The 4 Main Steps in the Business Planning Process

Business Planning Process January 11, 2023

Priyanka Bhadani

Writer

4 Steps to the Business Planning Process

Business planning is defined as the process of identifying an organization's strategies, objectives, and projected actions in order to optimize development and success over a specific time frame. Proper business planning is absolutely crucial to an organization's success and overall bottom line profitability.

In order for a business planning process to optimally benefit an organization, it must be both realistic and achievable. For this reason, some experts actually define the business planning process as a management function that involves the steps, design, and quantified resources necessary in order to achieve the optimized balance between demands and needs utilizing available resources.

One study shows that the average entrepreneur business owner dedicates around 68% of time spent working in their business on daily tasks and addressing short term issues. The same study shows that only around 32% of the time a business owner spends at work is dedicated to strategic planning and long term goals.

Clearly, there is a pressing need for both small business owners and business management professionals at larger corporations to focus on the business planning process. Before starting business planning processes, professionals must make sure they properly understand them.

Most human resource and business management professionals agree that there are 4 basic steps within the business planning process. The 4 main steps in the business planning process include-

1. Identification

The first of the planning process steps is the identification of objectives and business goals to be accomplished. Business goals may be either short term or long term in nature. In fact, many organizations list many different short term and long term goals during this step.

Identifying business goals and objectives to accomplish is necessary in order to actually achieve goals at an organization. Additionally, well established business goals help business management team professionals and human resource staff members to better perform their roles.

Alternatively, without the establishment of well defined business objectives, anything from marketing strategy to customer service oriented goals would not be achievable. The best business goals and objectives will follow the SMART goal acronym which stands for specific, measurable, achievable, realistic, and timely.

These SMART business goals and objectives will help business owners and their employees create and maintain a competitive advantage in the industry. Securing a competitive advantage will likely result in a larger market share and cash flow increases.

2. Formulation

After short term and long term business goals are established, the next process steps can be undertaken. The second of the planning process steps is the formulation of strategies in order to achieve set business goals and objectives.

Creating action steps and developing techniques for specific business goals will help business professionals to achieve previously set objectives. Best practices for this step of the planning process include the involvement of team members.

Team members can contribute invaluable advice and insights as a result of their first hand experience and knowledge. Additionally, team members can help business leaders better understand if any portions of business goals are unrealistic or unachievable.

3. Deligation

Once the business strategy and business goals are understood, the management team and other involved parties can move on to the next step. The third of the planning process steps is the designation of employees to roles and tasks.

It is crucial that individual team members understand their responsibilities comprehensively. For this reason, best practices suggest that business management professionals make sure to ask team members if they have any questions regarding their role in the business planning process.

One important consideration during this process step is for the management team to make sure they are establishing realistic time frames for tasks delegated. Providing too much time or too little time can result in devastating business planning consequences.

If supplied with too much time to accomplish delegated responsibilities, employees may procrastinate. On the other hand, if supplied with not enough time, employees may become demoralized about the possibility to achieve goals and give up.

4. Execution

The last of the planning process steps is the implementation, direction, and monitoring of business planning action items. The management team should not be content with team members merely understanding their role but must also actively monitor employee task progression.

Best practices recommend consistent follow ups between management team professionals and employees in regards to their progress. Consistent follow ups can not only increase employee morale but also helps to identify issues early on.

For example, if an employee needs additional resources to complete their tasks, the management team and human resource department can immediately address that issue. Alternatively, the human resource department and business management professionals may have not learned of the issue until even more significant issues developed.

Key Takeaways

Business planning consists of 4 main steps- identification, formulation, designation, and execution.
Tools helpful for the business planning process include SMART goals and SWOT analysis techniques.