WHAT DOES IT MEAN TO HAVE A PLAN?

It comprises three components – strategic plan (which sets your strategy), financial plan (which sets your financial goals and performance) and operating plan (that details how the company will align its efforts to achieve the financial plan and the overall objectives of the company).

Strategic Plan

The strategic plan is about setting a direction for the organization and identifying a range of strategies to pursue so that the organization might achieve its long term goals. The strategic plan is a general guide for the management of the organization but does not stipulate the day-to-day tasks and activities involved in running the organization. It is:

  • A general guide for the management of the organization
  • Suggests strategies to be employed in pursuit of the organization’s goals
  • Is a plan for the pursuit of the organization’s mission in the longer term (3 – 5 years)
  • Tends not to be significantly changed every year

With a strategic plan in place, you can now work to translate your strategy into a financial and operating plan.

“WITHOUT A PLAN – IT’S HARD TO KNOW WHERE YOU ARE GOING.” 

Financial Plan

Your financial plan shows how your business idea and strategy translates into a business that is financially viable. It takes into account your projected revenue, expenses, cash and other financial needs. The financial plan comes to life in three financial statements:

  • Income Statement. statement of your revenue and expenses.
  • Cash Flow Projection/Statement. projection of the cash inflows and outflows and resulting cash needs of the business
  • Balance Sheet. presentation of the net worth of the business by measuring the businesses assets, liabilities and associated “equity” in the business

Your financial plan outlines how the business will function from a financial perspective.

Operating Plan

Your Operating Plan presents highly detailed information specifically to direct people to perform the day-to-day tasks required in the running the organization. The purpose of the Operating Plan is to provide personnel with a clear picture of their tasks and responsibilities in line with the goals and objectives contained within the Strategic Plan and the Financial Plan. The Operational Plan provides the what, who, when and how much:

  • What. the strategies and tasks that must be undertaken
  • Who. the persons who have responsibility of each of the strategies/tasks
  • When. the timelines in which strategies/tasks must be completed
  • How Much. the amount of financial resources provided to complete each strategy/task

It is characterized by:

  • A specific plan for the use of resources in pursuit of the strategic plan
  • Details specific activities and events to be undertaken to implement strategies
  • Is a plan for the day-to-day management of the organization (one year time frame)
  • May differ from year to year significantly

Having your strategic plan to set your strategy, your financial plan to see how that translates your strategy into your financial performance and needs and your operating plan to drive your daily activities toward your goals, sets your organization up with the “plan” to succeed.

Not a member of the Learning Community yet!

Instead of countless hours searching for answers, we’ve organized what you need to know across all of the business and personal issues you face. You’ll get knowledge, ongoing support, weekly live coaching sessions, tools and templates, vendor reviews and a vibrant community of your fellow entrepreneurs. Join today!

START MY 14 DAY FREE TRIAL