In order for a business idea or model to flourish, a business plan is essential. With that in mind, ongoing business planning is necessary to ensure that the business goals of an organization or, to a lesser degree, a department are aligned with corporate goals and objectives. Without this focus, corporate revenues, products and services could be at risk of being out of step with corporate positioning, cost to revenue and market share.
The business planning department is also commonly referred to as strategic planning. This function analyzes the long-term goals of the company which, in turn, informs the development of organizational resources and strategic initiatives. For example, a company may be growing based on mergers and acquisitions. To support this, the company may decide it needs to invest in technology in order to remain competitive. It would be the responsibility of the business planning department to analyze the research, cost and implications of such an investment.
Companies that effectively plan, implement and measure business planning enjoy the benefits by being able to consistently monitor and work around problem areas that may arise. This lends itself to flexibility and an ability to reshuffle priorities while being able to anticipate challenges, turning them into potential opportunities. Conversely, with business planning in place, decision makers benefit from qualitative factors, such as streamlined communications, and quantitative factors such as financial cost savings.
The planning process isn't without its challenges. In fact, companies make fatal flaws that could knock the most precise strategic plan right out of the playing field. According to Harvard Business Review, there are four fatal flaws of strategic planning that companies make: 1) avoiding strategic analysis; 2) failing to understand that business planning takes time; 3) failing to link strategic planning with strategy execution; and 4) avoiding strategy review meetings. There is no shortcut to business planning.
Having a strategic executive committee that spearheads an annual meeting of company leaders helps to define the strategic direction. It's sort of like a peeling the proverbial onion, with the outgrowth resulting in a better understanding of the competitive landscape, the company's business needs and those identifiable areas associated with challenge, growth and opportunity. Through this, a long-term strategic plan can be developed with project plans designed from which functional leaders can work on an annualized basis.
A good way to test business planning is to implement a management best practice such as the balanced scorecard. This methodology is specific as it relates to aligning corporate goals with business objectives and is a way to to establish, monitor and measure financial and nonfinancial business performance based on metrics, data and analysis. The balanced scorecard is a widely utilized management tool, and coupled with a finely tuned business planning process, managers can be confident when navigating today's business challenges.