What Is a Business Planning Cycle?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 15 October 2019
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A business planning cycle is a logically sequenced plan of action that is designed to aid in the task of company planning. The cycle will often focus on the establishment of viable operational plans that ensure a smooth production process, as well as addressing issues such as the ordering and receipt of raw materials, the housing of finished goods prior to transport to customers, and even the shipping processes used to deliver those finished goods. The typical business cycle will address front, middle, and back office functions, making sure that all aspects of the company work in tandem for the benefit of the business itself.

While there is no one ideal way to create a viable business plan, the tools used in a business planning cycle are fairly uniform. The cycle will normally begin with an assessment of the nature of the company, identifying what the business is all about, its goals, and even what has been done to establish the facilities in which the business will operate. This serves as the starting point for the planning, making it possible to then follow through on the operating process from a point of origin to a point of completion.


Once the task of establishing what the business is and what it wants to accomplish, the next phase of the planning cycle will involve identifying the major phases of that ongoing cycle. One simple approach is to create specific categories that address the sequence necessary to manufacture goods and services. This will usually begin with securing raw materials, move on to the manufacturing process itself, and then culminate in the delivery of those finished goods to customers.

With the basics of the business planning cycle arranged, the next step will involve identifying the particulars of each one of those stages or phases. For example, issues such as the establishment of purchasing policies and procedures will be created. The layout of the production floor will be planned in detail, making sure the process minimizes waste as much as possible. From there, procedures for storing and inventorying finished goods is often addressed. Finally, the processes for order taking and fulfillment will be put in place, followed by instructions on how to go about delivering those ordered goods to customers and receiving payment for those goods.

Creating a viable business planning cycle is not the province of large companies. Even small businesses that are operated out of the home can make use of this type of planning tool, and make sure the general operation is efficient and responsible in terms of using resources to best effect. When owners do not feel comfortable with creating a business planning cycle, consulting firms can be called in to help with this process, making it much easier to move forward as a company.


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