Levels of Business Planning

Planning is vital to the continued success of small businesses. Business planning is performed at various levels in an organization, often in a hierarchical fashion, with each level drafting plans to achieve the goals set in the level directly above. Planning at various stages involves nearly everyone in an organization, from the business owner who crafts a strategic vision to front-line employees who plan their daily tasks to meet individual performance goals.

Strategic Planning

The owner of a small business, or the company's senior executives, develop strategic plans. This level of planning crafts the overall direction of the company over the long term. Company officials create vision and mission statements at this level, setting wide-reaching goals. Decisions made at this level concerning organizational structure, company values and business philosophies can influence company culture directly.

At this stage, managers define what business the company is in, exactly what the company does and what makes the company distinct from its competitors. These goals should be the basis for creating all other organizational plans.

“To be the No. 1 producer of organic pasta” is an example of a strategic level vision statement for a small business.

Company-Wide Goals

Company-wide goals are a bit more pragmatic than an overarching strategic vision; planning at this stage is concerned with making the grand vision of top executives a reality. Managers set performance goals for all departments, including financial goals, production-oriented goals such as cost control and goals for market share growth and new market penetration.

Plans made at this stage develop the core competencies needed to achieve the company's mission and vision. Plans to develop and grow the effectiveness of operations over time are paired with plans to grow the company's reputation in the marketplace and in its industry.

To realize the pasta company's vision, executives may set goals of achieving 15 percent market share growth per year, cutting production costs by 5 percent per year and aggressively growing a national network of local suppliers.

Departmental Goals

Planning within each department is highly practical, and is mainly concerned with bringing the objectives set at the company level to realization. Middle and front-line managers, who set performance goals for groups and individual employees, perform department planning activities. Innovation in business process design is encouraged at this level, and strict time lines are set for meeting company objectives.

To cut production costs by 5 percent per year, as mentioned in the pasta company example, production managers may plan to implement new ongoing best-practices training programs and alter incentive structures to favor cost-cutting activities, such as material conservation.

Operational Objectives

The lowest level of business planning has to do with setting goals and creating implementation plans for small groups and individual employees. At this level, employees put plans into place to achieve their contribution to the department-specific goals. Operational objectives are concerned with such things as efficiency, reduction of mistakes and reorganization of personal work processes.

To implement the training program in the pasta company example, managers could create specific training curricula, set aside time for training and communicate training attendance requirements to all employees.