Common Mistakes in Business Planning

Updated: June 02, 2009

Business planning provides both a strategic and operational framework for running a business regardless of its size. The most important rule to understand about business planning is that parts of the plan will always be wrong. Developing a plan around a framework that allows a business to be agile in the face of events that "don't go according to plan" will allow a business to adjust without hurting overall performance

The following are a list of things to keep in mind when establishing a planning process

  • Finance owns it - A financial model must be accompanied by specific operational actions that will allow the desire financial performance to be achieved. A plan developed by the finance/accounting organization that simply identifies what "numbers need to be" does not give actionable guidance to stakeholders across the business.
  • The plan is understood by the few and not the masses - Every person in a business needs to support the underlying assumption in a business plan and understand how their performance can contribute to the achievement of the desired result
  • Performance needs to be measurable - The key assumptions of any business plan need to be supported by underlying operational metrics that can be measured. Only then can you understand how you are performing versus plan real time. This is a critical component to choosing the underlying reporting system supporting the finance/accounting organization.
  • Using the wrong time horizon - There is no universal law of business planning that says a business plan needs to cover a fiscal year. Depending on the size of the business and length of the planning cycle, a business could redo the plan every six month or even quarterly. In larger organizations a common practice is to plan around a fiscal year, but tweak or reforecast the plan monthly or quarterly.
  • Identify the Risks and Opportunities - Identify and quantify the major risks and opportunities that may impact the desired plan result. This allows the company to be more agile in the face of adversity and more calculating in the face of opportunity.
  • Revisit, Revisit, Revisit - Challenge key assumptions based on what is actually happening - refining core assumptions may show a dramatically differently result than planned giving an agile business time to respond.
Featured Research
  • How UC Can Help Your Business Survive the Holidays

    The holiday season is filled with frenzy and excitement for businesses and consumers alike. Consumers prepare gift lists, compare brands and prices, and begin shopping with a vigor that is not present most other times of the year. For many businesses, the holiday season accounts for a large profit bump at the end of each year, and companies strive to exceed their goals and keep customers happy during this rush late in the year. more

  • [Infographic] Switching Phone Systems

    There are a lot of possible reasons you might want to switch to a new phone system. The old one might cost too much or be too troublesome to operate and maintain. It might not be flexible enough. It might not be reliable enough. Or it just might not have the kinds of features and capabilities that you need in today’s competitive business climate. more

  • Business Intelligence Software Cost Guide

    Your choice in a BI (Business Intelligence) provider can lead you to make better, data-driven decisions for your business, resulting in significant ROI. Or it can cost hundreds of thousands of dollars with mixed results. more

  • The New 2016 ERP Comparison Guide

    Selecting an ERP solution is no easy undertaking. You have to select and configure a system that fits your exact business needs. The right system can make operations more streamlined, efficient, and agile. But choosing the right vendor can be difficult. more

  • 2017 CRM Buyer's Guide

    Customer Relationship (CRM) software has become one of the most important business tools in today’s world. By allowing you to better connect with new and existing customers, CRM is an indispensable tool for sales teams and customer service teams alike. But with so many choices available, it can be difficult to decide on a solution. more