business planning activity

The Business Planning Process: 6 Steps To Creating a New Plan

In this article, we will define and explain the basic business planning process to help your business move in the right direction.

What is Business Planning?

Business planning is the process whereby an organization’s leaders figure out the best roadmap for growth and document their plan for success.

The business planning process includes diagnosing the company’s internal strengths and weaknesses, improving its efficiency, working out how it will compete against rival firms in the future, and setting milestones for progress so they can be measured.

The process includes writing a new business plan. What is a business plan? It is a written document that provides an outline and resources needed to achieve success. Whether you are writing your plan from scratch, from a simple business plan template , or working with an experienced business plan consultant or writer, business planning for startups, small businesses, and existing companies is the same.

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The Better Business Planning Process

The business plan process includes 6 steps as follows:

• Do Your Research
• Calculate Your Financial Forecast
• Draft Your Plan
• Revise & Proofread
• Nail the Business Plan Presentation

We’ve provided more detail for each of these key business plan steps below.

1. Do Your Research

Conduct detailed research into the industry, target market, existing customer base,  competitors, and costs of the business begins the process. Consider each new step a new project that requires project planning and execution. You may ask yourself the following questions:

• What are your business goals?
• What is the current state of your business?
• What are the current industry trends?
• What is your competition doing?

There are a variety of resources needed, ranging from databases and articles to direct interviews with other entrepreneurs, potential customers, or industry experts. The information gathered during this process should be documented and organized carefully, including the source as there is a need to cite sources within your business plan.

You may also want to complete a SWOT Analysis for your own business to identify your strengths, weaknesses, opportunities, and potential risks as this will help you develop your strategies to highlight your competitive advantage.

2. Strategize

Now, you will use the research to determine the best strategy for your business. You may choose to develop new strategies or refine existing strategies that have demonstrated success in the industry. Pulling the best practices of the industry provides a foundation, but then you should expand on the different activities that focus on your competitive advantage.

This step of the planning process may include formulating a vision for the company’s future, which can be done by conducting intensive customer interviews and understanding their motivations for purchasing goods and services of interest. Dig deeper into decisions on an appropriate marketing plan, operational processes to execute your plan, and human resources required for the first five years of the company’s life.

3. Calculate Your Financial Forecast

All of the activities you choose for your strategy come at some cost and, hopefully, lead to some revenues. Sketch out the financial situation by looking at whether you can expect revenues to cover all costs and leave room for profit in the long run.

Begin to insert your financial assumptions and startup costs into a financial model which can produce a first-year cash flow statement for you, giving you the best sense of the cash you will need on hand to fund your early operations.

A full set of financial statements provides the details about the company’s operations and performance, including its expenses and profits by accounting period (quarterly or year-to-date). Financial statements also provide a snapshot of the company’s current financial position, including its assets and liabilities.

This is one of the most valued aspects of any business plan as it provides a straightforward summary of what a company does with its money, or how it grows from initial investment to become profitable.

4. Draft Your Plan

With financials more or less settled and a strategy decided, it is time to draft through the narrative of each component of your business plan . With the background work you have completed, the drafting itself should be a relatively painless process.

If you have trouble writing convincing prose, this is a time to seek the help of an experienced business plan writer who can put together the plan from this point.

5. Revise & Proofread

Revisit the entire plan to look for any ideas or wording that may be confusing, redundant, or irrelevant to the points you are making within the plan. You may want to work with other management team members in your business who are familiar with the company’s operations or marketing plan in order to fine-tune the plan.

Finally, proofread thoroughly for spelling, grammar, and formatting, enlisting the help of others to act as additional sets of eyes. You may begin to experience burnout from working on the plan for so long and have a need to set it aside for a bit to look at it again with fresh eyes.

6. Nail the Business Plan Presentation

The presentation of the business plan should succinctly highlight the key points outlined above and include additional material that would be helpful to potential investors such as financial information, resumes of key employees, or samples of marketing materials. It can also be beneficial to provide a report on past sales or financial performance and what the business has done to bring it back into positive territory.

Business Planning Process Conclusion

Every entrepreneur dreams of the day their business becomes wildly successful.

But what does that really mean? How do you know whether your idea is worth pursuing?

And how do you stay motivated when things are not going as planned? The answers to these questions can be found in your business plan. This document helps entrepreneurs make better decisions and avoid common pitfalls along the way. ​

Business plans are dynamic documents that can be revised and presented to different audiences throughout the course of a company’s life. For example, a business may have one plan for its initial investment proposal, another which focuses more on milestones and objectives for the first several years in existence, and yet one more which is used specifically when raising funds.

Business plans are a critical first step for any company looking to attract investors or receive grant money, as they allow a new organization to better convey its potential and business goals to those able to provide financial resources.

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Other Helpful Business Plan Articles & Templates

6 strategic planning activities for your organization

Thomas Edison once said, “Good fortune is what happens when opportunity meets with planning.” In the business world, where chaos and opportunity often go together, Edison's words echo the importance of aligning foresight with action. 

That's where strategic planning comes into play.

Strategic planning operates as a guiding compass that steers organizations through the ever-changing landscape of the business world. It involves the meticulous process of goal setting, making informed decisions, and plotting a course of action to achieve those goals. By combining careful analysis, thoughtful foresight, and decisive action, strategic planning empowers organizations to navigate uncertainty and seize opportunities.

In this blog post, we'll delve into six key strategic planning activities. These activities serve as bridges that connect opportunities with planning, enabling your organization to thrive in a rapidly evolving business environment. When you embrace these strategic planning activities, you can unlock the full potential of your organization and position it for long-term growth and prosperity.

1. Set yourself up for success with a strategic analysis

Strategic analysis is a vital component of the strategic planning process. It involves a comprehensive evaluation of both internal and external factors that can impact your company's success. 

One notable type of strategic analysis is the PESTLE analysis, which assesses Political, Economic, Social, Technological, Legal, and Environmental factors.

During the strategic analysis phase, organizations typically perform a SWOT analysis , which involves identifying and analyzing internal strengths and weaknesses, as well as external opportunities and threats. 

For example, a company may discover that its internal strengths lie in its strong brand reputation and skilled workforce, while its weaknesses may include outdated technology infrastructure. External opportunities could include emerging markets or new customer segments, while threats may come from increased competition or changing regulatory environments.

The insights gained from your SWOT analysis lay the groundwork for strategic decision-making. It's about understanding where the organization stands and how it can navigate its unique landscape effectively.

Once armed with a clearer understanding, you can formulate strategies that harness strengths, address weaknesses, capitalize on opportunities, and mitigate threats. This process isn't about predicting the future, but instead adapting to it by making informed choices based on the current business environment.

2. Assess your rivals with a competitive analysis

A thorough competitive analysis is essential for identifying your organization's position in the market and anticipating challenges and opportunities.

• Start by identifying the key players in your industry, dissecting their market share, and understanding their strengths and weaknesses. By knowing who your competitors are, you can better position your organization to stand out in the market.
• Next, delve into your competitors' strategies to identify what works and what doesn't. Look at their marketing tactics, product offerings, pricing strategies, and customer engagement methods. This insight can help you refine your organization's approach and uncover new opportunities. 

Consider organizing a planning meeting with your team to dissect your competitors' strategies and brainstorm actionable insights. By understanding their successes and failures, you can learn from their experiences and make informed decisions that'll give your organization a competitive edge.

3. Get the lay of the business landscape with a market analysis

To thrive in a competitive landscape, you need to understand the market inside-out. Here’s how to do it:

Conduct market research

Dive into your customer needs, preferences, and behaviors using surveys, focus groups, customer journey maps , and data analysis. These insights will guide you in crafting products and services that resonate with their hearts and minds.

Analyze market size and growth

Assess the size of your target market and its growth potential. This information helps you set realistic goals and allows for strategic initiatives that align with the market's trajectory. For example, you can analyze market trends, competitor analysis, and customer demographics to gain a comprehensive understanding of the market landscape. This analysis will help you identify opportunities for growth and potential challenges that may arise.  

Evaluate market growth saturation

Understanding the dynamics of market growth and saturation is critical. It helps you identify when and where to enter new markets or when adjustments are needed in existing ones. You can use various tools and metrics to evaluate market growth and saturation. This includes analyzing the size of the target market, customer buying patterns, market share, and market segmentation. Additionally, you should consider industry trends, such as new product offerings and disruptive technologies. With this information, you can determine the potential for market saturation, levels of competition, and the overall market landscape.

4. Chart a course to success by setting a strategic direction

With a deep understanding of both internal dynamics and external market factors, the next step is defining the organization's path forward.

Define mission, vision, and values

Crafting a clear mission statement, vision , and values provides a foundation for decision-making . These elements serve as guiding principles, aligning the team's efforts with the organization's core beliefs.

Related: Check out Mural’s Vision Mission Strategy Values Pyramid template to help define your path forward with your team

Imagine a healthcare company whose mission is to improve the well-being of communities by providing accessible and affordable healthcare services. Its vision could be a world where everyone has equal access to good healthcare, and its core values might include compassion, integrity, and innovation. These powerful statements not only inspire the team but also resonate with customers and stakeholders, creating a strong sense of identity and purpose.

Establish strategic goals and objectives

To turn your organization’s vision into reality, it's crucial to set goals that are specific, measurable, achievable, relevant, and time-bound (SMART). These goals should be aligned with your organization's mission and provide a clear direction for everyone involved.

Let's say you're leading a technology startup aiming to disrupt the e-commerce industry. A SMART goal could be to achieve a 20% increase in monthly active users within the next six months by implementing targeted marketing campaigns, enhancing the user experience, and expanding product offerings. This goal is specific, measurable, achievable, relevant to the organization's mission, and has a defined timeframe, providing a clear target for the team to work toward to align with core competencies and market opportunities.

5. Optimize for efficiency with resource allocation

Effective resource allocation makes sure that resources are used efficiently and that your organization's efforts are focused on the most impactful projects. The following steps outline a process for effective resource allocation:

Assess available resources

Begin with a comprehensive assessment of the resources at your disposal — financial, human, and technological. Just as a traveler checks their supplies before setting out, assessing available resources allows for realistic planning. For instance, a startup entering a competitive market would carefully evaluate its financial capacity, available talent, and technological infrastructure to navigate challenges effectively.

Prioritize strategic initiatives

Not all initiatives are created equal. Prioritize strategic initiatives based on their alignment with organizational goals and resource availability. This step provides that efforts are concentrated where they matter most. For example, a marketing team might prioritize campaigns that align with the company's core objectives and have the potential for high returns.

Allocate resources effectively

Once priorities are established, allocate resources efficiently. This includes: 

• Financial resource allocation : Develop a comprehensive financial budget that aligns with the strategic priorities of the organization. Allocate funds to different projects and initiatives based on their importance and potential return on investment. 
• Human capital allocation: Assess the skills, expertise, and capacity of your workforce to allocate human capital effectively. Identify key talent and assign them to projects that align with their strengths and expertise. This ensures that the right people are working on the right initiatives, maximizing productivity and output. 
• Infrastructure optimization: Evaluate your technology infrastructure and allocate resources to optimize its efficiency and effectiveness. This may involve investing in new technologies, upgrading existing systems, or streamlining processes to enhance productivity.  

Effectively allocating financial resources enables your organization to achieve its strategic goals while maximizing the return on investment. 

6. Develop action plans to achieve organizational goals

Each strategic goal needs a detailed action plan. Define specific steps, assign responsibilities to team members, and establish timelines. The following steps will help you create a clear action plan that ensures everyone is on the same page regarding what needs to be done.

Create a roadmap with timelines and milestones

Think of your strategic plan as a team-building road trip. Your roadmap becomes the GPS that guides you. You outline timelines, milestones, and key deliverables, just like plotting stops along your journey. This visual representation helps you track progress and make adjustments as needed, making sure you stay on the right path, just like navigating a road trip.

Monitor progress and make adjustments

Strategic planning isn't a set-it-and-forget-it process. Regularly monitor progress against the established roadmap. This allows for timely adjustments, providing that the organization stays on course even in the face of unforeseen challenges. 

Communication and collaboration are essential components of the process. Establish clear channels of communication and decision-making protocols that involve all stakeholders. This will ensure that everyone is on the same page and can provide input on the direction the organization should take. By implementing regular reviews, progress can be tracked and adjustments can be made as needed.

Elevate your strategic planning with Mural's collaborative platform

To safeguard the success of your strategic plans, it's important to foster a culture of continuous improvement and collaboration.

Integrating Mural into your strategic planning process transforms it into a dynamic and engaging experience. Teams can collaborate seamlessly, share ideas visually, and make real-time adjustments to the plan. Leverage the power of Mural for effective team-building, planning sessions, and problem-solving. It's the tool that turns your strategic objectives into actionable plans, guiding your leadership team toward long-term goals and increased profitability.

Ready to dive in? Bring Mural into your next strategic planning meeting and experience the impact of collaborative and visual planning. Get in touch with us today to learn more.

About the authors

Bryan Kitch

Tagged Topics

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How to make a business plan

Table of Contents

How to make a good business plan: step-by-step guide.

A business plan is a strategic roadmap used to navigate the challenging journey of entrepreneurship. It's the foundation upon which you build a successful business.

A well-crafted business plan can help you define your vision, clarify your goals, and identify potential problems before they arise.

But where do you start? How do you create a business plan that sets you up for success?

This article will explore the step-by-step process of creating a comprehensive business plan.

What is a business plan?

A business plan is a formal document that outlines a business's objectives, strategies, and operational procedures. It typically includes the following information about a company:

Products or services

Target market

Competitors

Marketing and sales strategies

Financial plan

Management team

A business plan serves as a roadmap for a company's success and provides a blueprint for its growth and development. It helps entrepreneurs and business owners organize their ideas, evaluate the feasibility, and identify potential challenges and opportunities.

As well as serving as a guide for business owners, a business plan can attract investors and secure funding. It demonstrates the company's understanding of the market, its ability to generate revenue and profits, and its strategy for managing risks and achieving success.

Business plan vs. business model canvas

A business plan may seem similar to a business model canvas, but each document serves a different purpose.

A business model canvas is a high-level overview that helps entrepreneurs and business owners quickly test and iterate their ideas. It is often a one-page document that briefly outlines the following:

Key partnerships

Key activities

Key propositions

Customer relationships

Customer segments

Key resources

Cost structure

Revenue streams

On the other hand, a Business Plan Template provides a more in-depth analysis of a company's strategy and operations. It is typically a lengthy document and requires significant time and effort to develop.

A business model shouldn’t replace a business plan, and vice versa. Business owners should lay the foundations and visually capture the most important information with a Business Model Canvas Template . Because this is a fast and efficient way to communicate a business idea, a business model canvas is a good starting point before developing a more comprehensive business plan.

A business plan can aim to secure funding from investors or lenders, while a business model canvas communicates a business idea to potential customers or partners.

Why is a business plan important?

A business plan is crucial for any entrepreneur or business owner wanting to increase their chances of success.

Here are some of the many benefits of having a thorough business plan.

Helps to define the business goals and objectives

A business plan encourages you to think critically about your goals and objectives. Doing so lets you clearly understand what you want to achieve and how you plan to get there.

A well-defined set of goals, objectives, and key results also provides a sense of direction and purpose, which helps keep business owners focused and motivated.

Guides decision-making

A business plan requires you to consider different scenarios and potential problems that may arise in your business. This awareness allows you to devise strategies to deal with these issues and avoid pitfalls.

With a clear plan, entrepreneurs can make informed decisions aligning with their overall business goals and objectives. This helps reduce the risk of making costly mistakes and ensures they make decisions with long-term success in mind.

Attracts investors and secures funding

Investors and lenders often require a business plan before considering investing in your business. A document that outlines the company's goals, objectives, and financial forecasts can help instill confidence in potential investors and lenders.

A well-written business plan demonstrates that you have thoroughly thought through your business idea and have a solid plan for success.

Identifies potential challenges and risks

A business plan requires entrepreneurs to consider potential challenges and risks that could impact their business. For example:

Is there enough demand for my product or service?

Will I have enough capital to start my business?

Is the market oversaturated with too many competitors?

What will happen if my marketing strategy is ineffective?

By identifying these potential challenges, entrepreneurs can develop strategies to mitigate risks and overcome challenges. This can reduce the likelihood of costly mistakes and ensure the business is well-positioned to take on any challenges.

Provides a basis for measuring success

A business plan serves as a framework for measuring success by providing clear goals and financial projections . Entrepreneurs can regularly refer to the original business plan as a benchmark to measure progress. By comparing the current business position to initial forecasts, business owners can answer questions such as:

Are we where we want to be at this point?

Did we achieve our goals?

If not, why not, and what do we need to do?

After assessing whether the business is meeting its objectives or falling short, business owners can adjust their strategies as needed.

How to make a business plan step by step

The steps below will guide you through the process of creating a business plan and what key components you need to include.

1. Create an executive summary

Start with a brief overview of your entire plan. The executive summary should cover your business plan's main points and key takeaways.

Keep your executive summary concise and clear with the Executive Summary Template . The simple design helps readers understand the crux of your business plan without reading the entire document.

2. Write your company description

Provide a detailed explanation of your company. Include information on what your company does, the mission statement, and your vision for the future.

Provide additional background information on the history of your company, the founders, and any notable achievements or milestones.

3. Conduct a market analysis

Conduct an in-depth analysis of your industry, competitors, and target market. This is best done with a SWOT analysis to identify your strengths, weaknesses, opportunities, and threats. Next, identify your target market's needs, demographics, and behaviors.

Use the Competitive Analysis Template to brainstorm answers to simple questions like:

What does the current market look like?

Who are your competitors?

What are they offering?

What will give you a competitive advantage?

Who is your target market?

What are they looking for and why?

How will your product or service satisfy a need?

These questions should give you valuable insights into the current market and where your business stands.

4. Describe your products and services

Provide detailed information about your products and services. This includes pricing information, product features, and any unique selling points.

Use the Product/Market Fit Template to explain how your products meet the needs of your target market. Describe what sets them apart from the competition.

5. Design a marketing and sales strategy

Outline how you plan to promote and sell your products. Your marketing strategy and sales strategy should include information about your:

Pricing strategy

Advertising and promotional tactics

Sales channels

The Go to Market Strategy Template is a great way to visually map how you plan to launch your product or service in a new or existing market.

6. Determine budget and financial projections

Document detailed information on your business’ finances. Describe the current financial position of the company and how you expect the finances to play out.

Some details to include in this section are:

Startup costs

Revenue projections

Profit and loss statement

Funding you have received or plan to receive

Strategy for raising funds

7. Set the organization and management structure

Define how your company is structured and who will be responsible for each aspect of the business. Use the Business Organizational Chart Template to visually map the company’s teams, roles, and hierarchy.

As well as the organization and management structure, discuss the legal structure of your business. Clarify whether your business is a corporation, partnership, sole proprietorship, or LLC.

8. Make an action plan

At this point in your business plan, you’ve described what you’re aiming for. But how are you going to get there? The Action Plan Template describes the following steps to move your business plan forward. Outline the next steps you plan to take to bring your business plan to fruition.

Types of business plans

Several types of business plans cater to different purposes and stages of a company's lifecycle. Here are some of the most common types of business plans.

Startup business plan

A startup business plan is typically an entrepreneur's first business plan. This document helps entrepreneurs articulate their business idea when starting a new business.

Not sure how to make a business plan for a startup? It’s pretty similar to a regular business plan, except the primary purpose of a startup business plan is to convince investors to provide funding for the business. A startup business plan also outlines the potential target market, product/service offering, marketing plan, and financial projections.

Strategic business plan

A strategic business plan is a long-term plan that outlines a company's overall strategy, objectives, and tactics. This type of strategic plan focuses on the big picture and helps business owners set goals and priorities and measure progress.

The primary purpose of a strategic business plan is to provide direction and guidance to the company's management team and stakeholders. The plan typically covers a period of three to five years.

Operational business plan

An operational business plan is a detailed document that outlines the day-to-day operations of a business. It focuses on the specific activities and processes required to run the business, such as:

Organizational structure

Staffing plan

Production plan

Quality control

Inventory management

Supply chain

The primary purpose of an operational business plan is to ensure that the business runs efficiently and effectively. It helps business owners manage their resources, track their performance, and identify areas for improvement.

Growth-business plan

A growth-business plan is a strategic plan that outlines how a company plans to expand its business. It helps business owners identify new market opportunities and increase revenue and profitability. The primary purpose of a growth-business plan is to provide a roadmap for the company's expansion and growth.

The 3 Horizons of Growth Template is a great tool to identify new areas of growth. This framework categorizes growth opportunities into three categories: Horizon 1 (core business), Horizon 2 (emerging business), and Horizon 3 (potential business).

One-page business plan

A one-page business plan is a condensed version of a full business plan that focuses on the most critical aspects of a business. It’s a great tool for entrepreneurs who want to quickly communicate their business idea to potential investors, partners, or employees.

A one-page business plan typically includes sections such as business concept, value proposition, revenue streams, and cost structure.

Best practices for how to make a good business plan

Here are some additional tips for creating a business plan:

Use a template

A template can help you organize your thoughts and effectively communicate your business ideas and strategies. Starting with a template can also save you time and effort when formatting your plan.

Miro’s extensive library of customizable templates includes all the necessary sections for a comprehensive business plan. With our templates, you can confidently present your business plans to stakeholders and investors.

Be practical

Avoid overestimating revenue projections or underestimating expenses. Your business plan should be grounded in practical realities like your budget, resources, and capabilities.

Be specific

Provide as much detail as possible in your business plan. A specific plan is easier to execute because it provides clear guidance on what needs to be done and how. Without specific details, your plan may be too broad or vague, making it difficult to know where to start or how to measure success.

Be thorough with your research

Conduct thorough research to fully understand the market, your competitors, and your target audience . By conducting thorough research, you can identify potential risks and challenges your business may face and develop strategies to mitigate them.

Get input from others

It can be easy to become overly focused on your vision and ideas, leading to tunnel vision and a lack of objectivity. By seeking input from others, you can identify potential opportunities you may have overlooked.

Review and revise regularly

A business plan is a living document. You should update it regularly to reflect market, industry, and business changes. Set aside time for regular reviews and revisions to ensure your plan remains relevant and effective.

Create a winning business plan to chart your path to success

Starting or growing a business can be challenging, but it doesn't have to be. Whether you're a seasoned entrepreneur or just starting, a well-written business plan can make or break your business’ success.

The purpose of a business plan is more than just to secure funding and attract investors. It also serves as a roadmap for achieving your business goals and realizing your vision. With the right mindset, tools, and strategies, you can develop a visually appealing, persuasive business plan.

Ready to make an effective business plan that works for you? Check out our library of ready-made strategy and planning templates and chart your path to success.

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How to Write a Business Plan: Step-by-Step Guide + Examples

Noah Parsons

24 min. read

Updated April 10, 2024

Writing a business plan doesn’t have to be complicated. 

In this step-by-step guide, you’ll learn how to write a business plan that’s detailed enough to impress bankers and potential investors, while giving you the tools to start, run, and grow a successful business.

• The basics of business planning

If you’re reading this guide, then you already know why you need a business plan . 

You understand that planning helps you: 

• Raise money
• Grow strategically
• Keep your business on the right track 

As you start to write your plan, it’s useful to zoom out and remember what a business plan is .

At its core, a business plan is an overview of the products and services you sell, and the customers that you sell to. It explains your business strategy: how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

Most business plans also include financial forecasts for the future. These set sales goals, budget for expenses, and predict profits and cash flow. 

A good business plan is much more than just a document that you write once and forget about. It’s also a guide that helps you outline and achieve your goals. 

After completing your plan, you can use it as a management tool to track your progress toward your goals. Updating and adjusting your forecasts and budgets as you go is one of the most important steps you can take to run a healthier, smarter business. 

We’ll dive into how to use your plan later in this article.

There are many different types of plans , but we’ll go over the most common type here, which includes everything you need for an investor-ready plan. However, if you’re just starting out and are looking for something simpler—I recommend starting with a one-page business plan . It’s faster and easier to create. 

It’s also the perfect place to start if you’re just figuring out your idea, or need a simple strategic plan to use inside your business.

Dig deeper : How to write a one-page business plan

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• What to include in your business plan

Executive summary

The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally just one to two pages. Most people write it last because it’s a summary of the complete business plan.

Ideally, the executive summary can act as a stand-alone document that covers the highlights of your detailed plan. 

In fact, it’s common for investors to ask only for the executive summary when evaluating your business. If they like what they see in the executive summary, they’ll often follow up with a request for a complete plan, a pitch presentation , or more in-depth financial forecasts .

Your executive summary should include:

• A summary of the problem you are solving
• A description of your product or service
• An overview of your target market
• A brief description of your team
• A summary of your financials
• Your funding requirements (if you are raising money)

Dig Deeper: How to write an effective executive summary

Products and services description

This is where you describe exactly what you’re selling, and how it solves a problem for your target market. The best way to organize this part of your plan is to start by describing the problem that exists for your customers. After that, you can describe how you plan to solve that problem with your product or service. 

This is usually called a problem and solution statement .

To truly showcase the value of your products and services, you need to craft a compelling narrative around your offerings. How will your product or service transform your customers’ lives or jobs? A strong narrative will draw in your readers.

This is also the part of the business plan to discuss any competitive advantages you may have, like specific intellectual property or patents that protect your product. If you have any initial sales, contracts, or other evidence that your product or service is likely to sell, include that information as well. It will show that your idea has traction , which can help convince readers that your plan has a high chance of success.

Market analysis

Your target market is a description of the type of people that you plan to sell to. You might even have multiple target markets, depending on your business. 

A market analysis is the part of your plan where you bring together all of the information you know about your target market. Basically, it’s a thorough description of who your customers are and why they need what you’re selling. You’ll also include information about the growth of your market and your industry .

Try to be as specific as possible when you describe your market. 

Include information such as age, income level, and location—these are what’s called “demographics.” If you can, also describe your market’s interests and habits as they relate to your business—these are “psychographics.” 

Related: Target market examples

Essentially, you want to include any knowledge you have about your customers that is relevant to how your product or service is right for them. With a solid target market, it will be easier to create a sales and marketing plan that will reach your customers. That’s because you know who they are, what they like to do, and the best ways to reach them.

Next, provide any additional information you have about your market. 

What is the size of your market ? Is the market growing or shrinking? Ideally, you’ll want to demonstrate that your market is growing over time, and also explain how your business is positioned to take advantage of any expected changes in your industry.

Dig Deeper: Learn how to write a market analysis

Competitive analysis

Part of defining your business opportunity is determining what your competitive advantage is. To do this effectively, you need to know as much about your competitors as your target customers. 

Every business has some form of competition. If you don’t think you have competitors, then explore what alternatives there are in the market for your product or service. 

For example: In the early years of cars, their main competition was horses. For social media, the early competition was reading books, watching TV, and talking on the phone.

A good competitive analysis fully lays out the competitive landscape and then explains how your business is different. Maybe your products are better made, or cheaper, or your customer service is superior. Maybe your competitive advantage is your location – a wide variety of factors can ultimately give you an advantage.

Dig Deeper: How to write a competitive analysis for your business plan

Marketing and sales plan

The marketing and sales plan covers how you will position your product or service in the market, the marketing channels and messaging you will use, and your sales tactics. 

The best place to start with a marketing plan is with a positioning statement . 

This explains how your business fits into the overall market, and how you will explain the advantages of your product or service to customers. You’ll use the information from your competitive analysis to help you with your positioning. 

For example: You might position your company as the premium, most expensive but the highest quality option in the market. Or your positioning might focus on being locally owned and that shoppers support the local economy by buying your products.

Once you understand your positioning, you’ll bring this together with the information about your target market to create your marketing strategy . 

This is how you plan to communicate your message to potential customers. Depending on who your customers are and how they purchase products like yours, you might use many different strategies, from social media advertising to creating a podcast. Your marketing plan is all about how your customers discover who you are and why they should consider your products and services. 

While your marketing plan is about reaching your customers—your sales plan will describe the actual sales process once a customer has decided that they’re interested in what you have to offer. 

If your business requires salespeople and a long sales process, describe that in this section. If your customers can “self-serve” and just make purchases quickly on your website, describe that process. 

A good sales plan picks up where your marketing plan leaves off. The marketing plan brings customers in the door and the sales plan is how you close the deal.

Together, these specific plans paint a picture of how you will connect with your target audience, and how you will turn them into paying customers.

Dig deeper: What to include in your sales and marketing plan

Business operations

The operations section describes the necessary requirements for your business to run smoothly. It’s where you talk about how your business works and what day-to-day operations look like. 

Depending on how your business is structured, your operations plan may include elements of the business like:

• Supply chain management
• Manufacturing processes
• Equipment and technology
• Distribution

Some businesses distribute their products and reach their customers through large retailers like Amazon.com, Walmart, Target, and grocery store chains. 

These businesses should review how this part of their business works. The plan should discuss the logistics and costs of getting products onto store shelves and any potential hurdles the business may have to overcome.

If your business is much simpler than this, that’s OK. This section of your business plan can be either extremely short or more detailed, depending on the type of business you are building.

For businesses selling services, such as physical therapy or online software, you can use this section to describe the technology you’ll leverage, what goes into your service, and who you will partner with to deliver your services.

Dig Deeper: Learn how to write the operations chapter of your plan

Key milestones and metrics

Although it’s not required to complete your business plan, mapping out key business milestones and the metrics can be incredibly useful for measuring your success.

Good milestones clearly lay out the parameters of the task and set expectations for their execution. You’ll want to include:

• A description of each task
• The proposed due date
• Who is responsible for each task

If you have a budget, you can include projected costs to hit each milestone. You don’t need extensive project planning in this section—just list key milestones you want to hit and when you plan to hit them. This is your overall business roadmap. 

Possible milestones might be:

• Website launch date
• Store or office opening date
• First significant sales
• Break even date
• Business licenses and approvals

You should also discuss the key numbers you will track to determine your success. Some common metrics worth tracking include:

• Conversion rates
• Customer acquisition costs
• Profit per customer
• Repeat purchases

It’s perfectly fine to start with just a few metrics and grow the number you are tracking over time. You also may find that some metrics simply aren’t relevant to your business and can narrow down what you’re tracking.

Dig Deeper: How to use milestones in your business plan

Organization and management team

Investors don’t just look for great ideas—they want to find great teams. Use this chapter to describe your current team and who you need to hire . You should also provide a quick overview of your location and history if you’re already up and running.

Briefly highlight the relevant experiences of each key team member in the company. It’s important to make the case for why yours is the right team to turn an idea into a reality. 

Do they have the right industry experience and background? Have members of the team had entrepreneurial successes before? 

If you still need to hire key team members, that’s OK. Just note those gaps in this section.

Your company overview should also include a summary of your company’s current business structure . The most common business structures include:

• Sole proprietor
• Partnership

Be sure to provide an overview of how the business is owned as well. Does each business partner own an equal portion of the business? How is ownership divided? 

Potential lenders and investors will want to know the structure of the business before they will consider a loan or investment.

Dig Deeper: How to write about your company structure and team

Financial plan

Last, but certainly not least, is your financial plan chapter. 

Entrepreneurs often find this section the most daunting. But, business financials for most startups are less complicated than you think, and a business degree is certainly not required to build a solid financial forecast. 

A typical financial forecast in a business plan includes the following:

• Sales forecast : An estimate of the sales expected over a given period. You’ll break down your forecast into the key revenue streams that you expect to have.
• Expense budget : Your planned spending such as personnel costs , marketing expenses, and taxes.
• Profit & Loss : Brings together your sales and expenses and helps you calculate planned profits.
• Cash Flow : Shows how cash moves into and out of your business. It can predict how much cash you’ll have on hand at any given point in the future.
• Balance Sheet : A list of the assets, liabilities, and equity in your company. In short, it provides an overview of the financial health of your business. 

A strong business plan will include a description of assumptions about the future, and potential risks that could impact the financial plan. Including those will be especially important if you’re writing a business plan to pursue a loan or other investment.

Dig Deeper: How to create financial forecasts and budgets

This is the place for additional data, charts, or other information that supports your plan.

Including an appendix can significantly enhance the credibility of your plan by showing readers that you’ve thoroughly considered the details of your business idea, and are backing your ideas up with solid data.

Just remember that the information in the appendix is meant to be supplementary. Your business plan should stand on its own, even if the reader skips this section.

Dig Deeper : What to include in your business plan appendix

Optional: Business plan cover page

Adding a business plan cover page can make your plan, and by extension your business, seem more professional in the eyes of potential investors, lenders, and partners. It serves as the introduction to your document and provides necessary contact information for stakeholders to reference.

Your cover page should be simple and include:

• Company logo
• Business name
• Value proposition (optional)
• Business plan title
• Completion and/or update date
• Address and contact information
• Confidentiality statement

Just remember, the cover page is optional. If you decide to include it, keep it very simple and only spend a short amount of time putting it together.

Dig Deeper: How to create a business plan cover page

How to use AI to help write your business plan

Generative AI tools such as ChatGPT can speed up the business plan writing process and help you think through concepts like market segmentation and competition. These tools are especially useful for taking ideas that you provide and converting them into polished text for your business plan.

The best way to use AI for your business plan is to leverage it as a collaborator , not a replacement for human creative thinking and ingenuity. 

AI can come up with lots of ideas and act as a brainstorming partner. It’s up to you to filter through those ideas and figure out which ones are realistic enough to resonate with your customers. 

There are pros and cons of using AI to help with your business plan . So, spend some time understanding how it can be most helpful before just outsourcing the job to AI.

Learn more: 10 AI prompts you need to write a business plan

• Writing tips and strategies

To help streamline the business plan writing process, here are a few tips and key questions to answer to make sure you get the most out of your plan and avoid common mistakes .  

Determine why you are writing a business plan

Knowing why you are writing a business plan will determine your approach to your planning project. 

For example: If you are writing a business plan for yourself, or just to use inside your own business , you can probably skip the section about your team and organizational structure. 

If you’re raising money, you’ll want to spend more time explaining why you’re looking to raise the funds and exactly how you will use them.

Regardless of how you intend to use your business plan , think about why you are writing and what you’re trying to get out of the process before you begin.

Keep things concise

Probably the most important tip is to keep your business plan short and simple. There are no prizes for long business plans . The longer your plan is, the less likely people are to read it. 

So focus on trimming things down to the essentials your readers need to know. Skip the extended, wordy descriptions and instead focus on creating a plan that is easy to read —using bullets and short sentences whenever possible.

Have someone review your business plan

Writing a business plan in a vacuum is never a good idea. Sometimes it’s helpful to zoom out and check if your plan makes sense to someone else. You also want to make sure that it’s easy to read and understand.

Don’t wait until your plan is “done” to get a second look. Start sharing your plan early, and find out from readers what questions your plan leaves unanswered. This early review cycle will help you spot shortcomings in your plan and address them quickly, rather than finding out about them right before you present your plan to a lender or investor.

If you need a more detailed review, you may want to explore hiring a professional plan writer to thoroughly examine it.

Use a free business plan template and business plan examples to get started

Knowing what information to include in a business plan is sometimes not quite enough. If you’re struggling to get started or need additional guidance, it may be worth using a business plan template. 

There are plenty of great options available (we’ve rounded up our 8 favorites to streamline your search).

But, if you’re looking for a free downloadable business plan template , you can get one right now; download the template used by more than 1 million businesses. 

Or, if you just want to see what a completed business plan looks like, check out our library of over 550 free business plan examples . 

We even have a growing list of industry business planning guides with tips for what to focus on depending on your business type.

Common pitfalls and how to avoid them

It’s easy to make mistakes when you’re writing your business plan. Some entrepreneurs get sucked into the writing and research process, and don’t focus enough on actually getting their business started. 

Here are a few common mistakes and how to avoid them:

Not talking to your customers : This is one of the most common mistakes. It’s easy to assume that your product or service is something that people want. Before you invest too much in your business and too much in the planning process, make sure you talk to your prospective customers and have a good understanding of their needs.

• Overly optimistic sales and profit forecasts: By nature, entrepreneurs are optimistic about the future. But it’s good to temper that optimism a little when you’re planning, and make sure your forecasts are grounded in reality. 
• Spending too much time planning: Yes, planning is crucial. But you also need to get out and talk to customers, build prototypes of your product and figure out if there’s a market for your idea. Make sure to balance planning with building.
• Not revising the plan: Planning is useful, but nothing ever goes exactly as planned. As you learn more about what’s working and what’s not—revise your plan, your budgets, and your revenue forecast. Doing so will provide a more realistic picture of where your business is going, and what your financial needs will be moving forward.
• Not using the plan to manage your business: A good business plan is a management tool. Don’t just write it and put it on the shelf to collect dust – use it to track your progress and help you reach your goals.
• Presenting your business plan

The planning process forces you to think through every aspect of your business and answer questions that you may not have thought of. That’s the real benefit of writing a business plan – the knowledge you gain about your business that you may not have been able to discover otherwise.

With all of this knowledge, you’re well prepared to convert your business plan into a pitch presentation to present your ideas. 

A pitch presentation is a summary of your plan, just hitting the highlights and key points. It’s the best way to present your business plan to investors and team members.

Dig Deeper: Learn what key slides should be included in your pitch deck

Use your business plan to manage your business

One of the biggest benefits of planning is that it gives you a tool to manage your business better. With a revenue forecast, expense budget, and projected cash flow, you know your targets and where you are headed.

And yet, nothing ever goes exactly as planned – it’s the nature of business.

That’s where using your plan as a management tool comes in. The key to leveraging it for your business is to review it periodically and compare your forecasts and projections to your actual results.

Start by setting up a regular time to review the plan – a monthly review is a good starting point. During this review, answer questions like:

• Did you meet your sales goals?
• Is spending following your budget?
• Has anything gone differently than what you expected?

Now that you see whether you’re meeting your goals or are off track, you can make adjustments and set new targets. 

Maybe you’re exceeding your sales goals and should set new, more aggressive goals. In that case, maybe you should also explore more spending or hiring more employees. 

Or maybe expenses are rising faster than you projected. If that’s the case, you would need to look at where you can cut costs.

A plan, and a method for comparing your plan to your actual results , is the tool you need to steer your business toward success.

Learn More: How to run a regular plan review

Free business plan templates and examples

Kickstart your business plan writing with one of our free business plan templates or recommended tools.

Free business plan template

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How to write a business plan FAQ

What is a business plan?

A document that describes your business , the products and services you sell, and the customers that you sell to. It explains your business strategy, how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

What are the benefits of a business plan?

A business plan helps you understand where you want to go with your business and what it will take to get there. It reduces your overall risk, helps you uncover your business’s potential, attracts investors, and identifies areas for growth.

Having a business plan ultimately makes you more confident as a business owner and more likely to succeed for a longer period of time.

What are the 7 steps of a business plan?

The seven steps to writing a business plan include:

• Write a brief executive summary
• Describe your products and services.
• Conduct market research and compile data into a cohesive market analysis.
• Describe your marketing and sales strategy.
• Outline your organizational structure and management team.
• Develop financial projections for sales, revenue, and cash flow.
• Add any additional documents to your appendix.

What are the 5 most common business plan mistakes?

There are plenty of mistakes that can be made when writing a business plan. However, these are the 5 most common that you should do your best to avoid:

• 1. Not taking the planning process seriously.
• Having unrealistic financial projections or incomplete financial information.
• Inconsistent information or simple mistakes.
• Failing to establish a sound business model.
• Not having a defined purpose for your business plan.

What questions should be answered in a business plan?

Writing a business plan is all about asking yourself questions about your business and being able to answer them through the planning process. You’ll likely be asking dozens and dozens of questions for each section of your plan.

However, these are the key questions you should ask and answer with your business plan:

• How will your business make money?
• Is there a need for your product or service?
• Who are your customers?
• How are you different from the competition?
• How will you reach your customers?
• How will you measure success?

How long should a business plan be?

The length of your business plan fully depends on what you intend to do with it. From the SBA and traditional lender point of view, a business plan needs to be whatever length necessary to fully explain your business. This means that you prove the viability of your business, show that you understand the market, and have a detailed strategy in place.

If you intend to use your business plan for internal management purposes, you don’t necessarily need a full 25-50 page business plan. Instead, you can start with a one-page plan to get all of the necessary information in place.

What are the different types of business plans?

While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. Here are a few common business plan types worth considering.

Traditional business plan: The tried-and-true traditional business plan is a formal document meant to be used when applying for funding or pitching to investors. This type of business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix.

Business model canvas: The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea.

One-page business plan: This format is a simplified version of the traditional plan that focuses on the core aspects of your business. You’ll typically stick with bullet points and single sentences. It’s most useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business.

Lean Plan: The Lean Plan is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance. It’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.

What’s the difference between a business plan and a strategic plan?

A business plan covers the “who” and “what” of your business. It explains what your business is doing right now and how it functions. The strategic plan explores long-term goals and explains “how” the business will get there. It encourages you to look more intently toward the future and how you will achieve your vision.

However, when approached correctly, your business plan can actually function as a strategic plan as well. If kept lean, you can define your business, outline strategic steps, and track ongoing operations all with a single plan.

See why 1.2 million entrepreneurs have written their business plans with LivePlan

Noah is the COO at Palo Alto Software, makers of the online business plan app LivePlan. He started his career at Yahoo! and then helped start the user review site Epinions.com. From there he started a software distribution business in the UK before coming to Palo Alto Software to run the marketing and product teams.

Table of Contents

• Use AI to help write your plan
• Common planning mistakes
• Manage with your business plan
• Templates and examples

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Essential Guide to the Strategic Planning Process

By Joe Weller | April 3, 2019 (updated March 26, 2024)

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In this article, you’ll learn the basics of the strategic planning process and how a strategic plan guides you to achieving your organizational goals. Plus, find expert insight on getting the most out of your strategic planning.

Included on this page, you'll discover the importance of strategic planning , the steps of the strategic planning process , and the basic sections to include in your strategic plan .

What Is Strategic Planning?

Strategic planning is an organizational activity that aims to achieve a group’s goals. The process helps define a company’s objectives and investigates both internal and external happenings that might influence the organizational path. Strategic planning also helps identify adjustments that you might need to make to reach your goal. Strategic planning became popular in the 1960s because it helped companies set priorities and goals, strengthen operations, and establish agreement among managers about outcomes and results.

Strategic planning can occur over multiple years, and the process can vary in length, as can the final plan itself. Ideally, strategic planning should result in a document, a presentation, or a report that sets out a blueprint for the company’s progress.

By setting priorities, companies help ensure employees are working toward common and defined goals. It also aids in defining the direction an enterprise is heading, efficiently using resources to achieve the organization’s goals and objectives. Based on the plan, managers can make decisions or allocate the resources necessary to pursue the strategy and minimize risks.

Strategic planning strengthens operations by getting input from people with differing opinions and building a consensus about the company’s direction. Along with focusing energy and resources, the strategic planning process allows people to develop a sense of ownership in the product they create.

“Strategic planning is not really one thing. It is really a set of concepts, procedures, tools, techniques, and practices that have to be adapted to specific contexts and purposes,” says Professor John M. Bryson, McKnight Presidential Professor of Planning and Public Affairs at the Hubert H. Humphrey School of Public Affairs, University of Minnesota and author of Strategic Planning for Public and Nonprofit Organizations: A Guide to Strengthening and Sustaining Organizational Achievement . “Strategic planning is a prompt to foster strategic thinking, acting, and learning, and they all matter and they are all connected.”

What Strategic Planning Is Not

Strategic planning is not a to-do list for the short or long term — it is the basis of a business, its direction, and how it will get there.

“You have to think very strategically about strategic planning. It is more than just following steps,” Bryson explains. “You have to understand strategic planning is not some kind of magic solution to fixing issues. Don’t have unrealistic expectations.”

Strategic planning is also different from a business plan that focuses on a specific product, service, or program and short-term goals. Rather, strategic planning means looking at the big picture.

While they are related, it is important not to confuse strategic planning with strategic thinking, which is more about imagining and innovating in a way that helps a company. In contrast, strategic planning supports those thoughts and helps you figure out how to make them a reality.

Another part of strategic planning is tactical planning , which involves looking at short-term efforts to achieve longer-term goals.

Lastly, marketing plans are not the same as strategic plans. A marketing plan is more about introducing and delivering a service or product to the public instead of how to grow a business. For more about marketing plans and processes, read this article .

Strategic plans include information about finances, but they are different from financial planning , which involves different processes and people. Financial planning templates can help with that process.

Why Is Strategic Planning Important?

In today’s technological age, strategic plans provide businesses with a path forward. Strategic plans help companies thrive, not just survive — they provide a clear focus, which makes an organization more efficient and effective, thereby increasing productivity.

“You are not going to go very far if you don’t have a strategic plan. You need to be able to show where you are going,” says Stefan Hofmeyer, an experienced strategist and co-founder of Global PMI Partners . He lives in the startup-rich environment of northern California and says he often sees startups fail to get seed money because they do not have a strong plan for what they want to do and how they want to do it.

Getting team members on the same page (in both creating a strategic plan and executing the plan itself) can be beneficial for a company. Planners can find satisfaction in the process and unite around a common vision. In addition, you can build strong teams and bridge gaps between staff and management.

“You have to reach agreement about good ideas,” Bryson says. “A really good strategy has to meet a lot of criteria. It has to be technically workable, administratively feasible, politically acceptable, and legally, morally, and ethically defensible, and that is a pretty tough list.”

By discussing a company’s issues during the planning process, individuals can voice their opinions and provide information necessary to move the organization ahead — a form of problem solving as a group.

Strategic plans also provide a mechanism to measure success and progress toward goals, which keeps employees on the same page and helps them focus on the tasks at hand.

When Is the Time to Do Strategic Planning?

There is no perfect time to perform strategic planning. It depends entirely on the organization and the external environment that surrounds it. However, here are some suggestions about when to plan:

If your industry is changing rapidly

When an organization is launching

At the start of a new year or funding period

In preparation for a major new initiative

If regulations and laws in your industry are or will be changing

“It’s not like you do all of the thinking and planning, and then implement,” Bryson says. “A mistake people make is [believing] the thinking has to precede the acting and the learning.”

Even if you do not re-create the entire planning process often, it is important to periodically check your plan and make sure it is still working. If not, update it.

What Is the Strategic Planning Process?

Strategic planning is a process, and not an easy one. A key is to make sure you allow enough time to complete the process without rushing, but not take so much time that you lose momentum and focus. The process itself can be more important than the final document due to the information that comes out of the discussions with management, as well as lower-level workers.

“There is not one favorite or perfect planning process,” says Jim Stockmal, president of the Association for Strategic Planning (ASP). He explains that new techniques come out constantly, and consultants and experienced planners have their favorites. In an effort to standardize the practice and terms used in strategic planning, ASP has created two certification programs .

Level 1 is the Strategic Planning Professional (SPP) certification. It is designed for early- or mid-career planners who work in strategic planning. Level 2, the Strategic Management Professional (SMP) certification, is geared toward seasoned professionals or those who train others. Stockmal explains that ASP designed the certification programs to add structure to the otherwise amorphous profession.

The strategic planning process varies by the size of the organization and can be formal or informal, but there are constraints. For example, teams of all sizes and goals should build in many points along the way for feedback from key leaders — this helps the process stay on track.

Some elements of the process might have specific start and end points, while others are continuous. For example, there might not be one “aha” moment that suddenly makes things clear. Instead, a series of small moves could slowly shift the organization in the right direction.

“Don’t make it overly complex. Bring all of the stakeholders together for input and feedback,” Stockmal advises. “Always be doing a continuous environmental scan, and don’t be afraid to engage with stakeholders.”

Additionally, knowing your company culture is important. “You need to make it work for your organization,” he says.

There are many different ways to approach the strategic planning process. Below are three popular approaches:

Goals-Based Planning: This approach begins by looking at an organization’s mission and goals. From there, you work toward that mission, implement strategies necessary to achieve those goals, and assign roles and deadlines for reaching certain milestones.

Issues-Based Planning: In this approach, start by looking at issues the company is facing, then decide how to address them and what actions to take.

Organic Planning: This approach is more fluid and begins with defining mission and values, then outlining plans to achieve that vision while sticking to the values.

“The approach to strategic planning needs to be contingent upon the organization, its history, what it’s capable of doing, etc.,” Bryson explains. “There’s such a mistake to think there’s one approach.”

For more information on strategic planning, read about how to write a strategic plan and the different types of models you can use.

Who Participates in the Strategic Planning Process?

For work as crucial as strategic planning, it is necessary to get the right team together and include them from the beginning of the process. Try to include as many stakeholders as you can.

Below are suggestions on who to include:

Senior leadership

Strategic planners

Strategists

People who will be responsible for implementing the plan

People to identify gaps in the plan

Members of the board of directors

“There can be magic to strategic planning, but it’s not in any specific framework or anybody’s 10-step process,” Bryson explains. “The magic is getting key people together, getting them to focus on what’s important, and [getting] them to do something about it. That’s where the magic is.”

Hofmeyer recommends finding people within an organization who are not necessarily current leaders, but may be in the future. “Sometimes they just become obvious. Usually they show themselves to you, you don’t need to look for them. They’re motivated to participate,” he says. These future leaders are the ones who speak up at meetings or on other occasions, who put themselves out there even though it is not part of their job description.

At the beginning of the process, establish guidelines about who will be involved and what will be expected of them. Everyone involved must be willing to cooperate and collaborate. If there is a question about whether or not to include anyone, it is usually better to bring on extra people than to leave someone out, only to discover later they should have been a part of the process all along. Not everyone will be involved the entire time; people will come and go during different phases.

Often, an outside facilitator or consultant can be an asset to a strategic planning committee. It is sometimes difficult for managers and other employees to sit back and discuss what they need to accomplish as a company and how they need to do it without considering other factors. As objective observers, outside help can often offer insight that may escape insiders.

Hofmeyer says sometimes bosses have blinders on that keep them from seeing what is happening around them, which allows them to ignore potential conflicts. “People often have their own agendas of where they want to go, and if they are not aligned, it is difficult to build a strategic plan. An outsider perspective can really take you out of your bubble and tell you things you don’t necessarily want to hear [but should]. We get into a rhythm, and it’s really hard to step out of that, so bringing in outside people can help bring in new views and aspects of your business.”

An outside consultant can also help naysayers take the process more seriously because they know the company is investing money in the efforts, Hofmeyer adds.

No matter who is involved in the planning process, make sure at least one person serves as an administrator and documents all planning committee actions.

What Is in a Strategic Plan?

A strategic plan communicates goals and what it takes to achieve them. The plan sometimes begins with a high-level view, then becomes more specific. Since strategic plans are more guidebooks than rulebooks, they don’t have to be bureaucratic and rigid. There is no perfect plan; however, it needs to be realistic.

There are many sections in a strategic plan, and the length of the final document or presentation will vary. The names people use for the sections differ, but the general ideas behind them are similar: Simply make sure you and your team agree on the terms you will use and what each means.

One-Page Strategic Planning Template

“I’m a big fan of getting a strategy onto one sheet of paper. It’s a strategic plan in a nutshell, and it provides a clear line of sight,” Stockmal advises.

You can use the template below to consolidate all your strategic ideas into a succinct, one-page strategic plan. Doing so provides you with a high-level overview of your strategic initiatives that you can place on your website, distribute to stakeholders, and refer to internally. More extensive details about implementation, capacity, and other concerns can go into an expanded document.

Download One-Page Strategic Planning Template Excel | Word | Smartsheet

The most important part of the strategic plan is the executive summary, which contains the highlights of the plan. Although it appears at the beginning of the plan, it should be written last, after you have done all your research.

Of writing the executive summary, Stockmal says, “I find it much easier to extract and cut and edit than to do it first.”

For help with creating executive summaries, see these templates .

Other parts of a strategic plan can include the following:

Description: A description of the company or organization.

Vision Statement: A bold or inspirational statement about where you want your company to be in the future.

Mission Statement: In this section, describe what you do today, your audience, and your approach as you work toward your vision.

Core Values: In this section, list the beliefs and behaviors that will enable you to achieve your mission and, eventually, your vision.

Goals: Provide a few statements of how you will achieve your vision over the long term.

Objectives: Each long-term goal should have a few one-year objectives that advance the plan. Make objectives SMART (specific, measurable, achievable, and time-based) to get the most out of them.

Budget and Operating Plans: Highlight resources you will need and how you will implement them.

Monitoring and Evaluation: In this section, describe how you will check your progress and determine when you achieve your goals.

One of the first steps in creating a strategic plan is to perform both an internal and external analysis of the company’s environment. Internally, look at your company’s strengths and weaknesses, as well as the personal values of those who will implement your plan (managers, executives, board members). Externally, examine threats and opportunities within the industry and any broad societal expectations that might exist.

You can perform a SWOT (strengths, weaknesses, opportunities, and threats) analysis to sum up where you are currently and what you should focus on to help you achieve your future goals. Strengths shows you what you do well, weaknesses point out obstacles that could keep you from achieving your objectives, opportunities highlight where you can grow, and threats pinpoint external factors that could be obstacles in your way.

You can find more information about performing a SWOT analysis and free templates in this article . Another analysis technique, STEEPLE (social, technological, economic, environmental, political, legal, and ethical), often accompanies a SWOT analysis.

Basics of Strategic Planning

How you navigate the strategic planning process will vary. Several tools and techniques are available, and your choice depends on your company’s leadership, culture, environment, and size, as well as the expertise of the planners.

All include similar sections in the final plan, but the ways of driving those results differ. Some tools are goals-based, while others are issues- or scenario-based. Some rely on a more organic or rigid process.

Hofmeyer summarizes what goes into strategic planning:

Understand the stakeholders and involve them from the beginning.

Agree on a vision.

Hold successful meetings and sessions.

Summarize and present the plan to stakeholders.

Identify and check metrics.

Make periodic adjustments.

Items That Go into Strategic Planning

Strategic planning contains inputs, activities, outputs, and outcomes. Inputs and activities are elements that are internal to the company, while outputs and outcomes are external.

Remember, there are many different names for the sections of strategic plans. The key is to agree what terms you will use and define them for everyone involved.

Inputs are important because it is impossible to know where you are going until you know what is around you where you are now.

Companies need to gather data from a variety of sources to get a clear look at the competitive environment and the opportunities and risks within that environment. You can think of it like a competitive intelligence program.

Data should come from the following sources:

Interviews with executives

A review of documents about the competition or market that are publicly available

Primary research by visiting or observing competitors

Studies of your industry

The values of key stakeholders

This information often goes into writing an organization’s vision and mission statements.

Activities are the meetings and other communications that need to happen during the strategic planning process to help everyone understand the competition that surrounds the organization.

It is important both to understand the competitive environment and your company’s response to it. This is where everyone looks at and responds to the data gathered from the inputs.

The strategic planning process produces outputs. Outputs can be as basic as the strategic planning document itself. The documentation and communications that describe your organization’s strategy, as well as financial statements and budgets, can also be outputs.

The implementation of the strategic plan produces outcomes (distinct from outputs). The outcomes determine the success or failure of the strategic plan by measuring how close they are to the goals and vision you outline in your plan.

It is important to understand there will be unplanned and unintended outcomes, too. How you learn from and adapt to these changes influence the success of the strategic plan.

During the planning process, decide how you will measure both the successes and failures of different parts of the strategic plan.

Sharing, Evaluating, and Monitoring the Progress of a Strategic Plan

After companies go through a lengthy strategic planning process, it is important that the plan does not sit and collect dust. Share, evaluate, and monitor the plan to assess how you are doing and make any necessary updates.

“[Some] leaders think that once they have their strategy, it’s up to someone else to execute it. That’s a mistake I see,” Stockmal says.

The process begins with distributing and communicating the plan. Decide who will get a copy of the plan and how those people will tell others about it. Will you have a meeting to kick off the implementation? How will you specify who will do what and when? Clearly communicate the roles people will have.

“Before you communicate the plan [to everyone], you need to have the commitment of stakeholders,” Hofmeyer recommends. Have the stakeholders be a part of announcing the plan to everyone — this keeps them accountable because workers will associate them with the strategy. “That applies pressure to the stakeholders to actually do the work.”

Once the team begins implementation, it’s necessary to have benchmarks to help measure your successes against the plan’s objectives. Sometimes, having smaller action plans within the larger plan can help keep the work on track.

During the planning process, you should have decided how you will measure success. Now, figure out how and when you will document progress. Keep an eye out for gaps between the vision and its implementation — a big gap could be a sign that you are deviating from the plan.

Tools are available to assist with tracking performance of strategic plans, including several types of software. “For some organizations, a spreadsheet is enough, but you are going to manually enter the data, so someone needs to be responsible for that,” Stockmal recommends.

Remember: strategic plans are not written in stone. Some deviation will be necessary, and when it happens, it’s important to understand why it occurred and how the change might impact the company's vision and goals.

Deviation from the plan does not mean failure, reminds Hofmeyer. Instead, understanding what transpired is the key. “Things happen, [and] you should always be on the lookout for that. I’m a firm believer in continuous improvement,” he says. Explain to stakeholders why a change is taking place. “There’s always a sense of re-evaluation, but do it methodically.”

Build in a schedule to review and amend the plan as necessary; this can help keep companies on track.

What Is Strategic Management?

Strategic planning is part of strategic management, and it involves the activities that make the strategic plan a reality. Essentially, strategic management is getting from the starting point to the goal effectively and efficiently using the ongoing activities and processes that a company takes on in order to keep in line with its mission, vision, and strategic plan.

“[Strategic management] closes the gap between the plan and executing the strategy,” Stockmal of ASP says. Strategic management is part of a larger planning process that includes budgeting, forecasting, capital allocation, and more.

There is no right or wrong way to do strategic management — only guidelines. The basic phases are preparing for strategic planning, creating the strategic plan, and implementing that plan.

No matter how you manage your plan, it’s key to allow the strategic plan to evolve and grow as necessary, due to both the internal and external factors.

“We get caught up in all of the day-to-day issues,” Stockmal explains, adding that people do not often leave enough time for implementing the plan and making progress. That’s what strategic management implores: doing things that are in the plan and not letting the plan sit on a shelf.

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Team Building Exercises – Strategy and Planning

Engaging ways to build core skills.

By the Mind Tools Content Team

No matter how brilliant your mind or strategy, if you’re playing a solo game, you’ll always lose out to a team.– Reid Hoffman.

How does your company approach strategic planning?

Traditionally, strategy is developed by an executive team and rolled out to the rest of the company for implementation. But today's rapidly changing commercial environment, coupled with the growing popularity of agile business practices, means that many organizations are now moving away from a formal, top-down approach.

Our current climate calls for a more flexible method that allows teams to shape their own path (while following organizational goals and guidelines). So, it's important that your team has the strategic thinking and planning skills it needs to contribute effectively.

Individuals with strong skills in these areas are also better at aligning their efforts with the broader objectives of the organization, so that their work contributes to a meaningful end goal.

This article explores three team building exercises that can help your people develop their strategic thinking and planning skills.

Strategic Thinking and Planning Exercises

Use the exercises below to strengthen your team's strategic thinking and planning skills. The activities should also help to improve communication and collaboration skills.

You can use them in various ways, for example with a group of new managers, or to refresh the skills of senior leaders.

Exercise 1: Early Bird vs. Second Mouse

This exercise was inspired by the saying (often attributed to American comedian Stephen Wright): "The early bird gets the worm, but the second mouse gets the cheese."

In it, two teams explore the implications of the phrase through presentation, debate and discussion.

This exercise helps teams analyze different strategic positions. It also emphasizes teamwork , presentation , argument and debate, and group decision making .

People and Materials

• Between eight and 30 people.
• A presenter from each team.
• Two flip charts, with pens.
• Flexible, typically 30-60 minutes.

Instructions

• Divide the group into two equal teams. Make one the "early bird" and the other the "second mouse."
• Give both teams five to 10 minutes to develop a short presentation outlining why their strategy is the best for business.
• A member of each team gives their presentation.
• When the presentations are over, ask each team to elect someone to debate the question, "Is it better in business to be the early bird or the second mouse?"
• Combine the teams into one big group and ask for a show of hands to determine which strategy is, indeed, the best.

Advice for the Facilitator

This simple exercise can be adapted in various different ways, depending on your objectives. For example, you may wish to make the exercise about generic business practice or specific to a particular industry or situation. You could also try debating which strategy is best for a particular scenario and then, after the vote, ask if people's opinions would be different if you changed the scenario.

You could ask the group to vote on which strategy is best at the beginning of the exercise and again at the end of the debate, to see if opinions change.

Possible topics for discussion after the exercise include different strategies for different situations, the relative virtues of adaptability versus consistency, how much people's values influence their choice of strategy, and so on.

Exercise 2: United Hearts

In this exercise, teams develop a strategy and compete for points in a card game. The United Hearts Game was published in " Quick Team Building Activities for Busy Managers ," by Brian Cole Miller. This is an adaptation of his original game.

This game strengthens strategic thinking skills. It also reminds players to stay flexible with their strategy and adjust it according to events.

• Between six and 15 people.
• One deck of cards.
• Thirty minutes.

Rules of the Game

The aim is to get as close to 30 points as possible by winning hearts. Aces are low, Jacks are worth 11, Queens 12, and Kings 13 points. All other cards have face value.

Each round begins when the dealer places a heart card face up on the table. Team leaders then pick a card from their own deck and place it face down. When all three have laid down a card, they flip them over and the highest card (irrespective of suit) wins the heart. The rest of the cards from that round are discarded.

When all of the cards have been played (13 rounds in all), teams count up the number of hearts they have won. The closest to 30 wins.

In the event of a tie, the team with the highest value heart is the winner.

• Put people into three teams of two to five members – group sizes don't need to be equal – and ask each to designate a "leader" who will play for them.
• Remove the hearts from the deck, and give each team a suit of cards.
• Explain the rules of the game, and give each team three minutes to plan how they will play.
• Before the game begins, each team is given time to discuss their strategies but, once it gets underway, discussion is no longer allowed, although team members can indicate which card to play through non-verbal gestures.
• Interrupt the game after the fifth and ninth rounds to allow the groups to analyze their progress and, if necessary, adjust their strategies.

When the game is over, ask the members of each team to describe what their initial strategy was, whether they thought it was successful, and how it evolved over time.

Discuss how their strategies would have differed if the aim of the game had been to get as high a score or as low a score as possible.

Ask them if other roles, besides leader, emerged within the team. For example, one person may have decided to keep track of which hearts had already been played, while another could have kept track of their competitors' running totals.

Adapted from "Quick Team-Building Activities for Busy Managers: 50 Exercises That Get Results in Just 15 Minutes." by Brian Cole Miller. ©️ 2003 by Brian Cole Miller. Used by permission of HarperCollins Leadership. www.harpercollinsleadership.com

Exercise 3: Capture the Flag

Capture the Flag is a classic outdoor game for larger groups. The goal is to successfully capture the other team's flag, without being caught on "enemy territory."

This game is excellent for building strategic thinking and communication skills. Teams assign roles (such as guards and raiders) and use battlefield tactics to successfully capture the opposing flag. It can be a great exercise to help new teams get to know each other, or to break down barriers between hierarchies or departments.

This game only works if all participants are prepared to play a vigorous outdoor game. You won't build a happy, engaged team if you try to force unwilling people to play.

• Enough people for at least two groups of five.
• Two "flags" – anything from a towel to a company flag.
• Boundary markers (if necessary).
• A large outdoor space, ideally one with trees, hills or buildings.
• Flexible, typically 30-45 minutes.

The rules of the game are simple. The group is divided into two opposing teams. Within each team, there are guards and raiders. Guards stay on their own territory and capture any enemies who try to take their flag. Raiders infiltrate enemy territory to locate and capture their opponents' flag. Both roles report to the team leader, who makes sure everyone follows the overall strategy.

Guards capture trespassing raiders by tagging them. The prisoner must then stay where he is put until a member from his own team sets him free by tagging him again. Once a prisoner is set free, he must return to his home territory before resuming play.

If a flag is successfully captured, it must be taken back to the team's home territory. If the flag bearer is caught before she reaches her territory, the flag is returned to its original hiding place, the bearer goes to prison, and the game continues.

• Begin by dividing the available space up into three parts, with team territories at opposite ends and a neutral "no man's land" in the middle. Mark where each territory begins.
• Explain the rules, then split the group into two teams.
• Give each team 10 minutes to choose a leader, assign roles, and discuss their strategy. Teams can decide for themselves how many guards and raiders to have but, once roles have been allocated, they remain for the duration of the game.
• Instruct each team to place its flag in plain sight. It should present a challenge, but not be impossible to find.
• Each team then waits in its home territory until you blow the whistle to signal that the game has begun.
• The game ends when one team successfully brings the other's flag into its home territory. Blow the whistle again to show that the game is over.

Bear in mind that this game may not suit everyone. It can be quite physical, with lots of running and, depending on the terrain, climbing and scrambling over trails, rocks and trees.

It's important that team members approach their roles with sensitivity towards others – both their team members and their "enemies." Make sure that guards understand that they must "tag," not "tackle," enemy raiders, so that no one gets hurt.

Encourage the team to be creative with their roles, so that everyone, regardless of physical ability, can make a positive contribution. For example, some guards could act as "lookouts," while raiders could be divided into "scouts," who use stealth to discover the whereabouts of the flag or prisoners being held captive, and "runners," who create a diversion while others go after the prize.

At the end of the game, gather the group together to discuss how it went. Ask how each person's role contributed to the overall strategy. Examine each team's strategy (or lack of one) and how well it worked out for them, and identify what gave the winning team their competitive advantage.

Team building exercises work best when, as well as improving team work, they help people to develop skills that benefit them in their day-to-day jobs, too. Check out our other team building resources for skills such as creativity , problem solving and decision making , and communication .

Strategic thinking is important for aligning your own and your team's daily activities are aligned with the long-term goals and objectives of your organization.

The games in this article can help your team members learn how to think more strategically, and work together.

Apply This to Your Life

• Think about how you could incorporate one of these games into your next team meeting, Away Day , or company retreat .

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Essential Strategic Planning Activities for Business Success

Strategic planning activities stand at the heart of transforming visions into actionable realities, guiding organizations through the complexities of growth , competition , and change .

These activities are the blueprint for success, a series of deliberate steps designed to align goals with actions, ensuring that every move is purposeful and impactful. Whether you’re a seasoned executive or a budding entrepreneur, mastering these activities can propel your organization to new heights.

In this guide, we’ll dive into strategic planning , unveiling activities that are both innovative and effective. Let’s explore how to turn strategic foresight into tangible results, setting your business on a path of sustained growth and competitive advantage.

Strategic Planning Activities: Types and Examples

Strategic planning is an essential process for any organization, aiming to set priorities, focus energy and resources , strengthen operations, and ensure that employees and other stakeholders are working toward common goals.

It involves a series of activities designed to set the direction for an organization and to define measurable goals and objectives. Below, we outline a series of strategic planning activities that can help your organization navigate the future more effectively.

1. SWOT Analysis

• Conducting Team Workshops: Gather team members to identify strengths, weaknesses, opportunities, and threats.
• Competitor Analysis: Analyze competitors to identify opportunities and threats in the market.
• Customer Feedback Sessions: Collect feedback to understand strengths and weaknesses from the customer’s perspective.
• Internal Audits: Evaluate internal processes to identify strengths and weaknesses.
• Market Trend Analysis: Assess external market trends to identify opportunities and threats.

2. Goal Setting

• SMART Goals Workshops: Develop specific, measurable, achievable, relevant, and time-bound goals.
• Visioning Sessions: Facilitate discussions to define the long-term vision of the organization.
• Departmental Goals Alignment: Ensure that departmental goals align with the overall strategy.
• Benchmarking: Set goals based on industry benchmarks.
• Employee Engagement in Goal Setting: Involve employees in setting their own goals that contribute to the strategic objectives.

3. Scenario Planning

• Future Trends Workshops: Explore how future trends could impact the organization.
• Risk Management Sessions: Identify potential risks and develop strategies to mitigate them.
• Innovation Brainstorming: Create scenarios that encourage innovation in response to potential future changes.
• Stakeholder Analysis: Consider the impact of different scenarios on various stakeholders.
• Resource Allocation Planning: Plan for resource allocation under different future scenarios.

4. Value Chain Analysis

• Internal Processes Mapping: Map out all internal processes to identify value-adding activities.
• Supplier and Partner Analysis: Evaluate suppliers and partners to improve the value chain.
• Customer Journey Mapping: Understand the customer journey to enhance value at each touchpoint.
• Cost Reduction Strategies: Identify areas in the value chain where costs can be reduced without compromising quality.
• Quality Improvement Workshops: Focus on improving the quality of outputs at each stage of the value chain.

5. PESTLE Analysis

• Political Impact Workshops: Assess how political factors impact the organization.
• Economic Trend Analysis: Evaluate the economic environment and its impact on operations.
• Social Changes Discussions: Explore social trends and their implications for the business.
• Technology Innovation Sessions: Analyze technological advancements and how they can be leveraged.
• Legal and Environmental Compliance Reviews: Ensure the organization is compliant with current laws and environmental standards.

6. Resource Allocation

• Budgeting Workshops: Plan the budget in alignment with strategic priorities.
• Investment Analysis Sessions: Determine the best areas for investment based on strategic goals.
• Efficiency Audits: Identify ways to use resources more efficiently.
• Capacity Planning: Plan for the resources needed to meet future demand.
• Talent Allocation: Ensure that talent is allocated to strategic priority areas.

7. Strategic Partnerships

• Partnership Identification Workshops: Identify potential strategic partners.
• Collaborative Project Planning: Plan projects that involve strategic partners.
• Cross-Marketing Strategies: Develop marketing strategies that benefit all involved parties.
• Supply Chain Optimization: Work with partners to optimize the supply chain.
• Knowledge Sharing Sessions: Share knowledge and best practices with partners.

8. Market Analysis

• Customer Segmentation Analysis: Segment the customer base to target marketing efforts effectively.
• Product/Service Gap Analysis: Identify gaps in the market that the organization can fill.
• Competitive Benchmarking: Benchmark against competitors to identify areas for improvement.
• Market Entry Strategy Planning: Plan strategies for entering new markets.
• Pricing Strategy Workshops: Develop pricing strategies based on market analysis.

9. Performance Monitoring

• KPI Setting Sessions: Define key performance indicators (KPIs) that align with strategic goals.
• Dashboard Development: Develop dashboards to monitor performance in real-time.
• Regular Performance Reviews: Conduct regular reviews to assess progress against goals.
• Feedback Loops Creation: Create mechanisms for feedback to inform strategic adjustments.
• Benchmarking Against Past Performance: Use past performance as a benchmark to gauge progress.

10. Continuous Improvement

• Lean Management Workshops: Implement lean management principles to continuously improve processes.
• Innovation Challenges: Encourage innovation through regular challenges or hackathons.
• Quality Circles: Establish quality circles to focus on continuous improvement in specific areas.
• Employee Suggestion Schemes: Implement schemes to encourage suggestions from employees.
• Process Reengineering Projects: Undertake projects to fundamentally rethink and redesign processes.

The Importance of Strategic Planning Activities

Strategic planning serves as the compass for an organization, guiding its direction, helping allocate its resources efficiently, and setting a foundation for growth and success in a competitive environment.

1. Provides Direction and Focus

Strategic planning clearly defines the mission, vision, and core values of an organization. It sets clear objectives and goals that guide where the organization is heading. This clarity helps in focusing efforts and resources on what’s most important, ensuring that everyone is working towards the same end goal.

2. Facilitates Decision Making

With a strategic plan in place, decision-making becomes more informed and easier . Organizations can use their strategic objectives as a benchmark to evaluate options, making decisions that align with their long-term goals. This reduces uncertainty and enables proactive rather than reactive decision-making.

3. Improves Resource Allocation

Strategic planning helps organizations allocate their resources (time, money, and workforce) more effectively. By identifying key priorities and areas for growth, organizations can allocate their resources towards initiatives that offer the greatest return on investment, avoiding wastage on less impactful activities.

4. Enhances Organizational Performance

Organizations with a strategic plan often outperform those without one. Strategic planning involves setting performance metrics and benchmarks that align with the organization’s goals. This focus on performance and continuous improvement drives efficiency and effectiveness across the organization.

5. Encourages Market and Competitive Analysis

Strategic planning necessitates a thorough analysis of the market environment and competition. This analysis helps organizations understand their position in the market, identify opportunities for growth, and recognize threats that need to be managed. By staying informed about market trends and competitive dynamics, organizations can adapt and innovate to maintain their competitive edge.

6. Helps in Risk Management

By foreseeing potential risks and developing strategies to mitigate them, strategic planning plays a crucial role in risk management. It allows organizations to prepare for uncertainties and minimize the impact of adverse events, ensuring stability and continuity.

7. Fosters Team Alignment and Communication

A strategic plan acts as a shared document that aligns the team’s efforts. It enhances communication within the organization by providing a clear understanding of the organizational goals and the role of each team and individual in achieving these goals. This alignment is critical for fostering teamwork and collaboration.

8. Promotes Long-Term Success

Strategic planning is inherently forward-looking, focusing on long-term success rather than just short-term gains . It encourages organizations to think ahead, anticipate changes, and develop a roadmap for sustainable growth and development.

9. Improves Adaptability to Change

Organizations that engage in strategic planning are better equipped to adapt to changes in the business environment. The strategic planning process involves scenario planning and contingency planning, which prepare organizations to pivot their strategies in response to changing market conditions.

10. Enhances Stakeholder Confidence

A clear and coherent strategic plan enhances the confidence of stakeholders, including investors, customers, and employees. It demonstrates that the organization is forward-thinking, managed effectively, and has a clear vision for the future, which can attract investment, retain talent, and maintain customer loyalty.

In conclusion, strategic planning is an essential practice for any organization aiming for longevity , relevance , and success in today’s dynamic business environment.

How to Implement Strategic Planning Activities

Implementing strategic planning activities requires a systematic approach to ensure that the strategic plan is not only well-created but also effectively executed and integrated into the organization’s daily operations. Here is a quick guide in how to implement them:

1. Preparation and Engagement

• Secure Executive Buy-in: Ensure that top management supports the strategic planning process, as their leadership and commitment are crucial for success.
• Assemble the Planning Team: Form a diverse team that includes representatives from various departments to bring in multiple perspectives.
• Define the Scope and Timeline: Clearly outline the scope of the strategic planning process and establish a realistic timeline for completion.

2. Environmental Scanning

• Conduct a SWOT Analysis: Analyze the organization’s internal strengths and weaknesses, as well as external opportunities and threats.
• Perform a PESTLE Analysis: Examine political, economic, social, technological, legal, and environmental factors that could impact the organization.
• Market and Competitive Analysis: Assess the market and your competitors to identify trends, opportunities, and challenges .

3. Vision, Mission, and Goals Setting

• Define or Revisit the Vision and Mission: Ensure that the organization’s vision and mission are clear, inspiring, and reflective of its long-term aspirations.
• Set Strategic Goals: Based on the analysis conducted, set specific, measurable, achievable, relevant, and time-bound (SMART) goals that align with the vision and mission.

4. Strategy Formulation

• Identify Strategic Options: Brainstorm and list possible strategies for achieving the strategic goals.
• Evaluate and Select Strategies: Assess the feasibility, risks, and benefits of each strategy to select the most effective ones.
• Develop Action Plans: For each chosen strategy, develop detailed action plans including tasks, timelines, responsibilities, and resources needed.

5. Implementation

• Communicate the Plan: Share the strategic plan with all stakeholders to ensure understanding and buy-in. Clear communication is critical for successful implementation.
• Allocate Resources: Ensure that the necessary resources (budget, personnel, technology) are allocated to support the implementation of the strategic plan.
• Integrate into Operations: Integrate strategic tasks and objectives into the daily operations and individual job responsibilities across the organization.

Tips for Successful Implementation

• Leadership Commitment: Continuous support and involvement from leadership are vital throughout the process.
• Stakeholder Engagement: Engage employees and other stakeholders early and often to build support and ensure alignment.
• Flexibility: Be prepared to adapt strategies as needed in response to internal changes or external market shifts.
• Communication: Maintain open and ongoing communication to keep everyone informed and engaged.
• Accountability: Assign clear responsibilities and hold individuals accountable for their part in the implementation process.

A Case Study Using Strategic Planning Activities for Sustainable Growth

EasyCodeLines Corporation is a global technology company that specializes in software development and IT services.

Over the years, the company has experienced rapid growth and expansion, but its leadership recognized the need for a more structured approach to ensure sustained growth, competitive advantage, and adaptability in the dynamic tech industry.

• Lack of a clear strategic direction: EasyCodeLines Corporation lacked a cohesive and well-defined strategic plan that could guide its growth initiatives effectively.
• Inefficient resource allocation: Resources were often allocated without a clear understanding of their alignment with strategic objectives, leading to inefficiencies.
• Limited adaptability: The tech industry evolves rapidly, and EasyCodeLines Corporation needed a mechanism to adapt to changing market dynamics more effectively.
• Communication and alignment: Ensuring that all employees understood and were aligned with the company’s strategic goals was a challenge.

Implementation of Strategic Planning Activities

1. Preparation and Engagement:

• Secure Executive Buy-in: The CEO and top management fully endorsed the strategic planning process, highlighting its importance for the company’s future.
• Assemble the Planning Team: A cross-functional team was formed, including representatives from product development, marketing, sales, and finance, to provide diverse perspectives.
• Define the Scope and Timeline: A clear scope for the strategic planning process was established, and a realistic timeline was set for completion.

2. Environmental Scanning:

• SWOT Analysis: Workshops were conducted to identify internal strengths and weaknesses, as well as external opportunities and threats.
• PESTLE Analysis: A thorough analysis of political, economic, social, technological, legal, and environmental factors was performed to understand their impact.
• Market and Competitive Analysis: EasyCodeLines Corporation assessed market trends and analyzed competitors to identify opportunities and challenges.

3. Vision, Mission, and Goals Setting:

• Define Vision and Mission: The company revisited and refined its vision and mission statements to better reflect its long-term aspirations.
• Set Strategic Goals: Based on the analysis, SMART goals were established, ensuring they were specific, measurable, achievable, relevant, and time-bound.

4. Strategy Formulation:

• Identify Strategic Options: Brainstorming sessions generated a range of strategic options for achieving the established goals.
• Evaluate and Select Strategies: The leadership team assessed each strategy’s feasibility, risks, and benefits, selecting the most effective ones.
• Develop Action Plans: Detailed action plans were created for each chosen strategy, specifying tasks, timelines, responsibilities, and resource requirements.

5. Implementation:

• Communicate the Plan: The strategic plan was shared across all levels of the organization through clear and frequent communication channels.
• Allocate Resources: Resources were allocated in alignment with the strategic plan, ensuring that budget, personnel, and technology supported the chosen strategies.
• Integrate into Operations: Strategic objectives were integrated into daily operations and individual job responsibilities, fostering alignment throughout the organization.

Results and Impact

• Clear Direction and Focus: The strategic plan provided EasyCodeLines Corporation with a clear sense of direction, ensuring that all employees were aligned and working toward common goals.
• Improved Resource Allocation: Resources were allocated more efficiently, with a focus on initiatives that offered the greatest return on investment, reducing wastage.
• Enhanced Organizational Performance: The focus on performance and continuous improvement led to increased efficiency and effectiveness across the organization, resulting in improved financial performance.
• Market and Competitive Analysis: Regular analysis helped EasyCodeLines Corporation adapt to market trends and stay ahead of competitors, enabling innovation and maintaining its competitive edge.
• Effective Risk Management: The strategic planning process allowed the company to foresee potential risks and develop strategies to mitigate them, ensuring stability and continuity.
• Team Alignment and Communication: The strategic plan fostered alignment and improved communication within the organization, enhancing teamwork and collaboration.
• Long-Term Success: EasyCodeLines Corporation now has a roadmap for sustainable growth and development, promoting long-term success rather than short-term gains.
• Adaptability to Change: The strategic planning process enabled the company to adapt to changes in the business environment by anticipating future scenarios and preparing for them.
• Stakeholder Confidence: The clear and coherent strategic plan enhanced the confidence of investors, customers, and employees, attracting investment, retaining talent, and maintaining customer loyalty.

In conclusion, EasyCodeLines Corporation’s systematic implementation of strategic planning activities has helped the company navigate the complexities of the tech industry, achieve sustained growth, and maintain its competitive advantage in a dynamic market.

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4 Strategic Planning Exercises That You Should Do Annually Start with a SWOT framework for every department. That's short for 'strengths, weaknesses, opportunities and threats.'

By David Ciccarelli • Jan 22, 2016

Opinions expressed by Entrepreneur contributors are their own.

Strategic planning, carried out by senior members of a company's leadership team, is typically used to reaffirm corporate objectives and establish new ones, set goals, align resources and articulate in detail the direction, tactics and activities that the entire organization will engage in.

Related: A SWOT Analysis Provides a Full Picture When Looking at a Product and a Brand

The strategic plans that result are common to established organizations with a few years under their belts; they differ from the business plans startups use as they work to get off the ground.

Indeed, strategic plans draw on their companies' historical data, institutional knowledge and their employees' collective experience. In the end, these factors result in a robust and clear vision for how the upcoming year will play out.

If you yourself have completed a strategic plan of your own, one of two things likely happened. Either the plan was completed, with everyone seemingly buying into it before it was stored somewhere in the depths of your company where it collected dust.

Or else the plan became a living document and was referred to at monthly and quarterly meetings, then at year's end, when it was revisited during another annual strategic review.

It's the latter kind of plan that is obviously more effective. To achieve it, here are four exercises you can engage your leadership team in, and if appropriate, loop in more members from the rest of your organization.

1. SWOT analysis, on a department-by-department basis

Time: 30 minutes x number of departments

Who: executive team

It's possible that you got your own first exposure to business management tools with the SWOT framework (strengths, weaknesses, opportunities and threats), a two-by-two grid where strengths, weaknesses, opportunities and threats are put under the microscope.

In order to not miss vital details, you should conduct a SWOT analysis for each department. For instance, a SWOT analysis, seen through the lens of the finance department will differ greatly than that of the IT group. As you can imagine, the opportunities available to your sales department vary from those being explored by your customer service people.

By engaging the entire executive team, you'll create a venue for a healthy dialogue about every individual department.

Related: Add This Dimension to a Traditional Business Analysis for a Fuller Marketing Plan

2. Start, stop, continue

Time: 60 minutes x number of departments

Who: Small groups in each department

In most organizations, there's an intuitive sense of what's working and what isn't. To capture this sentiment in a safe environment, try a Start, Stop and Continue session. This session is best kept to an hour, with 20 minutes dedicated to each section.

Begin with the "Start," a brainstorm of all those activities you should start doing, and add the tools and technologies that you should at least start investigating. You'll likely hear requests for upgraded technology, cutting-edge software tools and new positions. All suggestions are valid.

Since time is finite, you'll need to make room for these new initiatives, which leads to "Stop," a list of those activities, bad habits and other issues that everyone agrees should stop immediately. This can even include declaring that a project once and for all is dead and that everyone will stop wasting time discussing it. End the session on a brighter note by identifying those activities that people are actively engaged in and are most meaningful.

During the "Continue" portion of the working session, management should express appreciation for all the great things everyone is doing, but put out the challenge for all staffers to raise their game.

At our company, we've identified excellence as a core value, and as such have embraced the notion of continuous improvement. It's this idea that encourages us to strive for greater heights.

3. Employee engagement survey

Time: 60 minutes per person

Who: entire company

Each year, we request feedback across the entire company in an anonymous employee engagement survey. This CORE Strategy assessment (CORE = climate, organization, relationships, employees) was developed to facilitate a strategic-planning process.

This particular survey includes more than 100 questions, asking participants to rate how likely they agree or disagree with a statement. Questions are grouped by themes, such as training, equipment, management, financial health, career opportunities and more.

Knowing the perceptions of the employees and leadership team will provide incredible insight to your company's operations. It's also imperative that you discuss the findings, summarize the key takeaways and commit to improving those issues clearly identified by all those who completed the survey.

Never be afraid to discuss a matter revealed in the survey, especially if it comes up multiple times. Your employees know you're struggling in that area because it was their words that identified it in the first place.

So, acknowledge the issue and set about making positive change.

4. Updating of your plan

Finally, it's time to launch your strategic plan, whether this occurs by way of a Word document, Google Doc or Apple Pages file. Go to the source document and start typing. Expect to dedicate 40 to 100 hours to do it correctly. What's crucial is that you put your ideas down in writing.

Own your organization's strengths, weaknesses, threats and opportunities. Commit to starting new initiatives, stopping others and renewing efforts in well-performing areas. All the while, consider vital input from employees.

By repeating these processes annually, you'll transform your organization from one where the status quo is acceptable to one that involves everyone and embraces the change that has been presented, discussed and committed to.

Related: Use These 3 Analysis Tools to Prepare a Killer Business Plan

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12 Strategic Planning Exercises to Help You Get Amazing Results Next Year

by Greg Head | Dec 28, 2016

If you are like most early-stage entrepreneurs, you set aggressive goals. You probably got a lot done this year, but you still came up short on achieving everything on your plan. Now it’s time to assess how you did this year and determine what needs to happen next year.

When you fell short, did you under-execute or did you set your goals too high? It was probably a little of both.

Great execution requires serious planning, especially as your team grows. Making clear strategic decisions and aligning everyone to the same goals are powerful “force multipliers” for your business. Strategy is simply the answer to the bigger questions, and what your execution depends on.

If you’re not taking time every quarter to ask deep questions and create goals for your company, you’re in a state of MSU (“Making Sh#% Up”). MSU creates misalignment, confusion, frustration, and the bad habit of missed commitments. This problem multiplies as your business grows.

Here are 12 powerful strategy exercises to help you think differently, set strategic priorities, align your plans, and get better results.

Strategic Planning Basics

These are the simple, time-tested strategic planning questions that are widely used in goal-setting, prioritization, and execution:

• Strategic Planning – What’s the current situation? What are we trying to accomplish? What do we need to do to get there from here in the next quarter, year, or 3 years? (see Strategic Planning for Dummies)
• SWOT Analysis – What are our internal Strengths and Weaknesses?  What are our external Opportunities and Threats? ( SWOT  explained)
• Continuous Improvement – What is working? What’s not working and needs to be improved? What lessons have we learned? ( Continuous Improvement  explained)
• People & Organization – Do we have the right people in the right roles? (Jim Collins calls this “A-players in key seats.”) Are all the major functions and priorities of the business “owned” by responsible leaders? How does our organization, staff, and culture need to change to accomplish our goals?

Check out Verne Harnish’s One-Page Strategic Plan and checklist for some simple tools to guide your discussion and final result.

Getting the Big Things Right

These questions will keep you out of the weeds and focus you on the real reasons you are in business:

• Serving Stakeholders  How well did we serve our stakeholders–employees, customers, partners, owners/investors, and our community? Which of these did we serve best and worst? How can we improve? (see  Shareholders First? ,  Harvard Business Review)
• Purpose and Values – Did we stay true to our stated Purpose (our larger cause)? Did we live up to (or fall short of) our stated Values? Are we hiring and firing to our Purpose and Values?
• The Dan Sullivan Question – If we were having this discussion 3 years from today, and we were looking back over those 3 years, what has to have happened for us to feel happy with our progress? ( The Dan Sullivan Question, Dan Sullivan of Strategic Coach)
• Hedgehog Concept – Three questions: 1) What are we deeply passionate about? 2) What can we be the best at?  3) What drives our economic or resource engine? Where do these three intersect (our hedgehog focus)? ( Hedgehog Concept , in “Good to Great,” by Jim Collins)

New Thinking Creates Different Results

These questions will help you expand your thinking and see things differently. You can make room for more productive actions when you let go of bad habits, unproductive beliefs, and outdated processes:

• New Possibilities – What would we do if we could not fail? What would we do if we had no fear and no excuses? What would be possible if we had no limits on our resources, staff, or time?
• Stop Doing List – What thoughts, beliefs, and habits are no longer useful and should be left in the past? What types of customers and employees should we stop pursuing/hiring? Which initiatives should be stopped so we can use the resources more productively?
• Fire Your Old Self – If you fired yourself and hired the best candidate in the world to replace you, what would they do differently to get better results? How can you start doing that immediately? Who do you need to be to create the results you want?
• The One Thing – What’s the ONE Thing we can do right now, and by doing it everything else will be easier or unnecessary? (see Gary Keller’s “ The One Thing”)

Even disciplined entrepreneurs who take planning seriously don’t accomplish all of their big goals. They face unexpected internal challenges, external forces they can’t control, and massive “learning opportunities.” No problem, just keep moving and start again.

The growth game is won by the leaders and teams who keep their eyes on the big goals and continually adjust to make progress. Keep moving forward.

80 Fun Strategic Planning Activities and Ideas!

Ebook , Compilations , Strategy , Tools , Creativity , Performance , Fun Strategic Planning , Strategic Planning , Strategic Thinking , Collaboration

Do you dread strategy meetings, especially the ones without any fun strategic planning activities ?

Really, we’re among friends, so you can be completely truthful in your answer: Do you REALLY, REALLY DREAD strategy meetings?

Of course, you dread them. Every executive dreads strategic planning. I know I do.

The reason is while it is important for organizations, participants hardly ever see the connection between participation and positive changes for brands and customers.

While a strategic planning process may promise to deliver real objectives and tactics, it often never happens as promised. Senior executives may say they want disruptive ideas, but they really want ideas that are easy to grasp and fit the current system. And who wants to waste precious time on trying to imagine and plan things an organization should pursue but ultimately never will?

That is why wrapping strategy meetings in creative thinking exercises and the appropriate amount of fun and diversion is optimum.

80+ Fun Strategic Planning Activities and Ideas!

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We’ve been facilitating fun strategic planning activities for years, so it's good to define how we think about it. 

Fun strategic planning is an experience that :

• Is highly collaborative among engaged groups
• Is mentally stimulating for everyone who participates
• Fosters people who are eager to participate in future strategic planning initiatives
• Leads to action and results 

While that definition may sound impossible, it's absolutely a reality when you approach strategic planning in a new way.  Across our client engagements , here are links to 80+ activities and ideas for making strategy more fun!

10 Moments Begging for Fun Strategic Planning

11 boring details for making strategy planning fun, 4 things to always have ready for fun strategic planning activities, 11 things about toys during strategy planning meetings, 3 stuffed toys that are ideal for strategy activities, 4 times to avoid toys, 6 last-minute creative ideas for fun strategy exercises, 9 ways to keep strategy meetings fresh, 12 ideas for spicing up strategy meetings in the boardroom via the bedroom, 11 ideas for fun strategic planning activities, 8 icebreaker activities, 5 fun strategic planning activities, 3 short, funny strategy questions, 7 types of strategy planning fun, 11 fun strategic planning approaches that are not stuffy for work, 7 ways groups can collaborate on fun strategic planning, new ways to productively translate fun strategic planning activities into virtual and hybrid meetings.

Even though fun strategy meetings seem elusive, we routinely make them productive, enjoyable, and fun for the organizations, senior executives, and teams with which we work. Enjoy this dive into our most successful approaches.

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• 6 steps for operations leaders to build ...

6 steps for operations leaders to build a better annual plan

An effective annual plan is critical to keep your teams, departments, and company together, working toward the same goals. 

As an operations leader, you oversee how your organization runs its business. By reviewing how your company performed in the past year, you and your operations teams can identify which strategies worked—and which fell short—to build an effective annual plan designed to maximize the impact of every department.

Here’s what you need to know about building a successful annual plan.

Connect everyone's work to company-wide goals

87% of workers with individual goals tied to company-wide goals say their business is well-prepared to meet customer expectations. Discover how Asana can transform the way your organization aligns work to goals.

Annual plans drive clarity and accountability 

With an annual plan, departments can start the year off with a strong understanding of the overall vision and how their work contributes to larger business goals. Without an overarching plan, it can be difficult to understand how a specific project or initiative moves the business forward. 

Clear goals establish benchmarks for project progress

Your annual plan shouldn’t be a set-it-and-forget-it goal. Rather, periodically check project progress against your annual plan so you can see how your operations teams are doing. Doing this throughout the year will not only give you a sense of how your teams are tracking towards their overall goals—it can also help you understand if they’re ahead or behind schedule, and adjust accordingly. 

If you notice that a specific initiative is not on track to meet the strategic goals outlined in your company’s annual plan, you can use this data to pivot and double down on—or divest from—specific initiatives. 

Establish concrete goals for a specific time period

The more specific your goal, the more concrete your action plan. Providing detailed and specific goals gives your employees a clear understanding of what work to prioritize and what deliverables they’re responsible for. 

Make sure your goals are measurable, as well. Clear KPIs and OKRs demonstrate how tangible work connects back to larger business goals. 

6 steps for annual business planning

The annual planning process often takes place near the end of the calendar year or at the end of your company’s fiscal year. As you get closer to annual planning time, consider these six steps of the annual planning process. 

1. Reflect on previous strategies—and develop new ones

Before your business can start planning for next year, ask yourself, your stakeholders, and your operations teams: How did we perform against the strategies laid out in last year’s annual plan?

No matter the answer, use these recent data points to steer your decision-making when building your next annual plan. That could mean doubling down on big programs or initiatives born in the last year—or going a different direction entirely. 

A well-built annual plan factors in reflection on what did and didn’t work—and improves off of it.

2. Transform your business’s greatest needs into goals

After reflecting on last year’s performance, hone in on the most significant growth and improvement opportunities. Use this for guidance as you construct company- and department-wide goals.

It helps to have a consistent framework for goals across the business, to accelerate the goal-setting process and ensure greater understanding of goals within all corners of the organization.

The exact goal framework you use will depend on your company, but a few good ones to consider are: 

The Objectives and Key Results (OKR) method , which helps your business set goals using the framework “I will [objective] as measured by [key result].”

Key Performance Indicators (KPIs) , which use leading and lagging indicators to track how you’re performing towards your goals. 

The SMART goals framework , which helps ensure the goals your organization sets are specific, measurable, achievable, realistic, and time-bound.

3. Create an action plan to maximize impact

The next step is to create an action plan for your business to achieve the goals outlined in step three. Your action plan should outline the list of steps your teams need to take to accomplish their goals. Think of an action plan like the map you’ll use to arrive at your final destination. 

From there, delegate the work laid out in the action plan to specific teams and departments. Connecting the work that your operations teams complete to larger company goals makes it easier for each team to understand the impact their work has on the business.

4. Ensure the annual plan is everyone’s plan

Not everyone can be involved in building the annual plan for your company—but every team member should feel like their work is seen and accounted for in the plan. 

As the annual plan comes together, meet with leaders and employees across the business to ensure varying perspectives and priorities are factored into the final product. This step is critical for getting buy-in and generating excitement across the business. 

You don’t want to be in a position where you’re just telling everyone what the annual plan is—you want to bring every department along for the journey and get them excited about what they’re working toward in the coming year. Consider conducting a presentation to not only share the company plan and why this plan matters, but also to outline timelines and how departments will use it to achieve the company’s goals. 

5. Execute your strategy, monitor metrics, and adjust as needed

At this point, your organization’s annual plan is completed, but nothing is ever fully set in stone. As the year progresses, make sure you’re continually monitoring success metrics and KPIs. If the results of your strategies are not behaving as you expected them to, it’s important to adjust so your business will still hit the goals outlined in your annual plan. 

6. Repeat again for next year 

At the end of the year, it’s time to start the process over again. Align with your strategic plan, look back at the past year’s results, and create another plan to achieve those business goals. 

What does a good annual plan include?

Effective annual plans should contain components that are essential for completing the work outlined in the plan itself, and context for why this plan will be effective. Here are a few examples of components you would find in an annual plan:

Reports of the previous year’s performance: Your company’s annual plan for the upcoming year should be based on the data from the previous year’s performance. This provides context for your teams as to what they’re capable of doing within one calendar year.

Budget estimates: A common KPI investors track is return on investment (ROI). Knowing how much money different teams are spending makes it easier for your organization to calculate ROI and adjust strategies. Providing budget estimations also gives departments the context they need for the amount of resources they have at their disposal for the year.

Clear and specific goals: Annual plans should use the SMART goal framework so that your company can easily measure progress and report back on it later. 

Important milestones: Your business can accomplish a lot of work within one year—but to do that, each department needs to know how they're doing. Milestones operate like checkpoints, giving teams and departments a sense of direction and an idea of how they're pacing against annual goals.

Project buffers and contingency plans: Unexpected things happen all the time, and it’s better to be prepared than caught off guard. Develop a contingency plan for how your organization will get back on track in the event of an unexpected roadblock. Also set aside some resource buffers, such as a small portion of your company’s budget, to accommodate for unexpected expenses.

Gear up for next year

After a year of hard work, it’s time to reflect back and plan for more great things in the future. While annual planning takes time, collaboration, and thoughtful strategy, the efforts show in the form of your business success. 

Still have questions? We have answers. 

What is annual planning.

Annual planning is the act of developing a strategy for the upcoming year based on the learnings from the current year’s performance. This provides an opportunity for your operations teams to iterate on strategy from the past year and incorporate those learnings into your upcoming plans. 

In essence, your annual plan should contain: 

The goals your business needs to achieve

A strategy for how your organization will hit those goals

Clear tactics for what each department will work on

Any important milestones that benchmark progress

What’s the difference between annual planning and strategic planning? 

Strategic planning and annual planning are both important business planning methods that help set your team's strategy for the future. However, the scale of these planning strategies are different.

Strategic planning is the long-term strategy for your business. This encompasses a basic roadmap of how business should develop within three to five years. You will use your strategic planning process to inform your annual plan. 

Annual planning represents all of the goals and strategies that you want your business to achieve, similar to a strategic goal. The main difference here is that an annual plan only encompasses one calendar year, instead of a few years. If you think of it like a pie, annual planning is just one slice of the larger strategic plan pie.

When should your operations teams start annual planning?

Begin your annual planning process during Q4, so you can begin day one of Q1 with your plan in hand. If that’s not an option, do your annual planning as close to the start of the new year as possible. 

There are two benefits to planning earlier. First off, you’ll beat the end-of-year crunch, and avoid the stress that traditionally comes with the end of the year. Additionally, if you run an efficient annual planning process with your leadership team, your operations teams will still be free to execute on high-impact projects throughout Q4.

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Table of Contents

What is a business plan, the advantages of having a business plan, the types of business plans, the key elements of a business plan, best business plan software, common challenges of writing a business plan, become an expert business planner, business planning: it’s importance, types and key elements.

Every year, thousands of new businesses see the light of the day. One look at the  World Bank's Entrepreneurship Survey and database  shows the mind-boggling rate of new business registrations. However, sadly, only a tiny percentage of them have a chance of survival.   

According to the Bureau of Labor Statistics, about 20% of small businesses fail in their first year, about 50% in their fifth year.

Research from the University of Tennessee found that 44% of businesses fail within the first three years. Among those that operate within specific sectors, like information (which includes most tech firms), 63% shut shop within three years.

Several  other statistics  expose the abysmal rates of business failure. But why are so many businesses bound to fail? Most studies mention "lack of business planning" as one of the reasons.

This isn’t surprising at all. 

Running a business without a plan is like riding a motorcycle up a craggy cliff blindfolded. Yet, way too many firms ( a whopping 67%)  don't have a formal business plan in place. 

It doesn't matter if you're a startup with a great idea or a business with an excellent product. You can only go so far without a roadmap — a business plan. Only, a business plan is so much more than just a roadmap. A solid plan allows a business to weather market challenges and pivot quickly in the face of crisis, like the one global businesses are struggling with right now, in the post-pandemic world.  

But before you can go ahead and develop a great business plan, you need to know the basics. In this article, we'll discuss the fundamentals of business planning to help you plan effectively for 2021.  

Now before we begin with the details of business planning, let us understand what it is.

No two businesses have an identical business plan, even if they operate within the same industry. So one business plan can look entirely different from another one. Still, for the sake of simplicity, a business plan can be defined as a guide for a company to operate and achieve its goals.  

More specifically, it's a document in writing that outlines the goals, objectives, and purpose of a business while laying out the blueprint for its day-to-day operations and key functions such as marketing, finance, and expansion.

A good business plan can be a game-changer for startups that are looking to raise funds to grow and scale. It convinces prospective investors that the venture will be profitable and provides a realistic outlook on how much profit is on the cards and by when it will be attained. 

However, it's not only new businesses that greatly benefit from a business plan. Well-established companies and large conglomerates also need to tweak their business plans to adapt to new business environments and unpredictable market changes. 

Before getting into learning more about business planning, let us learn the advantages of having one.

Since a detailed business plan offers a birds-eye view of the entire framework of an establishment, it has several benefits that make it an important part of any organization. Here are few ways a business plan can offer significant competitive edge.

• Sets objectives and benchmarks: Proper planning helps a business set realistic objectives and assign stipulated time for those goals to be met. This results in long-term profitability. It also lets a company set benchmarks and Key Performance Indicators (KPIs) necessary to reach its goals. 
• Maximizes resource allocation: A good business plan helps to effectively organize and allocate the company’s resources. It provides an understanding of the result of actions, such as, opening new offices, recruiting fresh staff, change in production, and so on. It also helps the business estimate the financial impact of such actions.
• Enhances viability: A plan greatly contributes towards turning concepts into reality. Though business plans vary from company to company, the blueprints of successful companies often serve as an excellent guide for nascent-stage start-ups and new entrepreneurs. It also helps existing firms to market, advertise, and promote new products and services into the market.
• Aids in decision making: Running a business involves a lot of decision making: where to pitch, where to locate, what to sell, what to charge — the list goes on. A well thought-out business plan provides an organization the ability to anticipate the curveballs that the future could throw at them. It allows them to come up with answers and solutions to these issues well in advance.
• Fix past mistakes: When businesses create plans keeping in mind the flaws and failures of the past and what worked for them and what didn’t, it can help them save time, money, and resources. Such plans that reflects the lessons learnt from the past offers businesses an opportunity to avoid future pitfalls.
• Attracts investors: A business plan gives investors an in-depth idea about the objectives, structure, and validity of a firm. It helps to secure their confidence and encourages them to invest. 

Now let's look at the various types involved in business planning.

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Business plans are formulated according to the needs of a business. It can be a simple one-page document or an elaborate 40-page affair, or anything in between. While there’s no rule set in stone as to what exactly a business plan can or can’t contain, there are a few common types of business plan that nearly all businesses in existence use.  

Here’s an overview of a few fundamental types of business plans. 

• Start-up plan: As the name suggests, this is a documentation of the plans, structure, and objections of a new business establishments. It describes the products and services that are to be produced by the firm, the staff management, and market analysis of their production. Often, a detailed finance spreadsheet is also attached to this document for investors to determine the viability of the new business set-up.
• Feasibility plan: A feasibility plan evaluates the prospective customers of the products or services that are to be produced by a company. It also estimates the possibility of a profit or a loss of a venture. It helps to forecast how well a product will sell at the market, the duration it will require to yield results, and the profit margin that it will secure on investments. 
• Expansion Plan: This kind of plan is primarily framed when a company decided to expand in terms of production or structure. It lays down the fundamental steps and guidelines with regards to internal or external growth. It helps the firm to analyze the activities like resource allocation for increased production, financial investments, employment of extra staff, and much more.
• Operations Plan: An operational plan is also called an annual plan. This details the day-to-day activities and strategies that a business needs to follow in order to materialize its targets. It outlines the roles and responsibilities of the managing body, the various departments, and the company’s employees for the holistic success of the firm.
• Strategic Plan: This document caters to the internal strategies of the company and is a part of the foundational grounds of the establishments. It can be accurately drafted with the help of a SWOT analysis through which the strengths, weaknesses, opportunities, and threats can be categorized and evaluated so that to develop means for optimizing profits.

There is some preliminary work that’s required before you actually sit down to write a plan for your business. Knowing what goes into a business plan is one of them. 

Here are the key elements of a good business plan:

• Executive Summary: An executive summary gives a clear picture of the strategies and goals of your business right at the outset. Though its value is often understated, it can be extremely helpful in creating the readers’ first impression of your business. As such, it could define the opinions of customers and investors from the get-go.  
• Business Description: A thorough business description removes room for any ambiguity from your processes. An excellent business description will explain the size and structure of the firm as well as its position in the market. It also describes the kind of products and services that the company offers. It even states as to whether the company is old and established or new and aspiring. Most importantly, it highlights the USP of the products or services as compared to your competitors in the market.
• Market Analysis: A systematic market analysis helps to determine the current position of a business and analyzes its scope for future expansions. This can help in evaluating investments, promotions, marketing, and distribution of products. In-depth market understanding also helps a business combat competition and make plans for long-term success.
• Operations and Management: Much like a statement of purpose, this allows an enterprise to explain its uniqueness to its readers and customers. It showcases the ways in which the firm can deliver greater and superior products at cheaper rates and in relatively less time. 
• Financial Plan: This is the most important element of a business plan and is primarily addressed to investors and sponsors. It requires a firm to reveal its financial policies and market analysis. At times, a 5-year financial report is also required to be included to show past performances and profits. The financial plan draws out the current business strategies, future projections, and the total estimated worth of the firm.

The importance of business planning is it simplifies the planning of your company's finances to present this information to a bank or investors. Here are the best business plan software providers available right now:

• Business Sorter

The importance of business planning cannot be emphasized enough, but it can be challenging to write a business plan. Here are a few issues to consider before you start your business planning:

• Create a business plan to determine your company's direction, obtain financing, and attract investors.
• Identifying financial, demographic, and achievable goals is a common challenge when writing a business plan.
• Some entrepreneurs struggle to write a business plan that is concise, interesting, and informative enough to demonstrate the viability of their business idea.
• You can streamline your business planning process by conducting research, speaking with experts and peers, and working with a business consultant.

Whether you’re running your own business or in-charge of ensuring strategic performance and growth for your employer or clients, knowing the ins and outs of business planning can set you up for success. 

Be it the launch of a new and exciting product or an expansion of operations, business planning is the necessity of all large and small companies. Which is why the need for professionals with superior business planning skills will never die out. In fact, their demand is on the rise with global firms putting emphasis on business analysis and planning to cope with cut-throat competition and market uncertainties.

While some are natural-born planners, most people have to work to develop this important skill. Plus, business planning requires you to understand the fundamentals of business management and be familiar with business analysis techniques . It also requires you to have a working knowledge of data visualization, project management, and monitoring tools commonly used by businesses today.   

Simpliearn’s Executive Certificate Program in General Management will help you develop and hone the required skills to become an extraordinary business planner. This comprehensive general management program by IIM Indore can serve as a career catalyst, equipping professionals with a competitive edge in the ever-evolving business environment.

What Is Meant by Business Planning?

Business planning is developing a company's mission or goals and defining the strategies you will use to achieve those goals or tasks. The process can be extensive, encompassing all aspects of the operation, or it can be concrete, focusing on specific functions within the overall corporate structure.

What Are the 4 Types of Business Plans?

The following are the four types of business plans:

Operational Planning

This type of planning typically describes the company's day-to-day operations. Single-use plans are developed for events and activities that occur only once (such as a single marketing campaign). Ongoing plans include problem-solving policies, rules for specific regulations, and procedures for a step-by-step process for achieving particular goals.

Strategic Planning

Strategic plans are all about why things must occur. A high-level overview of the entire business is included in strategic planning. It is the organization's foundation and will dictate long-term decisions.

Tactical Planning

Tactical plans are about what will happen. Strategic planning is aided by tactical planning. It outlines the tactics the organization intends to employ to achieve the goals outlined in the strategic plan.

Contingency Planning

When something unexpected occurs or something needs to be changed, contingency plans are created. In situations where a change is required, contingency planning can be beneficial.

What Are the 7 Steps of a Business Plan?

The following are the seven steps required for a business plan:

Conduct Research

If your company is to run a viable business plan and attract investors, your information must be of the highest quality.

Have a Goal

The goal must be unambiguous. You will waste your time if you don't know why you're writing a business plan. Knowing also implies having a target audience for when the plan is expected to get completed.

Create a Company Profile

Some refer to it as a company profile, while others refer to it as a snapshot. It's designed to be mentally quick and digestible because it needs to stick in the reader's mind quickly since more information is provided later in the plan.

Describe the Company in Detail

Explain the company's current situation, both good and bad. Details should also include patents, licenses, copyrights, and unique strengths that no one else has.

Create a marketing plan ahead of time.

A strategic marketing plan is required because it outlines how your product or service will be communicated, delivered, and sold to customers.

Be Willing to Change Your Plan for the Sake of Your Audience

Another standard error is that people only write one business plan. Startups have several versions, just as candidates have numerous resumes for various potential employers.

Incorporate Your Motivation

Your motivation must be a compelling reason for people to believe your company will succeed in all circumstances. A mission should drive a business, not just selling, to make money. That mission is defined by your motivation as specified in your business plan.

What Are the Basic Steps in Business Planning?

These are the basic steps in business planning:

Summary and Objectives

Briefly describe your company, its objectives, and your plan to keep it running.

Services and Products

Add specifics to your detailed description of the product or service you intend to offer. Where, why, and how much you plan to sell your product or service and any special offers.

Conduct research on your industry and the ideal customers to whom you want to sell. Identify the issues you want to solve for your customers.

Operations are the process of running your business, including the people, skills, and experience required to make it successful.

How are you going to reach your target audience? How you intend to sell to them may include positioning, pricing, promotion, and distribution.

Consider funding costs, operating expenses, and projected income. Include your financial objectives and a breakdown of what it takes to make your company profitable. With proper business planning through the help of support, system, and mentorship, it is easy to start a business.

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Business Planning

Written by True Tamplin, BSc, CEPF®

Reviewed by subject matter experts.

Updated on June 08, 2023

Get Any Financial Question Answered

Table of contents, what is business planning.

Business planning is a crucial process that involves creating a roadmap for an organization to achieve its long-term objectives. It is the foundation of every successful business and provides a framework for decision-making, resource allocation, and measuring progress towards goals.

Business planning involves identifying the current state of the organization, determining where it wants to go, and developing a strategy to get there.

It includes analyzing the market, identifying target customers, determining a competitive advantage, setting financial goals, and establishing operational plans.

The business plan serves as a reference point for all stakeholders , including investors, employees, and partners, and helps to ensure that everyone is aligned and working towards the same objectives.

Importance of Business Planning

Business planning plays a critical role in the success of any organization, as it helps to establish a clear direction and purpose for the business. It allows the organization to identify its goals and objectives, develop strategies and tactics to achieve them, and establish a framework of necessary resources and operational procedures to ensure success.

Additionally, a well-crafted business plan can serve as a reference point for decision-making, ensuring that all actions taken by the organization are aligned with its long-term objectives.

It can also facilitate communication and collaboration among team members, ensuring that everyone is working towards a common goal.

Furthermore, a business plan is often required when seeking funding or investment from external sources, as it demonstrates the organization's potential for growth and profitability. Overall, business planning is essential for any organization looking to succeed and thrive in a competitive market.

Business Planning Process

Step 1: defining your business purpose and goals.

Begin by clarifying your business's purpose, mission, and long-term goals. These elements should align with the organization's core values and guide every aspect of the planning process.

Step 2: Conducting Market Research and Analysis

Thorough market research and analysis are crucial to understanding the industry landscape, identifying target customers, and gauging the competition. This information will inform your business strategy and help you find your niche in the market.

Step 3: Creating a Business Model and Strategy

Based on the insights from your market research, develop a business model that outlines how your organization will create, deliver, and capture value. This will inform the overall business strategy, including identifying target markets, value propositions, and competitive advantages.

Step 4: Developing a Marketing Plan

A marketing plan details how your organization will promote its products or services to target customers. This includes defining marketing objectives, tactics, channels, budgets, and performance metrics to measure success.

Step 5: Establishing Operational and Financial Plans

The operational plan outlines the day-to-day activities, resources, and processes required to run your business. The financial plan projects revenue, expenses, and cash flow, providing a basis for assessing the organization's financial health and long-term viability.

Step 6: Reviewing and Revising the Business Plan

Regularly review and update your business plan to ensure it remains relevant and reflects the organization's current situation and goals. This iterative process enables proactive adjustments to strategies and tactics in response to changing market conditions and business realities.

Components of a Business Plan

Executive summary.

The executive summary provides a high-level overview of your business plan, touching on the company's mission, objectives, strategies, and key financial projections.

It is critical to make this section concise and engaging, as it is often the first section that potential investors or partners will read.

Company Description

The company description offers a detailed overview of your organization, including its history, mission, values, and legal structure. It also outlines the company's goals and objectives and explains how the business addresses a market need or problem.

Products or Services

Describe the products or services your company offers, emphasizing their unique features, benefits, and competitive advantages. Detail the development process, lifecycle, and intellectual property rights, if applicable.

Market Analysis

The market analysis section delves into the industry, target market, and competition. It should demonstrate a thorough understanding of market trends, growth potential, customer demographics, and competitive landscape.

Marketing and Sales Strategy

Outline your organization's approach to promoting and selling its products or services. This includes marketing channels, sales tactics, pricing strategies, and customer relationship management .

Management and Organization

This section provides an overview of your company's management team, including their backgrounds, roles, and responsibilities. It also outlines the organizational structure and any advisory or support services employed by the company.

Operational Plan

The operational plan describes the day-to-day operations of your business, including facilities, equipment, technology, and personnel requirements. It also covers supply chain management, production processes, and quality control measures.

Financial Plan

The financial plan is a crucial component of your business plan, providing a comprehensive view of your organization's financial health and projections.

This section should include income statements , balance sheets , cash flow statements , and break-even analysis for at least three to five years. Be sure to provide clear assumptions and justifications for your projections.

Appendices and Supporting Documents

The appendices and supporting documents section contains any additional materials that support or complement the information provided in the main body of the business plan. This may include resumes of key team members, patents , licenses, contracts, or market research data.

Benefits of Business Planning

Helps secure funding and investment.

A well-crafted business plan demonstrates to potential investors and lenders that your organization is well-organized, has a clear vision, and is financially viable. It increases your chances of securing the funding needed for growth and expansion.

Provides a Roadmap for Growth and Success

A business plan serves as a roadmap that guides your organization's growth and development. It helps you set realistic goals, identify opportunities, and anticipate challenges, enabling you to make informed decisions and allocate resources effectively.

Enables Effective Decision-Making

Having a comprehensive business plan enables you and your management team to make well-informed decisions, based on a clear understanding of the organization's goals, strategies, and financial situation.

Facilitates Communication and Collaboration

A business plan serves as a communication tool that fosters collaboration and alignment among team members, ensuring that everyone is working towards the same objectives and understands the organization's strategic direction.

Business planning should not be a one-time activity; instead, it should be an ongoing process that is continually reviewed and updated to reflect changing market conditions, business realities, and organizational goals.

This dynamic approach to planning ensures that your organization remains agile, responsive, and primed for success.

As the business landscape continues to evolve, organizations must embrace new technologies, methodologies, and tools to stay competitive.

The future of business planning will involve leveraging data-driven insights, artificial intelligence, and predictive analytics to create more accurate and adaptive plans that can quickly respond to a rapidly changing environment.

By staying ahead of the curve, businesses can not only survive but thrive in the coming years.

Business Planning FAQs

What is business planning, and why is it important.

Business planning is the process of setting goals, outlining strategies, and creating a roadmap for your company's future. It's important because it helps you identify opportunities and risks, allocate resources effectively, and stay on track to achieve your goals.

What are the key components of a business plan?

A business plan typically includes an executive summary, company description, market analysis, organization and management structure, product or service line, marketing and sales strategies, and financial projections.

How often should I update my business plan?

It is a good idea to review and update your business plan annually, or whenever there's a significant change in your industry or market conditions.

What are the benefits of business planning?

Effective business planning can help you anticipate challenges, identify opportunities for growth, improve decision-making, secure financing, and stay ahead of competitors.

Do I need a business plan if I am not seeking funding?

Yes, even if you're not seeking funding, a business plan can be a valuable tool for setting goals, developing strategies, and keeping your team aligned and focused on achieving your objectives.

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide , a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University , where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon , Nasdaq and Forbes .

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• Serious Planner: $500 - $1,000
• Aggressive Saver: $1,000+

How much will you need each month during retirement?

• Bare Necessities: $1,500 - $2,500
• Moderate Comfort: $2,500 - $3,500
• Comfortable Lifestyle: $3,500 - $5,500
• Affluent Living: $5,500 - $8,000
• Luxury Lifestyle: $8,000+

Part 4: Getting Your Retirement Ready

What is your current financial priority.

• Getting out of debt
• Growing my wealth
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• Building Your Business
• Becoming an Owner
• Business Plans

What Is Business Planning?

Why Business Planning Isn't Just for Startups

Susan Ward wrote about small businesses for The Balance for 18 years. She has run an IT consulting firm and designed and presented courses on how to promote small businesses.

Morsa Images / Getty Images

Business planning takes place when the key stakeholders in a business sit down and flesh out all the goals , strategies, and actions that they envision taking to ensure the business’s survival, prosperity, and growth.

Here are some strategies for business planning and the ways it can benefit your business.

Business planning can play out in many different ways. Anytime upper management comes together to plan for the success of a business, it is a form of business planning. Business planning commonly involves collecting ideas in a formal business plan that outlines a summary of the business's current state, as well as the state of the broader market, along with detailed steps the business will take to improve performance in the coming period.

Business plans aren't just about money. The business plan outlines the general planning needed to start and run a successful business, and that includes profits, but it also goes beyond that. A plan should account for everything from scoping out the competition and figuring out how your new business will fit into the industry to assessing employee morale and planning for how to retain talent.

How Does Business Planning Work?

Every new business needs a business plan —a blueprint of how you will develop your new business, backed by research, that demonstrates how the business idea is viable. If your new business idea requires investment capital, you will have a better chance of obtaining debt or equity financing from financial institutions, angel investors , or venture capitalists if you have a solid business plan to back up your ideas.

Businesses should prepare a business plan, even if they don't need to attract investors or secure loans.

Post-Startup Business Planning

The business plan isn’t a set-it-and-forget-it planning exercise. It should be a living document that is updated throughout the life cycle of your business.

Once the business has officially started, business planning will shift to setting and meeting goals and targets. Business planning is most effective when it’s done on a consistent schedule that revisits existing goals and projects throughout the year, perhaps even monthly. In addition to reviewing short-term goals throughout the year, it's also important to establish a clear vision and lay the path for your long-term success.

Daily business planning is an incredibly effective way for individuals to focus on achieving both their own goals and the goals of the organization.

Sales Forecasting

The sales forecast is a key section of the business plan that needs to be constantly tracked and updated. The sales forecast is an estimate of the sales of goods and services your business is likely to achieve over the forecasted period, along with the estimated profit from those sales. The forecast should take into account trends in your industry, the general economy, and the projected needs of your primary customers.

Cash Flow Analysis

Another crucial component of business planning is cash flow analysis. Avoiding extended cash flow shortages is vital for businesses, and many business failures can be blamed on cash flow problems.

Your business may have a large, lucrative order on the books, but if it can't be invoiced until the job is completed, then you may run into cash flow problems. That scenario can get even worse if you have to hire staff, purchase inventory, and make other expenditures in the meantime to complete the project.

Performing regular cash flow projections is an important part of business planning. If managed properly, cash flow shortages can be covered by additional financing or equity investment.

Business Contingency Planning

In addition to business planning for profit and growth, your business should have a contingency plan. Contingency business planning (also known as business continuity planning or disaster planning) is the type of business planning that deals with crises and worst-case scenarios. A business contingency plan helps businesses deal with sudden emergencies, unexpected events, and new information that could disrupt your business.

The goals of a contingency plan are to:

• Provide for the safety and security of yourself, your employees, and your customers in the event of a fire, flood, robbery, data breach, illness, or some other disaster
• Ensure that your business can resume operations after an emergency as quickly as possible

Business Succession Planning

If your business is a family enterprise or you have specific plans for who you want to take over in the event of your retirement or illness, then you should have a plan in place to hand over control of the business . The issues of management, ownership, and taxes can cause a great deal of discord within families unless a succession plan is in place that clearly outlines the process.

Key Takeaways

• Business planning is when key stakeholders review the state of their business and plan for how they will improve the business in the future.
• Business planning isn't a one-off event—it should be an ongoing practice of self-assessment and planning.
• Business planning isn't just about improving sales; it can also address safety during natural disasters or the transfer of power after an owner retires.

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• Business Essentials

Business Activities: Definition and 3 Main Types

What Are Business Activities?

Business activities include any activity a business engages in for the primary purpose of making a profit. This is a general term that encompasses all the economic activities carried out by a company during the course of business. Business activities, including operating, investing, and financing activities, are ongoing and focused on creating value for shareholders .

Key Takeaways

• Business activities are any events that are undertaken by a corporation for the purpose of earning a profit.
• Operating activities relate directly to the business providing its goods to the market, including manufacturing, distributing, marketing, and selling; they provide most of the company's cash flow and hugely influence its profitability.
• Investing activities relate to the long-term use of cash , such as buying or selling a property or piece of equipment, or gains and losses from investments in financial markets and operating subsidiaries.
• Financing activities include sources of cash from investors or banks, and the uses of cash paid to shareholders, such as payment of dividends or stock repurchases, and the repayment of loans.

Investopedia / Matthew Collins

Understanding Business Activities

There are three main types of business activities: operating, investing, and financing. The cash flows used and created by each of these activities are listed in the  cash flow statement . The cash flow statement is meant to be a reconciliation of net income on an accrual basis to cash flow. Net income is taken from the bottom of the income statement, and the cash impact of balance sheet changes are identified to reconcile back to actual cash inflows and outflows.

Non-cash items previously deducted from net income are added back to determine cash flow; non-cash items previously added to net income are deducted to determine cash flows. The result is a report that gives the investor a summary of business activities within the company on a cash basis, segregated by the specific types of activity.

Operating Business Activities

The first section of the cash flow statement is cash flow from operating activities . These activities include many items from the income statement and the current portion of the balance sheet. The cash flow statement adds back certain non-cash items such as depreciation and amortization . Then changes in balance sheet line items, such as accounts receivable and accounts payable, are either added or subtracted based on their previous impact on net income.

These line items impact the net income on the income statement but do not result in a movement of cash in or out of the company. If cash flows from operating business activities are negative, it means the company must be financing its operating activities through either investing activities or financing activities. Routinely negative operating cash flow is not common outside of nonprofits .

Investing Business Activities

Investing activities are in the second section of the statement of cash flows. These are business activities that are capitalized over more than one year. The purchase of long-term assets is recorded as a use of cash in this section. Likewise, the sale of real estate is shown as a source of cash. The line item " capital expenditures " is considered an investing activity and can be found in this section of the cash flow statement.

Financing Business Activities

The cash flow statement's final section includes financing activities . These include initial public offerings, secondary offerings, and debt financing. The section also lists the amount of cash being paid out for dividends, share repurchases, and interest. Any business activity related to financing and fundraising efforts is included in this section of the cash flow statement.

How Is the Cash Flow Statement Linked to Business Activities?

The cash flows used and created by each of the three main classifications of business activities—operating, investing, and financing—are listed in the cash flow statement. This financial statement is meant to be a reconciliation of net income on an accrual basis to cash flow.

Net income is taken from the bottom of the income statement, and the cash impact of balance sheet changes are identified to reconcile back to actual cash inflows and outflows. Non-cash items previously deducted from or added to net income are added or deducted respectively to determine cash flows. The result is a report that gives the investor a summary of business activities within the company on a cash basis, segregated by the specific types of activity.

What Are Operating Business Activities?

Cash flow from operating business activities, usually the first section of the cash flow statement, includes many items from the income statement and the current portion of the balance sheet. The cash flow statement adds back certain non-cash items such as depreciation and amortization. Then changes in balance sheet line items, such as accounts receivable and accounts payable, are either added or subtracted based on their previous impact on net income. These line items impact the net income on the income statement but do not result in a movement of cash in or out of the company. Routinely negative operating cash flow is not common outside of nonprofits.

What Are Investing Business Activities?

Investing business activities are those that are capitalized over more than one year and usually appear as the second section of the cash flow statement. The purchase of long-term assets is recorded as a use of cash in this section. Likewise, the sale of real estate is shown as a source of cash. The line item "capital expenditures" is considered an investing activity and can be found in this section of the cash flow statement.

What Are Financing Business Activities?

The cash flow statement's final section includes financing business activities. These include initial public offerings, secondary offerings, and debt financing. The section also lists the amount of cash being paid out for dividends, share repurchases, and interest. Any business activity related to financing and fundraising efforts is included in this section of the cash flow statement.

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• Solar Eclipse 2024

The Eclipse Could Bring $1.5 Billion Into States on the Path of Totality

T he total solar eclipse passing through parts of the U.S. on April 8 stands to have a major economic impact on cities across the country as stargazers flock to the path of totality. 

Factors including the date of the eclipse and the number of states in the path of totality means that millions of people will have the opportunity to view the event— and that the cities hosting them could see a combined $1.5 billion injected into their states’ economies.

“That number will include lodging costs for visitors coming from out of state or far away parts of their own state, as well as gas costs and food costs,” says Bulent Temel, assistant professor of practice in economics at the University of Texas at San Antonio, San Antonio, who performed the calculations to arrive at the $1.5 billion figure.

One to four million people are expected to travel for the eclipse, according to Great American Eclipse , an informational site that tracks solar eclipses around the world. The Federal Aviation Administration (FAA) estimates the days leading up to the eclipse will be some of the busiest travel days of the season, with 50,670 flights on Thursday, April 4 and 48,904 flights on Friday, April 5. That means the spending will be spread out: “[The eclipse] is on a Monday, so you might have folks coming Friday, Saturday, Sunday, spending a few days somewhere ahead of the event,” says John Downen, Director of Impact Analysis at Camoin Associates.

Read More : How Cities Around the U.S. Are Celebrating the Eclipse

Many regions along the path of totality have spent months—if not years—preparing for the upcoming surge of visitors and money. Rochester, NY, is expecting 300,000 to 500,000 visitors across the nine - county Greater Rochester region. Local businesses have a slate of specials and planned events the weekend leading up to the event—including eclipse themed beers from local breweries and a three-day pass from the Rochester Museum and Science Center for visitors to attend a range of talks and performances. 

The area’s tourism board says that some hotels have reported demand skyrocketing an average of 1200% for the four-day span leading up to April 8— unusual demand for a Monday in the region’s off-peak season. 

It’s an economic boost that no amount of planning— or marketing—can replicate. “It’s a really great tourism opportunity,” says Shannon Ealy, Director of Communications and Marketing for the Greater Rochester Chamber of Commerce. “You can spend millions of dollars on media buys to get our regional brand out there, but you can't exactly buy the sun and the moon crossing over us.” 

Read More: See the 2024 Solar Eclipse’s Path of Totality

But unfortunate weather could still put a damper on things, especially for businesses that might be stocking up for an influx of visitors, since many eclipse chasers decide where to view the eclipse based on weather that can’t be predicted until the event draws closer. “Even a simple factor like a cloudy day could just compromise all these expectations quite a bit,” Temel says. 

The real task for local business and tourism boards lies in converting one-time visitors into ones that return—without the promise of a solar eclipse. “Every single one of those visitors is a potential future visitor to the same area as well,” says Temel. “In the long run, the economic impact would be magnified quite significantly. 

Adds Downen: “It definitely presents an opportunity, especially in smaller communities, to showcase themselves and hopefully capture some future repeat visitors.”  

Read More : Where to Find Solar Eclipse Glasses—And Spot Fake Ones

Lebanon, Indiana, for example, is expecting its population to triple during the weekend before the eclipse. Joe Lepage, the city’s communication and community development director, says he hopes that the eclipse will change the way both locals and out-of-towners talk about Lebanon. 

“We have a large business park, great hospitals, establishments where people can work, but actually staying and living in Lebanon has been difficult to sell.” he says. "It'll give people that are going back home a chance to visit and realize, ‘Hey, that little town is nice.’ But then our locals can see all the things they have in their backyard and realize, ‘Hey, my community is pretty special too.’”

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• Exclusive: Google Workers Revolt Over $1.2 Billion Contract With Israel
• Jane Fonda Champions Climate Action for Every Generation
• Stop Looking for Your Forever Home
• The Sympathizer Counters 50 Years of Hollywood Vietnam War Narratives
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• Want Weekly Recs on What to Watch, Read, and More? Sign Up for Worth Your Time

Write to Simmone Shah at [email protected]

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Is CERN activating the world’s most powerful particle accelerator for the April 8 eclipse? No

Cern restarted its large hadron collider after a regular winter stop for maintenance. it is unrelated to the eclipse. .

As people around the country await the April 8 total eclipse, conspiracy theories about a Switzerland-based nuclear research facility have some social media users on edge. In their view is CERN, also known as the European Organization for Nuclear Research.

“Why is CERN being reactivated on April 8, the same day as the infamous eclipse?” asked a  March 29 Facebook post , referencing what it called the group’s plan to activate “the large hadron collider” on the day of the eclipse. “My gut instinct is that something really big is being planned for that day… perhaps a total takedown of both the grid and society in general worldwide.” In  another post  April 1, a man in a baseball cap speculated that CERN is deliberately starting back up April 8 to “open up a gateway, a portal.”

(Screenshot/Facebook)

These posts were flagged as part of Meta’s efforts to combat false news and misinformation on its News Feed. (Read more about our  partnership with Meta , which owns Facebook and Instagram.)

It is not unusual for scientists to conduct research during an eclipse, when the sun’s corona becomes visible and areas in totality go briefly dark in the moon’s shadow.  Total solar eclipses   allow researchers “to study Earth’s atmosphere under uncommon conditions.” NASA, for example, is launching three sounding rockets on the day of the eclipse to study its effects on the ionosphere (a mission that also became a  subject of   misinformation ).

But CERN’s research is different. The primary research focus of CERN — an acronym derived from the French name “Conseil Européen pour la Recherche Nucléaire” — is  particle physics , or “the study of the fundamental constituents of matter and the forces acting between them.” The organization seeks to find answers about the  universe’s fundamental structure .

CERN houses the Large Hadron Collider, the  most powerful particle accelerator in the world , which measures around 16.8 miles (27 kilometers) in circumference. The collider’s aim, as  Britannica explains , is to “understand the fundamental structure of matter by re-creating the extreme conditions that occurred in the first few moments of the universe according to the big-bang model.”

CERN spokesperson Sophie Tesauri told PolitiFact in an email that the collider’s activities have nothing to do with the April 8 eclipse.

“What we do at CERN is doing particle physics with accelerators such as the LHC, and this has little to do with astrophysics in a direct way,”  Tesauri said. “So there is no link between the solar eclipse on Monday 8th April, and what we do at CERN.”

CERN has an  accelerator complex  composed of machines with “increasingly higher energies.” A beam of particles is injected by one machine to the next one, bringing the beam to a higher energy — and the Large Hadron Collider is the last element in this complex.

“Hadrons” are a group of particles that include protons and ions. In the Large Hadron Collider,  two beams  travel in opposite directions at nearly light speed and are made to collide. In 2012, Large Hadron Collider experiments led to the discovery of the  Higgs boson particle , a particle named for British physicist Peter Higgs, who in the 1960s postulated about the existence of a particle that interacted with other particles at the beginning of time to provide them with their mass.

Tesauri told PolitiFact that the accelerator complex is restarted every year after a brief winter technical stop, when beam production ceases so that the accelerators can undergo maintenance. Restarting an accelerator like the Large Hadron Collider “requires a full commissioning process in order to check that all equipment works properly.”

“Now that all the checks have been performed, the LHC is ready to provide particle collisions to the LHC experiments, and first collisions for this year should actually happen today 5th April,” Tesauri said in her email. “This will mark the beginning of the physics run for 2024.”

The beams were initially expected to enter collision April 8, according to a  March 14 report . It said, “Depending on how work progresses, this milestone may shift forwards or backwards by a few days.”

On April 5, CERN  announced  that the Large Hadron Collider achieved its first stable beams in 2024, “marking the official start of the 2024 physics data-taking season.” The statement said that from March 8 to April 5, the Large Hadron Collider was set up to handle the beam and tested for any issues.

“Although the solar eclipse on 8 April will not affect the beams in the LHC, the gravitational pull of the moon, like the tides, changes the shape of the LHC because the machine is so big,” CERN’s announcement said. This phenomenon is not unique to an eclipse; a  2012 news release  discussed distortions in the machine brought about by a full moon.

According to CERN’s frequently asked questions page, the Large Hadron Collider is  expected to run over 20 years , “with several stops scheduled for upgrades and maintenance work.”

Conspiracy theories surrounding CERN’s work have been circulating for  years . In a statement to  Verify  fact-checkers, CERN said that its research “captures the imagination of lots of people, which is why CERN has been featured in a lot of science fiction books / even movies, around the world.” CERN said works inspired by its research are fictional and “should not be confused with the actual scientific research.”

False claims about the group’s work are so common that the organization addresses some common theories on its  FAQ page : No, it won’t “open a door to another dimension,” and no, it won’t “generate black holes in the cosmological sense.”

We rate the claim that CERN is activating its Large Hadron Collider in connection with the April 8 solar eclipse False.

More from Poynter:

• MAN ON MOON: Reflections on how mankind and the media came together on the surface of the moon 50 years ago
• Gannett journalists in the solar eclipse’s path go on strike
• What if newsrooms treated every day like eclipse day?

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