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What is the planning process, and why would you need one? In this lesson, we’ll learn what it is, what it does, the types of plans you might need to develop, and the steps in the process.

What Is the Planning Process?

The planning process is the steps a company takes to develop budgets to guide its future activities. The documents developed may include:

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  • Strategic plans (long-range, high-level company goals)
  • Tactical plans (shorter-term, specific plans to work toward goals in the strategic plan)
  • Operating plans (detailed plans for a specific department to implement)
  • Project plans (plans to implement projects such as launching new products or building a new plant)

How Does the Process Work?

Although the specific steps differ slightly from company to company and depend on which type of plan you’re developing, there are general steps that should be taken in order to ensure a good result. The steps in the planning process are:

  • Develop objectives
  • Develop tasks to meet those objectives
  • Determine resources needed to implement tasks
  • Create a timeline
  • Determine tracking and assessment method
  • Finalize plan
  • Distribute to all involved in the process

We’re going to follow Mark, a department manager in a large company, as he develops a tactical budget for his sales department for the next year.

Step One: Develop ObjectivesThe first step in the planning process is to determine what you want to accomplish during the planning period. A long-range strategic plan might focus on specific market share achievements five years in the future, while a department-level operating plan might target implementation of a new method of tracking sales orders in the next quarter.Mark is focused on annual objectives for his sales department, and so he begins by establishing sales goals for his team for the next year, and also defines a project he’d like to implement that automates the sales order process.Step Two: Develop Tasks to Meet Those ObjectivesThe next step is to come up with a list of required tasks to meet the objectives defined. In our example, Mark determines the sales per month required to meet the sales goal he is targeting, and also lists out a few main tasks relating to the automation process – including selection of the tool and training for the team on its use.Step Three: Determine Resources Needed to Implement TasksNext, resources to implement the objectives need to be determined. In this case, ‘resources’ includes both the people needed to implement the plan and the supplies or other resources needed to support those people.

For the sales department, this might include the salespeople, a sales administrator, various supplies such as brochures, and funds for an advertising campaign to increase the number of prospects in the sales team funnel.Step Four: Create a TimelineThe timing of resources now needs to be determined. For example, Mark anticipates the marketing campaign will start at the beginning of the year, and this will increase the number of prospects for the sales team for the second half of the year. Based on this, he shows the marketing campaign resources being spent in the first two months of the year, and the need for hiring of an additional salesperson near the end of the second quarter.Step Five: Determine Tracking and Assessment MethodSpecific metrics should be developed to help determine when actions should occur.

Continuing our example, Mark calculates that the marketing campaign should bring in 500 new leads, and that the additional salesperson will only be hired when the average leads per salesperson reaches 50 per month. If the marketing campaign doesn’t bring in the anticipated business, the additional salesperson won’t be hired, since the existing staff will be able to handle the volume.Step Six: Finalize PlanNow that all the pieces have been pulled together, the plan can be finalized. Mark inputs the salespeople needed, the sales goals for each month, and other resources needed for the year – including office supplies and the purchase of the new automation tool. Now that that’s ready, he submits the plan to the finance department for final review and approval by senior management.Step Seven: Distribute to All Involved in the ProcessThe final step in our process is to share the plan with everyone who has a role in its implementation, so they know their objectives. Mark gives a presentation to the sales team with target dates for the new tool implementation, and covers the sales goals for the group for the next year.

Lesson Summary

Let’s review. The planning process is the steps a company takes to develop budgets to guide its future activities. The documents developed may include strategic plans, tactical plans, operating plans, and project plans. Although the specific steps differ slightly from company to company and depend on which type of plan you’re developing, there are general steps that should be taken in order to ensure a good result. The steps in the planning process are:

  • Develop objectives
  • Develop tasks to meet those objectives
  • Determine resources needed to implement tasks
  • Create a timeline
  • Determine tracking and assessment method
  • Finalize plan
  • Distribute to all involved in the process

Types of Planning Documents

Business Meeting
  • Strategic plans (long-range, high-level company goals)
  • Tactical plans (short-term, specific plans to work toward goals in the strategic plan)
  • Operating plans (detailed plans for a specific department to implement)
  • Project plans (plans to implement projects like launching new products or building a new plant)

Learning Outcomes

After this lesson, check to see if you can:

  • Explain the various types of planning documents
  • Describe the planning process and each of its steps
  • Make a strategic plan using the planning process
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