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STRATEGY TO BUDGET

- SEVEN TYPES OF PLANS FOR


BUILDING SUSTAINABLE
ADVANGE

NIGEL A.L. BROOKS

THE BUSINESS LEADERSHIP DEVELOPMENT CORPORATION

Article reprint
STRATEGY TO BUDGET
- SEVEN TYPES OF PLANS FOR
BUILDING SUSTAINABLE ADVANTAGE

Building sustainable advantage begins with high-level planning and


policy development activities. Plans are subsequently drilled down into
greater levels of detail by purpose and activity as more information
becomes available. Plans include strategic, information technology,
tactical, operational, financial, financing, and budgets.

A plan is a proposed statement of direction and course of action to achieve


a desired result. The planning horizon is the period over which the end-
result is expected to be delivered, and can range from months to years.
The planning cycle either refers to the process by which plans are
prepared, or represents the time frame between planning activities. The
budget cycle is the most common, and is usually annual with quarterly
updates aligned to the fiscal year.

Many enterprises have planning methodologies that describe the scope,


objectives, approach, estimating guidelines, deliverables, roles, and
responsibilities of the activities. They also have formal schedules for
preparing plans that tie to financial reporting periods. However, sometimes
it is necessary to prepare or update a plan at any time as, or as a
consequence of, a "hi-spot" review - an "ad-hoc" project to determine the
impact of new innovative ideas on existing plans, programs, and projects.

The seven types of plans are:

Strategic plans: long-term statements of direction - typically three-to-


five years or more, with short-term initiatives as necessary from the
point of departure to one-to-three years out. Strategic plans
decompose into enterprise aspiration and industry position and
posture, competitive position and posture, performance improvement,
constituency-based, functional, and governance components.
Strategic decisions are made in the present about the future, and are
about doing the right thing.

Information technology strategy: a special case functional strategy


because information technology impacts all functions within the
enterprise.

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Tactical plans: activities to implement strategy - tactical decisions are
those made in the present about the present, and are about doing
things well.

Operational plans: address sales and production activities -


quantifiable targets in terms of markets, products and/or services, and
constituencies based upon market share and penetration, product
and/or service usage, satisfaction, quality, time-to-market, cycle time,
productivity, and asset capacity and utilization.

Financial plans: pro forma sets of projected financial statements with


assumptions. These plans represent the translation of tactical and
operational plans into financial targets in terms of revenue, costs and
expenses, profits, cash flows, financial capital, operating capital,
investment capital, and returns on investment based upon rates,
quantities of input, and volumes of output.

Business plans for financing: abstracts of strategic and tactical plans


aimed specifically at raising capital from third-party investors -
applicable to both private and public enterprises, and commonly used
by early stage entrepreneurial enterprises. Financing plans can also be
used for internally for bootstrapping new product lines, business
lines, and business units, or for research and development initiatives.
Plans are funded when commitments are actually made and when
sources are available.

Budgets: annualized financial plans at working levels of detail.


Budgets are the translation of strategic, tactical, operational, and
financial plans into specific period-based financial and non-financial
goals.

Plans are implemented through programs, projects, and perpetual


processes within and between functions.

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Periodic checkpoints should be established to review progress and
measure performance as plans are deployed and executed. A feedback
loop should be established between performance measurement and
planning and policy development activities so that adjustments can be
made in estimating guidelines, projections, and assumptions accordingly.

Developing plans is an enterpriship (entrepreneurship, leadership, and


management) competency.

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For more information...

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About Nigel A.L Brooks...

Nigel A.L Brooks is a management consultant to entrepreneurs, business


enterprise owners, executives, and managers, and the enterprises they
serve. He specializes in developing the entrepreneurial, leadership, and
managerial competencies that build sustainable advantage from vision to
value. He is an author and a frequent speaker.

He obtained his professional experience as a partner at Andersen


Consulting (now Accenture, Ltd.), as a vice president at Booz Allen
Hamilton, Inc. (now Booz and Company), as a senior vice president at the
American Express Company, as president of Javazona Cafes, Inc., and as
president of The Business Leadership Development Corporation. He has
been a contributing editor for the Bank Administration Institute magazine,
and has served on boards of entrepreneurial networks. He was educated at
the University of Exeter, Devon, United Kingdom.

His clients are in the financial services, food services, high-tech,


manufacturing and distribution, pharmaceuticals, oil and gas, professional
services, retail and wholesale, transportation, and government industries.

He has experience in North and Latin America, Europe and Asia-Pacific.

www.nigelalbrooks.com

About The Business Leadership Development Corporation (BLD)...

The Business Leadership Development Corporation is a professional


services firm that works with entrepreneurs, lifestyle business enterprise
owners, executives, and managers, and the enterprises they serve.

BLD develops entrepreneurial, leadership, and managerial competencies


that achieve performance excellence by building sustainable advantage
from vision to value through:

Strategic Management Consulting


Executive Coaching and Mentoring
Professional Training via The Center For Business Leadership
Development (CBLD)
Motivational Speaking

www.bldsolutions.com

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THE BUSINESS LEADERSHIP DEVELOPMENT CORPORATION
13835 NORTH TATUM BOULEVARD 9-102
PHOENIX, ARIZONA 85032 USA
www.bldsolutions.com
(602) 291-4595

Copyright 2008-10: The Business Leadership Development Corporation


All rights reserved

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