You can be on Entrepreneur’s cover!

The Perils of Step-by-Step Planning This strategy is a good start, but you need to be realistic about its long-term effectiveness.

By Tim Berry

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

Everybody wants business planning laid out in a simple step-by-step way. The idea is attractive: Start here, go there next, then there and, hooray, you're done.

Unfortunately it doesn't work that way, at least not with business planning. Whichever step-by-step sequence you follow, at some point you're going to double back toward the beginning to revise.

I'm not saying to completely avoid that type of methodology. I've been working with step-by-step plans for most of my adult life, although it seems like I'm constantly changing the order of the steps. I do, however, think it's best to recognize that planning is a constant process, not something you start at the beginning and work through to the end.

Take, for example, the following sequence, which I've used in a lot of seminars, articles, software and books.

  1. Situation analysis: Put together your mission statement, mantra, objectives, keys to success, company summary, business offering and market analysis.
  2. Strategy: Focus on well-defined market segments and product areas, set priorities, differentiate and position strategically.
  3. Plan: Create financial projections, milestones, activities, dates, deadlines, budgets, specific responsibility assignments, tactics and details.
  4. Management: Review progress, track results, revise, correct and manage. Compare the plan to what is actually happening. Develop and manage accountability.

That sequence can be useful. It's certainly helped me teach and explain how a company might go from nowhere to a first-draft business plan. So it serves its purpose; but it isn't accurate. No thoughtful manager or business owner is going to have the discipline to finish a situation analysis and leave it alone while developing strategy, or to develop the plan's details without referring back to situation analysis and strategy. They keep referring back, rethinking, discussing and analyzing. Assumptions change during the process. Business planning is always active, alive and changing.

If you like business and the business you're in, this is hardly a bad thing. The world and assumptions change, and plans help keep you oriented and remind you of long-term goals.

Here's an alternative sequence I sometimes use. This one starts with the market need and works through the specific company identity to the detailed plan and then the analysis of results.

  1. Market need: Figure out the market need--or want. Remember that what buyers want is often as valid as what they need.
  2. Business offering: Determine how your company can satisfy that need best with positioning, differentiation and a good story.
  3. Making it happen: Establish dates, deadlines, marketing messages, media, responsibility assignments and financial projections.
  4. Accountability: Review the plan compared with actual results, track achievement of original plans and goals, review why things were different, how assumptions had changed, revising as necessary to maintain the long-term orientation without doing anything just because it's in the plan.

Here, too, the sequence helps people get going and used to planning. In this case, the business offering and the market needs must be interactive, because the strategic core is not just what the market needs but what your company can do well and differently from the rest. Then when you get to the "making it happen" step, you'll have to review what you want to do with the resources you have. That often involves revising the positioning and strategy of the business offering and, ultimately, going back to the market need.

I've used the phrase "step by step" a lot in my work with business planning through the years. I've done a lot of task-oriented, wizard-steps-oriented work, setting up a sequence so people can theoretically go from the first step to the last step and have a finished business plan. I do it that way because so many people want it that way. It's not harmful; but it isn't realistic. It's not just a plan, it's a planning process.

It also might help to remember some of the basics: Your business plan will never be done; you'll always be working on it. Assumptions change, so use your planning to stay on top of the interplay between what was going to happen and what actually happened and what you need to do to stay on the right long-term course.

Tim Berry

Entrepreneur, Business Planner and Angel Investor

Tim Berry is the chairman of Eugene, Ore.-Palo Alto Software, which produces business-planning software. He founded and wrote The Plan-As-You-Go Business Plan, published by Entrepreneur Press. Berry is also a co-founder of, a leader in a local angel-investment group and a judge of international business-plan competitions.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Business News

James Clear Explains Why the 'Two Minute Rule' Is the Key to Long-Term Habit Building

The hardest step is usually the first one, he says. So make it short.

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Business Solutions

Grab Microsoft Project Professional 2021 for $20 During This Flash Sale

This small investment is well worth the time it will save your team in organizing and monitoring project work.

Business News

Microsoft's New AI Can Make Photographs Sing and Talk — and It Already Has the Mona Lisa Lip-Syncing

The VASA-1 AI model was not trained on the Mona Lisa but could animate it anyway.

Data & Recovery

This File Backup Tool Subscription Is $25 for Life for One Week Only

AOEMI Backupper Professional is designed to protect, store, and transfer user's files for them.