Why business planning is important
Business planning means writing down a clear vision for your business, including the steps you’ll take to achieve it.
But it’s not a one-off thing — planning involves regular monitoring and adjustments to stay on track. Your business plan should be a living document that you update as needed.
There’s no one way to write a business plan, but they usually cover:
- your short-term, medium-term and long-term goals
- what your business does and how your market looks
- who your competitors and customers are
- how you’ll manage your finances, employees and daily operations.
Business planning is worthwhile for businesses of all sizes. Stepping outside of the day-to-day gives you a better long-term perspective.
Planning helps you:
- get a clear idea of your direction
- manage your resources wisely
- spot opportunities to grow or improve
- identify skills and gaps
- make your business suit your lifestyle.
When business planning has the biggest impact
Planning is most effective when you do it in advance. Sounds obvious, right? But plenty of businesses leap into action first, and then find they are always reacting or playing catch-up.
Running your business on impulse alone can be risky. Planning ahead gives you a solid foundation for better decision-making.
It’s extra important to have an up-to-date business plan in place before major milestones.
For example, you’ll want to plan when you’re:
- starting out — figure how your business will work and set achievable milestones
- seeking investment — know how much money you need and how you’ll show your ability to repay investors
- not meeting your plan — monitor progress against your goals regularly, and update your plan to get back on track
- encountering the unexpected — plan for unforeseen trends, events and circumstances, so you can navigate challenges and make the most of opportunities
- expanding and exporting — make sure you’re well prepared for the changes and hurdles that growing your business or exporting to other markets may
Involving your team in business planning can be a good thing. Don’t delegate the planning though. Having the owner or manager involved in setting the direction of the business is important.
Common mistakes when business planning
Avoid these common mistakes:
- getting caught up in day-to-day operations without taking the time to think strategically.
- reacting to things when they happen instead of setting clear goals.
- spending time and money on things that don't support your core business model. You should be able to summarise how your product or service solves customers' problems in one clear statement — use this when you plan.
- creating a business plan that sits on the shelf and doesn’t get used.
- failing to regularly review how you’re tracking against your business plan.
- overlooking what will happen if your business grows. For example, if you decide to export your goods or services in future, you’ll need to prepare well in advance.
What's next
Choosing the right business structure
Business and financial advice
Governance
Marketing strategy
Business strategy
Strategic finance
Innovate and collaborate
Building a brand
Doing business online
Regional Business Partner Network