Types of Business Planning

Planning is a formal process of choosing the company’s vision and mission. Furthermore, it includes long- and short-term goals. Included in these goals, are divisional, departmental and individual goals. Planning also involves choosing the strategies and tactics to achieve those goals. And through strategizing, figuring out how to allocate resources that will achieve the necessary goals. 

Why should you plan?

Planning is a strategic way to get what you want. In the business context, there are many different reasons. For example, to identify future opportunities. Which will make you more susceptible to taking them. Another reason is to avoid future problems. Moreover, you develop courses of action to take to avoid these problems. And be more aware of opportunities that may arise. Through planning, you have a better understanding of risks and uncertainties that can surface.

To have a better understanding of how to plan, it’s helpful to know which path to follow. A few types of planning include strategic planning. Which means overall long term plans (5 years +). Another example is functional plans. This ranges between 1-5 years. And lastly, Tactical or operational plans. This is specific to one year.

Strategic planning

Strategic plans contain a far broader vision and mission. But it is important to ask three questions. Where are we now? Where do we want to be? How are we going to get there? This type of planning also takes into account contingency planning. That is to say, you prepare for unexpected, major and quick changes in the environment. Changes in the environment require a quick response from businesses. As we know after 2020!

Strategic planning is subdivided into 10 steps. The first is to identify the vision and mission. Then, to assess opportunities and threats. Followed by assessing strengths and weaknesses. Then, set strategic objectives. Thereafter, undertake the gap analysis. Followed by, develop strategies to fill the gap. After that, set a strategic plan. Thereafter, prepare a tactical plan. And following that, control and diagnose the results. Lastly, to continues planning! This plan can be edited and moulded to the changes and results that occur.

In this article, the first five steps will be discussed.

Identify vision and mission

To determine the vision, you should ask the question; what kind of organisation do we want to be in the future? For example, Coca-Cola’s vision is to be the best coca-cola bottler in the world. The vision should be aspiring and should have a sense of direction and destination. It should also include a stretch goal. A stretch goal is defined as something that’s clear, compelling and easily understood. This type of goal also has a clear finish line and applies to the whole organisation. 

The mission contains more practical steps. You ask the question, how are we going to get there in the future? Furthermore, it would be to bridge the gap between where you are and where you want to be. Four main components of a mission: core purpose; fundamental strategies; core values; fundamental behaviour standards.

The purpose refers to the reason for existence. This can include underlying customer needs to be satisfied with products. The core strategy aims to look at what can be done well. This is to achieve the purpose. Core values include what the company stands for. For example, ubuntu and diversity. And lastly, fundamental behaviour standards talk about behaviour to uphold strategies and values.

Assess Opportunities and Threats in the Planning Process

This step explains that you should be on the lookout. That is to say, you scan the external environment (macro and industry environment) to identify opportunities and threats. Opportunities come in trends and developments in the environment. If you act upon this, can bring great business success. Threats can come in the form of ignoring the environmental changes.

Assess Strengths and Weaknesses

Strengths include something a firm does well in. Or, it can be an attribute that enhances its uniqueness. For example, staff that is committed to the team or leader. On the contrary, weaknesses are something a firm lacks or does poorly. For example, a high staff turnover. It will be useful to create a SWOT analysis.

Set Strategic Objectives for Planning

Strategic objectives are of two types. Namely, financial and competitive. Financial meaning higher dividends and faster revenue growth. Competitive objectives include committed staff, higher product quality and a strong customer reputation. Therefore, you should set smart goals. 

Undertake Gap Analysis

The gap analysis consists of determining what is the gap between where we are and where we want to be. Asking the question, will what we have been doing in past get us where we want to be in future? If not, what is the size of the gap?

If there is a gap, stay up to date with our articles to find out strategies to fill the profit gap.

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