The Business Planning Process: 5 Steps To Creating a New Plan

Creating your new business plan involves a detailed process with a number of stages, some of which can overlap. Whether you are writing your plan from scratch or from a template, or working with an experienced business plan writer or consultant, you will find the following five steps through the process. 

Research 

Detailed research into the industry, customers, competitors, and costs of the business begins the process. A variety of resources can be used for research, ranging from databases and articles to direct interviews with other entrepreneurs or potential customers. Research should be documented and organized carefully with the information gathered and the source as there is a need to cite sources within the plan. 

Strategize 

Next, the information from the research should inform the strategy you choose for your business. Revisit the strategy you created even before your research and dig deeper into decisions on appropriate marketing, operations, and hiring for the first five years of the company's life. Strategy generally pulls from the best practices of the industry, but uses this only as a foundation on which to add very different activities that create a competitive advantage. 

Calculate 

All of the activities you choose for your strategy come as 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. 

Draft 

With financials more or less settled and a strategy decided, it is time to draft through the narrative of the plan's many sections. With the background work you have completed, the drafting itself should be a relatively painless process. If you have trouble creating convincing prose, this is a time to seek the help of a business plan writer who can put together the plan from this point. 

Revise and Proofread 

Revisit the entire plan to look for any ideas or wording that is confusing, redundant, or irrelevant to the points you are making within 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. 

Business Planning Process

Successfully launching a new business or initiative requires careful planning and the results of a business planning process are usually captured in a business plan. Any investor or those in an existing business responsible for approving new initiatives will invariably want to see a business plan before making any financial commitment. The business plan, besides being a prerequisite for gaining access to finance, also provides the blueprint for successfully creating and running a new venture. Even in fast-moving markets where the plan itself may quickly become outdated the insight gained from the planning process that created it remains invaluable. 

A business plan describes the business’s vision and objectives as well as the strategy and tactics that will be employed to achieve them. A plan may also provide the basis for operational budgets, targets, procedures and management controls. No two businesses are identical and no two business plans are ever exactly the same. There are different reasons for preparing a business plan and different audiences. The task of writing a business plan is a lot easier if you have a template that can be tailored to the specific needs of your business. The book “Guide to Business Planning” by Graham Friend and Stefan Zehle provides such template. It also explains how to design and present a business plan to maximise the likelihood of its gaining approval or funding. 

Although the presentation of the final business plan is important, ultimately the substance of the plan is most crucial. The strategies and tactics described in the plan should be the outputs from a logical and appropriately comprehensive business planning process. The book provides a practical step-by-step business planning process and a reference for the tools and techniques necessary to complete it. 

The stages of the business planning process are shown on the chart. The process should begin by evaluating the environment in which the business operates before analysing the specific industry and the suppliers, competitors and customers within it. The insight from this analysis and an understanding of the strengths and weaknesses of the business or new venture, combined with a set of expectations about the future, can be coupled with creative and innovative thinking to develop a range of strategic options for evaluation. The evaluation stage includes developing forecasts (notably for market demand), financial projections and, in some cases, a range of valuations, as well as calculating various measures of performance with which to validate and benchmark the forecasts. 

The business planning process should test alternative ideas and assumptions, as one of the main reasons for planning is to help the business prepare for an uncertain future.