William Wordsworth, famed British poet, once said, “In modern business, it is not the crook who is to be feared the most, it is the honest man who doesn’t know what he is doing.” While you may have a great idea for a business, it will go nowhere unless you have a plan. Corporate, or strategic, planning guides companies towards success by setting long term goals and ensuring these goals are met.
Corporate planning sets out long term goals. When a company has long term goals, it can focus its resources and efforts on a specific target. Employees become focused on fulfilling that goal in an efficient and effective way. In fact, having a long term goal can serve to unite employees and supervisors, because everyone is working towards a common purpose.
Creating a strategic business plan provides focus. One of the first steps of corporate planning involves writing a mission statement. The mission statement clearly tells the rest of the world what the company does. Once a company has a mission statement, it can focus on fulfilling its task. For example, if a company’s mission statement declares its purpose is to produce the best refrigerators in the country, it will not be distracted by lesser, or unrelated tasks.
By developing a plan, a company can make better business decisions. The business plan needs to spell out what choices will further the company's interest, such as what personnel it needs, and what equipment it requires. When the business knows what it needs to accomplish to be successful, its leaders can steer it towards hiring the best possible people for open positions, purchase equipment appropriate to its needs, and invest in the best opportunities.
Corporate planning also acts as a yardstick for a company. A company should frequently examine its progress in regards to its corporate plan. If the business has not met a particular goal on its strategic map, its executives must ask themselves what must be done in order to get things back on track. The yardstick function of business planning works best when companies build a mechanism into the strategy which allows for change -- in case the company needs to alter its direction.
Corporate planning has the additional benefit of saving companies money. Part of creating a business strategy involves developing a budget. Budgeting allows businesses to allocate their financial resources to the projects which need them most, while cutting out unnecessary expenses. Budgets also eliminate confusion. With a budget, everyone knows what the company earns, what it spends, what it can afford, and what it cannot.