the main importance of business planning is

14 Reasons Why You Need a Business Plan

Female entrepreneur holding a pen and pointing to multiple sticky notes on the wall. Presenting the many ways having a business plan will benefit you as a business owner.

10 min. read

Updated May 10, 2024

There’s no question that starting and running a business is hard work. But it’s also incredibly rewarding. And, one of the most important things you can do to increase your chances of success is to have a business plan.

A business plan is a foundational document that is essential for any company, no matter the size or age. From attracting potential investors to keeping your business on track—a business plan helps you achieve important milestones and grow in the right direction.

A business plan isn’t just a document you put together once when starting your business. It’s a living, breathing guide for existing businesses – one that business owners should revisit and update regularly.

Unfortunately, writing a business plan is often a daunting task for potential entrepreneurs. So, do you really need a business plan? Is it really worth the investment of time and resources? Can’t you just wing it and skip the whole planning process?

Good questions. Here’s every reason why you need a business plan.

1. Business planning is proven to help you grow 30 percent faster

Writing a business plan isn’t about producing a document that accurately predicts the future of your company. The process of writing your plan is what’s important. Writing your plan and reviewing it regularly gives you a better window into what you need to do to achieve your goals and succeed.

You don’t have to just take our word for it. Studies have proven that companies that plan and review their results regularly grow 30 percent faster. Beyond faster growth, research also shows that companies that plan actually perform better. They’re less likely to become one of those woeful failure statistics, or experience cash flow crises that threaten to close them down.

2. Planning is a necessary part of the fundraising process

One of the top reasons to have a business plan is to make it easier to raise money for your business. Without a business plan, it’s difficult to know how much money you need to raise, how you will spend the money once you raise it, and what your budget should be.

Investors want to know that you have a solid plan in place – that your business is headed in the right direction and that there is long-term potential in your venture.

A business plan shows that your business is serious and that there are clearly defined steps on how it aims to become successful. It also demonstrates that you have the necessary competence to make that vision a reality.

Investors, partners, and creditors will want to see detailed financial forecasts for your business that shows how you plan to grow and how you plan on spending their money.

3. Having a business plan minimizes your risk

When you’re just starting out, there’s so much you don’t know—about your customers, your competition, and even about operations.

As a business owner, you signed up for some of that uncertainty when you started your business, but there’s a lot you can do to reduce your risk . Creating and reviewing your business plan regularly is a great way to uncover your weak spots—the flaws, gaps, and assumptions you’ve made—and develop contingency plans.

Your business plan will also help you define budgets and revenue goals. And, if you’re not meeting your goals, you can quickly adjust spending plans and create more realistic budgets to keep your business healthy.

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4. Crafts a roadmap to achieve important milestones

A business plan is like a roadmap for your business. It helps you set, track and reach business milestones.

For your plan to function in this way, your business plan should first outline your company’s short- and long-term goals. You can then fill in the specific steps necessary to reach those goals. This ensures that you measure your progress (or lack thereof) and make necessary adjustments along the way to stay on track while avoiding costly detours.

In fact, one of the top reasons why new businesses fail is due to bad business planning. Combine this with inflexibility and you have a recipe for disaster.

And planning is not just for startups. Established businesses benefit greatly from revisiting their business plan. It keeps them on track, even when the global market rapidly shifts as we’ve seen in recent years.

5. A plan helps you figure out if your idea can become a business

To turn your idea into reality, you need to accurately assess the feasibility of your business idea.

You need to verify:

If there is a market for your product or service
Who your target audience is
How you will gain an edge over the current competition
If your business can run profitably

A business plan forces you to take a step back and look at your business objectively, which makes it far easier to make tough decisions down the road. Additionally, a business plan helps you to identify risks and opportunities early on, providing you with the necessary time to come up with strategies to address them properly.

Finally, a business plan helps you work through the nuts and bolts of how your business will work financially and if it can become sustainable over time.

6. You’ll make big spending decisions with confidence

As your business grows, you’ll have to figure out when to hire new employees, when to expand to a new location, or whether you can afford a major purchase.

These are always major spending decisions, and if you’re regularly reviewing the forecasts you mapped out in your business plan, you’re going to have better information to use to make your decisions.

7. You’re more likely to catch critical cash flow challenges early

The other side of those major spending decisions is understanding and monitoring your business’s cash flow. Your cash flow statement is one of the three key financial statements you’ll put together for your business plan. (The other two are your balance sheet and your income statement (P&L).

Reviewing your cash flow statement regularly as part of your regular business plan review will help you see potential cash flow challenges earlier so you can take action to avoid a cash crisis where you can’t pay your bills.

8. Position your brand against the competition

Competitors are one of the factors that you need to take into account when starting a business. Luckily, competitive research is an integral part of writing a business plan. It encourages you to ask questions like:

What is your competition doing well? What are they doing poorly?
What can you do to set yourself apart?
What can you learn from them?
How can you make your business stand out?
What key business areas can you outcompete?
How can you identify your target market?

Finding answers to these questions helps you solidify a strategic market position and identify ways to differentiate yourself. It also proves to potential investors that you’ve done your homework and understand how to compete.

9. Determines financial needs and revenue models

A vital part of starting a business is understanding what your expenses will be and how you will generate revenue to cover those expenses. Creating a business plan helps you do just that while also defining ongoing financial needs to keep in mind.

Without a business model, it’s difficult to know whether your business idea will generate revenue. By detailing how you plan to make money, you can effectively assess the viability and scalability of your business.

Understanding this early on can help you avoid unnecessary risks and start with the confidence that your business is set up to succeed.

10. Helps you think through your marketing strategy

A business plan is a great way to document your marketing plan. This will ensure that all of your marketing activities are aligned with your overall goals. After all, a business can’t grow without customers and you’ll need a strategy for acquiring those customers.

Your business plan should include information about your target market, your marketing strategy, and your marketing budget. Detail things like how you plan to attract and retain customers, acquire new leads, how the digital marketing funnel will work, etc.

Having a documented marketing plan will help you to automate business operations, stay on track and ensure that you’re making the most of your marketing dollars.

11. Clarifies your vision and ensures everyone is on the same page

In order to create a successful business, you need a clear vision and a plan for how you’re going to achieve it. This is all detailed with your mission statement, which defines the purpose of your business, and your personnel plan, which outlines the roles and responsibilities of current and future employees. Together, they establish the long-term vision you have in mind and who will need to be involved to get there.

Additionally, your business plan is a great tool for getting your team in sync. Through consistent plan reviews, you can easily get everyone in your company on the same page and direct your workforce toward tasks that truly move the needle.

12. Future-proof your business

A business plan helps you to evaluate your current situation and make realistic projections for the future.

This is an essential step in growing your business, and it’s one that’s often overlooked. When you have a business plan in place, it’s easier to identify opportunities and make informed decisions based on data.

Therefore, it requires you to outline goals, strategies, and tactics to help the organization stay focused on what’s important.

By regularly revisiting your business plan, especially when the global market changes, you’ll be better equipped to handle whatever challenges come your way, and pivot faster.

You’ll also be in a better position to seize opportunities as they arise.

Further Reading: 5 fundamental principles of business planning

13. Tracks your progress and measures success

An often overlooked purpose of a business plan is as a tool to define success metrics. A key part of writing your plan involves pulling together a viable financial plan. This includes financial statements such as your profit and loss, cash flow, balance sheet, and sales forecast.

By housing these financial metrics within your business plan, you suddenly have an easy way to relate your strategy to actual performance. You can track progress, measure results, and follow up on how the company is progressing. Without a plan, it’s almost impossible to gauge whether you’re on track or not.

Additionally, by evaluating your successes and failures, you learn what works and what doesn’t and you can make necessary changes to your plan. In short, having a business plan gives you a framework for measuring your success. It also helps with building up a “lessons learned” knowledge database to avoid costly mistakes in the future.

14. Your business plan is an asset if you ever want to sell

Down the road, you might decide that you want to sell your business or position yourself for acquisition. Having a solid business plan is going to help you make the case for a higher valuation. Your business is likely to be worth more to a buyer if it’s easy for them to understand your business model, your target market, and your overall potential to grow and scale.

the main importance of business planning is

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Writing your business plan

By taking the time to create a business plan, you ensure that your business is heading in the right direction and that you have a roadmap to get there. We hope that this post has shown you just how important and valuable a business plan can be. While it may still seem daunting, the benefits far outweigh the time investment and learning curve for writing one.

Luckily, you can write a plan in as little as 30 minutes. And there are plenty of excellent planning tools and business plan templates out there if you’re looking for more step-by-step guidance. Whatever it takes, write your plan and you’ll quickly see how useful it can be.

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

Table of Contents

6. You’ll make big spending decisions with confidence
7. You’re more likely to catch critical cash flow challenges early

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What Is a Business Plan?

Understanding business plans, how to write a business plan, common elements of a business plan, how often should a business plan be updated, the bottom line, business plan: what it is, what's included, and how to write one.

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

A business plan is a document that details a company's goals and how it intends to achieve them. Business plans can be of benefit to both startups and well-established companies. For startups, a business plan can be essential for winning over potential lenders and investors. Established businesses can find one useful for staying on track and not losing sight of their goals. This article explains what an effective business plan needs to include and how to write one.

Key Takeaways

A business plan is a document describing a company's business activities and how it plans to achieve its goals.
Startup companies use business plans to get off the ground and attract outside investors.
For established companies, a business plan can help keep the executive team focused on and working toward the company's short- and long-term objectives.
There is no single format that a business plan must follow, but there are certain key elements that most companies will want to include.

Investopedia / Ryan Oakley

Any new business should have a business plan in place prior to beginning operations. In fact, banks and venture capital firms often want to see a business plan before they'll consider making a loan or providing capital to new businesses.

Even if a business isn't looking to raise additional money, a business plan can help it focus on its goals. A 2017 Harvard Business Review article reported that, "Entrepreneurs who write formal plans are 16% more likely to achieve viability than the otherwise identical nonplanning entrepreneurs."

Ideally, a business plan should be reviewed and updated periodically to reflect any goals that have been achieved or that may have changed. An established business that has decided to move in a new direction might create an entirely new business plan for itself.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. These include being able to think through ideas before investing too much money in them and highlighting any potential obstacles to success. A company might also share its business plan with trusted outsiders to get their objective feedback. In addition, a business plan can help keep a company's executive team on the same page about strategic action items and priorities.

Business plans, even among competitors in the same industry, are rarely identical. However, they often have some of the same basic elements, as we describe below.

While it's a good idea to provide as much detail as necessary, it's also important that a business plan be concise enough to hold a reader's attention to the end.

While there are any number of templates that you can use to write a business plan, it's best to try to avoid producing a generic-looking one. Let your plan reflect the unique personality of your business.

Many business plans use some combination of the sections below, with varying levels of detail, depending on the company.

The length of a business plan can vary greatly from business to business. Regardless, it's best to fit the basic information into a 15- to 25-page document. Other crucial elements that take up a lot of space—such as applications for patents—can be referenced in the main document and attached as appendices.

These are some of the most common elements in many business plans:

Executive summary: This section introduces the company and includes its mission statement along with relevant information about the company's leadership, employees, operations, and locations.
Products and services: Here, the company should describe the products and services it offers or plans to introduce. That might include details on pricing, product lifespan, and unique benefits to the consumer. Other factors that could go into this section include production and manufacturing processes, any relevant patents the company may have, as well as proprietary technology . Information about research and development (R&D) can also be included here.
Market analysis: A company needs to have a good handle on the current state of its industry and the existing competition. This section should explain where the company fits in, what types of customers it plans to target, and how easy or difficult it may be to take market share from incumbents.
Marketing strategy: This section can describe how the company plans to attract and keep customers, including any anticipated advertising and marketing campaigns. It should also describe the distribution channel or channels it will use to get its products or services to consumers.
Financial plans and projections: Established businesses can include financial statements, balance sheets, and other relevant financial information. New businesses can provide financial targets and estimates for the first few years. Your plan might also include any funding requests you're making.

The best business plans aren't generic ones created from easily accessed templates. A company should aim to entice readers with a plan that demonstrates its uniqueness and potential for success.

2 Types of Business Plans

Business plans can take many forms, but they are sometimes divided into two basic categories: traditional and lean startup. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

Traditional business plans : These plans tend to be much longer than lean startup plans and contain considerably more detail. As a result they require more work on the part of the business, but they can also be more persuasive (and reassuring) to potential investors.
Lean startup business plans : These use an abbreviated structure that highlights key elements. These business plans are short—as short as one page—and provide only the most basic detail. If a company wants to use this kind of plan, it should be prepared to provide more detail if an investor or a lender requests it.

Why Do Business Plans Fail?

A business plan is not a surefire recipe for success. The plan may have been unrealistic in its assumptions and projections to begin with. Markets and the overall economy might change in ways that couldn't have been foreseen. A competitor might introduce a revolutionary new product or service. All of this calls for building some flexibility into your plan, so you can pivot to a new course if needed.

How frequently a business plan needs to be revised will depend on the nature of the business. A well-established business might want to review its plan once a year and make changes if necessary. A new or fast-growing business in a fiercely competitive market might want to revise it more often, such as quarterly.

What Does a Lean Startup Business Plan Include?

The lean startup business plan is an option when a company prefers to give a quick explanation of its business. For example, a brand-new company may feel that it doesn't have a lot of information to provide yet.

Sections can include: a value proposition ; the company's major activities and advantages; resources such as staff, intellectual property, and capital; a list of partnerships; customer segments; and revenue sources.

A business plan can be useful to companies of all kinds. But as a company grows and the world around it changes, so too should its business plan. So don't think of your business plan as carved in granite but as a living document designed to evolve with your business.

Harvard Business Review. " Research: Writing a Business Plan Makes Your Startup More Likely to Succeed ."

U.S. Small Business Administration. " Write Your Business Plan ."

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6 Reasons You Really Need to Write A Business Plan

Published: October 14, 2020

Starting a busine ss can be a daunting task, especially if you’re starting from square one.

It’s easy to feel stuck in the whirlwind of things you’ll need to do, like registering your company, building a team, advertising, the list goes on. Not to mention, a business idea with no foundation can make the process seem incredibly intimidating.

Thankfully, business plans are an antidote for the new business woes that many entrepreneurs feel. Some may shy away from the idea, as they are lengthy documents that require a significant amount of attention and care.

However, there’s a reason why those who take the time to write out a business plan are 16% more likely to be successful than those who don’t. In other words, business plans work.

What is a business plan, and why does it matter?

In brief, a business plan is a roadmap to success. It's a blueprint for entrepreneurs to follow that helps them outline, understand, and cohesively achieve their goals.

Writing a business plan involves defining critical aspects of your business, like brand messaging, conducting market research, and creating pricing strategies — all before starting the company.

A business plan can also increase your confidence. You’ll get a holistic view of your idea and understand whether it's worth pursuing.

So, why not take the time to create a blueprint that will make your job easier? Let’s take a look at six reasons why you should write a business plan before doing anything else.

Six Reasons You Really Need To Write a Business Plan

Legitimize your business idea.
Give your business a foundation for success.
Obtain funding and investments.
Hire the right people.
Communicate your needs.
It makes it easier to sell your business.

1. Legitimize your business idea.

Pursuing business ideas that stem from passions you’ve had for years can be exciting, but that doesn’t necessarily mean it’s a sound venture.

One of the first things a business plan requires you to do is research your target market. You’ll gain a nuanced understanding of industry trends and what your competitors have done, or not, to succeed. You may find that the idea you have when you start is not likely to be successful.

That may feel disheartening, but you can always modify your original idea to better fit market needs. The more you understand about the industry, your future competitors, and your prospective customers, the greater the likelihood of success. If you identify issues early on, you can develop strategies to deal with them rather than troubleshooting as they happen.

It’s better to know sooner rather than later if your business will be successful before investing time and money.

2. Give your business a foundation for success.

Let's say you’re looking to start a clean beauty company. There are thousands of directions you can go in, so just saying, “I’m starting a clean beauty company!” isn’t enough.

You need to know what specific products you want to make, and why you’re deciding to create them. The Pricing and Product Line style="color: #33475b;"> section of a business plan requires you to identify these elements, making it easier to plan for other components of your business strategy.

You’ll also use your initial market research to outline financial projections, goals, objectives, and operational needs. Identifying these factors ahead of time creates a strong foundation, as you’ll be making critical business decisions early on.

You can refer back to the goals you’ve set within your business plan to track your progress over time and prioritize areas that need extra attention.

All in all, every section of your business plan requires you to go in-depth into your future business strategy before even acting on any of those plans. Having a plan at the ready gives your business a solid foundation for growth.

When you start your company, and your product reaches the market, you’ll spend less time troubleshooting and more time focusing on your target audiences and generating revenue.

3. Obtain funding and investments.

Every new business needs capital to get off the ground. Although it would be nice, banks won’t finance loans just because you request one. They want to know what the money is for, where it’s going, and if you’ll eventually be able to pay it back.

If you want investors to be part of your financing plan, they’ll have questions about your business’ pricing strategies and revenue models. Investors can also back out if they feel like their money isn’t put to fair use. They’ll want something to refer back to track your progress over time and understand if you’re meeting the goals you told them you’d meet. They want to know if their investment was worthwhile.

The Financial Considerations section of a business plan will prompt you to estimate costs ahead of time and establish revenue objectives before applying for loans or speaking to investors.

You’ll secure and finalize your strategy in advance to avoid showing up unprepared for meetings with potential investors.

4. Hire the right people.

After you’ve completed your business plan and you have a clear view of your strategies, goals, and financial needs, there may be milestones you need to meet that require skills you don’t yet have. You may need to hire new people to fill in the gaps.

Having a strategic plan to share with prospective partners and employees can prove that they aren’t signing on to a sinking ship.

If your plans are summarized and feasible, they’ll understand why you want them on your team, and why they should agree to work with you.

5. Communicate your needs.

If you don’t understand how your business will run, it’ll be hard to communicate your business’s legitimacy to all involved parties.

Your plan will give you a well-rounded view of how your business will work, and make it easier for you to communicate this to others.

You may have already secured financing from banks and made deals with investors, but a business’ needs are always changing. While your business grows, you’ll likely need more financial support, more partners, or just expand your services and product offers. Using your business plan as a measure of how you’ve met your goals can make it easier to bring people onto your team at all stages of the process.

6. It makes it easier to sell your business.

A buyer won’t want to purchase a business that will run into the ground after signing the papers. They want a successful, established company.

A business plan that details milestones you can prove you’ve already met can be used to show prospective buyers how you’ve generated success within your market. You can use your accomplishments to negotiate higher price points aligned with your business’ value.

A Business Plan Is Essential

Ultimately, having a business plan can increase your confidence in your new venture. You’ll understand what your business needs to succeed, and outline the tactics you’ll use to achieve those goals.

Some people have a lifetime goal of turning their passions into successful business ventures, and a well-crafted business plan can make those dreams come true.

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The importance of a business plan

Business plans are like road maps: it’s possible to travel without one, but that will only increase the odds of getting lost along the way.

Owners with a business plan see growth 30% faster than those without one, and 71% of the fast-growing companies have business plans . Before we get into the thick of it, let’s define and go over what a business plan actually is.

What is a business plan?

A business plan is a 15-20 page document that outlines how you will achieve your business objectives and includes information about your product, marketing strategies, and finances. You should create one when you’re starting a new business and keep updating it as your business grows.

Rather than putting yourself in a position where you may have to stop and ask for directions or even circle back and start over, small business owners often use business plans to help guide them. That’s because they help them see the bigger picture, plan ahead, make important decisions, and improve the overall likelihood of success. ‍

Why is a business plan important?

A well-written business plan is an important tool because it gives entrepreneurs and small business owners, as well as their employees, the ability to lay out their goals and track their progress as their business begins to grow. Business planning should be the first thing done when starting a new business. Business plans are also important for attracting investors so they can determine if your business is on the right path and worth putting money into.

Business plans typically include detailed information that can help improve your business’s chances of success, like:

A market analysis : gathering information about factors and conditions that affect your industry
Competitive analysis : evaluating the strengths and weaknesses of your competitors
Customer segmentation : divide your customers into different groups based on specific characteristics to improve your marketing
Marketing: using your research to advertise your business
Logistics and operations plans : planning and executing the most efficient production process
Cash flow projection : being prepared for how much money is going into and out of your business
An overall path to long-term growth

10 reasons why you need a business plan

I know what you’re thinking: “Do I really need a business plan? It sounds like a lot of work, plus I heard they’re outdated and I like figuring things out as I go...”.

The answer is: yes, you really do need a business plan! As entrepreneur Kevin J. Donaldson said, “Going into business without a business plan is like going on a mountain trek without a map or GPS support—you’ll eventually get lost and starve! Though it may sound tedious and time-consuming, business plans are critical to starting your business and setting yourself up for success.

To outline the importance of business plans and make the process sound less daunting, here are 10 reasons why you need one for your small business.

1. To help you with critical decisions

The primary importance of a business plan is that they help you make better decisions. Entrepreneurship is often an endless exercise in decision making and crisis management. Sitting down and considering all the ramifications of any given decision is a luxury that small businesses can’t always afford. That’s where a business plan comes in.

Building a business plan allows you to determine the answer to some of the most critical business decisions ahead of time.

Creating a robust business plan is a forcing function—you have to sit down and think about major components of your business before you get started, like your marketing strategy and what products you’ll sell. You answer many tough questions before they arise. And thinking deeply about your core strategies can also help you understand how those decisions will impact your broader strategy.

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2. To iron out the kinks

Putting together a business plan requires entrepreneurs to ask themselves a lot of hard questions and take the time to come up with well-researched and insightful answers. Even if the document itself were to disappear as soon as it’s completed, the practice of writing it helps to articulate your vision in realistic terms and better determine if there are any gaps in your strategy.

3. To avoid the big mistakes

Only about half of small businesses are still around to celebrate their fifth birthday . While there are many reasons why small businesses fail, many of the most common are purposefully addressed in business plans.

According to data from CB Insights , some of the most common reasons businesses fail include:

No market need : No one wants what you’re selling.
Lack of capital : Cash flow issues or businesses simply run out of money.
Inadequate team : This underscores the importance of hiring the right people to help you run your business.
Stiff competition : It’s tough to generate a steady profit when you have a lot of competitors in your space.
Pricing : Some entrepreneurs price their products or services too high or too low—both scenarios can be a recipe for disaster.

The exercise of creating a business plan can help you avoid these major mistakes. Whether it’s cash flow forecasts or a product-market fit analysis , every piece of a business plan can help spot some of those potentially critical mistakes before they arise. For example, don’t be afraid to scrap an idea you really loved if it turns out there’s no market need. Be honest with yourself!

Get a jumpstart on your business plan by creating your own cash flow projection .

4. To prove the viability of the business

Many businesses are created out of passion, and while passion can be a great motivator, it’s not a great proof point.

Planning out exactly how you’re going to turn that vision into a successful business is perhaps the most important step between concept and reality. Business plans can help you confirm that your grand idea makes sound business sense.

A graphic showing you a “Business Plan Outline.” There are four sections on the left side: Executive Summary at the top, Company Description below it, followed by Market Analysis, and lastly Organization and Management. There was four sections on the right side. At the top: “Service or Product Line.” Below that, “Marketing and Sales.” Below that, “Funding Request.” And lastly: “Financial Projections.” At the very bottom below the left and right columns is a section that says “Appendix.

A critical component of your business plan is the market research section. Market research can offer deep insight into your customers, your competitors, and your chosen industry. Not only can it enlighten entrepreneurs who are starting up a new business, but it can also better inform existing businesses on activities like marketing, advertising, and releasing new products or services.

Want to prove there’s a market gap? Here’s how you can get started with market research.

5. To set better objectives and benchmarks

Without a business plan, objectives often become arbitrary, without much rhyme or reason behind them. Having a business plan can help make those benchmarks more intentional and consequential. They can also help keep you accountable to your long-term vision and strategy, and gain insights into how your strategy is (or isn’t) coming together over time.

6. To communicate objectives and benchmarks

Whether you’re managing a team of 100 or a team of two, you can’t always be there to make every decision yourself. Think of the business plan like a substitute teacher, ready to answer questions any time there’s an absence. Let your staff know that when in doubt, they can always consult the business plan to understand the next steps in the event that they can’t get an answer from you directly.

Sharing your business plan with team members also helps ensure that all members are aligned with what you’re doing, why, and share the same understanding of long-term objectives.

7. To provide a guide for service providers

Small businesses typically employ contractors , freelancers, and other professionals to help them with tasks like accounting , marketing, legal assistance, and as consultants. Having a business plan in place allows you to easily share relevant sections with those you rely on to support the organization, while ensuring everyone is on the same page.

8. To secure financing

Did you know you’re 2.5x more likely to get funded if you have a business plan?If you’re planning on pitching to venture capitalists, borrowing from a bank, or are considering selling your company in the future, you’re likely going to need a business plan. After all, anyone that’s interested in putting money into your company is going to want to know it’s in good hands and that it’s viable in the long run. Business plans are the most effective ways of proving that and are typically a requirement for anyone seeking outside financing.

Learn what you need to get a small business loan.

9. To better understand the broader landscape

No business is an island, and while you might have a strong handle on everything happening under your own roof, it’s equally important to understand the market terrain as well. Writing a business plan can go a long way in helping you better understand your competition and the market you’re operating in more broadly, illuminate consumer trends and preferences, potential disruptions and other insights that aren’t always plainly visible.

10. To reduce risk

Entrepreneurship is a risky business, but that risk becomes significantly more manageable once tested against a well-crafted business plan. Drawing up revenue and expense projections, devising logistics and operational plans, and understanding the market and competitive landscape can all help reduce the risk factor from an inherently precarious way to make a living. Having a business plan allows you to leave less up to chance, make better decisions, and enjoy the clearest possible view of the future of your company.

Understanding the importance of a business plan

Now that you have a solid grasp on the “why” behind business plans, you can confidently move forward with creating your own.

Remember that a business plan will grow and evolve along with your business, so it’s an important part of your whole journey—not just the beginning.

Now that you’ve read up on the purpose of a business plan, check out our guide to help you get started.

The information and tips shared on this blog are meant to be used as learning and personal development tools as you launch, run and grow your business. While a good place to start, these articles should not take the place of personalized advice from professionals. As our lawyers would say: “All content on Wave’s blog is intended for informational purposes only. It should not be considered legal or financial advice.” Additionally, Wave is the legal copyright holder of all materials on the blog, and others cannot re-use or publish it without our written consent.

Do you REALLY need a business plan?

The top three questions that I get asked most frequently as a professional business plan writer will probably not surprise you:

What is the purpose of a business plan – why is it really required?
How is it going to benefit my business if I write a business plan?
Is a business plan really that important – how can I actually use it?

Keep reading to get my take on what the most essential advantages of preparing a business plan are—and why you may (not) need to prepare one.

The importance, purpose and benefit of a business plan is in that it enables you to validate a business idea, secure funding, set strategic goals – and then take organized action on those goals by making decisions, managing resources, risk and change, while effectively communicating with stakeholders.

Let’s take a closer look at how each of the important business planning benefits can catapult your business forward:

1. Validate Your Business Idea

The process of writing your business plan will force you to ask the difficult questions about the major components of your business, including:

External: industry, target market of prospective customers, competitive landscape
Internal: business model, unique selling proposition, operations, marketing, finance

Business planning connects the dots to draw a big picture of the entire business.

And imagine how much time and money you would save if working through a business plan revealed that your business idea is untenable. You would be surprised how often that happens – an idea that once sounded so very promising may easily fall apart after you actually write down all the facts, details and numbers.

While you may be tempted to jump directly into start-up mode, writing a business plan is an essential first step to check the feasibility of a business before investing too much time and money into it. Business plans help to confirm that the idea you are so passionate and convinced about is solid from business point of view.

Take the time to do the necessary research and work through a proper business plan. The more you know, the higher the likelihood that your business will succeed.

2. Set and Track Goals

Successful businesses are dynamic and continuously evolve. And so are good business plans that allow you to:

Priorities: Regularly set goals, targets (e.g., sales revenues reached), milestones (e.g. number of employees hired), performance indicators and metrics for short, mid and long term
Accountability: Track your progress toward goals and benchmarks
Course-correction: make changes to your business as you learn more about your market and what works and what does not
Mission: Refer to a clear set of values to help steer your business through any times of trouble

Essentially, business plan is a blueprint and an important strategic tool that keeps you focused, motivated and accountable to keep your business on track. When used properly and consulted regularly, it can help you measure and manage what you are working so hard to create – your long-term vision.

As humans, we work better when we have clear goals we can work towards. The everyday business hustle makes it challenging to keep an eye on the strategic priorities. The business planning process serves as a useful reminder.

3. Take Action

A business plan is also a plan of action . At its core, your plan identifies where you are now, where you want your business to go, and how you will get there.

Planning out exactly how you are going to turn your vision into a successful business is perhaps the most important step between an idea and reality. Success comes not only from having a vision but working towards that vision in a systematic and organized way.

A good business plan clearly outlines specific steps necessary to turn the business objectives into reality. Think of it as a roadmap to success. The strategy and tactics need to be in alignment to make sure that your day-to-day activities lead to the achievement of your business goals.

4. Manage Resources

A business plan also provides insight on how resources required for achieving your business goals will be structured and allocated according to their strategic priority. For example:

Large Spending Decisions

Assets: When and in what amount will the business commit resources to buy/lease new assets, such as computers or vehicles.
Human Resources: Objectives for hiring new employees, including not only their pay but how they will help the business grow and flourish.
Business Space: Information on costs of renting/buying space for offices, retail, manufacturing or other operations, for example when expanding to a new location.

Cash Flow It is essential that a business carefully plans and manages cash flows to ensure that there are optimal levels of cash in the bank at all times and avoid situations where the business could run out of cash and could not afford to pay its bills.

Revenues v. Expenses In addition, your business plan will compare your revenue forecasts to the budgeted costs to make sure that your financials are healthy and the business is set up for success.

5. Make Decisions

Whether you are starting a small business or expanding an existing one, a business plan is an important tool to help guide your decisions:

Sound decisions Gathering information for the business plan boosts your knowledge across many important areas of the business:

Industry, market, customers and competitors
Financial projections (e.g., revenue, expenses, assets, cash flow)
Operations, technology and logistics
Human resources (management and staff)
Creating value for your customer through products and services

Decision-making skills The business planning process involves thorough research and critical thinking about many intertwined and complex business issues. As a result, it solidifies the decision-making skills of the business owner and builds a solid foundation for strategic planning , prioritization and sound decision making in your business. The more you understand, the better your decisions will be.

Planning Thorough planning allows you to determine the answer to some of the most critical business decisions ahead of time , prepare for anticipate problems before they arise, and ensure that any tactical solutions are in line with the overall strategy and goals.

If you do not take time to plan, you risk becoming overwhelmed by countless options and conflicting directions because you are not unclear about the mission , vision and strategy for your business.

6. Manage Risk

Some level of uncertainty is inherent in every business, but there is a lot you can do to reduce and manage the risk, starting with a business plan to uncover your weak spots.

You will need to take a realistic and pragmatic look at the hard facts and identify:

Major risks , challenges and obstacles that you can expect on the way – so you can prepare to deal with them.
Weaknesses in your business idea, business model and strategy – so you can fix them.
Critical mistakes before they arise – so you can avoid them.

Essentially, the business plan is your safety net . Naturally, business plan cannot entirely eliminate risk, but it can significantly reduce it and prepare you for any challenges you may encounter.

7. Communicate Internally

Attract talent For a business to succeed, attracting talented workers and partners is of vital importance.

A business plan can be used as a communication tool to attract the right talent at all levels, from skilled staff to executive management, to work for your business by explaining the direction and growth potential of the business in a presentable format.

Align performance Sharing your business plan with all team members helps to ensure that everyone is on the same page when it comes to the long-term vision and strategy.

You need their buy-in from the beginning, because aligning your team with your priorities will increase the efficiency of your business as everyone is working towards a common goal .

If everyone on your team understands that their piece of work matters and how it fits into the big picture, they are more invested in achieving the objectives of the business.

It also makes it easier to track and communicate on your progress.

Share and explain business objectives with your management team, employees and new hires. Make selected portions of your business plan part of your new employee training.

8. Communicate Externally

Alliances If you are interested in partnerships or joint ventures, you may share selected sections of your plan with the potential business partners in order to develop new alliances.

Suppliers A business plan can play a part in attracting reliable suppliers and getting approved for business credit from suppliers. Suppliers who feel confident that your business will succeed (e.g., sales projections) will be much more likely to extend credit.

In addition, suppliers may want to ensure their products are being represented in the right way .

Professional Services Having a business plan in place allows you to easily share relevant sections with those you rely on to support the organization, including attorneys, accountants, and other professional consultants as needed, to make sure that everyone is on the same page.

Advisors Share the plan with experts and professionals who are in a position to give you valuable advice.

Landlord Some landlords and property managers require businesses to submit a business plan to be considered for a lease to prove that your business will have sufficient cash flows to pay the rent.

Customers The business plan may also function as a prospectus for potential customers, especially when it comes to large corporate accounts and exclusive customer relationships.

9. Secure Funding

If you intend to seek outside financing for your business, you are likely going to need a business plan.

Whether you are seeking debt financing (e.g. loan or credit line) from a lender (e.g., bank or financial institution) or equity capital financing from investors (e.g., venture or angel capital), a business plan can make the difference between whether or not – and how much – someone decides to invest.

Investors and financiers are always looking at the risk of default and the earning potential based on facts and figures. Understandably, anyone who is interested in supporting your business will want to check that you know what you are doing, that their money is in good hands, and that the venture is viable in the long run.

Business plans tend to be the most effective ways of proving that. A presentation may pique their interest , but they will most probably request a well-written document they can study in detail before they will be prepared to make any financial commitment.

That is why a business plan can often be the single most important document you can present to potential investors/financiers that will provide the structure and confidence that they need to make decisions about funding and supporting your company.

Be prepared to have your business plan scrutinized . Investors and financiers will conduct extensive checks and analyses to be certain that what is written in your business plan faithful representation of the truth.

10. Grow and Change

It is a very common misconception that a business plan is a static document that a new business prepares once in the start-up phase and then happily forgets about.

But businesses are not static. And neither are business plans. The business plan for any business will change over time as the company evolves and expands .

In the growth phase, an updated business plan is particularly useful for:

Raising additional capital for expansion

Seeking financing for new assets , such as equipment or property
Securing financing to support steady cash flows (e.g., seasonality, market downturns, timing of sale/purchase invoices)
Forecasting to allocate resources according to strategic priority and operational needs
Valuation (e.g., mergers & acquisitions, tax issues, transactions related to divorce, inheritance, estate planning)

Keeping the business plan updated gives established businesses better chance of getting the money they need to grow or even keep operating.

Business plan is also an excellent tool for planning an exit as it would include the strategy and timelines for a transfer to new ownership or dissolution of the company.

Also, if you ever make the decision to sell your business or position yourself for a merger or an acquisition , a strong business plan in hand is going to help you to maximize the business valuation.

Valuation is the process of establishing the worth of a business by a valuation expert who will draw on professional experience as well as a business plan that will outline what you have, what it’s worth now and how much will it likely produce in the future.

Your business is likely to be worth more to a buyer if they clearly understand your business model, your market, your assets and your overall potential to grow and scale .

Business Plan Benefits: What are the benefits of a business plan?

A business plan benefits businesses by serving as a strategic tool outlining the steps and resources required to achieve goals and make business ideas succeed, as well as a communication tool allowing businesses to articulate their strategy to stakeholders that support the business.

Business Plan Importance: Why is business plan important?

The importance of a business plan lies in it being a roadmap that guides the decisions of a business on the road to success, providing clarity on all aspects of its operations. This blueprint outlines the goals of the business and what exactly is needed to achieve them through effective management.

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Resources for Your Growing Business

The importance of business plan: 5 key reasons.

A key part of any business is its business plan. They can help define the goals of your business and help it reach success. A good business plan can also help you develop an adequate marketing strategy. There are a number of reasons all business owners need business plans, keep reading to learn more!

Here’s What We’ll Cover:

What Is a Business Plan?

5 reasons you need a well-written business plan, how do i make a business plan, key takeaways.

A business plan contains detailed information that can help determine its success. Some of this information can include the following:

Market analysis
Cash flow projection
Competitive analysis
Financial statements and financial projections
An operating plan

A solid business plan is a good way to attract potential investors. It can also help you display to business partners that you have a successful business growing. In a competitive landscape, a formal business plan is your key to success.

Check out all of the biggest reasons you need a good business plan below.

1. To Secure Funding

Whether you’re seeking funding from a venture capitalist or a bank, you’ll need a business plan. Business plans are the foundation of a business. They tell the parties that you’re seeking funding from whether or not you’re worth investing in. If you need any sort of outside financing, you’ll need a good business plan to secure it.

2. Set and Communicate Goals

A business plan gives you a tangible way of reviewing your business goals. Business plans revolve around the present and the future. When you establish your goals and put them in writing, you’re more likely to reach them. A strong business plan includes these goals, and allows you to communicate them to investors and employees alike.

3. Prove Viability in the Market

While many businesses are born from passion, not many will last without an effective business plan. While a business concept may seem sound, things may change once the specifics are written down. Often, people who attempt to start a business without a plan will fail. This is because they don’t take into account all of the planning and funds needed to get a business off of the ground.

Market research is a large part of the business planning process. It lets you review your potential customers, as well as the competition, in your field. By understanding both you can set price points for products or services. Sometimes, it may not make sense to start a business based on the existing competition. Other times, market research can guide you to effective marketing strategies that others lack. To have a successful business, it has to be viable. A business plan will help you determine that.

4. They Help Owners Avoid Failure

Far too often, small businesses fail. Many times, this is due to the lack of a strong business plan. There are many reasons that small businesses fail, most of which can be avoided by developing a business plan. Some of them are listed below, which can be avoided by having a business plan:

The market doesn’t need the business’s product or service
The business didn’t take into account the amount of capital needed
The market is oversaturated
The prices set by the business are too high, pushing potential customers away

Any good business plan includes information to help business owners avoid these issues.

5. Business Plans Reduce Risk

Related to the last reason, business plans help reduce risk. A well-thought-out business plan helps reduce risky decisions. They help business owners make informed decisions based on the research they conduct. Any business owner can tell you that the most important part of their job is making critical decisions. A business plan that factors in all possible situations helps make those decisions.

Luckily, there are plenty of tools available to help you create a business plan. A simple search can lead you to helpful tools, like a business plan template . These are helpful, as they let you fill in the information as you go. Many of them provide basic instructions on how to create the business plan, as well.

If you plan on starting a business, you’ll need a business plan. They’re good for a vast number of things. Business plans help owners make informed decisions, as well as set goals and secure funding. Don’t put off putting together your business plan!

If you’re in the planning stages of your business, be sure to check out our resource hub . We have plenty of valuable resources and articles for you when you’re just getting started. Check it out today!

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What is a business plan, the advantages of having a business plan, the types of business plans, the key elements of a business plan, best business plan software, common challenges of writing a business plan, become an expert business planner, business planning: it’s importance, types and key elements.

Every year, thousands of new businesses see the light of the day. One look at the World Bank's Entrepreneurship Survey and database shows the mind-boggling rate of new business registrations. However, sadly, only a tiny percentage of them have a chance of survival.

According to the Bureau of Labor Statistics, about 20% of small businesses fail in their first year, about 50% in their fifth year.

Research from the University of Tennessee found that 44% of businesses fail within the first three years. Among those that operate within specific sectors, like information (which includes most tech firms), 63% shut shop within three years.

Several other statistics expose the abysmal rates of business failure. But why are so many businesses bound to fail? Most studies mention "lack of business planning" as one of the reasons.

This isn’t surprising at all.

Running a business without a plan is like riding a motorcycle up a craggy cliff blindfolded. Yet, way too many firms ( a whopping 67%) don't have a formal business plan in place.

It doesn't matter if you're a startup with a great idea or a business with an excellent product. You can only go so far without a roadmap — a business plan. Only, a business plan is so much more than just a roadmap. A solid plan allows a business to weather market challenges and pivot quickly in the face of crisis, like the one global businesses are struggling with right now, in the post-pandemic world.

But before you can go ahead and develop a great business plan, you need to know the basics. In this article, we'll discuss the fundamentals of business planning to help you plan effectively for 2021.

Now before we begin with the details of business planning, let us understand what it is.

No two businesses have an identical business plan, even if they operate within the same industry. So one business plan can look entirely different from another one. Still, for the sake of simplicity, a business plan can be defined as a guide for a company to operate and achieve its goals.

More specifically, it's a document in writing that outlines the goals, objectives, and purpose of a business while laying out the blueprint for its day-to-day operations and key functions such as marketing, finance, and expansion.

A good business plan can be a game-changer for startups that are looking to raise funds to grow and scale. It convinces prospective investors that the venture will be profitable and provides a realistic outlook on how much profit is on the cards and by when it will be attained.

However, it's not only new businesses that greatly benefit from a business plan. Well-established companies and large conglomerates also need to tweak their business plans to adapt to new business environments and unpredictable market changes.

Before getting into learning more about business planning, let us learn the advantages of having one.

Since a detailed business plan offers a birds-eye view of the entire framework of an establishment, it has several benefits that make it an important part of any organization. Here are few ways a business plan can offer significant competitive edge.

Sets objectives and benchmarks: Proper planning helps a business set realistic objectives and assign stipulated time for those goals to be met. This results in long-term profitability. It also lets a company set benchmarks and Key Performance Indicators (KPIs) necessary to reach its goals.
Maximizes resource allocation: A good business plan helps to effectively organize and allocate the company’s resources. It provides an understanding of the result of actions, such as, opening new offices, recruiting fresh staff, change in production, and so on. It also helps the business estimate the financial impact of such actions.
Enhances viability: A plan greatly contributes towards turning concepts into reality. Though business plans vary from company to company, the blueprints of successful companies often serve as an excellent guide for nascent-stage start-ups and new entrepreneurs. It also helps existing firms to market, advertise, and promote new products and services into the market.
Aids in decision making: Running a business involves a lot of decision making: where to pitch, where to locate, what to sell, what to charge — the list goes on. A well thought-out business plan provides an organization the ability to anticipate the curveballs that the future could throw at them. It allows them to come up with answers and solutions to these issues well in advance.
Fix past mistakes: When businesses create plans keeping in mind the flaws and failures of the past and what worked for them and what didn’t, it can help them save time, money, and resources. Such plans that reflects the lessons learnt from the past offers businesses an opportunity to avoid future pitfalls.
Attracts investors: A business plan gives investors an in-depth idea about the objectives, structure, and validity of a firm. It helps to secure their confidence and encourages them to invest.

Now let's look at the various types involved in business planning.

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Business plans are formulated according to the needs of a business. It can be a simple one-page document or an elaborate 40-page affair, or anything in between. While there’s no rule set in stone as to what exactly a business plan can or can’t contain, there are a few common types of business plan that nearly all businesses in existence use.

Here’s an overview of a few fundamental types of business plans.

Start-up plan: As the name suggests, this is a documentation of the plans, structure, and objections of a new business establishments. It describes the products and services that are to be produced by the firm, the staff management, and market analysis of their production. Often, a detailed finance spreadsheet is also attached to this document for investors to determine the viability of the new business set-up.
Feasibility plan: A feasibility plan evaluates the prospective customers of the products or services that are to be produced by a company. It also estimates the possibility of a profit or a loss of a venture. It helps to forecast how well a product will sell at the market, the duration it will require to yield results, and the profit margin that it will secure on investments.
Expansion Plan: This kind of plan is primarily framed when a company decided to expand in terms of production or structure. It lays down the fundamental steps and guidelines with regards to internal or external growth. It helps the firm to analyze the activities like resource allocation for increased production, financial investments, employment of extra staff, and much more.
Operations Plan: An operational plan is also called an annual plan. This details the day-to-day activities and strategies that a business needs to follow in order to materialize its targets. It outlines the roles and responsibilities of the managing body, the various departments, and the company’s employees for the holistic success of the firm.
Strategic Plan: This document caters to the internal strategies of the company and is a part of the foundational grounds of the establishments. It can be accurately drafted with the help of a SWOT analysis through which the strengths, weaknesses, opportunities, and threats can be categorized and evaluated so that to develop means for optimizing profits.

There is some preliminary work that’s required before you actually sit down to write a plan for your business. Knowing what goes into a business plan is one of them.

Here are the key elements of a good business plan:

Executive Summary: An executive summary gives a clear picture of the strategies and goals of your business right at the outset. Though its value is often understated, it can be extremely helpful in creating the readers’ first impression of your business. As such, it could define the opinions of customers and investors from the get-go.
Business Description: A thorough business description removes room for any ambiguity from your processes. An excellent business description will explain the size and structure of the firm as well as its position in the market. It also describes the kind of products and services that the company offers. It even states as to whether the company is old and established or new and aspiring. Most importantly, it highlights the USP of the products or services as compared to your competitors in the market.
Market Analysis: A systematic market analysis helps to determine the current position of a business and analyzes its scope for future expansions. This can help in evaluating investments, promotions, marketing, and distribution of products. In-depth market understanding also helps a business combat competition and make plans for long-term success.
Operations and Management: Much like a statement of purpose, this allows an enterprise to explain its uniqueness to its readers and customers. It showcases the ways in which the firm can deliver greater and superior products at cheaper rates and in relatively less time.
Financial Plan: This is the most important element of a business plan and is primarily addressed to investors and sponsors. It requires a firm to reveal its financial policies and market analysis. At times, a 5-year financial report is also required to be included to show past performances and profits. The financial plan draws out the current business strategies, future projections, and the total estimated worth of the firm.

The importance of business planning is it simplifies the planning of your company's finances to present this information to a bank or investors. Here are the best business plan software providers available right now:

Business Sorter

The importance of business planning cannot be emphasized enough, but it can be challenging to write a business plan. Here are a few issues to consider before you start your business planning:

Create a business plan to determine your company's direction, obtain financing, and attract investors.
Identifying financial, demographic, and achievable goals is a common challenge when writing a business plan.
Some entrepreneurs struggle to write a business plan that is concise, interesting, and informative enough to demonstrate the viability of their business idea.
You can streamline your business planning process by conducting research, speaking with experts and peers, and working with a business consultant.

Whether you’re running your own business or in-charge of ensuring strategic performance and growth for your employer or clients, knowing the ins and outs of business planning can set you up for success.

Be it the launch of a new and exciting product or an expansion of operations, business planning is the necessity of all large and small companies. Which is why the need for professionals with superior business planning skills will never die out. In fact, their demand is on the rise with global firms putting emphasis on business analysis and planning to cope with cut-throat competition and market uncertainties.

While some are natural-born planners, most people have to work to develop this important skill. Plus, business planning requires you to understand the fundamentals of business management and be familiar with business analysis techniques . It also requires you to have a working knowledge of data visualization, project management, and monitoring tools commonly used by businesses today.

Simpliearn’s Executive Certificate Program in General Management will help you develop and hone the required skills to become an extraordinary business planner. This comprehensive general management program by IIM Indore can serve as a career catalyst, equipping professionals with a competitive edge in the ever-evolving business environment.

What Is Meant by Business Planning?

Business planning is developing a company's mission or goals and defining the strategies you will use to achieve those goals or tasks. The process can be extensive, encompassing all aspects of the operation, or it can be concrete, focusing on specific functions within the overall corporate structure.

What Are the 4 Types of Business Plans?

The following are the four types of business plans:

Operational Planning

This type of planning typically describes the company's day-to-day operations. Single-use plans are developed for events and activities that occur only once (such as a single marketing campaign). Ongoing plans include problem-solving policies, rules for specific regulations, and procedures for a step-by-step process for achieving particular goals.

Strategic Planning

Strategic plans are all about why things must occur. A high-level overview of the entire business is included in strategic planning. It is the organization's foundation and will dictate long-term decisions.

Tactical Planning

Tactical plans are about what will happen. Strategic planning is aided by tactical planning. It outlines the tactics the organization intends to employ to achieve the goals outlined in the strategic plan.

Contingency Planning

When something unexpected occurs or something needs to be changed, contingency plans are created. In situations where a change is required, contingency planning can be beneficial.

What Are the 7 Steps of a Business Plan?

The following are the seven steps required for a business plan:

Conduct Research

If your company is to run a viable business plan and attract investors, your information must be of the highest quality.

Have a Goal

The goal must be unambiguous. You will waste your time if you don't know why you're writing a business plan. Knowing also implies having a target audience for when the plan is expected to get completed.

Create a Company Profile

Some refer to it as a company profile, while others refer to it as a snapshot. It's designed to be mentally quick and digestible because it needs to stick in the reader's mind quickly since more information is provided later in the plan.

Describe the Company in Detail

Explain the company's current situation, both good and bad. Details should also include patents, licenses, copyrights, and unique strengths that no one else has.

Create a marketing plan ahead of time.

A strategic marketing plan is required because it outlines how your product or service will be communicated, delivered, and sold to customers.

Be Willing to Change Your Plan for the Sake of Your Audience

Another standard error is that people only write one business plan. Startups have several versions, just as candidates have numerous resumes for various potential employers.

Incorporate Your Motivation

Your motivation must be a compelling reason for people to believe your company will succeed in all circumstances. A mission should drive a business, not just selling, to make money. That mission is defined by your motivation as specified in your business plan.

What Are the Basic Steps in Business Planning?

These are the basic steps in business planning:

Summary and Objectives

Briefly describe your company, its objectives, and your plan to keep it running.

Services and Products

Add specifics to your detailed description of the product or service you intend to offer. Where, why, and how much you plan to sell your product or service and any special offers.

Conduct research on your industry and the ideal customers to whom you want to sell. Identify the issues you want to solve for your customers.

Operations are the process of running your business, including the people, skills, and experience required to make it successful.

How are you going to reach your target audience? How you intend to sell to them may include positioning, pricing, promotion, and distribution.

Consider funding costs, operating expenses, and projected income. Include your financial objectives and a breakdown of what it takes to make your company profitable. With proper business planning through the help of support, system, and mentorship, it is easy to start a business.

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What is a Business Plan and Why is it Important?

What is a business plan.

Whether you’re starting a small business or exploring ways to expand an existing one, a business plan is an important tool to help guide your decisions. Think of it as a roadmap to success, providing greater clarity on all aspects of your business, from marketing and finance to operations and product/service details.

While some owners may be tempted to jump directly into startup mode, writing a business plan is a crucial first step for budding entrepreneurs to check the viability of a business before investing too much time or money. The purpose of a business plan is to help articulate a strategy for starting your business. It also provides insight on steps to be taken, resources required for achieving your business goals and a timeline of anticipated results.

In fact, businesses that plan grow 30% faster than those that don’t. 1

For existing small businesses, a business plan should be updated annually as a way to guide growth and navigate the expansion into new markets.

Studies show that nearly 71% of the fastest-growing businesses have business plans, indicating that even existing businesses can benefit from updating their plans. 2

Your plan should include explicit objectives for hiring new employees , market analysis, financial projections, and potential investors. The objectives should indicate how they’ll help your business prosper and grow.

Building an asset management business plan

Committing resources to capital improvements and new assets such as computers, software or cars/trucks is never an easy decision for budget-conscious small business owners. But a business plan can bring clarity to the process of whether to buy or lease and help determine the optimal amount allocated to those assets. A good business plan can also help you decide if it’s feasible to take on additional office, retail or work space.

Creating a marketing strategy

Marketing and market potential are important aspects of a plan for aspiring small businesses.

Getting your business in front of customers on a consistent basis is one of the keys to ensuring your business not only stays afloat but also thrives.

Marketing strategies can be simple, but before you decide on how you will get the word out, getting clear on your target audience and why your business solves their problem can make sticking to your marketing plan easier.

Knowing your unique market positioning can help you determine your messaging. Your marketing strategy should include who your target audience is, the platforms or methods you will connect with them on, and a measurement framework to determine if your efforts are working.

Take entrepreneur Scott Sultzer, who opened Sandwich Joint restaurant in downtown Los Angeles in 2009. “I included the potential marketing demographic of all those who lived in a certain area of the city,” he said of his marketing strategy. “My goal was to capture a certain percentage of all those people who lived and worked nearby.” 4

Created primarily as a marketing tool, Sulzer’s 10-page plan included such topics as target market breakdown, marketing strategy and market penetration. “My business plan was mostly about market projections,” he said. “How are we going to get those people that lead to an increase in our daily sales? And how are we going to reach them to let them know we’re here?” 4

Depending on your business, it’s important to have both brick-and-mortar marketing strategies as well as a plan for marketing your business online .

Seeking investment for your business

In addition to providing a roadmap for progress and a marketing plan , your business plan could also be important in securing funding .

Whether you’re seeking a credit line from a bank or an influx of capital from investors, a business plan that answers questions about profitability and revenue generation can make the difference between whether someone decides to invest – or how much they might choose to invest.

In fact, a study showed that businesses with a plan were more likely to receive formal financial support, such as funding, than businesses without one. 3

Hiring the right talent

A business plan may also be needed to retain other professional services as well, such as attorneys, landlords, consultants or accountants. Sulzer used his business plan to secure a lease.

“I had to have a viable document that they could trust,” said Sulzer, who leased from one of the largest landowners in downtown Los Angeles. 4

“With a corporate landlord, they wouldn’t deal with me unless I had a business plan. I had to submit all my information and a plan that presented what I wanted to do, with financial breakdowns and percentages, demographics, and how I was going to get customers.” 4

For a small business to succeed, attracting talented workers and partners is of vital importance. A part of a business plan for hiring employees is to help bring in the right talent, from the executive level to skilled staff, by showing them the direction and growth potential of the business. It can also help secure vendor accounts, especially with exclusive suppliers.

Setting business plan objectives for management

Finally, a business plan can be important in providing structure and management objectives to a small business. It can become a reference tool to keep management on track with sales targets and operational milestones. When used properly and consulted regularly, it can help you measure and manage what you’re working so hard to create.

Ready to take the next step? Learn how to write a business plan .

Don’t forget to consider insurance coverage in your business plan. When the unexpected happens, you want to make sure your small business is covered. Customized insurance solutions are crucial to protecting and keeping your operation going.

Find out how small business insurance from Nationwide can help you build and protect your business whether you are just starting up or already established.

1 https://www.effectuation.org/wp-content/uploads/2017/06/The-Multiple-Effects-of-Business-Planning-onNew-Venture-Performance-1.pdf , Accessed October 2021. 2 https://onlinelibrary.wiley.com/doi/abs/10.1111/0447-2778.00006 , Accessed October 2021. 3 https://www.tandfonline.com/doi/abs/10.1080/13504851.2014.967377 , Accessed October 2021. 4 Nationwide Interview with Scott Sultzer, 2016.

Disclaimer: The information included is designed for informational purposes only. It is not legal, tax, financial or any other sort of advice, nor is it a substitute for such advice. The information may not apply to your specific situation. We have tried to make sure the information is accurate, but it could be outdated or even inaccurate in parts. It is the reader’s responsibility to comply with any applicable local, state, or federal regulations. Nationwide Mutual Insurance Company, its affiliates and their employees make no warranties about the information nor guarantee of results, and they assume no liability in connection with the information provided. Nationwide, Nationwide is on your side, and the Nationwide N and Eagle are services marks of Nationwide Mutual Insurance Company. © 2021 Nationwide.

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What is a business plan? Definition, Purpose, and Types

In the world of business, a well-thought-out plan is often the key to success. This plan, known as a business plan, is a comprehensive document that outlines a company’s goals, strategies , and financial projections. Whether you’re starting a new business or looking to expand an existing one, a business plan is an essential tool.

As a business plan writer and consultant , I’ve crafted over 15,000 plans for a diverse range of businesses. In this article, I’ll be sharing my wealth of experience about what a business plan is, its purpose, and the step-by-step process of creating one. By the end, you’ll have a thorough understanding of how to develop a robust business plan that can drive your business to success.

What is a business plan?

Purposes of a business plan, what are the essential components of a business plan, executive summary, business description or overview, product and price, competitive analysis, target market, marketing plan, financial plan, funding requirements, types of business plan, lean startup business plans, traditional business plans, how often should a business plan be reviewed and revised, what are the key elements of a lean startup business plan.

What are some of the reasons why business plans don't succeed?

A business plan is a roadmap for your business. It outlines your goals, strategies, and how you plan to achieve them. It’s a living document that you can update as your business grows and changes.

Looking for someone to write a business plan?

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These are the following purpose of business plan:

Attract investors and lenders: If you’re seeking funding for your business , a business plan is a must-have. Investors and lenders want to see that you have a clear plan for how you’ll use their money to grow your business and generate revenue.
Get organized and stay on track: Writing a business plan forces you to think through all aspects of your business, from your target market to your marketing strategy. This can help you identify any potential challenges and opportunities early on, so you can develop a plan to address them.
Make better decisions: A business plan can help you make better decisions about your business by providing you with a framework to evaluate different options. For example, if you’re considering launching a new product, your business plan can help you assess the potential market demand, costs, and profitability.

The Essential Components of a Business Plan

The executive summary is the most important part of your business plan, even though it’s the last one you’ll write. It’s the first section that potential investors or lenders will read, and it may be the only one they read. The executive summary sets the stage for the rest of the document by introducing your company’s mission or vision statement, value proposition, and long-term goals.

The business description section of your business plan should introduce your business to the reader in a compelling and concise way. It should include your business name, years in operation, key offerings, positioning statement, and core values (if applicable). You may also want to include a short history of your company.

In this section, the company should describe its products or services , including pricing, product lifespan, and unique benefits to the consumer. Other relevant information could include production and manufacturing processes, patents, and proprietary technology.

Every industry has competitors, even if your business is the first of its kind or has the majority of the market share. In the competitive analysis section of your business plan, you’ll objectively assess the industry landscape to understand your business’s competitive position. A SWOT analysis is a structured way to organize this section.

Your target market section explains the core customers of your business and why they are your ideal customers. It should include demographic, psychographic, behavioral, and geographic information about your target market.

Marketing plan describes how the company will attract and retain customers, including any planned advertising and marketing campaigns . It also describes how the company will distribute its products or services to consumers.

After outlining your goals, validating your business opportunity, and assessing the industry landscape, the team section of your business plan identifies who will be responsible for achieving your goals. Even if you don’t have your full team in place yet, investors will be impressed by your clear understanding of the roles that need to be filled.

In the financial plan section,established businesses should provide financial statements , balance sheets , and other financial data. New businesses should provide financial targets and estimates for the first few years, and may also request funding.

Since one goal of a business plan is to secure funding from investors , you should include the amount of funding you need, why you need it, and how long you need it for.

Tip: Use bullet points and numbered lists to make your plan easy to read and scannable.

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Business plans can come in many different formats, but they are often divided into two main types: traditional and lean startup. The U.S. Small Business Administration (SBA) says that the traditional business plan is the more common of the two.

Lean startup business plans are short (as short as one page) and focus on the most important elements. They are easy to create, but companies may need to provide more information if requested by investors or lenders.

Traditional business plans are longer and more detailed than lean startup business plans, which makes them more time-consuming to create but more persuasive to potential investors. Lean startup business plans are shorter and less detailed, but companies should be prepared to provide more information if requested.

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A business plan should be reviewed and revised at least annually, or more often if the business is experiencing significant changes. This is because the business landscape is constantly changing, and your business plan needs to reflect those changes in order to remain relevant and effective.

Here are some specific situations in which you should review and revise your business plan:

You have launched a new product or service line.
You have entered a new market.
You have experienced significant changes in your customer base or competitive landscape.
You have made changes to your management team or organizational structure.
You have raised new funding.

A lean startup business plan is a short and simple way for a company to explain its business, especially if it is new and does not have a lot of information yet. It can include sections on the company’s value proposition, major activities and advantages, resources, partnerships, customer segments, and revenue sources.

What are some of the reasons why business plans don't succeed?

Unrealistic assumptions: Business plans are often based on assumptions about the market, the competition, and the company’s own capabilities. If these assumptions are unrealistic, the plan is doomed to fail.
Lack of focus: A good business plan should be focused on a specific goal and how the company will achieve it. If the plan is too broad or tries to do too much, it is unlikely to be successful.
Poor execution: Even the best business plan is useless if it is not executed properly. This means having the right team in place, the necessary resources, and the ability to adapt to changing circumstances.
Unforeseen challenges: Every business faces challenges that could not be predicted or planned for. These challenges can be anything from a natural disaster to a new competitor to a change in government regulations.

What are the benefits of having a business plan?

It helps you to clarify your business goals and strategies.
It can help you to attract investors and lenders.
It can serve as a roadmap for your business as it grows and changes.
It can help you to make better business decisions.

How to write a business plan?

There are many different ways to write a business plan, but most follow the same basic structure. Here is a step-by-step guide:

Executive summary.
Company description.
Management and organization description.
Financial projections.

How to write a business plan step by step?

Start with an executive summary, then describe your business, analyze the market, outline your products or services, detail your marketing and sales strategies, introduce your team, and provide financial projections.

Why do I need a business plan for my startup?

A business plan helps define your startup’s direction, attract investors, secure funding, and make informed decisions crucial for success.

What are the key components of a business plan?

Key components include an executive summary, business description, market analysis, products or services, marketing and sales strategy, management and team, financial projections, and funding requirements.

Can a business plan help secure funding for my business?

Yes, a well-crafted business plan demonstrates your business’s viability, the use of investment, and potential returns, making it a valuable tool for attracting investors and lenders.

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The Importance of Business Plans

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Importance of Business Plans
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The Importance of Business Planning

Business planning & analysis, what are the basic components of a business plan.

What Is the Relationship Between the Business Plan, Marketing Plan & Sales Plan?
Key Factors That Shape Effective Goal Setting

Many entrepreneurs are intimidated by the idea of writing a business plan. The idea of writing such a detailed document may remind you of the dreaded days of school, or may just feel that you can better utilize your time elsewhere. But, the business plan is a strong business tool, especially for the small business owner. It provides you with every detail about your business and allows you to review the hard, clear facts that are needed to make strong and successful business decisions, even if it means starting the business over.

Business Planning: Structure

Business owners must identify their business' structure before operations can begin. You must understand the ins and outs of your business, from its core operations to its customer service. This analysis of your business and its external environment will help you to drive your business decisions and develop your business strategies. These decisions and strategies are essential in the success of your business.

Troubleshooting for Your Future

The U.S. Small Business Administration Office of Advocacy 's 2020 FAQ report showed that small businesses have a 48.8 percent chance of surviving five years or more. In fact, the report also showed that only 67.6 percent of small businesses survive its first two years of operation. Although the failure reasons vary, much of the failure is as a result of little or no planning. The business plan allows you the opportunity to think through aspects of your business, troubleshoot needy areas and assure success before any action is taken.

Business Forecasting and Updates

For you to forecast aspects of your business, you must understand your business' current and historical standings. The business plan provides a detailed snapshot of your business at a point in time. In most cases, the first snapshot is the just before the small business startup. The plan should be updated at least once each year and at every defining business event. The continuous updates will provide you with an ever-developing business document, which you can use to review the past history, trends and statistical changes within your business. You can use this information to benchmark the upward and downward fluctuations of your business while being able to identify the causes of these fluctuations.

Financing Your Success

According to Investopedia , financing is one of the most common uses of the business plan. The importance of business plan financial details lies in its ability to include investors and angels in your success. Because the business plan provides such a detailed review of your small business, it is a key tool for obtaining financing for your business. Investors are able to review the details and obtain clear snapshots of your business, including its operations, financial stability and forecasted sales and income. Along with a strong credit score and capital, most lending institutions want to see a business plan when considering a business loan application.

Basic Planning Considerations

It may be easier to hire someone to write a business plan for you. However, completing the business plan yourself is more beneficial for your business. Developing your business plan requires detailed consideration, plenty of research and exceptional brainstorming. If you complete your own business plan, you will be better prepared to explain your business' processes and address questions about your business.

SBA Office of Advocacy: Frequently Asked Questions
Investopedia: Business Plan

What are the benefits of preparing a business plan, the importance of a business plan, what is the difference between a marketing & business plan, why is it important to have a business plan, why is planning an important step in starting a business, what are the main purposes of a business plan, key tools for planning finances, what is the meaning of business finance, importance of following a business plan, most popular.

1 What Are the Benefits of Preparing a Business Plan?
2 The Importance of a Business Plan
3 What Is the Difference Between a Marketing & Business Plan?
4 Why Is It Important to Have a Business Plan?

Introduction, Meaning, Importance, Features and Limitations of Planning

Just like management is a never-ending activity, so is planning. In fact business planning, it is one of the primary functions of management . It sets up the stage for all further functions of management like organizing, directing etc. Let us understand the concept of planning.

Browse more Topics under Planning

Planning Process
Types of Plan

Importance of Business Planning

Planning is an important function of management, it tells the manager where the organization should be headed. It also helps the organization reduce uncertainty. Let us take a look at some important functions of planning.

1] Planning provides a sense of Direction

Planning means coming up with a predetermined action plan for the organization. It actually states in advance what and how the work is to be done. This helps provide the workers and the managers with a sense of direction , a guidance in a way. Without planning their actions would be uncoordinated and unorganized.

2] Planning reduces Uncertainty

Planning not only sets objectives but also anticipates any future changes in the industry or the organization. So it allows the managers to prepare for these changes, and allow them to deal with the uncertainties. Planning takes into consideration past events and trends and prepares the managers to deal with any uncertain events.

3] Planning reduces Wastefulness

The detailed plans made keep in mind the needs of all the departments. This ensures that all the departments are on the same page about the plan and that all their activities are coordinated. There is clarity in thought which leads to clarity in action. All work is carried out without interruptions or waste of time or resources ,

4] Planning invokes Innovation

Planning actually involves a lot of innovation on the part of the managers . Being the first function of management it is a very difficult activity. It encourages the manager to broaden their horizons and forces them to think differently. So the managers have to be creative, perceptive and innovative.

5] Makes Decision=Making Easier

In business planning the goals of the organization have been set, an action plan developed and even predictions have been made for future events. This makes it easier for all managers across all levels to make decisions with some ease. The decision-making process also becomes faster.

6] Establishes Standards

Once the business planning is done, the managers now have set goals and standards. This provides the manager’s standards against which they can measure actual performances. This will help the organization measure if the goals have been met or not. So planning is a prerequisite to controlling.

Limitations of Planning

While business planning is important and a requisite for every organization, it does have some limitations. Let us take a look at some limitations of business planning.

1] Rigidity

Once the planning function is complete and the action plan is set, then the manager tends to only follow the plan. The manager may not be in a position to change the plan according to circumstances. Or the manager may be unwilling to change the plan. This sort of rigidity is not ideal for an organization.

2] Not ideal in Dynamic Conditions

In an economic environment rarely anything is stagnant or static. Economic, political, environmental, legal conditions keep changing. In such a dynamic environment it becomes challenging to predict future changes. And if a manager cannot forecast accurately, the plan may fail.

3] Planning can also reduce creativity

While making a plan takes creativity after that managers blindly follow the plan. They do not change the plan according to the dynamic nature of the business. Sometimes they do not even make the appropriate suggestions to upper management. The work becomes routine.

4] Planning is Expensive

Planning is a cost-consuming process. Since it is an intellectual and creative process, specialized professionals must be hired for the job. Also, it involves a lot of research and facts collection and number crunching. At certain times the cost of the planning process can outweigh its benefits.

5] Not Completely Accurate

When planning we have to forecast the future and predict certain upcoming events in the organization and the industry. So, of course, there cannot be hundred per cent certainty in such cases. So it can be said that business planning lacks accuracy

Solved Question for You

Q: Which of the following can be referred to planning?

Departmentation
Government policy
Forecasting
All of the above

Ans: The correct option is C. Planning is forecasting as it is deciding what to do in advance. Planning is futuristic as it never relates to the past. So planning bridges the gap between where the company is and where it wishes to go.

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One response to “Introduction, Meaning, Importance, Features and Limitations of Planning”

You made a good point that I should be wary of dynamic situations when dealing with business planning. Nevertheless, I still think that having a good business plan is essential for the game development company that I’m planning to start in the future. Perhaps hiring a business planning consultant would be a good way to have a good footing from the very beginning of the venture.

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What Is Business Strategy & Why Is It Important?

overhead view of business strategy meeting

20 Oct 2022

Every business leader wants their organization to succeed. Turning a profit and satisfying stakeholders are worthy objectives but aren’t feasible without an effective business strategy.

To attain success, leaders must hone their skills and set clear business goals by crafting a strategy that creates value for the firm, customers, suppliers, and employees. Here's an overview of business strategy and why it's essential to your company’s success.

Access your free e-book today.

What’s a Business Strategy?

Business strategy is the strategic initiatives a company pursues to create value for the organization and its stakeholders and gain a competitive advantage in the market. This strategy is crucial to a company's success and is needed before any goods or services are produced or delivered.

According to Harvard Business School Online's Business Strategy course, an effective strategy is built around three key questions:

How can my business create value for customers?
How can my business create value for employees?
How can my business create value by collaborating with suppliers?

Many promising business initiatives don’t come to fruition because the company failed to build its strategy around value creation. Creativity is important in business , but a company won't last without prioritizing value.

The Importance of Business Strategy

A business strategy is foundational to a company's success. It helps leaders set organizational goals and gives companies a competitive edge. It determines various business factors, including:

Price: How to price goods and services based on customer satisfaction and cost of raw materials
Suppliers: Whether to source materials sustainably and from which suppliers
Employee recruitment: How to attract and maintain talent
Resource allocation: How to allocate resources effectively

Without a clear business strategy, a company can't create value and is unlikely to succeed.

Creating Value

To craft a successful business strategy, it's necessary to obtain a thorough understanding of value creation. In the online course Business Strategy , Harvard Business School Professor Felix Oberholzer-Gee explains that, at its core, value represents a difference. For example, the difference between a customer's willingness to pay for a good or service and its price represents the value the business has created for the customer. This difference can be visualized with a tool known as the value stick.

The value stick has four components, representing the value a strategy can bring different stakeholders.

Willingness to pay (WTP) : The maximum amount a customer is willing to pay for a company's goods or services
Price : The actual price of the goods or services
Cost : The cost of the raw materials required to produce the goods or services
Willingness to sell (WTS) : The lowest amount suppliers are willing to receive for raw materials, or the minimum employees are willing to earn for their work

The difference between each component represents the value created for each stakeholder. A business strategy seeks to widen these gaps, increasing the value created by the firm’s endeavors.

Increasing Customer Delight

The difference between a customer's WTP and the price is known as customer delight . An effective business strategy creates value for customers by raising their WTP or decreasing the price of the company’s goods or services. The larger the difference between the two, the more value is created for customers.

A company might focus on increasing WTP with its marketing strategy. Effective market research can help a company set its pricing strategy by determining target customers' WTP and finding ways to increase it. For example, a business might differentiate itself and increase customer loyalty by incorporating sustainability into its business strategy. By aligning its values with its target audiences', an organization can effectively raise consumers' WTP.

Increasing Firm Margin

The value created for the firm is the difference between the price of an item and its cost to produce. This difference is known as the firm’s margin and represents the strategy's financial success. One metric used to quantify this margin is return on invested capital (ROIC) . This metric compares a business's operating income with the capital necessary to generate it. The formula for ROIC is:

Return on Invested Capital = Net Operating Cost After Tax (NOCAT) / Invested Capital (IC)

ROIC tells investors how successful a company is at turning its investments into profit. By raising WTP, a company can risk increasing prices, thereby increasing firm margin. Business leaders can also increase this metric by decreasing their costs. For example, sustainability initiatives—in addition to raising WTP—can lower production costs by using fewer or more sustainable resources. By focusing on the triple bottom line , a firm can simultaneously increase customer delight and margin.

Increasing Supplier Surplus & Employee Satisfaction

By decreasing suppliers' WTS, or increasing costs, a company can create value for suppliers—or supplier surplus . Since increasing costs isn't sustainable, an effective business strategy seeks to create value for suppliers by decreasing WTS. How a company accomplishes this varies. For example, a brick-and-mortar company might partner with vendors to showcase its products in exchange for a discount. Suppliers may also be willing to offer a discount in exchange for a long-term contract.

In addition to supplier WTS, companies are also responsible for creating value for another key stakeholder: its employees. The difference between employee compensation and the minimum they're willing to receive is employee satisfaction . There are several ways companies can increase this difference, including:

Increasing compensation: While most companies hesitate to raise salaries, some have found success in doing so. For example, Dan Price, CEO of Gravity Payments, increased his company's minimum wage to $80,000 per year and enjoyed substantial growth and publicity as a result.
Increasing benefits: Companies can also decrease WTS by making working conditions more desirable to prospective employees. Some offer remote or hybrid working opportunities to give employees more flexibility. Several have also started offering four-day work weeks , often experiencing increased productivity as a result.

There are several ways to increase supplier surplus and employee satisfaction without hurting the company's bottom line. Unfortunately, most managers only devote seven percent of their time to developing employees and engaging stakeholders. Yet, a successful strategy creates value for every stakeholder—both internal and external.

Business Strategy | Simplify Strategy to Make the Greatest Business Impact | Learn More

Strategy Implementation

Crafting a business strategy is just the first step in the process. Implementation takes a strategy from formulation to execution . Successful implementation includes the following steps :

Establish clear goals and key performance indicators (KPIs)
Set expectations and ensure employees are aware of their roles and responsibilities
Delegate work and allocate resources effectively
Put the plan into action and continuously monitor its progress
Adjust your plan as necessary
Ensure your team has what they need to succeed and agrees on the desired outcome
Evaluate the results of the plan

Throughout the process, it's important to remember to adjust your plan throughout its execution but to avoid second-guessing your decisions. Striking this balance is challenging, but crucial to a business strategy's success.

How to Formulate a Successful Business Strategy | Access Your Free E-Book | Download Now

Learn More About Creating a Successful Business Strategy

Business strategy constantly evolves with changing consumer expectations and market conditions. For this reason, business leaders should continuously educate themselves on creating and executing an effective strategy.

One of the best ways to stay up-to-date on best practices is to take an online course, such as HBS Online's Business Strategy program. The course will provide guidance on creating a value-driven strategy for your business.

Do you want to learn how to craft an effective business strategy and create value for your company's stakeholders? Explore our online course Business Strategy , or other strategy courses , to develop your strategic planning skills. To determine which strategy course is right for you, download our free flowchart .

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The Top 10 Benefits of Effective Planning

By Arootah read

By Arootah

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Effective planning is more than just a pathway to achieving your goals — it offers a host of other benefits.

While goal setting can be an exciting and energizing process, achieving your goals requires considerable effort. This is why organizations that craft meticulous business plans experience a 30% greater chance of growth.

However, the benefits of effective planning extend far beyond helping the organization meet its goals. Planning turns a company’s vision into a series of actionable steps and enriches the professional lives of all team members involved in the goal-realization process.

Here are 10 key ways effective planning benefits your organization.

The Importance of Planning to Accomplish an Objective

Goal setting alone isn’t enough to guarantee success; it must be accompanied by effective planning. In our eBook, The 10 Step Arootah Success Formula, we introduce a detailed, step-by-step process designed to help you accomplish any objective.

Take the Target Corporation, for instance. Target devised a series of action steps to ensure that 100% of its private-label products would be environmentally stable by 2040. Target’s leadership began by identifying clear and specific goals and then publicly announcing its plan. Achieving a goal as ambitious as sustainability, however, necessitates an extensive and well-thought-out plan of action built on a strong purpose.

Once establishing its action plan and the purpose behind it, Target realized the immense advantages of creating such a comprehensive strategy. First, it minimized the risk of errors by providing employees with a clear plan of action, on both a micro and macro level. This clarity enabled them to take appropriate steps while following the laid-out strategy.

Target’s plan also offered their employees and customers a clear focus, akin to a mission or goal, for performance. As a result, everyone understood the purpose behind their actions.

The key to efficiently and effectively achieving any goal is to develop a solid plan. The roadmap helps you determine which actions you need to take and in what order. Through careful planning, you can apply logical reasoning to significantly increase the likelihood of your success.

10 Benefits of Effective Planning

If you’re contemplating the value of investing in a thorough and strategic planning process for your organization, we’re about to make your decision a lot easier.

Here are 10 compelling advantages of planning that underscore its significance in any successful endeavor.

1. Increases Proactivity

Planning, like goal setting , fosters proactive behavior by empowering team members to take initiative. With shared ownership of the plan, team members are inspired to act preemptively, rather than wait for instructions.

2. Enhances Focus

Staying focused is essential for the successful and timely completion of all goals. Proper planning ensures that individuals, teams, and organizations remain focused on their objectives, leaving no room for distractions. The satisfaction derived from achieving the goal serves as a powerful motivator, fueling further focus and commitment within the team.

3. Fosters Teamwork

The act of planning serves as a rallying point for teams to unite around a common objective. The more they collaborate towards a shared goal, the stronger they become as a unit.

4. Improves Risk Management

An effective plan enables organizations to foresee potential challenges and proactively devise strategies to tackle them.

5. Enforces Decision Making

The discipline instilled by planning necessitates swift decision making. This leaves teams with more time and energy for action. A well-structured plan provides the benchmark for all decisions.

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6. Inspires Greater Achievement

Strategic planning cultivates an environment that inspires and motivates employees to aim for and achieve even higher goals in the future.

7. Optimizes Resource Allocation

Effective planning instills the discipline organizations need to optimize their allocation of resources. A clear roadmap allows teams to strategize how to achieve the highest return with minimal resource expenditure.

8. Stimulates Creativity

The discipline involved in crafting a plan can significantly enhance the creative process. Interestingly, studies have shown that creativity flourishes under constraint. Those a ctively engaged in planning may find their creative thinking and innovative problem-solving skills heightened.

9. Reduces Stress

By outlining every action step clearly, planning can help minimize uncertainty and keep teams on track, reduce stress , and prevent feelings of overwhelm.

10. Amplifies Success Rate

Without competent planning, there is little organization or means to measure progress. Thus, well-devised plans exponentially increase the probability of a team or organization achieving a goal .

The Secret to Effective Planning? Put It in Writing.

A successful planning process isn’t complete, however, until you’ve committed your plan to writing. By documenting your goals and plans, you can increase your likelihood of success by a staggering 42% . Not only does this allow you to identify potential gaps in your planning, but it also transforms your aspirations from a mere wish list into a robust, strategic blueprint for future success.

Take the example of Target’s sustainability plan. By making its comprehensive strategy publicly available on its website, the company fostered a heightened sense of accountability among its employees. At the same time, it signaled to its customers the high standard it was setting for itself.

The effectiveness of writing down goals is further backed by neuroscientists . On both an individual and organizational level, documenting your plan significantly increases your odds of its successful execution.

The Bottom Line

The benefits of effective planning go far beyond merely achieving your goals. Planning breathes life into a company’s vision and enriches everyone who works toward the shared objective.

If a goal is worth setting, then it’s worth pursuing with the right tools and strategies. By creating and following an effective plan, you not only increase your chances of goal achievement, but you also reap a multitude of additional benefits. A well-structured plan of action is a potent catalyst for growth and development at the individual, organizational, or company level.

Looking to maximize your goal-setting and planning efforts in the new year? Save the date for our annual Goal-Setting Workshop on January 4th, 2024!

Disclaimer: This article is for general informational purposes only and is not intended to be and should not be taken as professional medical, psychological, legal, investment, financial, accounting, or tax advice. Arootah does not warrant or guarantee the accuracy, reliability, completeness, or suitability of its content for a particular purpose. Please do not act or refrain from acting based on anything you read in our newsletter, blog or anywhere else on our website.

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Importance of Planning in Business Management

Planning is one of the most important tasks in business or any type of management as well. It is really does not a matter of the size of the business. Does not matter if it is a profitable or non-profitable business organization you are going to start, a planning is a must. Why? The reason is that the planning is the first element of the four core elements of management. It is very easy to start a business, but without proper planning it will fall apart soon after the inception. So, p laning is one of the most important works an entrepreneur must do.

I have listed top reasons why planning is important in business organization. Below the important points are discussed.

Planning for Uncertainty

Uncertainty is a common phenomenon for every type of profitable or non-profit business organization. When you do not have any knowledge of any future event, then it is called to be an uncertainty. Here a business plan comes with a solution. A business plan is a future course of actions. That means you enlist a set of work you will be doing after launching the business. You know your steps. Now you know what you will be doing throughout the business life cycle. By pointing out your future actions, you are avoiding many uncertainties. For example, maybe you do not know how you will find an effective employee for your organization. But in the plan, you mentioned that the recruitment process will be handled by a third party. It will surely reduce the uncertainty in the future.

Reducing the Business Risk

Risk is the chance of happening a thing that may bring profit or loss for your business. Risk deals with chances. That means it’s about the probability. You cannot be completely sure of an event. For example, a flood may occur in the beginning of the year which may result in decrease in sales. Business risk will always be there. Here plan plays an important role. A business plan includes a list of events that may or may not take place in the future and a set of solutions. So, if those problematic events take place, the business owner goes for a solution. So, you know the solution for a set of problems. In this way, an effective business plan is very much important for your business.

Planning for a better Growth

A business does not stand alone is the same place year after year. It needs to grow. Why? Because, if a business does not expand, you cannot increase profit after a certain amount. So, you need your business grown. A business plan tells you when you will want to inject more money in your business, that’s investment plan. You want to take loan for your business? When do you want to do that? After reaching few certain goals? Do you want to take more investors? Or you just want to borrow from your relatives? A business plan creates a timeline for the future investment which ensures a future growth and results in increased profit margin .

Taking a Specific Action for your Business

We have already talked about that a plan is a set of future actions that you are going to execute. There are specific actions you will be taking for your business. A business plan enlists future business opportunities that might be utilized in the future. For that, a business might need to develop the strengths needed to utilize those opportunities in the future. By taking proper actions in the business, a company develops its strengths. For example, a specific action might be recruitment of a set of sale’s executive who will be working under the condition of sales commission when there is a chance of high sales growth. A business plan identifies specific action for your business.

Proper Management of Cash Flow

Managing cash flow is a vital task in a business organization. If you do not know how to utilize the cash flow, you might end up with losses. As a result, your business will fail. A business plan creates a financial plan. It tells you how you will pay the payment to your suppliers or how much credit will be there. It will also help you to maintain a good relationship with your suppliers if you go with your plan. Though it is very critical task, but still you must manage you cash flow according to your business plan.

Planning includes the SWOT Analysis

A business plan also includes a SWOT Analysis. The SWOT is an acronym. The elaboration of SWOT is the strengths & weaknesses of and the opportunities & threats for a business organization. So, it will help you to identify the strengths and weaknesses, not only for your business but also for your competitors’. It will also help to identify the opportunities & threats for your business. It will help you to compare your business with the business of your competitors. As a result, you will be able to be more competitive in your industry.

Valuation of the Business

A business plan tells about the value of the business. When you have the complete business plan, you know what can be the value of that business in future. Measuring the value is critical when it deals with the fair value. But an effective business plan certainly can tell you what might be the business worth of.

Efficient and Effective Use of the Resources

Resources are not unlimited. As every business has a limitation for the resources, those businesses want to utilize those resources efficiently. Low cost production can be achieved only if the resources are utilized properly. A business plan has a set of actions. So, you know how much resource you will need in the future. As a result, resource allocation can be done beforehand. For example, you may need to take a business loan. But why should you take the loan today if you start your production in the next week?

Enlisting the Short Term and Long Term Goals

Setting goal is one of the most important tasks in small or large sized business organization. Every business organization needs to set its short term and long term goals in the inception. A business includes a set of business goals. These goals maybe divided into short terms and long term goals. Short term goals are those goals that can be achieved within a very short period of time, perhaps a week or a month. Reaching the monthly target sale can be an example of a short term goal. On the other hand, capturing a large market share can be an example of a long term goal. For the both cases, the goals should be specific, reachable, and countable. A business plan specifies those goals. By setting up the goal, a business planner makes a way to the success of the business organization because everyone knows for what they are working in the organization. This is why an effective business plan includes a set of business goals.

Creation of Distinctive Advantages

A business plan helps you to identify the strengths and weaknesses of your business. This is exactly what you need to develop competitive advantages for your business. You may have one advantage that your competitors do not possess. For example, you have the ability to recognize an efficient employee in the interview board. But your competitors can not select the correct people for their organization. So, you can build an efficient workforce which may lead to a distinctive advantage.

Determine the Future Recruitment

As a business plan has an expansion plan in it, it has the recruitment plan as well. If you know the time when you are going to inject more fund into your business, you also know how many people you will have to recruit to look after the new operations.

A Gateway to the Feasibility Study

A business plan is the complete set of actions that you will execute. You perhaps soon will start your business. But how do you know that the business will bring profit for you? Do you have any confirmation for it? Here the feasibility study comes to play the next role. The feasibility study assesses the practicality of the business plan. It will examine the business plan, and tells you if the business will be able to make the profit or not.

Additional Reading on the Significance of Business Planning

What are the essential elements of a business plan.

According to the QuickBook, a business plan must have 7 elements. Those are the executive summary, business description, market analysis, organization management, sales strategies, funding requirements, and financial projections.

What are some Uses of Business Plan?

The most important uses of an effective business plan are sticking to the plan, understanding the pressure points, dealing with the possibility of failure, managing more investment, taking loans from venture capitalists, selling the plan, and many more.

What is the Importance of Planning in Management?

Planning is the first priority in a business. In management, the planning give you the opportunities to set the future course of actions.

Why Planning is Important in Life?

Without making and following a plan, a person may fall apart. Passing a life without a proper plan is like meaningless. Planning helps us to select future course of actions, organizing our lives, setting up the proper directions, and achieve desired goals. Without planning, our lives are like buildings with weak pillars.

What is the Importance of Planning in Education?

Planning for education is one of the most important tasks in our lives. The most important reasons are financial supports, selection of institutions, achieving a desired goal, reaching a target career, and finally, uses of knowledge for a better world.

What is the most popular Quote by Peter Drucker on Planning?

One of the strongest quotes I encountered in my life is by Peter F. Drucker, – “Unless commitment is made, there are only promises and hopes; but no plans.”

In Conclusion

We have elaborated most important points on the importance of business planning. Without a business plan, a business person is totally blind. If the person does not have a plan, s/he does not know what to do next. In every step he takes, he needs time to make a decision. But if there is a business plan, there is certainty.

https://en.wikipedia.org/wiki/Feasibility_study
https://www.sba.gov/starting-business/write-your-business-plan
https://en.wikipedia.org/wiki/Business_plan
https://www.financialplanning.org.uk/wayfinder/what-financial-planning

Sheikh Faizul Haque is an internet entrepreneur and the founder of The Strategy Watch ; Graduated from North South University with a double major in Accounting & Finance in Bangladesh.

With a strong interest in developing and improving Business Strategy and to Conduct Business Analysis.

TechBullion

The role of strategic planning in business success.

Strategic planning is the cornerstone of building any profitable business. This process involves carefully outlining a company’s goals over the coming years while allocating resources efficiently toward attaining them. With today’s ever-evolving markets characterized by rapid technological progress and shifting consumer tastes, being able to strategically plan with precision has never been more essential; not only does this practice clarify the future trajectory for a business but it also aligns organizational efforts toward common goals for enhanced cohesion and focus.

Key Components of Strategic Planning

At the core of strategic planning lies several crucial components that ensure its efficacy. This process begins with creating vision and mission statements to outline your company’s purpose and values as a starting point for all future strategic decisions. Implementing specific, measurable, attainable, relevant, and time-bound (SMART) objectives provides organizations with clear targets they can aim for. Conducting a comprehensive SWOT analysis — in which your company identifies both internal and external strengths, weaknesses, opportunities, and threats — is indispensable to understanding how its landscape functions. Strategy formulation involves synthesizing these components into an action plan with prioritized projects designed to leverage its strengths, opportunities, and weaknesses as well as any threats it might face.

The Process of Strategic Planning

Strategic planning is not simply an academic exercise but an ongoing process that adapts as your business and its environment change. Initial steps involve setting clear yet realistic business goals, followed by an in-depth examination of both internal resources and market forces affecting your business. At this stage, strategies that not only are innovative but also meet both the company’s core competencies and market requirements must be devised. Once strategies have been created, their implementation requires careful consideration, resource allocation, and oftentimes significant organizational restructuring . Once implemented successfully, monitoring and evaluation are employed as measures of performance to assess whether strategies are meeting objectives while any necessary modifications must be made accordingly.

Benefits of Strategic Planning

Strategic planning has far-reaching advantages that extend throughout an organization. It significantly boosts organizational performance by aligning all departmental actions with larger strategic goals, thus eliminating redundant efforts and allocating resources where they will have maximum value-creation potential. An effective strategic planning program also enhances a company’s adaptability to rapidly fluctuating market conditions by helping it respond swiftly and effectively to opportunities and threats emerging within its environment. Furthermore, strategic planning aids resource allocation by more effectively outlining key priorities across an organization more efficiently; finally enabling proactive rather than reactive management by anticipating change with well-considered plans rather than quick reactions.

Strategic Use of Insurance in Business Planning

Insurance should be included as an essential element of strategic planning to reduce risks and ensure long-term business resilience and continuity. Insurance offers financial protection against losses such as liability claims or property damage claims that might otherwise incur. Strategic planning necessitates choosing insurance policies–such as liability, property, and professional indemnity–that cover risks specific to a business’s industry and operation. Good insurance coverage not only gives companies peace of mind but also supports their stability and growth by protecting against potentially catastrophic financial losses. Therefore, understanding and using insurance for business owners strategically are both integral parts of any comprehensive business strategy, acting both as shields against potentially devastating financial losses while helping operations run more smoothly.

Common Challenges in Strategic Planning

Implementing strategic planning effectively presents numerous obstacles. One such hindrance is resistance to change that may be deeply embedded within an organization’s culture. Employees and managers accustomed to routines may be reluctant to change, especially if this means significant alterations to workflows or roles. Without an engaging vision in place, efforts can become disjointed and their impacts diminished. Communication breakdown between strategists and other members of an organization may lead to misalignments between objectives and means for meeting them, leading to mistrust about goals and means. Furthermore, even well-thought-out plans may fail due to poor implementation due to ineffective leadership, inadequate resources or a lack of commitment at different levels within an organization.

Strategic Planning and Risk Management

Risk management is an integral element of strategic planning that involves the identification, assessment, and mitigation of any threats that might inhibit an organization from meeting its goals. Companies incorporating risk management as part of their planning processes not only protect assets while assuring continuity but can also gain an edge against uncertainty or emergencies more efficiently.

Businesses use strategic planning as their roadmap; using its blueprints to navigate through challenges effectively while allocating resources effectively and capitalizing on opportunities proactively. By cultivating an organization-wide culture focused on clear objectives, risk mitigation and continuous adaptation – strategic planning ensures businesses not only prepare themselves for tomorrow but are shaping it according to their interests!

Strategic planning has become ever more essential to businesses due to global markets’ constant shift and evolution, acting as a guide during moments of doubt or volatility; providing guidance for growth; and modernizing processes so as to guarantee ongoing survival and expansion. For companies hoping to thrive rather than just survive, undertaking an inclusive strategic planning process should not just benefit but be mandatory for success.

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Planning Department

Celebrate Preservation Month with the City's Equity-Based Preservation Plan

Adopted Plans
Urban Design and Zoning

City of Austin

A flyer advertising two public engagement events at which residents can learn about the Equity-Based Preservation Plan

The Historic Preservation Office is hosting two engagement events before public comments close on May 31

May is Preservation Month, the perfect time to get involved with the City’s Equity-Based Preservation Plan ! The draft plan is open for public feedback until Friday, May 31. Two FREE special events are happening soon in East and South Austin. The public is invited to attend to learn more:

Block Party on Saturday, May 18, 12-4 p.m. on Givens Avenue in East Austin’s Rogers-Washington-Holy Cross Historic District. Co-sponsored by Preservation Austin, the Block Party will feature kids’ activities, tours of the historic neighborhood by Black Austin Tours, free food from local businesses, and DJ Lauren Light.
Community Open House on Thursday, May 23, 4-7 p.m. at the landmark Broken Spoke. Dig into the draft plan, share feedback, and enjoy light refreshments and live music.

“We’re excited to connect with community members about the draft plan in two unique historic places,” said Cara Bertron, Program Manager with the City’s Planning Department. “With two weeks left to give feedback, we hope more people will join the many Austinites who have contributed to this important community-based effort.” The draft Equity-Based Preservation Plan was created by a diverse community working group appointed by the Historic Landmark Commission. The group met over a year and heard input from a range of community members and stakeholders. In total, more than 300 people helped to shape the draft plan. When adopted by City Council, the plan will replace Austin’s existing historic preservation plan from 1981. The draft plan envisions engaging communities to protect and share important places and stories. It proposes using the past to create a shared sense of belonging and to shape an equitable, inclusive, sustainable, and economically viable future for all. Fourteen goals and more than 100 draft recommendations support that vision, and the City is seeking community feedback on all of them by May 31. The draft plan was released for community review in February. Outreach to date has included events at Huston-Tillotson University and the Baker School in Hyde Park, tabling at about 25 community events, deep dives with professional organizations, nearly 30 presentations to community groups and City commissions, and a social media campaign. Ten community ambassadors and five local organizations are being funded to help engage historically marginalized communities around the draft plan. Public comments for the plan close on May 31. Don’t miss out on this important opportunity to help us learn from our past to shape a future for everyone. For more information on the plan and upcoming events, visit PublicInput.com/ATXpresplan .

Michael J. Francis: Maximizing your retirement savings by minimizing your taxes

To maximize retirement income, it’s important to leverage current tax law to your advantage. The coordinated use of taxable, tax deferred, and tax free retirement accounts — including Health Savings Accounts — is critical to your success and requires intentional planning. Big picture, the less you pay Uncle Sam, the more you keep for yourself.

Strategy one: tax advantages of long term investments

Everyone should keep some savings in a taxable checking, saving, or investment account, for everyday spending. Keeping at least three months of regular expenses is a good start. The income generated by assets held in such accounts is subject to ordinary income tax, but gains on investments in a taxable investment account held more than one year are subject to a favorable long-term capital gains rate, currently 15% for most people.

The greater your income, the more you should consider municipal bond funds, which are not subject to federal income tax on the interest received. Additionally, you’re allowed to bequeath any highly appreciated assets held in a taxable account to an heir who will receive the asset with a “step-up” in cost basis, i.e., the value at your death, for purposes of calculating their long-term capital gains.

Strategy two: use employer sponsored plans

Saving for retirement in an employer-sponsored retirement plan, like a 401(k), is the next priority especially if your employer offers to match your contribution. If your employer does not sponsor a retirement savings program, then an Individual Retirement Account (IRA) offers essentially the same tax benefits and nearly as much legal protection against creditors while the maximum allowable annual contribution is lower.

The key is determining the type of retirement plan or IRA account to fund. A traditional tax deferred account allows you to deduct your contribution from your taxable income, which makes the most sense if you’re in a higher tax bracket when you contribute. However, the distributions in retirement are taxed as ordinary income. On the other hand, a Roth account provides no deduction for contributing, but everything you accumulate in the account is withdrawn tax free in retirement.

The question of which type of retirement account is best is answered by comparing your pre-retirement and post-retirement tax brackets. Theoretically, if you invest the tax savings received from contributing to a traditional account, then the issue is moot. However, most are not disciplined enough to invest their tax savings. Therefore, the Roth account, in which you invest after tax money and withdraw principal and earnings tax free, ends up netting the typical saver the most spendable income in retirement.

Other benefits of a Roth account include the avoidance of required minimum distributions (RMDs) in your 70s, tax free inheritance for your heirs, and the emotional benefit of knowing you aren’t compounding your future tax bill to the government.

Strategy three: advantages of Health Savings Accounts

After contributing to your retirement, the next consideration should be a Health Savings Account. These accounts allow you to save for current or future medical expenses with the most robust tax advantages of any account available. Not everyone can open an HSA, but if you participate in a high-deductible (at least $1,600 for individuals) health insurance plan, there’s a good chance you qualify.

HSAs allow you to deduct the amount contributed, up to $4,150 for individuals and $8,300 for families this year, from your taxable income. Your contributions grow tax free and if used to cover any related medical expense, withdrawals are tax free as well. It’s the trifecta of tax savings, and a great way to save for future needs while minimizing your taxes.

Strategy four: plan how you will spend assets

When planning your retirement income, carefully consider the order in which you liquidate and spend your retirement savings between assets held in taxable, traditional tax deferred, and Roth accounts.

Generally, any excess of your three months in expenses in your taxable investment accounts should be spent first, tax deferred assets second, and save your Roth assets for last. The longer assets stay in a Roth account, the more you benefit from their tax free compounding. For some, Roth assets can also come in handy keeping taxable income in retirement under the necessary level to protect Social Security benefits from taxation.

Once you reach retirement age, the IRS requires distributions from your traditional IRA and 401(k) accounts. The amount you’re required to withdraw is approximately 4% of the account balance and gradually increases annually to around 8% by age 90. The IRS levies a substantial penalty for failure to comply. If you donate to charity, another distribution strategy is to utilize a Qualified Charitable Distribution from a traditional IRA. The IRS allows you to donate directly from an IRA to satisfy your annual distribution and not pay income tax on the amount.

In the final analysis, your tax planning strategy may be more complex than your contribution strategy, but both require careful planning and execution to maximize your retirement income.

Michael J. Francis, is President of Francis LLC, a registered investment adviser with offices in Brookfield and Minneapolis. Francis can be reached at [email protected]. The information contained herein is provided for informational purposes only.

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Housing, local and community
Planning and building
Planning reform

Nationally Significant Infrastructure Projects: 2024 Pre-application Prospectus

Introducing the new pre-application service for Nationally Significant Infrastructure Projects.

Applies to England and Wales

Introducing a new pre-application service.

In 2020, the National Infrastructure Strategy established a government ambition to accelerate and improve the decision-making process for major infrastructure projects, including those considered under The Planning Act 2008 (PA2008). This ambition was reinforced in 2022 within the British Energy Security Strategy which committed to establishing a process allowing some Nationally Significant Infrastructure Projects (NSIPs) to be capable of receiving a decision within 12 months.

Following an operational review of the PA2008 process beginning in 2021, the Department for Levelling Up, Housing and Communities (DLUHC) published an Action Plan setting out proposed reforms that would be implemented to ensure the PA2008 process can support the country’s future infrastructure needs. Between July and September 2023, DLUHC consulted on the details of the operational reforms and government’s response to the consultation was published on 6 March 2024.

The Planning Inspectorate has responded to the government brief by developing a new pre-application service which is set out in this, the 2024 Pre-application Prospectus. The key areas of operational reform supported within the Inspectorate’s new service are:

The introduction of three pre-application tier options reflecting different levels of service that applicants may receive from the Inspectorate ahead of submitting an application.
The introduction of pre-application fees associated with the service under each pre-application tier, discharging government’s policy ambition for the Inspectorate to achieve full cost recovery for the services it provides.
The introduction of a ‘Fast Track’ procedure which will allow some applications, that are able to satisfy a new Quality Standard, to potentially receive a decision within 12 months from the point that the application is accepted for examination.

Updated government guidance has been published which provides the framework for our new pre-application service, including the Fast Track procedure. Government’s 2024 National Infrastructure Planning Guidance Portal.

What does success look like and what does it depend upon?

The Inspectorate is confident that through these reforms our service will be substantially improved, providing applicants with better focused and more helpful advice, enhanced certainty of timescales and improved project outcomes. Through a collaborative effort involving statutory bodies, local authorities, and other stakeholders, the new pre-application service is expected to result in consistently smoother and potentially faster post-submission stages.

We note that the success of our service reforms has interdependencies with the progression of other government policy initiatives, including for example the update and ongoing maintenance of National Policy Statements. The success of our service, and the achievement of government’s policy objectives, also has interdependencies with service reforms at other government bodies which have an advisory role in the PA2008 process. These interdependencies will be taken into account as the performance of the new service is monitored by the Inspectorate and wider government.

The 2024 Pre-application Prospectus supersedes the ‘Pre-application Prospectus for Applicants’ published in 2014, which is being withdrawn and should not be relied upon by projects entering the PA2008 system from May 2024. Further information about transitional arrangements.

The Inspectorate considers that the services set out in the 2024 Pre-application Prospectus are relevant to, and will add value for, all users of the PA2008 process. However, the prospectus establishes a service within the pre-application stage which is necessarily led, and paid for, by applicants. On this basis, the prospectus describes services which are predominantly framed around the interests and needs of applicants in relation to the submission of well-prepared applications.

Paragraph: 001 Reference ID: 1-001-20240516

Revision date: 16 05 2024

The pre-application stage – an overview

The main features of the pre-application stage in the PA2008 process are explained in government guidance. Government’s 2024 National Infrastructure Planning Guidance about the pre-application process . Additional details are provided within our Advice Pages which are also being updated to reflect and support the new service. As a frontloaded process, activities within the pre-application stage are of critical importance in preparing applications that, if accepted, are capable of receiving a decision within statutory timeframes and, where consent is granted, being delivered to meet the national need.

For applicants, in general terms the activities at the pre-application stage include:

Establishing early relationships with stakeholders affected by the project, including statutory bodies, local authorities, persons with an interest in the land affected by the project and the local community;
establishing the tier of support requested from the Inspectorate and preparing and maintaining a pre-application Programme Document ;
developing relationships and, where relevant, agreeing requested levels of service with affected statutory bodies and local authorities, in accordance with the pre-application Programme Document, and progressing to resolution, where achievable, relevant issues raised by those bodies;
developing relationships with other stakeholders, including the local community, and progressing to resolution, where achievable, relevant issues raised by those stakeholders;
for relevant projects, seeking advice from the Inspectorate on the project’s suitability for a Fast Track procedure , and meeting associated requirements at the pre-application stage;
developing the design of the project to reflect the good design criteria in the relevant National Policy Statement(s);
giving required notifications to the Inspectorate;
undertaking mandatory pre-application consultation and publicity;
preparing and undertaking necessary project assessments, if required, such as Environmental Impact Assessment (EIA) and Habitats Regulations Assessment (HRA);
beginning the work necessary for obtaining other non-planning consents or licenses such as species licences or environmental permits;
preparing the application documents including the draft Development Consent Order (DCO); and
logistical preparations for post-submission stages including the identification of potential Preliminary Meeting and hearing venues etc.

What does this mean for other people and organisations?

For other individuals and organisations affected by proposals under the PA2008, the pre-application stage represents the main opportunity to engage with the applicant to shape the proposal. After an application has been accepted for examination, there is limited scope for the substance of the proposals to change. This means that comprehensive stakeholder engagement at the pre-application stage is critical in order that their views may influence the final form of the submitted application. Further information in relation to engagement at the pre-application stage is provided in our Advice Pages .

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Section 51 advice and how it may change

Although the pre-application stage is led by the applicant, the Inspectorate can advise applicants and others with a view to ensuring an application is better prepared for post-submission stages, including the examination. This advice is issued under section 51 of the PA2008 . Any section 51 advice that we issue is without prejudice to the acceptance decision under section 55 of the PA2008 and any future decision taken by the relevant Secretary of State about whether development consent should be granted. The relevant Secretary of State is the Secretary of State for the type of development under consideration, for example for highway-related NSIP development the Secretary of State for Transport is the decision-maker for applications.

We can provide advice to applicants on procedural matters and also provide an impartial view on questions relating to potential examination issues and the readiness of an application to proceed beyond the pre-application stage. Drawing on our experience, we can also provide advice about what to expect during post-submission stages, including the examination, and indicate approaches to best practice. Within the new service, the extent of the advice service provided to applicants by the Inspectorate will be limited by the tier subscription of the applicant.

For applicants, the type of advice available from the Inspectorate can include, depending on the tier subscription, the aspects of advice set out below:

The process and the application

Advice about procedural matters;
Advice emerging from an impartial view on questions which relate to potential examination issues;
Advice about the policy framework for a proposed application;
Advice about the project design options being considered by the applicant;
Advice about the consultation strategies, consent strategies and the programme for pre-application activities eg advising whether timescales are realistic or about any important omissions;
Advice about the acceptance tests under the legislation and acceptance process; and
Advice about the Quality Standard test associated with the Fast Track procedure .

EIA, HRA and land rights advice

Advice about proposed approaches to EIA including cumulative effects and use of the Rochdale envelope;
Advice about approaches to HRA;
Advice about EIA screening and scoping;
Advice about the list of consultees for the Environmental Statement;
Advice about transboundary consultation and the process followed;
Advice about working with public bodies in EIA and HRA processes; and
Advice about making land rights and access requests ( section 52/ 53 of the PA2008 ).

Good practice advice

Helping applicants to build and sustain good working relationships with relevant statutory bodies, local authorities and other stakeholders including the local community;
Advice about what to expect in examination and examination risks based on experience of other cases;
Signposting to good practice examples of application and examination documents and approaches; and
Advice about approaches to evidencing agreement/ disagreement with consultees eg in Statements of Common Ground and pre-application Principal Areas of Disagreement Summary Statements (PADSS) .

Paragraph: 003 Reference ID: 1-003-20240516

Our openness policy

The Inspectorate has a duty under section 51 of the PA2008 to publish any advice we give about applying for a DCO or making representations about an application, or proposed application, for a DCO. This duty reflects the importance of the pre-application stage and the role of the Inspectorate within it.

We seek to be helpful in advising applicants and other stakeholders about applications and our commitment to fairness, openness and impartiality means that we publish advice that we have given to any party regardless of whether that advice was given under section 51 of the PA2008 . Where advice relates to a specific project, it is published on the relevant project page on Find a National Infrastructure Project . If we issue advice at a meeting, a draft of the advice will always be shared with the meeting attendees before publication.

Within the new service project-specific advice given to applicants will be published in the form of an Advice Log. Every project will have an individual Advice Log which will be published and maintained on the relevant project page on Find a National Infrastructure Project . A draft of the Advice Log will always be shared with the applicant for comment before publication. The Advice Log will be updated to record all advice that we issue to each applicant during pre-application, including any advice issued at project meetings.

Paragraph: 004 Reference ID: 1-004-20240516

Publication of early advice and project information

We are conscious of the need to strike an appropriate balance between openness and enabling potential investors to protect sensitive information at the earliest stages of discussion. Some applicants feel that there may be occasions in the early stages of pre-application when they may be able to engage more fully with us if the publication of any advice given and any information about a project provided by an applicant to the Inspectorate did not immediately emerge into the public domain.

As explained above, we are required to publish any advice we give under section 51 of the PA2008 . Whilst the PA2008 does not specify any time period within which such advice must be published, it implies an expectation that there should not be any unreasonable delay. Our openness policy sets an expectation that advice will be published as soon as practicable, except in circumstances where a reasonable delay is justified.

What happens where EIA Regulations are concerned?

Where an applicant has not yet submitted a request or notification under Regulation 8 of the EIA Regulations , it can ask us to delay publication of early project discussions by up to six months, specifically:

Publishing advice given to the applicant and other information relating to such advice; and/ or
adding the project to the list of pre-application projects on Find a National Infrastructure Project .

We will expect applicants to justify why delaying publication of such information is required for commercial confidentiality/ sensitivity reasons. We will not unreasonably decline any such request.

When an EIA Regulation 8 request or notification is received, all advice given in relation to that project will be published at that point irrespective of whether or not six months have passed from the time information for the website was received, advice was given, or a meeting held for which we had agreed to a delay of publication. Once we have received an EIA Regulation 8 request or notification, the existing practice of publishing all advice provided as soon as practicable will continue in the interests of openness and transparency.

Applicants should note our obligations under the Freedom of Information Act and the Environmental Information Regulations. These may, following a request, require us to disclose any unpublished information for which we have agreed to delay publication, either where an exemption or exception does not apply or, if in all the circumstances of the case, the public interest in disclosing the information outweighs the public interest in maintaining the exemption or exception.

In addition, all applicants are expected to have early (in confidence if necessary) discussions with affected statutory bodies, such as the statutory nature conservation bodies, and affected local authorities, on the scope, where necessary, of their EIA and HRA (including consideration of alternatives and approaches to surveys). Any public record of these discussions will be subject to the individual policies of these bodies.

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Our new pre-application service

We recognise that our pre-application service is not ‘one size fits all’ and on that basis we have established flexibility through a new tiered approach to our service offer. This will enable a proportionate approach according to the needs of individual applicants. Different projects, and different applicants, will require different levels of engagement at the pre-application stage depending on, for example:

whether the applicant has experience of using the PA2008 process;
whether the project’s system of stakeholders, including affected local authorities, have experience of the PA2008 process;
the scale and location of the project;
the complexity of the project issues and likely levels of agreement/ disagreement between the applicant and other key stakeholders, including affected statutory bodies and local authorities, at the point of submission;
the extent to which the project or approach to seeking consent is novel;
whether the applicant is seeking a Fast Track procedure ;
whether or not a relevant National Policy Statement is designated, or otherwise the status of the designated National Policy Statement; and
the level of local and national interest in a project.

On this basis, we have developed three pre-application service tiers which are expected to be appropriate for the range of applications we provide advice and support in relation to. In all service tiers, all applicants are expected to engage five primary service features . The five primary service features.

What are the three tier options?

Tier 1: the basic service.

Within the basic tier, direct interactions between the Inspectorate and applicants are minimised. Only statutory duties are discharged by the Inspectorate, including a screening and scoping service if engaged by the applicant. We consider that the basic tier could represent an appropriate service for very experienced applicants and low-complexity projects, for which an up-to-date relevant National Policy Statement(s) is in place, seeking no or limited compulsory acquisition powers, and/ or which are likely to give rise to examination issues that are few and commonly considered by Examining Authorities.

In general, we consider that subscription to a basic tier service is a higher risk consenting strategy for most applications as there will be far less opportunity for us to inform any key matters of concern prior to receipt of the application. Some types of applications which subscribe to a basic tier service may be more likely to experience more challenging examinations and statutory maximum timeframes.

Tier 2: The standard service

Within this service tier, most applications should be capable of being prepared to a standard which enables them to be accepted for examination and examined within a proportionate period which is within the statutory six months maximum. This service tier includes project update meetings between the applicant and the Inspectorate at key milestones in the pre-application process, a standard draft documents review service and an embedded risk review process. Applicants may choose to develop one or more of the supplementary components identified within the enhanced tier service in order to optimise their application and minimise risk, but we will not provide focused support in the development of these components within the standard tier service.

We consider that the standard tier could represent an appropriate service for most projects ie those which are neither exceptionally straightforward nor exceptionally complex. Applicants will not however be enabled to qualify for a Fast Track procedure under the standard tier service. Although entry to a formal Fast Track procedure is not enabled, where residual pre-application issues are minimised within a standard tier service, this will not prevent an examination from being shorter than the statutory six-months maximum; in accordance with the discretion of the appointed Examining Authority.

Tier 3: The enhanced service

The enhanced tier features unique service offers including:

The Inspectorate supporting the development of up to nine supplementary pre-application components which can assist in optimising applications prior to submission, increasing the likelihood of smoother and potentially faster post-submission stages. The Annex to this Prospectus provides more information about supplementary pre-application components.
The Inspectorate adopting a facilitative and pre-emptive role, including within multiparty forums . A ‘pre-emptive’ role will involve the Inspectorate identifying project and programme risks based on its experience of the PA2008 process and providing advice to the applicant about how to offset or mitigate those risks. More information about facilitation.
Enhanced Examining Inspector involvement in pre-application advice.
The enablement of applicants to qualify for a Fast Track procedure through the satisfaction of the Quality Standard, including associated support from the Inspectorate.

For non-Fast Track applications, we consider that the enhanced tier will represent an appropriate service for projects that require or would benefit from system-wide coordination and support. These projects may be very complex, giving rise to likely examination issues which are numerous and less commonly considered by Examining Authorities.

For applicants seeking a Fast Track procedure , the enhanced tier service must be subscribed to in order to engage the Quality Standard test and potentially qualify for a four-month examination. This requirement is established in government’s 2024 National Infrastructure Planning Guidance about the Fast Track process .

What are the detailed arrangements for each service tier?

The table below establishes the detailed offering associated with the three service tiers available for applications. To engage our services applicants are requested to subscribe to one of the tiers at the pre-application stage of the process. We consider the basic tier to broadly align with our statutory duties in pre-application services (eg accommodating EIA screening and/ or scoping) with our levels of input increasing at the standard and enhanced tiers. Information about transitional arrangements, including for applicants that have already held an Inception Meeting with us prior to 16 May 2024.

Paragraph: 006 Reference ID: 1-006-20240516

The Planning Inspectorate’s Pre-application Service Tiers

PDF , 160 KB , 3 pages

This file may not be suitable for users of assistive technology.

TIER 1: BASIC

Cost to the applicant ( further information about cost recovery )

£62,350 per year of service

Suitable projects

Very experienced applicants, low-complexity projects, with an up-to-date relevant National Policy Statement(s) in place, no or limited compulsory acquisition, and where the likely examination issues are few and commonly considered by Examining Authorities.

Planning Inspectorate role

Planning Inspectorate discharging statutory duties only including section 51 advice and EIA screening/ scoping.

Section 51 advice

Advice normally limited to signposting to existing written resources including published advice, guidance and precedents established in other cases.

Meetings and interactions

Meetings with the Planning Inspectorate available to applicants at essential milestones only (maximum three meetings per annum) comprising:

Inception Meeting
Post-section 42 consultation meeting
Pre-submission meeting

In all service tiers, the occurrence of additional meetings (ie over the maximum occurrences per annum stated) may be agreed on a needs basis. Planning Inspectorate not available for involvement in multiparty forums, including Evidence Plan process. No Examining Inspector involvement in pre-application advice.

Draft documents

No access to Planning Inspectorate draft documents review service.

Acceptance and post-submission risk

Risk review at outset, in conjunction with decision to proceed with basic tier offer.

Additional features

TIER 2: STANDARD

£126,050 per year of service

Potentially any project, apart from projects seeking qualification for a Fast Track procedure for which an enhanced tier service is prerequisite.

Planning Inspectorate discharging statutory duties and supporting the preparation of applications which are:

Capable of being accepted for examination; and
capable of being examined within the statutory six-month maximum.

Applicants may choose to develop one or more of the supplementary pre-application components listed in the enhanced tier offer in order to optimise their application but will not receive focused support from the Inspectorate.

Issuing of procedural advice to support programme and advice to assist progression and/ or resolution of likely examination issues prior to submission.

Meetings with the Planning Inspectorate available to applicants at key milestones, as requested/ required by applicant (maximum six meetings per annum), including:

Post-Scoping, pre-section 42 consultation meeting
Post-section 42 consultation/ post- Preliminary Environmental Information Report meeting
Draft documents feedback meeting

In all service tiers, the occurrence of additional meetings (ie over the maximum occurrences per annum stated) may be agreed on a needs basis.

Offer of Planning Inspectorate involvement in non-Evidence Plan multiparty forums, where agreed, in observer/ advisory role. More information about multiparty meetings.

Offer of Planning Inspectorate involvement in Evidence Plan process, where agreed, in observer/ advisory role. More information about the Evidence Plan process.

Examining Inspector involvement in some elements of pre-application advice.

Standard draft documents review service available to applicants. Documents included in standard tier review service. Examining Inspectors support review of draft DCO and Explanatory Memorandum.

Iterative risk review at key milestones.

TIER 3: ENHANCED

£208,850 per year of service

Projects seeking qualification for a Fast Track procedure .

Novel or very complex/ cross-sector interests where likely examination issues are numerous and less commonly considered by Examining Authorities, not seeking Fast Track Consent but requiring or benefitting from system-wide coordination and support.

Planning Inspectorate discharging statutory duties and performing an enhanced role supporting the preparation of applications which are optimised to facilitate an efficient and effective route to decision, with potential for certain projects to qualify for a Fast Track procedure. Supplementary pre-application components supportable by the Planning Inspectorate to optimise applications include:

Evidence Planning
Pre-application PADSS
Policy Compliance Document
Design Approach Document
Outline control documents
Multiparty meetings (non-Evidence Plan)
Preparation of Compulsory Acquisition and Temporary Possession evidence
Preparation of evidence to support the Public Sector Equality Duty
Multiparty application readiness gate-check (trial)

Some supplementary pre-application components are required for applications seeking a Fast Track procedure . The Annex to this Prospectus gives details in relation to the development of supplementary pre-application components, including the value they are expected to add, and identifies those which are required for applications seeking a Fast Track procedure.

Issuing of procedural advice to support programme and advice to assist progression and/ or resolution of likely examination issues prior to submission, including on a pre-emptive basis in accordance with increased Planning Inspectorate exposure to pre-application evidence.

Where requested by the applicant, and agreed by the Planning Inspectorate, topic-based meetings with the Planning Inspectorate in addition to meetings at key milestones identified in standard tier offer (maximum nine meetings per annum). In all service tiers, the occurrence of additional meetings (ie over the maximum occurrences per annum stated) may be agreed on a needs basis. Offer of Planning Inspectorate involvement in non-Evidence Plan multiparty forums, where agreed, including at the Adequacy of Consultation Milestone. This may be in a chairperson or facilitator role. More information about multiparty meetings . Offer of Planning Inspectorate involvement in Evidence Plan process, where engaged as agreed, as facilitator. More information about the Evidence Plan process. Enhanced Examining Inspector involvement in pre-application advice, including potential deployment as facilitator in multiparty forums.

Enhanced draft documents review service available to applicants, which may consider more than one draft iteration of documents over time, as agreed in the pre-application Programme Document, including:

Documents reviewable under standard tier
Documents associated with supportable components listed above

Documents included in enhanced tier review service.

Examining Inspectors available to support review of all draft documents.

Iterative risk review, including affected statutory bodies and local authorities.

For applications seeking a Fast Track procedure, support from the Planning Inspectorate to prepare an application that is capable of satisfying the Quality Standard established in government’s 2024 National Infrastructure Planning Guidance about the Fast Track process .

Paragraph: 007 Reference ID: 1-007-20240516

The Inception Meeting

For the Inspectorate, the pre-application stage of the process begins with the applicant’s first organised interaction with us at an Inception Meeting . Although the Inception Meeting represents the start of the pre-application process for the purposes of monitoring the timeframe for pre-application, the applicant will have been initialising its project, including through early engagement with relevant statutory bodies and local authorities, prior to this meeting over varying timescales.

The Inception Meeting will feature an introduction by the applicant to the Proposed Development, confirmation of its requested service tier and presentation of its proposed programme for pre-application activities in a Programme Document. The Inception Meeting also marks the point at which invoicing for the Inspectorate’s pre-application services will commence. Further information about the charges for our pre-application services.

It is expected that prior to the Inception Meeting, the applicant will have interacted with relevant statutory bodies and local authorities to explore, and where possible agree, the scope of services required to support the requested service tier and the proposed programme of pre-application activities. It will also be necessary for applicants to have established contact with the Inspectorate prior to the Inception Meeting to provide essential basic project information and to prepare the agenda for the meeting.

Inception Meeting agenda template

MS Word Document , 64.4 KB

The tier of pre-application support provided will be agreed between the applicant and the Inspectorate at, or within a maximum of 28 days following, the Inception Meeting. To inform this agreement the applicant must notify the following basic information to us at least 14 days before the Inception Meeting is scheduled to take place:

Basic information about the project including details of the applicant, the location of the project and a high-level description of the proposed development.
The applicant’s provisional opinion on the appropriate service tier.
A Programme Document covering pre-application activities from the Inception Meeting to the submission of the application. It is accepted that there may be some uncertainty around elements of detail in this first iteration pre-application Programme Document.

Basic case information required in advance of Inception Meeting template

MS Word Document , 58.1 KB

At the Inception Meeting, the applicant will elaborate on the basic information provided to inform agreement on the appropriate service tier. This will include a detailed description and explanation of the activities and predicted timescales established within the pre-application Programme Document . The detailed project description will include such elements as an outline of the main environmental issues/ constraints and the extent of any compulsory acquisition powers sought in relation to the project. The Inspectorate may ask clarifying questions about the information provided by the applicant and may ask for further information to inform identification of the appropriate service tier. The agreed tier will be kept under review throughout the pre-application stage and, if circumstances change, the applicant may be advised on the basis of risk to change its subscription to an alternative tier. Further information about changing subscription.

It is assumed that, based on the facts of the case, the Inspectorate and the applicant will normally agree on the appropriate pre-application service tier. In circumstances where there is disagreement, the Inspectorate’s view will be final. We will only ever exercise this policy where we consider that a lower tier service is appropriate for the application in question. We will inform the applicant of our decision, with reasons, and will publish any associated advice under section 51 of the PA2008 .

Paragraph: 008 Reference ID: 1-008-20240516

Primary service features

Across all three tiers of pre-application service, all applicants are expected to engage the following five primary service features. We consider that these features are fundamental general requirements for improved service, certainty and outcomes:

1. Programme Document

The production and maintenance, by the applicant, of a pre-application Programme Document setting out the main steps that the applicant anticipates taking during the preparation of the application. This document will be introduced by the applicant at the Inception Meeting and its development and maintenance monitored by the Inspectorate throughout the pre-application stage. A public version of the pre-application Programme Document must be published on the applicant’s website.

Updates to the pre-application Programme Document should be communicated by the applicant proactively, with a clear description of the potential impacts on the requested services of the Inspectorate, relevant statutory bodies, local authorities and other stakeholders provided. A reliable view of programmes across the NSIP portfolio is essential to enable these actors to resource and support the pre-application service effectively. In preparing and making updates to the pre-application Programme Document, we expect applicants to be responsive and reasonable in tailoring programmes to support the engagement of statutory bodies and local authorities where required.

2. Issues Tracker and Potential Main Issues for the Examination

The production and maintenance, by the applicant, of an Issues Tracker throughout the pre-application stage. The expectation is for applicants to be upfront about issues and who they affect. The Issues Tracker should be made available for regular review by the Inspectorate, affected statutory bodies and local authorities in order to encourage dialogue and, where possible, achieve resolution. The degree of risk associated with each issue identified in the tracker should be allocated a ‘RAG’ (red, amber, green) status. The Issues Tracker may be sustained into post-submission stages subject to the discretion of the appointed Examining Authority.

The issues tracking process will culminate in a list of Potential Main Issues for the Examination (PMIE) which will be entered into the examination as an application document. The PMIE should be a short document which, where possible, is agreed by relevant statutory bodies and local authorities. It is entirely separate from the later Initial Assessment of Principal Issues (IAPI) developed by the appointed Examining Authority, but may, per any evidence within the application documentation, influence the content of the IAPI. The function of the PMIE (along with PADSS ) is to demonstrate that there are sufficiently few and uncomplex residual issues to potentially allow for a four-month examination to be timetabled (in Fast Track procedure cases) and/ or to facilitate more robust preparation for examination and a smoother and more proportionate examination experience for all parties. In the enhanced tier service, a multiparty meeting may be convened by the applicant to assist finalisation of the PMIE.

How the Issues Tracker, PADSS, PMIE and Statements of Common Ground interact

Flow Chart 1 - How the Issues Tracker, PADSS, PMIE and Statements of Common Ground interact

PDF , 328 KB , 1 page

Pre-application Issues Tracker template

MS Word Document , 62.7 KB

Potential Main Issues for Examination template

MS Word Document , 61.2 KB

3. Advice Log

Engagement in the Inspectorate’s production of an Advice Log to replace meeting notes as a record of interactions between us and the applicant. Trials of the Advice Log approach have proved it to be an effective mechanism to streamline the way in which we record advice and free-up resources (both internal and external) to deal with other elements of the pre-application process which focus on improving the quality of the emerging application. The Advice Log is owned and maintained by the Inspectorate. After each meeting with the applicant, we will seek comments on drafting within the Advice Log from the applicant prior to publication on Find a National Infrastructure Project . The applicant will use the Advice Log as the basis for demonstrating regard to section 51 advice within the application (see 5, below).

4. Adequacy of Consultation Milestone

Engagement in a pre-submission Adequacy of Consultation Milestone (AoCM) intended to allow early consideration of the adequacy of consultation undertaken by the applicant and minimise risk at the acceptance stage. The AoCM should be programmed to occur early enough to enable applicants to consider how to undertake any additional engagement that may be needed, but sufficiently towards the end of the pre-application stage to assess the adequacy of the consultation that has been done. To inform the AoCM, the applicant will make a written submission to the Inspectorate which establishes the consultation undertaken to date, confirms the approaches set out in the Statement of Community Consultation, and summarises the consultation responses and the way in which they are shaping the application. Importantly, it should include the views and any relevant supporting material from local authorities if available. The written submission will be published on the relevant project page on Find a National Infrastructure Project .

The AoCM and associated activities will be established in the applicant’s pre-application Programme Document . In the enhanced tier service, where requested and required, an additional multiparty meeting, chaired/ facilitated by the Inspectorate, will be made available to discuss the AoCM submission including the views from local authorities.

5. Demonstrating regard to advice

The production of evidence, presented within the Consultation Report accompanying the submitted application, demonstrating the applicant’s regard to the advice that the Inspectorate and affected statutory bodies have issued during the pre-application stage. This should highlight amendments to the application arising from advice received, and similarly provide justification where advice received has not led to an amendment to the application. This new requirement is expected to give rise to better evidence to support the applicant’s case for compliance with Part 5, Chapter 2 of the PA2008 , and give better confidence to the stakeholder system that the applicant has taken account of the statutory advice received and made reasonable efforts to submit an application that is in an optimised condition for post-submission stages, including the examination.

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Facilitation within the enhanced tier service

There are sometimes occasions when disagreement between an applicant and a key consultee about a certain aspect of a project can mean that progress is difficult to achieve. If such disagreements are not resolved during the pre-application stage, and the application is subsequently accepted, this could present challenges to everyone during the time-limited post-submission stages. There are also times when, for example, resource constraints within a statutory body may limit the amount of advice and engagement that can be offered to an applicant. This can result in project delays at the pre-application stage. Where this is the case, or to seek to prevent this from happening, within the enhanced tier service the Inspectorate can have a role in helping to facilitate a way forward. More information about our interaction with the services of statutory bodies.

Our role as facilitator

For projects engaged in the enhanced tier service we are able to facilitate multiparty round table meetings, including within Evidence Plan processes, with a view to optimising the evidence being prepared to support an application and/ or tackle potential blockages in the process to move an application forward. Typically, such meetings may involve the Inspectorate, applicant, relevant local authority and/ or any other relevant statutory bodies and will be undertaken on a ‘virtual first’ basis. This means that we will attend/ facilitate within multiparty forums via Microsoft Teams (or equivalent). ‘In person’ attendance may be considered where circumstances are clearly justified in the interests of the process. In accordance with our statutory duty under section 51 of the PA2008, any advice that we issue at a multiparty meeting will be published on the relevant project page on Find a National Infrastructure Project . A draft of the advice will always be shared with the meeting participants for comment before publication.

Where it is agreed that we will adopt a facilitator role, we will aim to promote adherence to the agreed terms of reference, and to be fair, balanced and objective in our consideration of the issues. We will encourage productive discussion through interpretation of points raised by participants, the clarification and summarising of positions and active and open-ended questioning. In our role as a facilitator, we will communicate in terms of the risk that positions pose for acceptance, examination, recommendation and where applicable admission to a Fast Track procedure , and will work with parties to identify actions to overcome barriers to resolving issues. Where certain issues are not able to be fully resolved, we will encourage parties to narrow and focus specific areas of disagreement prior to submission of the application in order to allow for a more efficient and effective use of time at post-submission stages.

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Revision date: 16 05 2024

Types of multiparty forums

Multiparty meetings within the evidence plan process.

An Evidence Plan is an optional way to agree and record the information the applicant needs to supply to the Inspectorate when applying for a DCO so that environmental issues arising from multiple assessments (for example EIA, HRA and/ or Flood Risk Assessments) within the application can be efficiently identified, tracked, discussed and progressed. This process can lead to a smoother examination as it provides the opportunity for all parties to agree and provide certainty on proportionate assessments and for issues to be agreed outside the constraints of statutory timeframes.

The option to request and agree an Evidence Plan is available to all applicants for proposed NSIPs that are in England, or England and Wales, and are entering the pre-application stage. It is an optional process, and resource constraints within a consultee body may limit the amount of advice and engagement they are able to provide. To oversee and monitor the progress of Evidence Plans during the pre-application stage, steering groups are formed which are able to agree/ sign off any issues that arise from Expert Topic Groups. Expert Topic Groups are formed of technical specialists who agree methodological and analytical assessment approaches. Both groups consist of attendees from the applicant and relevant statutory bodies. The Inspectorate can attend where requested and agreed. More information about the Evidence Plan process is set out in our Advice Pages .

The Inspectorate’s structure and working principles for Evidence Planning, and the details of the approach, are to be developed in discussion between the Inspectorate, the applicant and relevant statutory bodies. Before we can begin engaging with the Evidence Plan process, we must have been provided with the applicant’s pre-application Programme Document including the proposed activities and timeframes associated with the process. We must also have been given an opportunity to review and agree the applicant-owned terms of reference for the Evidence Plan process. We will issue standard text establishing our role for the applicant to insert.

Our involvement in the Evidence Plan process will be available to applicants within the standard tier and enhanced tier service, as set out below. Meetings undertaken within the Evidence Plan component are in addition to the maximum annual service meetings, but do not attract additional charges within the parameters of the table below . Some statutory bodies will charge for engagement in an Evidence Plan process. Similarly, local authority participation may be governed by the terms of any Planning Performance Agreement (PPA) that is in place.

What is the Inspectorate’s role?

Observer only. The Inspectorate will provide high level advice on the implications of discussions held. We will review one iteration of the applicant’s notes of the meeting which are to be circulated within five working days of the meeting.

How will the Inspectorate attend?

On a ‘virtual first’ basis.

How many meetings can the Inspectorate attend?

Up to five meetings. The Inspectorate’s attendance at these five meetings can be a mix of steering group and Expert Topic Group meetings. The applicant, in conjunction with relevant statutory bodies, will advise us accordingly.

What is the required notice period for meetings and the information required?

The schedule of Evidence Plan activities (including meetings) should be provided to the Inspectorate before the process formally begins, within the pre-application Programme Document. For any additional meetings, in order to resource attendance and make appropriate preparations, we require a minimum of six weeks’ notice to participate.

A minimum of ten working days prior to each meeting, the applicant will circulate the relevant information to us ensuring that we can fully prepare for the meeting. This information should be adequately detailed, including key assumptions and evidence in support of any proposed approach/ conclusion.

Who will attend from the Inspectorate?

The Inspectorate’s Environmental Services Team.

How will the Inspectorate engage with the SNCBs out of project-specific Evidence Plan meetings?

The Inspectorate will be available to engage with the relevant statutory bodies to discuss progress in the resolution of issues, including how our engagement could be of assistance.

Observer and/ or facilitator as required. As a facilitator, the Inspectorate will actively engage to progress the resolution of outstanding issues and take actions away. We will review one iteration of the applicant’s notes of the meeting which are to be circulated within five working days of the meeting.

Maximum number of five in-person meetings per annum (can be a mix of steering group and Expert Topic Group meetings). All other meetings will be attended virtually.

Up to eight meetings. The Inspectorate’s attendance at these eight meetings can be a mix of steering group and Expert Topic Group meetings. The applicant, in conjunction with relevant statutory bodies, will advise us accordingly.

The Inspectorate’s Environmental Services Team and/ or an Examining Inspector, dependent on stage in the process and agenda items/ issues being discussed.

In addition to the offer at the standard tier, where issues are identified, the Inspectorate may proactively engage the relevant statutory bodies to understand the issues in greater detail and offer advice on implications.

Multiparty meetings outside of the Evidence Plan process

It may be appropriate for the Inspectorate to be involved in multiparty meetings outside of an established Evidence Plan process, either because an Evidence Plan process has not been engaged in relation to a particular project, or because the subject or issue for discussion at the meeting is not directly related to an environmental matter covered within the scope of the Evidence Plan. We may attend such a multiparty party meeting either on an observer/ advisory basis within the standard tier service, or in a facilitator or chairperson role within the enhanced tier service. Our involvement will be determined in discussion with the applicant, affected statutory bodies and/ or local authorities. Inspectorate involvement in multiparty meetings is not available to applicants which have subscribed to the basic tier service.

Who can attend a multiparty meeting?

Local authority officers, the applicant, the Inspectorate, relevant statutory bodies, other interest groups. Some statutory bodies will charge for attendance at such meetings. Similarly, local authority participation may be governed by the terms of any PPA that is in place.

When should a multiparty meeting take place?

Depending on the project, a multiparty meeting could be held before the applicant starts statutory consultation or following close of the final round of section 42 consultation. The timing of a multiparty party meetings will be optimised based on the facts of individual cases, including the theme or issue for discussion. A multiparty meeting can be requested by the applicant, affected statutory bodies or local authorities. Where a multiparty meeting is requested to take place, the requesting party must provide clear reasons, purpose and intended outcomes. The final decision on whether a requested multiparty meeting will be convened will always rest with the applicant.

What notice of meetings is required by the Inspectorate and what information is required?

In order to resource attendance and make appropriate preparations, we require a minimum of six weeks’ notice to participate.

A minimum of ten working days prior to a multiparty meeting, the applicant will circulate the relevant information to us ensuring that we can fully prepare for the meeting.

How are multiparty meetings held?

In a roundtable format, held on a ‘virtual first’ basis.

The Inspectorate’s Case Team and/ or Environmental Services Team and/ or an Examining Inspector, dependent on stage in the process and agenda items/ issues being discussed.

What is the purpose of multiparty meetings?

To understand:

What the process requires of each party and to agree response timings;
any issues that are potentially difficult to achieve agreement on during the pre-application stage;
what the implications of any unresolved issues are for the parties and for the statutory process;
what action is required by relevant parties prior to submission of the application and what the timescale is for addressing particular issues; and/ or whether all parties are prepared for the acceptance post-submission stages.

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Review of draft application documents

In the standard and enhanced tier services the Inspectorate can review certain draft application documents during the pre-application stage. There is not access to a draft documents review service within the basic tier service.

Draft documents review allows us to give advice about the standard of the documentation, any aspects that may need clarification and any procedural omissions prior to submission. It also helps us to understand more about the proposed application and to prepare for the submission so that we can deal with the application within statutory timeframes, and potentially faster.

Experience has shown that our review of draft documents can help to avoid possible problems before they arise, resulting in a smoother experience at post-submission stages for the applicant and other Interested Parties. Our approach to reviewing draft application documents is set out in the table below.

Which draft documents can the Inspectorate review?

The Inspectorate can review the following draft application documents within the standard tier service:

Draft DCO, including protective provisions and/ or draft deemed marine licence(s)
Draft DCO Explanatory Memorandum
Draft sample Works Plans and Land Plans
Draft Consultation Report including section 42 consultee list
Draft HRA report
Draft Environmental Statement project description chapter(s)
Draft Planning Statement
Draft Book of Reference
Draft Statement of Reasons
Draft Funding Statement

In addition to the draft documents that can be reviewed in the standard tier service, in the enhanced tier service the following draft documents can also be reviewed:

Draft DCO control documents eg Draft Outline Construction Environmental Management Plan
Drafting associated with key issues and/ or novel approaches within the draft Environmental Statement
Draft Policy Compliance Document
Draft Design Approach Document
For relevant projects, draft Fast Track Admission Document

What is the Inspectorate unable to review?

The Inspectorate is unable to review draft Environmental Statements in their entirety due to the size of documents. Applicants are encouraged, however, to share draft chapters of the Environmental Statement with relevant statutory bodies and local authorities at the pre-application stage.

When should draft documents be prepared and how long does the review stage last?

Applicants are encouraged to start preparing application documents sufficiently early (for example before statutory consultation). Standard and enhanced tier applicants should carefully consider the best time to provide draft documents to us. The more complete the documents are when provided to us, the more thorough our advice can be. This needs to be balanced against seeking advice on key elements sufficiently early to frame and shape project development.

Due to the volume of material, standard and enhanced tier applicants must allow sufficient time for the Inspectorate to review draft documents. The submission of draft documents must be established in the applicant’s pre-application Programme Document, allowing six weeks for the Inspectorate to review the documents and provide feedback. This may be shorter or longer depending how complex and novel a project or the issues it raises might be, subject to our agreement.

Standard and enhanced tier applicants must provide sufficient time to allow for the Inspectorate’s comments on draft documents to be reflected in the final form of the submitted application. This is essential in relation to the requirement for applicants to demonstrate regard to the Inspectorate’s pre-application advice in the Consultation Report.

Who reviews draft documents?

Within the standard tier service, draft document reviews will generally be undertaken by suitable persons within the allocated project team at the Inspectorate. The review of the draft DCO and draft Explanatory Memorandum will be undertaken by an Examining Inspector(s).

Within the enhanced tier service, draft document reviews will be undertaken by the project team with support across the suite of documentation by an Examining Inspector(s).

How is advice on draft documents given?

Normal practice is to give advice on draft documents in writing. This written note (recorded within the Advice Log then forms the agenda at a subsequent meeting at which the applicant can seek clarifications about the written advice issued by the Inspectorate. In some circumstances we can take a different approach, to be agreed between the applicant and ourselves. In all cases, our advice on draft application documents is published.

Who else should the applicant share draft documents with?

All applicants, including those within the basic tier service, are expected to share relevant draft application documents with key stakeholders, enabling those stakeholders to provide a response, outlining any areas of concern or disagreement. This can be carried out as part of an applicant’s consultation under section 42 of the PA2008 and/ or at other appropriate points established in the pre-application Programme Document .

For example, as a minimum, we would expect relevant provisions within the draft DCO to be shared with any party specifically affected by them, including those responsible for the discharge or enforcement of requirements, and those affected by any protective provisions. The expectation is that as many matters as possible are agreed with those directly affected by the drafting of the DCO prior to submission of the application.

We also expect applicants to share draft Environmental Statement chapters with statutory bodies, local authorities and other relevant stakeholders where they are aware that they may have substantial interests that may need addressing. Sufficient time should be established in the Programme Document for any requested responses to be reflected in the final form of the Environmental Statement.

Some statutory bodies will charge for advice given in response to draft documents. Similarly, local authority responses may be governed by the terms of any PPA that is in place.

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The Fast Track procedure and the Quality Standard

Government has established a new policy framework which will allow some NSIPs to be capable of receiving a decision within 12 months from the point at which the application is accepted for examination. To realise this timeframe, applicants may apply to the Inspectorate to be considered for a Fast Track procedure. Admission to a Fast Track procedure will require the application to be examined in a statutory maximum period of four months. Under conventional PA2008 timescales the statutory maximum period for the examination is six months.

Whilst the Inspectorate will have control of delivering examinations in a maximum of four months, and producing a recommendation within two and a half months, achieving the 12 months target set by government will also require:

Substantial investment by the applicant, set out below, including a commitment, for elements within its control, to minimise the duration of the pre-examination stage to a maximum of three months;
investment in the shortened timescales by affected statutory bodies and local authorities throughout pre-application and post-submission stages, including the examination; and
the relevant Secretary of State in each case to uphold a non-statutory commitment to produce its decision on whether development consent should be granted within two and a half months.

Applicants wishing to put their projects forward for a Fast Track procedure will need to demonstrate that their application meets the Quality Standard set out in government’s 2024 National Infrastructure Planning Guidance about the Fast Track process .

Preparing an application to be considered for a Fast Track procedure

Before deciding whether to apply for a Fast Track procedure, applicants should consider carefully whether this consenting strategy is appropriate and realistic in relation to the project they are promoting. Considerations in this respect will include, amongst other things:

The novelty and complexity of likely issues associated with the application and the likelihood of those issues being resolved at pre-application, and/ or within shorter post-submission process timeframes;
whether the application is likely to give rise to change requests post-submission;
the levels of local, national and cross-sector interest in the project; and
the status of any relevant National Policy Statement(s).

The applicant’s interest in a Fast Track procedure should be established at the Inception Meeting at which the Inspectorate will provide advice to the applicant in relation to the suitability of its application for a Fast Track procedure, including consideration of the required interactions with affected statutory bodies and local authorities.

The applicant’s interest in a Fast Track procedure should be established at the Inception Meeting. To inform the Inception Meeting, the applicant must establish within its pre-application Programme Document the main matters that, to qualify for a Fast Track procedure, the applicant will need to cover in addition to the normal pre-application requirements. For applicants seeking to qualify for a Fast Track procedure, the pre-application Programme Document must include:

an indicative programme setting out the keys steps in the preparation of the Fast Track procedure application to the point of submission;
a summary of the policy context for the application;
the potential issues that require input from statutory bodies, including for relevant projects an indicative Evidence Plan process timetable;
for relevant projects, an indicative programme for the preparation of an Information to Inform Habitats Regulations Assessment Report, with endorsement by the relevant statutory nature conservation body;
a clear position on, and activities to support, the intended design approach and level of detail likely to be provided in the final application;
activities relating to the development of, and engagement on, key application documents including the draft DCO and Explanatory Memorandum; and
details of any licencing requirements or non-planning consents not included in the draft DCO that are needed.

The Inspectorate will continue to provide advice on the suitability of the application for a Fast Track procedure as the pre-application programme develops.

Following the Inception Meeting, and as established within the pre-application Programme Document , an applicant seeking to qualify for a Fast Track procedure must discharge the following procedural steps:

Subscribe to use the Inspectorate’s enhanced tier pre-application service;
within its PA2008 section 42, section 47 and section 48 statutory notification and consultation materials, provide written confirmation/ notification of its intent or potential to apply for a Fast Track procedure;
prior to statutory consultation, publicise its programme of relevant activities, milestones and dependencies (required for both Fast Track and non-Fast Track procedures), ensuring transparency and meaningful engagement in progress towards meeting the Quality Standard; and
provide a Fast Track Admission Document accompanying the application submission, setting out how in the applicant’s view the application satisfies the Quality Standard.

Demonstrating satisfaction of the Quality Standard

The Quality Standard test is applied by the Inspectorate, on behalf of the Secretary of State, during the 28-day Acceptance stage. A provisional decision on the application’s suitability for a Fast Track procedure is made at the same time as the Acceptance decision. The non-statutory decision on the suitability of the application for a Fast Track procedure, and the Quality Standard test, is entirely independent of the decision and tests relating to the acceptance of the application under section 55 of the PA2008 . On this basis, affected applicants will receive two separate decisions; the application may be accepted for examination but refused entry to a Fast Track procedure.

The Fast Track Admission Document is not in a prescribed format but must clearly evidence how the main and supplementary tests comprising the Quality Standard are satisfied, including how each of the required supplementary components for a Fast Track procedure have contributed. As part of this, in support of the main test, the Fast Track Admission Document must include as appendices the PADSS produced by relevant consultees. This will allow the conclusions drawn by the applicant within the Fast Track Admission Document to be verified by the Inspectorate. The document is also expected to include as an appendix a Policy Compliance Document

Within the enhanced tier pre-application service, the applicant will receive focused support from the Inspectorate in preparing actions and evidence to support satisfaction of the Quality Standard, including the Fast Track Admission Document.

The Fast Track procedure decision

If having considered the Fast Track Admission Document and supporting evidence the Inspectorate considers that the application satisfies the Quality Standard, we will issue a decision to the applicant confirming provisional admission to a Fast Track procedure. A Fast Track procedure, however, cannot be confirmed until the appointed Examining Authority has received and considered all Relevant Representations later in the pre-examination stage. This establishes an essential opportunity for the Examining Authority to be satisfied that new evidence within the Relevant Representations would not prevent the application from being examined in a maximum of four months. After the Examining Authority has considered the Relevant Representations, the Inspectorate will issue a final decision about whether the application will be progressed through a Fast Track procedure.

If the application is endorsed for a Fast Track procedure, the Examining Authority will develop a draft up to four-month examination timetable in accordance with Rule 6 of the Examination Rules . If the application is not endorsed for a Fast Track procedure, the Examining Authority will develop a draft up to six-month examination timetable in accordance with conventional statutory timeframes. Within conventional statutory timeframes, the ExA’s discretion to complete the examination in less than six months is always retained. Our Advice Pages provide information about the preparation of the draft examination timetable .

Preparing for a Fast Track procedure and the decision process

Flow Chart 2 - Preparing for a Fast Track procedure and the decision process

PDF , 283 KB , 1 page

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Recovering the cost of our pre-application services

In order to meet government’s policy objective of cost recovery in NSIP service provision, applicants will be charged for the pre-application services described in this Prospectus. The Infrastructure Planning (Fees) Regulations 2010 have been amended by The Infrastructure Planning (Fees) (Amendment) Regulations 2024 to insert Regulation 2A which enables cost recovery for pre-application services provided by the Inspectorate on behalf of the Secretary of State. Government’s 2024 National Infrastructure Planning Guidance about cost recovery should be read in conjunction with the legislation and this Prospectus.

The charges below are reflective of the anticipated days and mix of input required by the Inspectorate to deliver each tier of service, including Inspector, support staff and overhead costs and, as appropriate, a waiver in part using the relevant day rate figure stated in The Infrastructure Planning (Fees) (Amendment) Regulations 2024 .

In accordance with Managing public money - GOV.UK (www.gov.uk) , the Inspectorate cannot make profit on the overall services we provide. The charges applied relate solely to the work of the Inspectorate and not any pre-application support provided to the applicant by other organisations. The charges will be reviewed periodically and subject to adjustment in line with consumer price index annually and the Fees Regulations amendments. We will review the levels of service and the cost of the service to applicants periodically.

We will raise invoices in advance in order to resource the service, typically twice a year, in April and October. Where an applicant joins the pre-application service mid-way through any invoicing period, charges will be applied pro rata for that period on a whole month basis.

In the event of non-payment, we will not provide the pre-application service as otherwise agreed with the applicant.  

We understand that depending on the maturity of the proposed project, some applicants may want to embark on a lower-level tier service at the Inception Meeting prior to moving into a different tier as the project evolves. We would expect any applicant to provide at least three months’ notice of any desire to change tier and the likelihood and timing of this would be expected to be identified in the associated pre-application Programme Document . We cannot guarantee that such requests to move up a tier will be agreed in light of likely competing demand for service provision but will accommodate where possible. Applicants are therefore advised to consider their intended approach to pre-application support carefully and in consultation with the Inspectorate, relevant statutory bodies and local authorities as early as is practicable. Any agreed uplift in service provision will be chargeable in advance and this will be on a whole month basis.

In line with government’s 2024 National Infrastructure Planning Guidance about the Fast Track process , any applicant intending to submit an application which qualifies for the Fast Track procedure will be required to enter the enhanced tier service from the Inception Meeting through to submission of the application.

We will review the pre-application service over time and could agree with an applicant additional service offerings which may require a supplementary fee. Any supplementary service would be subject to the appropriate daily rate for the chosen pre-application service tier. It is unlikely that any additional service offerings will be available in the first year whilst the new process is being established.

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Interaction with the services of statutory bodies

The Inspectorate has good working relationships with the statutory bodies relevant to the PA2008 process and maintains regular contact about the issues arising from our collective experience, but it is not the role of the Inspectorate to ensure or monitor the performance of their pre-application services on behalf of the applicant and/ or the body’s parent government department.

The pre-application stage of the PA2008 process is driven by the applicant, but the quality of applications and the success of service reforms is dependent upon the performance of multiple actors within the PA2008 process, including statutory bodies. Some statutory bodies have an important role in advising applicants on the preparation of evidence to support applications. The services associated with this function are set out in separate resources owned and maintained by those statutory bodies and may have charges associated with them. It is for the applicant to access these resources and ensure that the required services of statutory bodies are programmed effectively through early and direct interactions with those bodies. All required or requested interactions with statutory bodies and local authorities should be established in the applicant’s pre-application Programme Document .

Further information on our approach to working with other public bodies, including contact information for applicants .

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Transitional arrangements

In order to establish the tier service preference of all current projects at the pre-application stage on Find a National Infrastructure Project , the Inspectorate will carry out an expression of interest exercise from late May 2024. Details of the expression of interest exercise, including what information is required to accompany responses, and the deadline for responses, will be sent to individual applicants directly.

The Inspectorate’s pre-application service tiers attract different levels of resource input from those involved in pre-application. As such, responses to the expression of interest will be considered carefully by the Inspectorate to understand, amongst other things, the demand placed on the capacity of its available resource. Equally, it is necessary to consider the resource capacity of key dependents including relevant statutory bodies. Applicants should be clear as to whether the likely level of support required from such organisations, specific to the project, has already been secured and if not, is realistically achievable for the desired tier.

The Inspectorate is not responsible for the co-ordination of pre-application resourcing across the system. Applicants should note that information submitted within the expressions of interest may be shared with relevant statutory bodies, particularly if seeking the enhanced tier service, for their own input. Going forward applicants should work with such bodies to agree and secure their capacity to support the preferred service tier in advance of entering into agreement with the Inspectorate.

All projects should expect to be confirmed within a service tier before the end of August 2024.

For projects that have not notified us or requested an opinion in accordance with EIA Regulation 8 before 30 April 2024, charging for our new services will begin on 1 October 2024.

For projects that have notified us or requested an opinion in accordance with EIA Regulation 8 before 30 April 2024, charging for our new services will begin on 1 April 2025.

For all projects subscribing to the enhanced tier of pre-application service, charging will begin on 1 October 2024.

All system users should be aware that the services established within this version of the Prospectus are anticipated to evolve as they are matured and embedded in practices and procedures. On this basis, the Prospectus will be a flexible resource and subject to amendment and update as we continue to learn to optimise the process together.

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Contact information

If you are interested in finding out more about our pre-application services, please contact us. If you are a potential applicant and have not previously talked to us about your project, please contact us on 0303 444 5000 or at [email protected] .

If you are an existing applicant and already have an identified Case Manager/ Operations Manager, please contact them to discuss how the changes to our pre-application services affect you. If you do not have an identified Case Manager/ Operations Manager, please contact us using the details provided above.

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Annex – Supplementary pre-application components

Planning Inspectorate support in the development of the supplementary pre-application components detailed in this annex is available to applicants that have subscribed to the enhanced service tier . Development of these components is expected to assist in optimising applications for smoother and potentially faster post-submission stages.

Enhanced tier applicants that are not seeking admission to a Fast Track procedure are not compelled to develop all of the supplementary components on offer, dependent upon the characteristics of the application in question. The suitability of individual components in relation to an application will be discussed with the Inspectorate at the Inception Meeting and confirmed at an early stage in the applicant’s programme.

Applicants seeking to qualify for a Fast Track procedure are encouraged to develop all supplementary components, but the components indicated in the table below are required:

Applicants that subscribe to the standard service tier may choose to develop one or more of the supplementary components listed below but will not receive the focused Inspectorate support described in this annex.

The value offer and roles in relation to the development of supplementary pre-application components

Component 1: evidence planning.

An Inspectorate role in the development of an Evidence Plan can have a variety of positive effects on the experience and outcomes of the process. The value added through Inspectorate involvement is reflected in feedback from various statutory bodies which report that our engagement can positively influence interactions and the progression of issues. Establishing final, and where possible agreed, positions between the parties engaged in the Evidence Plan process can help to narrow and focus the issues that may require further consideration at post-submission stages, making for a smoother and potentially faster process for everybody involved.

The applicant’s role : To drive an optimised Evidence Plan where there are complex or substantial/ numerous environmental issues arising from the Environmental Impact Assessment, Habitats Regulations Assessment, Flood Risk Assessment etc. These issues/ disagreements should be identified, and the programme agreed with affected statutory bodies and local authorities as early as possible in the pre-application stage and shared with the Inspectorate. The process will be investigative, and solution/ agreement focussed. The final positions reached at the completion of the Evidence Plan should be reflected in the Issues Tracker.

The Inspectorate’s role : To provide facilitative support, including assisting/ advising where there are ongoing issues and/ or disagreements/ stalemates which may impact post-submission stages. More information in relation to the Inspectorate’s role in Evidence Planning.

COMPONENT 2: Use of pre-application Principal Areas of Disagreement Summary Statements

Pre-application Principal Areas of Disagreement Summary Statements (PADSS) provide a mechanism for consultees to present unfettered evidence to the pre-application process. Based on this evidence the Inspectorate can identify and explore key areas of disagreement with the applicant before the application is submitted. This will provide the applicant with an opportunity to provide clarifications and/ or take action, where appropriate, and to optimise how areas of disagreement are presented in the application. Pre-application PADSS can help to narrow and focus the issues that may require further consideration by an Examining Authority at post-submission stages, making for a smoother and potentially faster process for everybody involved.

The applicant’s role : To initiate pre-application PADSS with relevant consultees from the beginning of the pre-application stage. Pre-application PADSS are owned and authored by consultees. The expectation is for Pre-application PADSS to be periodically updated by consultees post-submission, contributing towards agreed Statements of Common Ground in reasonable advance of the Examination close. PADSS will supplement, not replace, the preparation of Statements of Common Ground. More information on the relationship between pre-application PADSS and Statements of Common Ground.

PADSS are designed to:

Provide a record of the pre-application areas of disagreement from the perspective of the consultee; and/ or
in relation to an application for a Fast Track procedure , assist the decision about whether the number and complexity of residual issues at the point of submission would preclude an application from achieving a robust examination within a maximum of four months.

PADSS should be prepared by consultees with areas of disagreement presented in priority order.

The applicant’s Issues Tracker must consolidate relevant areas of disagreement established in PADSS, enabling PADSS to also inform the Potential Main Issues for the Examination. Pre-application PADSS must be retrieved from affected consultees by the applicant and provided with the submitted application. For projects seeking admission to a Fast Track procedure, the PADSS will be provided as an appendix to the Fast Track Admission Document.

The Inspectorate’s role : To elevate the status of PADSS as key evidence informing pre-application interactions with the applicant. The Inspectorate will monitor and query the status of issues identified in PADSS with the applicant, and where appropriate consultees, in pre-application interactions.

COMPONENT 3: Production of Policy Compliance Document

The development by the applicant of a Policy Compliance Document (PCD) will establish a resource which may assist a variety of stakeholders, but it will have particular value for appointed Examining Authorities. We have heard from Examining Authorities that the presentation of policy evidence in the PCD format helps them to monitor the performance of the application against policy requirements and objectives in a systematic way, improving the post-submission experience for all. Applicants can expect that the development of a PCD may result in fewer written and oral questions to them and other Interested Parties concerning the policy case, allowing resources to be focused on other important areas of the examination.

The applicant’s role : To prepare a PCD to accompany its application. This is a separate document to the Planning Statement required in government’s 2024 National Infrastructure Planning Guidance about the pre-application process . The PCD will include itemised evidence for how the policy requirements established within any relevant National Policy Statement(s) (and/ or emerging drafts) and other important national and local policy documents are satisfied by the application. It should be approached section by section/ requirement by requirement and outline the applicant’s response with links to (a) evidence in the Environmental Statement, (b) the outcomes and (c) where they are secured.

Relevant consultees (including policy owners) should be asked by the applicant to input on the scope of the PCD during pre-application, with updates on its development provided to those consultees and the Inspectorate at appropriate intervals. The applicant will be frank/ upfront about policy issues with potential implications for post-submission stages, including the examination.

The Inspectorate’s role : To provide focused support in the applicant’s development of the PCD, including a draft PCD review service with relevant expert input. The Inspectorate will require updates from the applicant on its preparation of the PCD and will query input/ consensus from relevant consultees (including policy owners). The Inspectorate will maintain detailed advice concerning the preparation of PCDs and signpost to good example PCDs prepared for decided cases.

The Inspectorate will work with applicants to establish the different functions of the Planning Statement and the PCD in the course of their development.

COMPONENT 4: Production of Design Approach Document

The development by the applicant of a Design Approach Document (DAD) will assist the Examining Authority and Interested Parties to understand the preparation and evolution of the design case from project inception, providing important context for the design of the project presented in the final form of the application. We expect that the production of a DAD will assist Examining Authorities in considering the satisfaction of design-related policy requirements established in relevant National Policy Statement(s). Applicants can expect that the development of DAD may result in fewer written and oral questions to them, and other Interested Parties, concerning the design case, allowing resources to be focused on other important areas of the examination.

The applicant’s role : To prepare a DAD to accompany its application which sets out how the application satisfies design criteria in eg any relevant National Policy Statement(s) and best practice guidance. The DAD is a separate product to the Design Principles Statement (or equivalent), which is also typically provided by applicants in support of Nationally Significant Infrastructure Project applications. More information about the format and content of a DAD will be provided in our Advice Pages .

Relevant consultees (including policy owners) should be asked by the applicant to input on the scope of the DAD during pre-application, with updates on its development provided to those consultees and the Inspectorate at appropriate intervals.

The Inspectorate’s role : To provide focused support in the applicant’s development of the DAD, including a draft DAD review service with relevant expert input. The Inspectorate will require updates from the applicant on its preparation of the DAD and will query input/ consensus from relevant consultees. The Inspectorate will maintain detailed advice concerning the preparation of DADs and signposting to good example DADs prepared for decided cases.

The Inspectorate will work with applicants to establish the different functions of the Design Principles Statement (or equivalent) and the DAD in the course of their development.

COMPONENT 5: Production of mature outline control documents

The preparation of mature outline control documents to support the application submission, which are agreed by affected stakeholders, is likely to result in fewer written and oral questions for the applicant and other Interested Parties concerning the construction and operationalisation of the Proposed Development. We have heard from Examining Authorities that the provision of underdeveloped outline control documents with the application can demand substantial time and effort at post-submission stages to develop detail and resolve issues, complicating and potentially extending post-submission stages.

The applicant’s role : To prepare mature outline control documents to accompany its application. These should be consulted upon with relevant stakeholders in accordance with the agreed pre-application Programme Document . Control documents include any documents named within the draft Development Consent Order (DCO) (normally within Requirements) which provide specific and detailed practical controls on the Proposed Development eg Construction Environmental Management Plan and equivalents. Outline control documents should include, where applicable, a robust case for why elements of detail may be required to follow at later stages.

The Inspectorate’s role : To provide focused support in the applicant’s development of outline control documents, including a draft document review service in accordance with the agreed Programme Document . The Inspectorate will proactively seek updates from the applicant on preparation of outline control documents and query input/ consensus from relevant consultees.

COMPONENT 6: Use of multiparty meetings (non-Evidence Plan)

Multiparty meetings provide an opportunity for key issues to be considered in an open way and for actions towards resolution prior to submission to be identified and, where possible, agreed and discharged. Feedback confirms that an Inspectorate role in multiparty meetings can help to focus and manage discussion and provides additional value by establishing the likely impacts of unresolved matters on statutory timeframes at post-submission stages.

The applicant’s role : To use multiparty meetings during pre-application to facilitate resolution of issues or disagreements. The approach to multiparty meetings should be proportionate to any arising issues/ disagreements or the complexity of ongoing issues/ disagreements. The applicant is responsible for arranging multiparty meetings and briefing the attendees on their roles and expectations in advance of the meeting occurrence.

The Inspectorate’s role : To engage on the basis of the applicant’s tier subscription , acting as either an observer/ advisor (standard or enhanced tier) or as a chairperson/ facilitator (enhanced tier only). The Inspectorate’s role as facilitator . The Inspectorate will be responsive to meeting objectives and its requested role within it, and resource to ensure relevant/ required skills and expertise are available for meetings. The Inspectorate will provide advice to the applicant and other attendees, including in respect of the resolution (or otherwise) of ongoing issues and the implications for post-submission stages, including the examination.

COMPONENT 7: Preparation of Compulsory Acquisition and Temporary Possession evidence

The development of a pre-application Land and Rights Negotiations Tracker will help the Inspectorate to understand the issues, monitor progress and target advice at the pre-application stage. Experience shows that unresolved land and rights issues can complicate and extend the duration of post-submission stages. The Inspectorate’s support will help the applicant to prepare and optimise the Compulsory Acquisition and Temporary Possession evidence within the application, potentially giving rise to fewer Examining Authority written and oral questions and smoother, possibly faster, post-submission stages. The pre-application Land and Rights Negotiations Tracker will provide the basis for a detailed post-submission Land Rights Tracker which will be requested by the appointed Examining Authority.

The applicant’s role : To prepare mature and robust evidence to support the application for compulsory acquisition and temporary possession powers in the draft DCO. This evidence will be developed around a pre-application Land and Rights Negotiations Tracker, which will ultimately form part of the submitted application. The Land and Rights Negotiations Tracker will provide a live and consolidated view of the status of negotiations and inform pre-application interactions between the applicant and the Inspectorate. The applicant will be frank/ upfront about barriers and the likelihood of individual and/ or collective land and rights issues affecting the smoothness and duration of the examination. The applicant will prepare mature versions of the draft DCO, draft Land Plans (including special category land and crown land information), draft Book of Reference, draft Statement of Reasons and draft Funding Statement for review by the Inspectorate within the timeframes agreed in the pre-application Programme Document .

The Inspectorate’s role : To elevate the status of the Land and Rights Negotiations Tracker as key evidence informing pre-application interactions with the applicant. The Inspectorate will monitor and query the status of issues identified in the Land and Rights Negotiations Tracker with the applicant, issuing advice on the impacts (and mitigations) for post-submission stages.

Pre-application Land and Rights Negotiations Tracker template

MS Word Document , 64.8 KB

COMPONENT 8: Preparation evidence to support the Public Sector Equality Duty

Inspectorate support in the development of application evidence which is optimised in relation the Examining Authority’s requirement to discharge the PSED is expected to result in better applicant practice and less examination time taken up with written and oral questions posed to the applicant and other Interested Parties.

The applicant’s role : To design events, communicate with consultees (including, in particular, those affected by Compulsory Acquisition and/ or Temporary Possession powers) and mature evidence at the pre-application stage to assist the Inspectorate and the appointed Examining Authority, during post-submission stages, to discharge the Public Sector Equality Duty (PSED) under The Equality Act 2010 .

The Inspectorate’s role : To elevate the requirements of the PSED and provide support to the applicant in having regard to those requirements in designing events, communicating with consultees, developing pre-application resources, establishing the final form of the application and preparing for post-submission representations.

COMPONENT 9: Multiparty application readiness gate-check (trial)

The purpose of the gate-check trial is to establish an event occurring after statutory consultation and before the application is submitted to identify any substantive gaps in information, with a focus on where any such gaps might present risks to the acceptance and examination. The timing of the gate-check event will allow for the applicant and other relevant parties to take remedial action before the application is submitted, facilitating more focused, smoother and potentially faster post-submission stages.

The applicant’s role : To work with the Inspectorate and relevant statutory bodies within the trial of a multiparty gate-check process, engaging proactively, being responsive and developing and making essential supporting resources available in a timely way. The applicant will be responsible for organising the gate-check meeting (in addition to the maximum total of standard meetings) with themselves, the Inspectorate and relevant statutory bodies in attendance.

The Inspectorate’s role : To facilitate a multiparty gate-check meeting for applicants, involving relevant statutory bodies. Within the trial, the gate-check would occur between the statutory consultation and submission stages and would enable the Inspectorate to understand issues and associated risks and facilitate agreement in relation to appropriate remedial actions prior to submission. The gate-check event can include consideration of any project-related issues but is expected to focus on environmental matters, including those identified within the Evidence Plan process (where engaged).

The gate-check trial will be made available to a limited number of applicants to test appetite, deliverability and value added . Further details on the proposed gate-check process and requirements will be made available to the applicants involved in the trial.

Paragraph: 018 Reference ID: 1-018-20240516

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IMAGES

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6. You’ll make big spending decisions with confidence

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2. Give your business a foundation for success.

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The importance of a business plan

What is a business plan?

Why is a business plan important?

10 reasons why you need a business plan

1. To help you with critical decisions

2. To iron out the kinks

3. To avoid the big mistakes

4. To prove the viability of the business

5. To set better objectives and benchmarks

6. To communicate objectives and benchmarks

7. To provide a guide for service providers

8. To secure financing

9. To better understand the broader landscape

10. To reduce risk

Understanding the importance of a business plan

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1. Validate Your Business Idea

2. Set and Track Goals

3. Take Action

4. Manage Resources

5. Make Decisions

6. Manage Risk

7. Communicate Internally

8. Communicate Externally

9. Secure Funding

10. Grow and Change

Related Questions

Business Plan Benefits: What are the benefits of a business plan?

Business Plan Importance: Why is business plan important?

Resources for Your Growing Business

What Is a Business Plan?

1. To Secure Funding

2. Set and Communicate Goals

3. Prove Viability in the Market

4. They Help Owners Avoid Failure

5. Business Plans Reduce Risk

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What Is Meant by Business Planning?

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Operational Planning

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