Planning – The Process

The Importance of Planning

...executives are overloaded with clamouring demands to make daily or hourly decisions relating to operational and administrative issues – what to do about this order, how to fix that machine breakdown, who will cover for Ahmed while he is on vacation, how to resolve the squabble between marketing and manufacturing, and so on.

The strategic decisions that are critical to the long-term health of the business do not clamour. They lie quietly in the background trying not to be noticed. All too often, when someone trips over them they pay back the neglect by taking the business helter-skelter towards ruin. Executives are forced to take sometimes expensive, corrective action to avert disaster. How often do your hear "if only we had planned (planned sooner) for that"? [The millennium bug was a classic example.]

From The Definitive Business Plan, page 9

Having identified what and why, you then need to work through the planning process. Do not be daunted by the following list. The tasks are each relatively straightforward when you tackle them individually and in order:

• Define your business activities
• Define the current status of the business
• Define the external market, your competition and your market positioning
• Define your objectives for the period of the plan
• Develop a strategy for achieving the objectives
• Identify the risks and opportunities
• Develop a strategy for limiting risks and exploiting opportunities
• Refine the strategies into working plans
• Project costs and revenues and develop a financial plan
• Document it concisely

This an iterative process. The identification of risks and opportunities might cause you to go back and change your strategy for achieving your objectives. The plans themselves or the bottom line – the cash flow, profit or loss – might highlight new risks.

Two more steps to making it work

There are two more steps that can be added to the previous ten points:

• Get it approved.
• Use it.

The link between planning and writing a plan

It is a happy fact that you can economize on effort when you prepare a business plan. The planning process and writing a plan are closely inter-linked. Do it right, and by the time that you have finished your planning, you will also have an excellent written plan. Take a look at the contents of a typical business plan.