Why Is Planning Important?

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Business planning is important because it establishes the direction of the organization. When people plan before launching a business, they avoid many pitfalls that others do not anticipate. With many businesses failing within their first few years, a sound plan is like a compass to navigate through the obstacles.

There are different levels of planning business owners must navigate. Top level planning refers to strategic planning. Strategic planning identifies the overall objectives of the organization. Marketing strategies, hierarchy and the decision to make the company public are all parts of strategic planning.

The next level of planning is essentially operational. Mid-level managers identify business actions that support the firm’s bigger strategy and then implement them. Customer service ratings, sales quotas and attendance tracking are all parts of a business’s operational strategy.

Everyone within an organization contributes to whether or not the organization meets its overall objective. Fortunately, with proper business planning, the process is much easier. Managers can easily identify when a department fails to meet its goals and respond appropriately.

Organizations that do not properly plan, consistently fail to perform. They have no idea what direction the organization must take; therefore it is hit and miss. Until they find leadership that plans and anticipates problems, they continue to underperform.