5 Principles of Business Planning

These 5 principles of business planning apply especially well to lean business planning and lean business plans. We focus on lean planning here but you can see, if you have experience with business, that they apply to all good business planning. Charles Darwin wrote:

“It is not the strongest of the species that survive, not the most intelligent, but the one most responsive to change.”

  1. Do Only What You’ll Use. Avoid waste. Go forward with small steps. Start with a lean plan and grow it only as needed for business circumstances. Don’t build a big formal business plan unless you have a business plan event and need to show it to outsiders.
  2. Business planning is a Continuous Process, Not Just a Plan. One business plan is of very little use, but the lean business planning process is essential. Keep the plan small and review and revise often.
  3. Good business planning Assumes Constant Change. Lean business planning helps to manage change. You don’t plan on long time frames and then stick to the plan regardless. Instead, your business planning process helps to manage change.
  4. Good business planning Empowers Accountability. Good business planning establishes specific responsibilities, dates, deadlines, activities, and performance metrics. The process includes tracking and following up to manage.
  5. Understand that It’s Planning Not Accounting. Financial projections in business planning are educated guesses, summarized and aggregated to optimize their use in decision making, tracking, and managing. They are not statements, but projections. A projected profit-and-loss table does look like the output of accounting, and that confuses people. It is never exact. It is predicting the future. It is guessing.

Keep these five principles of business planning in mind from the beginning.

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