Planning is the most influential part of a business. Every business organization must plan their activities on a long term or short-term basis for the proper development of their organization. Lack of planning may create some loss in financial, mechanical, or in human resources management divisions. A developed company has a wing that deals with this type of planning process and holds highly qualified and skilled workers appointed for this process.
What is business planning
A good business plan is to consider as the base of every business. Proper business planning reflects the company’s overview, and it attracts investors from different sectors. In modern times we get assistance from many online applications for planning for a startup company. Business planning should be easy to understand and have to be done in a systematic order. A graphical representation is the best way to represent planning. A good business plan should include an executive summary, marketing policies, and analysis of budget and financial planning. The business planning cycle is a diagrammatic representation of business planning, which includes eight main steps.
Business Planning Cycle
The planning cycle is a systematic process that includes eight steps. We use this planning cycle to plan any small-to-large-sized projects in action. This cycle helps you to identify your mistakes and teaches you some lessons from your previous error, and these lessons are helpful for feature planning. Project or business planning steps are
- Analyze Your Situation: You must have proper data that helps you to analyze the present situation of your organization. You must start thinking about the current situation and deciding how you can improve it. For better analyzing, you must gather as much data as possible regarding the company. We can follow some methods to analyze data in your company like:
- SWOT Analysis: SWOT ( Strengths, Weaknesses, Opportunities, and Threats) Analysis is a technique for evaluating the four main aspects of the business.
- Risk Analysis: By using this method, you can detect potential traps and defects in your organization that may affect your plan. You can identify the external risk by using this method and can neutralize or mitigate those risks.
- Simplexity Thinking: It is a powerful tool that helps to encourage creativity and helps to solve complicated problems in the organization.
- To fix a Mission or Vision statement to your plan: After analyzing the current situation of the organization, the next step is to determine an aim for our plans. First, you must fix your Vision and Mission of our organization. The vision statement of an organization means the privilege that an organization will provide to its customers, and the mission statement will explain how we can achieve the vision of your organization.
- Examine your Results or options from previous steps: After completing the first two steps, we get several options to establish our planning. We must go through every record one by one and prepare data regarding the economic and social feasibility of the plan. In this step, you can sort the available data and identify the best plans that suit your organization and help in its development.
- Identify the best plan: After examining the previous results and options, you need to find the best plan. To find out the best possible outcome, you need to calculate the cost and risk assessment work for each plan. They can use different methods like Decision Matrix Analysis and Decision Trees for the selection process. After selecting the best one, you can move to the next phase of the cycle.
- Detailed planning: You need to identify the most efficient and suitable way to execute our plans. For proper planning, you need to answer many WH questions like who, where, why, what, and when. The detailed planning helps you to identify cost controls and quality assurance of the business are in place. If some deviations occur from the actual plan, you can quickly point out those deviations in the early stage and can solve those issues. If you are working out with priorities and deadlines, the techniques like Critical Path Analysis and Gantt Charts helps to make your work easier.
- Impact of the plan: The next step is to review the impact of the plan and need to decide whether you should execute it. If it shows some negative results at this stage, you can drop this plan and continue with others before investing your funds and valuable time in it. There are different methods to calculate the impact of the plan in different circumstances.
- Quantitative Pros and Cons: By using this method, you can list the pros and cons of your plan in two different columns and allocate positive and negative points for each data accordingly. Then identify the difference between the positive and negative points to find the impact of your plan.
- Cost/Benefit Analysis: In a financial sense, you can compare all expenditures for executing this plan with the expected benefits.
- Force Field Analysis: This will give you a detailed report about the factors for and against your plan on a large platform.
- Cash Flow Forecast: The cash flow forecast deals with the cash inflow and outflow for an organization. By evaluating this cash flow statement, we can analyze the impact of our plan.
- Execute your plan: Once you complete all these steps and finalize your decision, then it’s time to execute the plan. Then you can monitor the real-time performance of the plan.
- Stop executing the Plan and Review: After completing the current cycle, you must stop running your plan. Create a review of the execution of your plan and can refer to this data for future planning.
Every organization has its own goals or targets that they should achieve shortly. To attain this goal, they need to plan their daily activities accordingly. The Business Planning Cycle helps them to implement plans in a systematic way to achieve their goal. It helps to identify the threats in the early stages of planning and allow you to modify your plans accordingly for better results. Proper Business Planning Cycle will reduce the risk in investments and attract more people to start their own business.