The Ultimate Guide to a Business Planning Process

What is Business Planning, and Why Do It?

Essentially, business planning is the process of defining your company’s vision and mission, goals, and strategies for achieving them. Often, this involves combining the soft and hard metrics needed to determine business success.

Depending on your company size, long-term strategic goals, and current business performance, there are different ways to create a business plan. However, the essential steps remain the same, and we will walk you through them step by step.

So, why go through a formal business planning process? Even if you think you have a well-crafted business plan, a dedicated business planning process can be a helpful exercise. It allows you to examine the entire organization, plotting your company’s future and defining its purpose and goals. This process also forces you to look at competitive pressures, potential obstacles, your target customers, market data, and industry trends.

All business leaders who are focused on profitability and long-term success need a clear strategy to support every business decision. This business planning process is your road to success.

The 7 Steps of a Successful Business Planning Process

The business planning process is a structured way to outline the goals, marketing and sales strategies, and steps for achieving business success. A well-thought-out plan guides decision-making and helps ensure small business sustainability.

We walk you through the seven key steps that are interdependent and essential for a successful business planning process:

Step 1 - Conduct Research and Analysis

Thorough research and analysis provide the framework for your business plan. By understanding market trends, customer needs, and your competitive landscape, you can effectively make informed decisions to improve your position. Without this step, you risk launching a business without understanding the environment, which can lead to failure.

• Market Research: Analyze your industry, target market, competition, and trends. Use market research reports to make data-driven decisions.

• SWOT Analysis: Evaluate your business's Strengths, Weaknesses, Opportunities, and Threats.

Tip: Consult industry experts through podcasts, small business blogs, and articles to learn what other business owners and decision-makers are doing.

Step 2 - Define Business Goals & Objectives

Clearly defined objectives help to guide your business decisions and ensure everyone is working towards the same goals and business outcomes. SMART objectives provide clarity and focus, allowing you to prioritize efforts and track progress. Without clear objectives, businesses can drift and lack direction, wasting resources and effort.

• Set clear, specific, measurable, achievable, relevant, and time-bound (SMART) goals.

• Define Key Performance Indicators (KPIs) that align with your company’s long-term and short-term goals, like sales revenue targets, new product launch dates, new v. returning customers, etc.

Tip: This step can also include creating a detailed description of your business’s vision, creating vision and mission statements, and your business’s value proposition. These serve as compass points to keep your business on track value-wise toward your goals.

Step 3 - Develop a Business Strategy & Resource Plan

A well-crafted strategy outlines the steps needed to achieve your objectives. It serves as a blueprint for how you will navigate the market, differentiate your business, and grow. A lack of strategy often leads to inconsistent actions, poor resource allocation, and missed opportunities in the marketplace.

Coming up with a resource plan allows you insight into different departments, daily operations, and your internal environment. This is crucial information to collect on an ongoing basis for human resources. Plus, it can inform your strategic management process.

• Strategic Plan: Create a roadmap for achieving your business objectives. This includes marketing, sales, operations, and financial strategies.

• Competitive Positioning: Identify your unique value proposition, your competitive edge, and how you'll stand out in the market.

Step 4 - Create an Operational Plan & Timeline

An operational plan ensures that the business's day-to-day activities align with your overall strategy. It provides clear guidance for teams, ensures resources are used efficiently, and ensures that all business parts work together.

Plus, with a timeline, you have a clear roadmap and specific steps to meet your overall business objectives.

• Outline the daily tasks and operations required to run the business.

• Include the roles and responsibilities of your team, resources needed, and key processes.

Step 5 - Open a Bank Account

Opening a bank account is one step in a more extensive exercise of financial planning and readiness, but it’s important. Your focus should be on banks like Axos Bank, which works closely with small businesses.

A larger financial goal setting and planning exercise can help you anticipate future income, expenses, and capital needs. It is crucial for securing funding, maintaining cash flow, and making informed spending decisions. Poor financial planning can lead to liquidity issues, making it difficult to sustain or scale the business. Economic stability is critical for long-term success.

• Develop detailed financial projections, including profit and loss, cash flow statements, and balance sheets.

• Determine funding needs, revenue models, pricing strategies, and cost structures.

Step 6 - Understand Risk Management

Identifying and preparing for risks allows you to address potential challenges that could derail your business. Without a risk management plan, businesses are vulnerable to unexpected events, leading to financial loss, operational issues, or reputational damage.

It’s important to have contingency plans in place for emergencies. Also, it’s best practice to understand what legal structure and written documents are needed to protect your business.

• Identify potential risks (e.g., economic, operational, legal, or market risks) and create a risk mitigation plan.

• Consider creating a contingency or backup plan for unforeseen challenges.

Step 7 - Monitor, Review, and Adjust

Adjusting as needed is the key to running an agile, booming business of any size. Understand the most important elements for marketing and selling your business’s products and services and be willing to flex on everything else.

Adjusting to the economic climate, environmental and cultural influences, customer needs and wants, buyer behavior, and requirements. It all matters.

• Regularly monitor performance, gauge your brand awareness,

• Adjust your strategies and plans based on performance data, market changes, or feedback.

Tip: Use data visualization, predictive analytics, or other dashboard tools to monitor performance on an ongoing basis. This can help you make faster, more agile decisions regarding your small business.

The Next Step: Go-to-Market Business Planning

Once you’ve completed a business planning process, the next step is to understand your go-to-market plan. This is where you can get specific about things like funding requirements, new product lines, partnerships, and customer journey maps. Mapping this into an annual plan is a good place to start.

Since every business environment constantly changes, monitoring performance and adjusting as needed is essential. Reviewing progress can identify areas of success and improvement, ensuring the business stays on track. Failure to adapt can cause businesses to fall behind competitors or miss new opportunities.

This cycle is continuous and iterative; all successful businesses must follow it. You must constantly evolve to achieve your desired outcome of business growth and profitability. This includes adapting to changing conditions, consumer behavior, and business requirements.

For more information on the small business planning process, check out these articles:

• 9 Effective Small Business Management Strategies for Growth

• Why You Should Have Multiple Small Business Bank Accounts

• 7 Financial Tips for Your Small Business

Explore the Axos business banking blog for more tips and resources.