As markets and products evolve, business must keep pace with these changes. You may have a vision of what you want your business to look like, but without planning it will be difficult to meet these goals. Business planning should be an ongoing process rather than a one-time statement of intent. This is where the business planning cycle phases come in, allowing businesses to continually be analysing, improving, and reviewing their plans.
Business planning cycle definition
Before you get started with the business planning cycle, it helps to define its scope and purpose. This multi-step process can be used to plan any new project, whether it’s developing a product or planning a fundraising event. By following a series of stages, you will create a well-thought-out plan involving review, analysis, and smarter goal setting.
Why is business planning important?
A business plan encompasses several important documents, beginning with the financial statements. However, planning also includes marketing strategies, budget analysis, and an executive summary that you can present to investors.
Following the business planning cycle phases serves several purposes. It always begins by taking stock of where your business is currently at through financial analysis and other tools. You’ll then outline the concrete steps you need to take to get where you want to go. With a solid business plan in place, you’ll be better able to stick to your budget while attracting investment and securing financing.
Stages of business planning cycle
While the business planning cycle definition might vary depending on your business size, industry, and outlook, generally there are four stages of business planning cycles to follow.
1. Take stock of the current situation.
All business planning cycle examples begin by analysing the current situation. You won’t be able to plan if you don’t understand where your business is now. At this primary stage, you should draw up financial statements including the income statement, balance sheet, and cash flow statement. A few helpful techniques during this first phase include:
Risk analysis to outline any tricky areas that need attention
SWOT (strengths, weaknesses, opportunities, and threats) analysis to evaluate your business as a whole
You should also perform a market analysis to understand your current competitors and customers.
2. Examine future scenarios and set goals.
The next business planning phases relate to goal setting. Using the results of your risk analysis, you can look at likely future scenarios to see where your business could be at over the next few months or years. Create a new mission statement or outline a vision for your business plan, taking all outside influences into consideration. What will your new product look like? How will you provide new value to your customers?
3. Create an action plan to meet your targets.
With your targets in mind, the next stages of business planning cycles relate to creating a detailed, point-by-point action plan. You’ve analysed the current situation and looked ahead to the future; so now it’s time to focus on the next steps.
At this stage in the cycle, many businesses will pull out a few potential plans and analyse their outcomes, using methods like a decision matrix analysis to calculate cost and risk. Here are a few tools to help at this stage of the cycle:
Force field analysis
Once you’ve selected the most efficient option, you can create a detailed step-by-step map to execute the plan. Build in allocations, deadlines, and priorities as necessary.
4. Review the impact of your plan
You’re ready to act. Execute the plan while monitoring its performance in real-time. You can stop and adjust the plan at any time during this final stage of the cycle – nothing is set in stone.
The business plan’s complete, but you’re not finished yet. The final stage of any business planning cycle example involves reviewing the project’s success. Think about whether you solved your initial problem, looking for ways to improve for next time. Are there actions you can take in the future to deliver bigger benefits? Were there any takeaway lessons to use for future projects?
The bottom line
While every business goes through its own rhythm or series of cycles, when it comes to planning these stages will help you clearly define and achieve your goals. Applying systematic analysis to each project allows you to identify threats, mitigate risks, and stay within budget. And with greater attention to each detail, you’ll be well placed to attract wider investment.
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