Business Planning vs. Functional Planning

by Mary Jane; Updated September 26, 2017

The terms “business planning” and “functional planning” may be used interchangeably in a business setting, because both describe planning techniques for a business. However, each term has its own meaning that describes different planning strategies in a business. While business planning occurs before the business starts operating, functional planning is used if a business is working on a large project.

Business Planning Definition

Business planning is done before a business is registered and launched. It is often written as an actual plan, which the owner can refer to during the start-up phases of the business and years down the road. The planning is beneficial, because it identifies the purpose of the business, where the owner wants it go to and includes short-term and long-term goals.

Parts of a Business Plan

The written business plan includes descriptions of the business, the owner and the business' role in the given market. It will also present an operational budget, a list of marketing ideas and strategies and an operations description with names of employees and managers. This document is important for keeping the business on track during the first couple of years of the business. The plan can be adjusted to suit the changes and growth the business can experience during the first couple of years.

Functional Planning

Functional planning refers to the process of managing the work and tasks within a given department of a larger business. This work includes tasks with a specific project and general planning to improve the work environment in a department. Functional planning includes identifying employees’ strengths in the department, identifying the department’s output and objectives and making a plan that assesses the work process.

Cross-Functional Planning

Cross-functional planning refers to how several departments function together on a collaborative project. While each department may have a functional plan, the cross-functional plan focuses on what each department must contribute to keep the overall project active. This can include listing each department’s responsibilities and activities, so the project is completed within the given timeline.

About the Author

Based in Toronto, Mary Jane has been writing for online magazines and databases since 2002. Her articles have appeared on the Simon & Schuster website and she received an editor's choice award in 2009. She holds a Master of Arts in psychology of language use from the University of Copenhagen in Denmark.