I have been putting together business plans for over 30 years and it is clear to me that the strength of its core rests solely on being able to execute the plan. Each year I approach business planning as an opportunity, rather than a burden. I would rather invest the time up front in mapping out the upcoming year, than leaving it to chance to dictate my strategy. While this may force me to think strategically as well as tactically, preparing a detailed business plan enables me to identify the challenges in advance of facing them.

So, why is business planning so crucial? In a word, it provides “clarity”. Investing time to develop a plan provides precise clarification of the company vision to both employees and customers. In short, the benefits of planning allow the company to articulate a common vision to align resources and make an efficient use of investment dollars.

Strategic Planning & Goals:  The first step is to identify the key company goals which will be the over-arching direction of the plan. These goals should be focused on three areas: financial, growth initiatives and alignment to the company’s vision/mission. This provides the overall direction of the company by establishing high-level goals that will be achieved by tactical initiatives.

Developing Planning Modules:  Compartmentalizing your plan by developing planning modules or “chunks” allows you to attack the plan in parts, yet still maintain a cohesive plan. I have found that developing an annual plan made up of quarterly targets – thus becoming a rolling quarterly forecast financial model – allows for a cohesive structure along with the nimbleness to react to market conditions.

Develop Non-Capital Initiatives:  Each project initiative should have a corresponding project plan that monitors whether it will be completed on-time and on-budget. The importance of the detailed project plan is to accomplish the following: a) identify all the steps to be completed; b) establish a realistic timeline for each step; c) identify and allocate the necessary resources for accomplishing the initiative; d) ensure that the initiative has been vetted for departmental inter-dependencies and potential conflicts; and e) ensure that the initiative is in alignment with the overall strategic plan.

Create A Capital Plan:  Next, I would develop a capital plan identifying dollars to be spent on the business to increase its overall value. While all capital dollars may not entirely be discretionary – i.e., investing dollars for anticipated return from growth – it is necessary to determine how capital dollars will be allocated whether for discretionary purposes or general maintenance. 

Write An Actionable Plan:  Business plans come in many shapes and sizes. Strategic business plans should provide financial targets to achieve, high-level strategic initiatives to reach those targets and an overarching philosophy in which the company operates. Much like putting together a household budget, it is easy to say, “pay off the mortgage” or “save for college”, the larger challenge is putting together an actionable plan and doing it!

Cascade Throughout Team:  The strategic plan generally comes from the top and it is up to each of the department heads to internalize these plans and cascade the tactics throughout their teams. Specific tasks should be assigned with timetables to ensure that initiatives are being executed on-time and on-plan. A manager sets the benchmark, helps the team lay out the tactics and mileposts, and then holds their time accountable to achieving those mileposts.

Business Plan Analytics Through Key Performance Indicators (KPI’s):  Identifying key performance indicators for your business to use as benchmarks throughout the year is perhaps the most critical step you can make regarding business analytics. Not only will KPI’s help identify key shortfalls in the plan but will help narrow your focus in addressing the shortfalls.

Monitor Weekly & Monthly:  I follow the adage that “You can’t manage what you don’t measure”. The management of my tactical execution of an overall strategic goal not only indicates that I am on target, but also provides the inspiration to stay on task. Achieving strategic success is one part execution and one part inspiration.

Business planning is the road map that identifies where you are headed in advance. As importantly, it also identifies roadblocks – in advance. Your business plan should provide a common vision supported by tactical initiatives that, ultimately, creates greater value for your company. It may seem daunting, but by knowing your vision and its corresponding financial targets, you will have a better chance at executing how to get there and avoiding traps in advance.