Do You Need A Business Planning Cycle?
Planning is one of the key elements to running a successful business. It needs to be carried out on a short-term basis for everyday organisation, and for long term financial security.
Without proper planning, your business could suffer – a good business plan covers an analysis of budget and financial planning, alongside marketing policies and a reflection of the company’s overview. And it should be simple to understand and implement.
Do you need a business planning cycle? Read on…
What is a business planning cycle?
A business planning cycle provides systematic plans for courses of action. To explain the business planning cycle, you should know that helping to identify mistakes and learning from previous errors are fundamental for future planning. The cycle will typically progress with:
An assessment of the company – identifying the business and its goals, gathering data, and establishing how the business will operate from the point of origin through to completion. Detecting defects that may affect your plan, and evaluating strengths, weaknesses, and opportunities will help mitigate risks.
Determining your aim – after analysing the current position a mission or vision statement will explain how goals will be achieved. After examining previous results data will be prepared regarding economic and social feasibility, with cost and risk assessment taken into account.
Identifying major phases – creating categories that relate to the necessary sequences to manufacture goods or provide services is of great benefit. This process planning may involve securing raw materials, manufacturing processes, and the delivery of finished products to customers.
Establishing policies and procedures – this detailed planning may include pricing, production floor layout, minimising waste, storage procedures, and inventory of goods. Processes for order taking and instructions for picking and delivery will also be included here, alongside receiving payments from customers.
Reviewing the impact of the plan – this step involves decisions as to whether the plan should be implemented, depending on positive or negative results of investigations. There are several methods used in calculating impact and these include:
- Cash flow forecast: by evaluating the cash flow forecast of money coming into the business and expenses going out, analysis can be made of the bearing of the plan.
- Cost and benefit analysis: comparing all expenditures gained from executing the plan against expected benefits will provide a financial forecast.
- Forcefield analysis: this helps with consideration of pressures for and against a decision change. This basic tool for root cause analysis will help with any action needed to be taken once the root cause has been identified. This technique can be used to assess several project ideas and determine which has the greatest potential for success.
- Quantitative pros and cons: by listing pros and cons in different columns points can be allocated positively or negatively from collected data, identifying the differences that can sway the decision.
Executing the plan
As soon as you’ve made an informed decision you can start your initial business planning cycle. Then you’ll be able to monitor it in real-time. After completing the cycle for the first time you can stop running it and create a review.
Your business planning cycle will provide a systematic way to achieve goals, identify risks, and allow modification of your plans to obtain the best results.
Hire a business plan consultant
Reputable business planning services are the perfect solution to making your plan work for you. Getting a virtual Chief Financial Officer (CFO) to create a business plan which defines everything your business needs will ensure your company thrives. You’ll be able to set your goals, plan your sales and marketing, and identify problems and how to overcome them. This will provide you with an accurate business picture and secure your future.