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Business Planning Process - Introduction

Author: Jim Riley  Last updated: Sunday 23 September, 2012

Every planning process goes through a series of stages.  In essence the aim is to complete each of the following steps:

  • Analyse the external environment
  • Analyse the internal environment
  • Define the business and mission
  • Set corporate objectives
  • Formulate strategies
  • Make tactical plans
  • Build in procedures for monitoring and controlling

An overview of the traditional business planning process is illustrated below:

Overview of the business planning process

Effective business planning has to begin with an honest and realistic appraisal of the current position of the business.  The formal term for this is “situational analysis” and there are several planning tools and methods which are helpful in putting the analysis together. The true purpose of situational analysis is to determine which opportunities to pursue:

  • PEST / PESTEL analysis:  identify and analyse trends in the environment
  • Competitor analysis: understand and, if possible, predict the behaviour of competitors
  • Audit of internal resources
  • SWOT analysis: build on strengths; resolve weaknesses; exploit opportunities; confront threats

Having determined the current position, the next step is to determine the direction of the business – by answering the question “where are we going”?  The outputs from asking this question are:

  • Vision: the non-specific directional and motivational guidance for the entire business. What will the business be like in five years time?
  • Mission statement: a statement of the business’s reason for being. The mission statement is concerned with the scope of the business and what distinguishes it from similar businesses
  • Objectives: SMART objectives set out what the business aims to achieve
  • Goals: specific statements of anticipated results


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Market Research for a Startup
Locating the Startup Business
Choosing a Legal Structure for a Startup
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Using Budgets
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Investment Appraisal Basics
Financial Strategies
Measuring and Improving Profit
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Working Capital
Balance Sheet
Income Statement
Financial Efficiency Ratios
Profitability Ratios and ROCE
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Business Organisation

Basics of Business Growth
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Limited Companies
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