Nature of the business planning process

The business planning process must be continuous and repetitive. According to the pace of change across the business will be the regularity with which the business plan is analyzed and updated. In dynamic industries, the business planning activities must be fast, like decision making and will require regular updates of the business plan. Some may even get to create business plan documents consist of modules to update the sheets are inserted and removed as the market evolves and tactics change. The scenario-building techniques, which will be presented on topics asides may be used to identify what might happen in the future and what are warning signs that may suggest that the potential scenario is evolving. Environment should be monitored continuously and, if they are received signals that the market is changing, should analyze the tactics, strategies and operations.

Overview of the business planning process

The business planning process also must be flexible and continuous feedback at each stage. (In the table at the end, I will describe the steps of business planning process which should start with the strategic assessment, that is, the position has a business or planning to do). This process can be adapted to meet the specific needs of organizational planning, business or project.

      I. Stage - Strategic Analysis and Plan

The process begins with strategic analysis designed to examine the current state of business and also identify the axis around which the future may evolve. The idea (Vision), Task (Mission) and business objectives can be the source or result of the business planning process. We will discuss this in detail in another section.

The strategic analysis examines customers, suppliers and competitors out of business as well as the industry dynamics that governs the way in which these groups interact. The analysis also includes the wider environment in which the company operates, and may also include the political, economic, social and technological factors affecting the business. Finally, the analysis examines the company itself, which may include the firm's financial capacity, operational infrastructure, patents, and the knowledge and skills of its staff.

    II. Stage - Marketing Plan

Having considered the current state of the company and its environment, the planning process will consider the future. The scenario building techniques may be used to predict a variety of scenarios of future markets in which the business should operate and for which alternatives can be developed for marketing strategy and tactics, all within the marketing plan. The distinction between strategy and tactic is not always clear. Strategic planning addresses the question of what the company should do. The tactics are sometimes expressed with a question: "How should the company do?".

   III. Stage - Operational Plan

At this stage, the company must be clear what your idea (Vision) and task (mission) as well as some of the objectives. It will come to collect a number of strategic alternatives designed to achieve these goals, and strategies will be supported by a set of tactics. The tactics may be subdivided into operational plans, which explain in detail how to execute the tactics. When the business planning process has reached the stage of operational planning, should develop the financial model.

  IV. Step - Select the financial or business model

A financial or business model provides a rigorous framework for analyzing the strategies, tactics and operational plans of the company to see if they allow the company to achieve their financial goals. The strategic alternatives will be evaluated qualitatively throughout the business planning process, but a business model will evaluate quantitatively. Quantitative measures typically include the net present value (NPV) project, the internal rate of return (IRR) and the recovery period of investment (which is discussed in detail in another post). The business simulation exercise provides perspective on the financial strength of the strategic and tactical plan that is based, and through an iterative process of strategy and tactics evolve until it finds the optimal strategic solution.

   V. Stage - Examine the funding

The financial model or business can then be used to identify funding needs and the time during which such funding will be needed. Funding needs and estimates that support will be scrutinized in depth by those who provide financing or those with responsibilities for plan approval.

  VI. Stage - Perform a risk analysis

Investors also want to have a full understanding of the risks involved in the proposal. Risk analysis can be done both qualitatively and quantitatively. The qualitative risk analysis involves asking the question "what if ..." and then identify actions that can be done to mitigate any potential risks. With regard to quantitative risk, the business model can be used to identify variables (eg price) which are more sensitive the significant results of the model (such as sales). Once these variables have been identified, you can perform a sensitivity analysis by changing each variable individually and together. Simulation techniques can be used for variables such as Monte Carlo simulation technique. Risk analysis is usually performed once the agreed funding strategy, so you can examine any risk arising from bank contracts, requirements such as interest coverage levels, maximum levels of leverage or other covenants ().

 VII. Stage - Present and obtain the approval of business plan

Now is the time of writing the plan and ensure that it is serious, credible and convincing. Once drafted to be presented to those who agree to fund the project, or who approve its implementation.

Note: (This theme continues in the third part: "Table - The business planning process").