Creating Business Plans and Goals

Planning, as we saw in the last lesson, is one of the functions of management. Managers at all levels of business find it necessary to plan. For that planning to be successful, however, the company's vision, mission statement, and goals must be clear to the manager. Let's begin by looking briefly at each of these:

- Mission Statement- The mission statement is meant to be an internal document aimed at the leadership of the business. The purpose of the mission statement is to define the key measures of an organization's success. The mission statement talks about how you will get to where you want to be.
- Vision Statement - The vision statement also defines the business' purpose, but does it in terms of the core values of the business. The vision statement describes where a business wants to be in the future. The vision statement gives employees motivation and direction. When shared with customers it should give them an understanding of the reasons they should patronize the business.
- Goals - It is wise to set goals for your business for four reasons: 1) To measure success, 2) So everyone in the organization is headed in the same direction, 3) To aid decision making (asks the question, "Is this decision in line with company goals?" and 4) To know when changes need to be made through reexamining goals periodically. However, just setting goals is not enough. Goals need to be SMART.

Understanding SMART Goals Interactivity

Click on each letter to understand more about SMART goals.

Types of Planning

Managers, depending on their level of management, participate in several distinct types of planning.

Strategic Planning - Top level managers focus on the vision and long-term goals of an organization to produce strategic plans that look at where the business wants to be in 3, 5, even 10 years. These plans tend to focus on things like profitability, growth, and customer service. These plans tend to involve multiple levels within the organization.

Tactical Planning - Tactical planning is usually done by middle level management to support the vision and goals of strategic planning. Its purpose is to recognize the responsibility and function of a department in supporting the company's strategic planning. A tactical plan might include testing a new process, purchasing a new machine, or planning a new delivery route. Tactical plans are by nature calculated to take less time and be narrower in scope than a strategic plan.

Operational Planning - This planning venue of the lower level manager focuses on the specific policies, procedures, and rules needed for achieving day to day operation of the business. These plans may be single use or ongoing, and include such things as budgeting, scheduling, ordering, and tracking inventory.

Contingency Planning - To quote Scots Poet, Robert Burns, "The best laid plans of mice and men go oft astray;" hence, the need for contingency plans. Managers at all levels know that sometimes things don't go as planned and there needs to be plans in place for that eventuality. Disaster recovery, recessionary budgets, or any other event that might interrupt an business would necessitate the need for a contingency plan.

The Business Plan

Before the managers of a business can create a strategic, tactical, or operational plan, an overall plan for the business must be put together by the business owner to seek investment and funding for the business. This is called a business plan. View the interactive below to see what needs to be included in a business plan.

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