Planning is key to growing any business. It helps organizations set clear goals, identify the resources needed to achieve them, measure progress, and adapt quickly to unexpected challenges or opportunities in the marketplace.
But when a small business owner launches their enterprise, planning is often ad-hoc and focused primarily on surviving day-to-day. This is especially true for those bootstrapping as opposed to those with funding.
However, ad hoc planning only takes an organization so far before it collapses into chaos. Once an organization reaches “the messy middle,” planning requirements change. At this point, the entrepreneur needs to consider several types of planning that allow the business to stay one step ahead of the industry.
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Let’s dive into the different types of planning:
Strategic planning is the highest-level planning that occurs within an enterprise. It’s the process that involves analyzing the internal and external environments, identifying the critical areas of focus, determining long-term goals and objectives, and the strategies, resources, and actions required to achieve them. Strategic planning — and the accompanying skill of strategic thinking — is beneficial in identifying opportunities and threats in your external environment and aligning your internal resources and capabilities to exploit them. A well-planned and executed strategic plan helps build a sustainable competitive advantage and achieve long-term growth.
Business planning is a process that helps organizations define their short and medium-term goals and identify the resources required to achieve them. Unlike strategic planning, a high-level process, business planning focuses on specific operational areas such as marketing, sales, operations, and finance. It typically covers a one-to-three-year period and involves setting clear targets and milestones to measure progress. The duration of short and medium-term goals can be relative to the organization’s needs, including how rapidly the business is growing and the industry is changing or the impact of outside forces (think COVID or economic uncertainty).
Operational planning focuses on the day-to-day activities of your business. It involves defining specific actions required to achieve business objectives and allocating resources to execute them. Operational planning typically covers a shorter time frame than strategic or business planning, such as a month or a quarter. To develop your operational plan, identify the specific actions required to achieve your goals. You’ll also want to identify the resources needed to execute these actions, such as personnel, equipment, and technology. Next, allocate resources and set specific timelines and milestones to measure progress. And remember, automation can be your best friend in setting up repeatable processes to reduce workload and improve operational efficiency.
Financial planning is a critical process that helps you effectively manage your business’s financial resources. It involves forecasting future revenue and expenses, developing a budget, and monitoring actual performance against planned targets. Financial planning helps to manage cash flow, identify potential financial risks, and make informed decisions about resource investment and financing. To develop your financial plan, start by forecasting future revenue and expenses. Next, create a budget that allocates resources to different business areas, such as marketing, operations, and personnel. Also, develop a cash flow analysis that predicts future cash inflows and outflows. Finally, monitor actual performance against planned targets and adjust their financial plan as needed.
Contingency planning is a process that helps your business prepare for whatever unexpectedly is thrown your way. It includes identifying potential risks and developing plans to mitigate them. Events such as natural disasters, economic downturns, or supply chain disruptions can create a major upheaval in your business, often threatening closure. A contingency plan helps you reduce the impact of unforeseen events. Also, consider including a communication plan to ensure that employees, customers, and suppliers are informed of any disruptions and how the business plans to mitigate them.
Last but not least, succession planning ensures your business has a clear continuity plan and can maintain operations during periods of leadership change. Identify key leadership positions and provide mentorship, coaching, and shadowing opportunities as part of your succession plan. This will ensure a smooth transition when the time comes for a change in leadership.
Additionally, consider developing a contingency plan for unexpected leadership changes, such as sudden illness or death. This ensures your business can continue to operate without interruption in an emergency.
In conclusion, planning is crucial for the success of any business. It helps organizations set clear goals, identify the resources needed to achieve them, measure progress, and adapt quickly to unforeseen challenges or opportunities. By mastering different types of planning, you can set your business up for long-term success and secure your legacy for the future.