Planning is the heart of business management. It refers to formulating goals, outlining strategies, and finding the most appropriate course of action to pursue those goals.
Business ventures can lose focus, squander resources, and find difficulty staying competitive without proper planning. But did you know that there were several types of planning in business management?
We are going to take you through different types of business management planning. These plans are useful for every level-from business operations in daily activities to long-term goals.
We will explain each kind in simple ways that you can apply them to your business or workplace.
1. Strategic Planning
Among the types of planning, the most critical one for business managers is strategic planning. It pertains to formulating long-term organizational goals and strategies for achieving the desired goals.
Strategic plans normally extend over a number of years and form a guide to the future guidance of the company.
It is crucial because strategic planning helps a business compete and align with a changing market environment. The focus on the big picture allows a company to predict future threats and opportunities.
Example: In this example, a company constructs a strategic plan to enter a new international marketplace within a five-year time frame.
A company conducts market research, identifies risk factors, and monitors specific objectives, which are often expressed as a percentage of increase in market share.
Key considerations of strategic planning:
- Long-term objectives for 3-5 years or more.
- Composing vision and mission statements.
- Assessing SWOT analysis- strength, weakness, opportunities, and threats.
- Resources needed to attain the desired goals.
- Track activity and make adjustments.
2. Tactical Planning
Tactical planning is indeed the next level below strategic planning. Where a strategic plan addresses the long-term goals, a tactical plan breaks down the overall goals into smaller, more measurable tasks.
Thus, tactical planning focuses on methods to reach these short-term objectives that, in turn, ensure the realization of the objectives expressed in the strategic plan.
Why is this important?
It's tactically important because tactical planning helps open and divide the general vision of business into more manageable and actionable steps that can be put into place for the business.
In short, without it, a company might just not be able to implement its broader strategies.
Example: If the company's strategic plan is to enter a new market then its tactical plan may perhaps be doing some market research, recruiting some new staff or developing a marketing plan that is novel for the next year.
Key tactical planning elements:
- Goals accomplished in less than a year.
- Well-defined task and action steps to the goals.
- Resources: staff, money, and time required to accomplish the tasks.
- Deadlines established and measurable milestones set to track progress along the way.
3. Operational Planning
Operational planning is the daily planning and keeps the business running efficiently. This is basically focusing on the internal processes required in order to achieve tactical and strategic goals.
Operational plans are very detailed, for example involving the tasks that have to be accomplished by the employees day by day or week by week.
Why is it important?
A good operational plan is the glue that keeps even the greatest strategies together. This also ensures all operational parts work well and employees know what to expect from them.
Example: In a manufacturing business, some of their operational plans will encompass such things as production run scheduling, managing their own inventory to keep up levels at proper standards, and machinery maintenance schedules to meet daily production targets.
Key elements of operational planning:
- Daily/weekly goals and tasks.
- Task assignment to specific employees or teams.
- Tracking of performance and processes' adjustment as needed.
- Timelines-specific in nature, usually weeks to months or a year.
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4. Contingency Planning
Contingency planning is all about preparation for events that may not work out. While most plans assume that everything will be just fine, contingency planning will tell you what to do if things actually go wrong.
This planning is essential to manage risks and ensure that the business can thrive by operating in cases of unexpected challenges that may arise, such as a natural disaster, a supply chain issue, or a sudden economic downturn.
Why does this matter?
Even the best-planned business can have surprises. Inhibiting that disruption and recovering quickly from an unexpected problem may mean developing a contingency plan for a business.
Example: A retailer who loses its primary supplier when one goes out of business may find an alternative supplier, adjust the inventory level, or move production to another plant temporarily as a contingency plan.
Main features of contingency planning:
- Identification of risk and worst-case scenarios.
- Alternative courses of action that the organization can utilize in case these risks arise or become a reality.
- Assigning accountability for implementing the contingency.
- Review and update contingency as times change.
5. Financial Planning
Financial planning is managing the financial resources of an organization in such a way that it remains financially stable and is able to meet its goals.
Budgeting, forecasting, and analyzing financial data in order to make decisions that form the future of the organization falls within the scope of financial planning.
Why is it important?
Most companies run out of money and spend on other unwanted projects if they do not have a good financial plan.
Financial planning ensures that the company is not getting off track of meeting its financial goals by using resources prudently.
Example: A business can develop a financial plan that reduces its cost by 10 percent during the year but increases the volume of production.
This will involve non-productive cost reduction, improved supply side negotiation, and minimizing unnecessary costs.
Key areas of financial planning:
- Budgeting for income and expenditures.
- Financial operations for the future through historic data use.
- Management of cash flow.
- Track financial performance and adjust budgets if needed.
6. Workforce Planning
Workforce planning deals with the human resources of the company as it should have the right people in the right roles.
Hiring, training, and keeping staff fall under workforce planning with a focus on delivering short-term and long-term goals for the company.
Why is it important?
Most of any company's success is attributed to the employees who work there.
Workforce planning ensures adequate skilled workers to achieve the company's desired outcome and motivates and engages its employees.
Example: An organization that would enter a new market would require a workforce plan to recruit and train employees who would work in the new market. I
n such a case, this could come as hiring new staff, training programs for the existing employees, or outsourcing specific tasks to other service providers.
Key elements of workforce planning:
- Forecasting staff needed to meet business objectives.
- Recruit and employ new staff.
- Develop and enhance existing staff.
- Competitive salaries, benefits, and career development opportunities remain attractive to retain the best talent.
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7. Sales and Marketing Planning
Sales and marketing planning involves the strategies that would help promote products or services and eventually maximize sales.
That form of planning allows the company to create income while ensuring that its products satisfy the need of the customers.
Why is it important?
A firm fails to attract customers and therefore loses potential revenue without a wholesome sales and marketing plan.
It is through the application of sales and marketing planning that businesses look at identifying their intended market, find out the needs of the customer, and finding ways of effectively reaching them.
Example: A small business would thus have a marketing plan through the launch of a social media campaign, and attendance at industry events, offering discounts to new customers in a bid to increase brand awareness.
The basic components that have to be part of a sales and marketing plan are :
- Identifying the target market and comprehension of customers' needs.
- Development of marketing strategies in order to promote a product or service.
- Formulation of sales goals and tracking of performance.
- Changes of marketing tactics with regard to customer feedback and market conditions.
Conclusion
Planning is one of the major functions of business management that keeps the company focused and directing all resources towards achieving the set goals.
Each of these plans - strategic, tactical, operational, contingency, financial, workforce, and sales and marketing - plays a significant part in gaining success in business.
Such kinds of planning can therefore help a business manage its resources and prepare for some of the challenges that are likely to arise on the way to a long-term success.
Mastery of different kinds of planning enables any person who is entrusted with leading a small team or runs a huge organization to take certain steps for shifting the business towards growth and stability.
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