's working for them, what's not working for them, and everybody is so unique…25 years ago we didn't have this. So, just soak it all in, ask questions from other advisors that are out there on how they do it. And be willing to fail. I think that's something that I've always had a hard time with. One of my messages in general was, "If you can't do it right, don't do it." So, I've probably not scaled, I've probably not become a bigger business, and I'm okay with that because there's that fear of failure that's still pretty sitting pretty strongly in me.

And at the same time, I am so grateful every day that I have the beautiful business that I have, I have the amazing clients that I have. I get to work in an industry that allows me to do it the way I want to do it and supports me in that.

Danielle’s Advice For Newer Advisors [1:24:22]

Michael: So, what other advice would you give younger, newer advisors looking to come into the profession today?

Danielle: Well, if I may speak especially to women.

Michael: Yeah, please.

Danielle: I just think we have such a unique opportunity to show up in our integrity and authenticity. And if we're brave, step into a space that honestly has been dominated by male energy for quite some time. And we need it, there's a lot of good things about it. But I think bringing a softness to this industry and finding a fit that is unique to you in your life season. You may be a young female advisor, you may have a kiddo at home, you may be just kind of getting into the industry and don't have a real set career track yet. But there are all sorts of ways to define success in this business. And if you just make sure you know yourself and know that you are going to continuously be growing and continuously evolving in who you are and how you show up in this business, it's a fantastic career path.

What Success Means To Danielle [1:26:04]

Michael: So, as we come to the end, this is a podcast about success and one of themes we always talk about is just the word success means different things to different people and sometimes different things to us as we go through life, as you said, the seasons. So, you had shared a little bit earlier about what success looks like now. I appreciated the Ralph Waldo Emerson quote, but I guess help us understand, how has the definition of success changed for you over the seasons?

Danielle: Early on, it was more about the money, it was more about gathering assets or, very early on, selling product. And then shifting into success is really helping people feel like they're succeeding and creating a healthy financial trajectory, and making sure people felt like they had somebody as a thinking partner, as an advocate, or as a coach when life happens. I remember a client's husband passed away and she came up to me after his service and she said, "I need you more than ever." And to be able to walk alongside her over the past 12 years, and she's a giver, so I have to keep her from giving it all away, but guiding her along that path, and the smile on her face and the peace of mind, I hear from her kids, "Thanks so much for being there for mom and helping us to understand what's going on and all of this," that is huge.

And now it's also encouraging, it's encouraging other advisors. It's encouraging other people in this space that we've been able to walk for the past 28 years. And just being a cheerleader. Again, I appreciate all of those who have walked before me, and I hope to be one of those who can encourage somebody today through your vehicle to, again, live this industry as it continues to unfold. And it's changing, it's changing fast, and I'm excited to see that.

Michael: I am too. I am too. Well, thank you so much, Danielle, for joining us on the "Financial Advisor Success" Podcast.

Danielle: It's been a pleasure. Thank you so much, Michael.

Michael: Thank you.

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Strategic planning is the process through which enterprises, functions and business units identify the roadmap of initiatives and portfolio of investments that will be required in the medium term to achieve long-term strategic objectives.
The Strategic Planning Process in 4 Steps
Estimated Duration. Determine organizational readiness. Owner/CEO, Strategy Director. Readiness assessment. Establish your planning team and schedule. Owner/CEO, Strategy Leader. Kick-Off Meeting: 1 hr. Collect and review information to help make the upcoming strategic decisions. Planning Team and Executive Team.
Business Planning Process: 6 Steps to a Winning Business Plan
1. Carry out your research. The first step to creating a business plan is to do thorough research about the business and industry you are trying to get into. Tap into all the information you can get about your target audience, potential customer base, competitors, market and industry trends, cost of business, etc.
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 ...
Strategic Planning
However, enthusiasm for strategic business planning was revived in the 1990s and strategic planning remains relevant in modern business. CFI's Course on Corporate & Business Strategy is an elective course for the FMVA Program. Strategic Planning Process.
How to Write a Business Plan: Guide + Examples
This type of business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix. Business model canvas: The business model canvas is a one-page template designed to demystify the business planning process.
The 5 steps of the strategic planning process
Determine your priorities and objectives. Define responsibilities. Measure and evaluate results. Each step requires close collaboration as you build a shared vision, strategy for implementation, and system for understanding performance. Related: Learn how to hold an effective strategic planning meeting.
Strategic Planning Process Definition, Steps and Examples
The outcome of strategic planning is typically a long-term strategic plan that outlines the organization's vision, mission, values, and objectives. Business planning, on the other hand, is a more tactical process that focuses on the implementation of specific initiatives and projects to support the organization's long-term goals.
What Is the Business Planning Process?
The business planning process is the act of deciding where the company is currently, and where it wants to go. The process should describe the critical tasks the business must undertake and ...
Business Planning: It's Importance, Types and Key Elements
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.
How To Write A Business Plan (2024 Guide)
Describe Your Services or Products. The business plan should have a section that explains the services or products that you're offering. This is the part where you can also describe how they fit ...
Why Is Strategic Planning Important?
Strategic planning is the ongoing organizational process of using available knowledge to document a business's intended direction. This process is used to prioritize efforts, effectively allocate resources, align shareholders and employees on the organization's goals, and ensure those goals are backed by data and sound reasoning. It's ...
Why Your Business-Planning Process Is More Important Than The ...
Planning shouldn't happen once a year; it should happen all year long. The questions one attempts to answer in strategic planning should be asked and answered as often as you have new information.
The transformative power of integrated business planning
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.
Business Planning Process and Strategy
Developing a business plan is essential to the strategic management planning process. It helps you to set goals, establish priorities, and develop strategies for achieving them. Business planning involves many critical steps, including market analysis, competitive research, financial forecasting, and risk assessment.
Planning Process: 8 Important Steps of Planning, Videos and ...
1] Recognizing Need for Action. An important part of the planning process is to be aware of the business opportunities in the firm's external environment as well as within the firm. Once such opportunities get recognized the managers can recognize the actions that need to be taken to realize them. A realistic look must be taken at the ...
Free Strategic Plan Template and Best Practices
Discover a collection of 11 free strategic plan templates and best practices to help you streamline your planning process and maximize your results. ... a strategic plan and a work plan serve different purposes and are used at different times in business planning. A strategic plan is a high-level document that outlines a business's long-term ...
The Role of Strategic Planning in Business Success
The Process of Strategic Planning. Strategic planning is not simply an academic exercise but an ongoing process that adapts as your business and its environment change. Initial steps involve setting clear yet realistic business goals, followed by an in-depth examination of both internal resources and market forces affecting your business.
AI strategy in business: A guide for executives
One mobility player adjusts its financial planning based on pricing patterns it observes in the market. Its business has relatively high flexibility to demand but less so to supply, so the company uses AI to continuously signal back when pricing dynamics are trending in a way that would affect profitability or where demand is rising.
Estate Planning for the Business Owner Series, Part 5: Estate Planning
The business owner may be an existing client who has already done some estate planning with the business interests. In this case, the estate planner will likely need to be involved to educate the M&A counsel on the trusts that have been put into place and provide documentation to be shared during the due diligence process.
Complete Employee Onboarding Guide
Onboarding is the process of integrating new employees into an organization. It includes the orientation process and opportunities for new hires to learn about the organization's structure ...
Unblocking Clients That Won't Implement With A Financial Health Journey
Michael Kitces is Head of Planning Strategy at Buckingham Strategic Wealth, which provides an evidence-based approach to private wealth management for near- and current retirees, and Buckingham Strategic Partners, a turnkey wealth management services provider supporting thousands of independent financial advisors through the scaling phase of growth.
UDR's 25-story tower in Dallas' Turtle Creek gets FAA OK
A new filing reveals a major apartment owner's plan for a site it purchased two years ago. The developer will still need to follow the city's planning and zoning process and receive a building permit.

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

What is Business Planning?

Finish Your Business Plan Today!

The Better Business Planning Process

1. Do Your Research

2. Strategize

3. Calculate Your Financial Forecast

4. Draft Your Plan

5. Revise & Proofread

6. Nail the Business Plan Presentation

Business Planning Process Conclusion

How to Finish Your Business Plan in 1 Day!

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Other Helpful Business Plan Articles & Templates

Margin Size

17.2: The Planning Process

Learning Objectives

Step 1: Developing an Awareness of the Present State

Step 2: Establishing Outcome Statements

Goal vs. Domain Planning

Hybrid Planning

Consequences of Goal, Domain, and Hybrid Planning

Step 3: Premising

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

Step 5: Formulating Supportive Plans

Planning, Implementation, and Controlling

concept check

CAPABILITIES

Featured Reads

What is strategic planning? A 5-step guide

How to build an organizational strategy

What is strategic planning?

What is a strategic plan?

What are the benefits of strategic planning?

What are the 5 steps in strategic planning?

Step 1: Assess your current business strategy and business environment

Step 2: Identify your company’s goals and objectives

Step 3: Develop your strategic plan and determine performance metrics

Step 4: Implement and share your plan

Step 5: Revise and restructure as needed

Build a smarter strategic plan with a work management platform

Strategic planning FAQs

Why do I need a strategic plan?

When should I create a strategic plan?

What is a strategic planning template?

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

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

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

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

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

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

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17.2 The Planning Process

Step 1: Developing an Awareness of the Present State

Step 2: Establishing Outcome Statements

Goal vs. Domain Planning

Hybrid Planning

Consequences of Goal, Domain, and Hybrid Planning

Step 3: Premising

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

Step 5: Formulating Supportive Plans

Planning, Implementation, and Controlling

Concept Check

Module 3: Planning and Mission

Stages in the Planning Cycle

Define objectives

Develop premises

Evaluate alternatives

Identify resources

Plan and implement tasks

Determine tracking and evaluation methods

Practice Question

PRactice Question

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

Step 1: Conducting a SWOT Analysis

What is a SWOT Analysis?