Approaches to Business Planning
Business planning consists of the goals and strategies devised by an organization to create and maintain a sustainable competitive advantage. It may occur on a product-by-product basis, or it may encompass the entire organization. Approaches to business planning may vary depending on the type of organization and industry. However, a few proven methods are commonly used by most contemporary business leaders.
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Traditional Business Plan
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The traditional business plan is typically used either when starting a new business or creating a new product line, or when organizational leaders identify a need to expand an existing operation to maintain its competitive edge. The traditional business plan generally consists of a business summary, as well as a summary of all research conducted to justify that there is a market for the products and services the business hopes to sell. Traditional business planning also includes specific lists of key people involved in running the organization as well as a step-by-step plan for implementing the business plan.
Product/Service-Specific Planning
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According to Rolfe Larson, an consultant in social enterprise and business planning, business planning should be specific to a product or a service. Larson says business planning should not be confused with strategic planning, which takes place on an organizational level. However, when organizational leaders consider business planning, they often think of planning for the business as a whole rather than for a product line or service. While product-specific business planning is essential, it is also vital to consider organizational business planning.
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Strategic Planning
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Strategic planning is a common approach for business planning at the organizational level. This process begins with the creation of a mission statement that outlines the business' reason for existence. Organizational leaders then set goals and objectives they envision the business meeting within the next two to five years. The next step in strategic business planning is to analyze and measure the size of the gap between the organization's current situation and its desired situation. Strategies for closing this gap are developed by leaders at the highest echelons of the organization before being implemented at the operational level.
Considerations
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Consider a variety of elements when choosing the best approach to business planning for your situation. For example, starting a new business may require the use of a traditional business plan. An existing business that has determined the need to introduce a new product line may require a traditional business plan that demonstrates that leaders have done the proper research and analysis required to ensure potential investors that their money will be well spent with this business. Finally, a business that has identified a gap between the espoused values of its mission statement and the actual values of its employees may choose to implement strategic planning to align the day-to-day work activities of the business with its mission statement.
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