A plan is like a road map. You don’t have to follow it, but it tells you where you want to go and gives you a route to get there. There are various categories of plans including, strategic planning, business planning, budgets, forecasts and business cases.
Strategic Planning is the master plan. This is the map of your world. (Or the map of your universe, if you dream really big.) It lays out the main objectives for your business and has general directions for how you are going to get there.
You would normally have an annual business plan. It has a lot more detail than the strategic plan and lays out some of the steps you have to do accomplish to start achieving the main goals. It’s a tactical plan. It shows you what you have to do and when to make it all work.
A budget is a financial plan for your business. You usually prepare a budget before the beginning of the year (or project). It gives you a road map for your revenues and expenditures. Budgets are usually fixed. (Cast in stone.) Tracking your progress against the budget shows you where you are in relation to your original goals. Accountants love budgets.
Forecasts are more complex than budgets, because they try to predict the ever-changing future. Forecasts usually reflect what has happened in the past combined with what you think will happen in the future. Before you start a project (or a financial year), you prepare a budget. Once you have started, you update the budget to produce a forecast to see where you are really going to end up. A good forecasting system is a great early warning system. Good business managers, project managers and business consultants use forecasts to manage their operation or project.
A business case is a document used to justify the commitment of resources to a project.
I also like this definition from the US Government Accountability Office: “A structured proposal for business improvement that functions as a decision package for organizational decision-makers. A business case includes an analysis of business process performance and associated needs or problems, proposed alternative solutions, assumptions, constraints, and a risk-adjusted cost-benefit analysis."
I’ve researched, prepared and presented hundreds of business plans, strategic plans, budgets, forecasts and business cases. For small businesses and large corporations. My audience has been managers, business owners, bankers and Boards of Directors. When you need planning help, call Barry toll free at (800) 661-9842.