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What Is a Business Plan?

Understanding business plans, how to write a business plan, common elements of a business plan, 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.

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A business plan is a document that outlines a company's goals and the strategies to achieve them. It's valuable for both startups and established companies. For startups, a well-crafted business plan is crucial for attracting potential lenders and investors. Established businesses use business plans to stay on track and aligned with their growth objectives. This article will explain the key components of an effective business plan and guidance on how to write one.

Key Takeaways

• A business plan is a document detailing a company's business activities and strategies for achieving its goals.
• Startup companies use business plans to launch their venture and to attract outside investors.
• For established companies, a business plan helps keep the executive team focused on short- and long-term objectives.
• There's no single required format for a business plan, but certain key elements are essential for most companies.

Investopedia / Ryan Oakley

Any new business should have a business plan in place before beginning operations. Banks and venture capital firms often want to see a business plan before considering making a loan or providing capital to new businesses.

Even if a company doesn't need additional funding, having a business plan helps it stay focused on its goals. Research from the University of Oregon shows that businesses with a plan are significantly more likely to secure funding than those without one. Moreover, companies with a business plan grow 30% faster than those that don't plan. According to a Harvard Business Review article, entrepreneurs who write formal plans are 16% more likely to achieve viability than those who don't.

A business plan should ideally be reviewed and updated periodically to reflect achieved goals or changes in direction. An established business moving in a new direction might even create an entirely new plan.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. It allows for careful consideration of ideas before significant investment, highlights potential obstacles to success, and provides a tool for seeking objective feedback from trusted outsiders. A business plan may also help ensure that a company’s executive team remains aligned on strategic action items and priorities.

While business plans vary widely, even among competitors in the same industry, they often share basic elements detailed below.

A well-crafted business plan is essential for attracting investors and guiding a company's strategic growth. It should address market needs and investor requirements and provide clear financial projections.

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, gathering the basic information into a 15- to 25-page document is best. Any additional crucial elements, such as patent applications, can be referenced in the main document and included as appendices.

Common elements in many business plans include:

• 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 : Describe the products and services the company offers or plans to introduce. Include details on pricing, product lifespan, and unique consumer benefits. Mention production and manufacturing processes, relevant patents , proprietary technology , and research and development (R&D) information.
• Market analysis : Explain the current state of the industry and the competition. Detail where the company fits in, the types of customers it plans to target, and how it plans to capture market share from competitors.
• Marketing strategy : Outline the company's plans to attract and retain customers, including anticipated advertising and marketing campaigns. Describe the distribution channels that will be used to deliver products or services to consumers.
• Financial plans and projections : Established businesses should include financial statements, balance sheets, and other relevant financial information. New businesses should provide financial targets and estimates for the first few years. This section may also include any funding requests.

Investors want to see a clear exit strategy, expected returns, and a timeline for cashing out. It's likely a good idea to provide five-year profitability forecasts and realistic financial estimates.

2 Types of Business Plans

Business plans can vary in format, often categorized into traditional and lean startup plans. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

• Traditional business plans : These are detailed and lengthy, requiring more effort to create but offering comprehensive information that can be persuasive to potential investors.
• Lean startup business plans : These are concise, sometimes just one page, and focus on key elements. While they save time, companies should be ready to provide additional details if requested by investors or lenders.

Why Do Business Plans Fail?

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

How Often Should a Business Plan Be Updated?

How frequently a business plan needs to be revised will depend on its nature. Updating your business plan is crucial due to changes in external factors (market trends, competition, and regulations) and internal developments (like employee growth and new products). While 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 ideal for quickly explaining a business, especially for new companies that don't have much information yet. Key sections may include a value proposition , major activities and advantages, resources (staff, intellectual property, and capital), partnerships, customer segments, and revenue sources.

A well-crafted business plan is crucial for any company, whether it's a startup looking for investment or an established business wanting to stay on course. It outlines goals and strategies, boosting a company's chances of securing funding and achieving growth.

As your business and the market change, update your business plan regularly. This keeps it relevant and aligned with your current goals and conditions. Think of your business plan as a living document that evolves with your company, not something carved in stone.

University of Oregon Department of Economics. " Evaluation of the Effectiveness of Business Planning Using Palo Alto's Business Plan Pro ." Eason Ding & Tim Hursey.

Bplans. " Do You Need a Business Plan? Scientific Research Says Yes ."

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

Harvard Business Review. " How to Write a Winning Business Plan ."

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

SCORE. " When and Why Should You Review Your Business Plan? "

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What is a Business Plan? Definition, Tips, and Templates

Published: June 28, 2024

Years ago, I had an idea to launch a line of region-specific board games. I knew there was a market for games that celebrated local culture and heritage. I was so excited about the concept and couldn't wait to get started.

But my idea never took off. Why? Because I didn‘t have a plan. I lacked direction, missed opportunities, and ultimately, the venture never got off the ground.

And that’s exactly why a business plan is important. It cements your vision, gives you clarity, and outlines your next step.

In this post, I‘ll explain what a business plan is, the reasons why you’d need one, identify different types of business plans, and what you should include in yours.

Table of Contents

What is a business plan?

What is a business plan used for.

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Purposes of a Business Plan

What does a business plan need to include, types of business plans.

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A business plan is a comprehensive document that outlines a company's goals, strategies, and financial projections. It provides a detailed description of the business, including its products or services, target market, competitive landscape, and marketing and sales strategies. The plan also includes a financial section that forecasts revenue, expenses, and cash flow, as well as a funding request if the business is seeking investment.

The business plan is an undeniably critical component to getting any company off the ground. It's key to securing financing, documenting your business model, outlining your financial projections, and turning that nugget of a business idea into a reality.

The purpose of a business plan is three-fold: It summarizes the organization’s strategy in order to execute it long term, secures financing from investors, and helps forecast future business demands.

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Business Plan – Glossary

Before you start creating your business plan you should know a few relevant terms.

This section prevents losing time doing research all over the Internet. We collected and compiled important terms and information, so you can start writing your business plan immediately and without frustration.

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What Is a Business Plan? Definition and Planning Essentials Explained

Posted august 1, 2024 by kody wirth.

What is a business plan? It’s the roadmap for your business. The outline of your goals, objectives, and the steps you’ll take to get there. It describes the structure of your organization, how it operates, as well as the financial expectations and actual performance. 

A business plan can help you explore ideas, successfully start a business, manage operations, and pursue growth. In short, a business plan is a lot of different things. It’s more than just a stack of paper and can be one of your most effective tools as a business owner. 

Let’s explore the basics of business planning, the structure of a traditional plan, your planning options, and how you can use your plan to succeed. 

What is a business plan?

A business plan is a document that explains how your business operates. It summarizes your business structure, objectives, milestones, and financial performance. Again, it’s a guide that helps you, and anyone else, better understand how your business will succeed.  

Why do you need a business plan?

The primary purpose of a business plan is to help you understand the direction of your business and the steps it will take to get there. Having a solid business plan can help you grow up to 30% faster , and according to our own 2021 Small Business research working on a business plan increases confidence regarding business health—even in the midst of a crisis. 

These benefits are directly connected to how writing a business plan makes you more informed and better prepares you for entrepreneurship. It helps you reduce risk and avoid pursuing potentially poor ideas. You’ll also be able to more easily uncover your business’s potential. 

The biggest mistake you can make is not writing a business plan, and the second is never updating it. By regularly reviewing your plan, you can understand what parts of your strategy are working and those that are not.

That just scratches the surface of why having a plan is valuable. Check out our full write-up for fifteen more reasons why you need a business plan .  

What can you do with your plan?

So what can you do with a business plan once you’ve created it? It can be all too easy to write a plan and just let it be. Here are just a few ways you can leverage your plan to benefit your business.

Test an idea

Writing a plan isn’t just for those who are ready to start a business. It’s just as valuable for those who have an idea and want to determine whether it’s actually possible. By writing a plan to explore the validity of an idea, you are working through the process of understanding what it would take to be successful. 

Market and competitive research alone can tell you a lot about your idea. 

• Is the marketplace too crowded?
• Is the solution you have in mind not really needed? 

Add in the exploration of milestones, potential expenses, and the sales needed to attain profitability, and you can paint a pretty clear picture of your business’s potential.

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Understanding where you’re going and how you’re going to get there is vital for those starting or managing a business. Writing your plan helps you do that. It ensures that you consider all aspects of your business, know what milestones you need to hit, and can effectively make adjustments if that doesn’t happen. 

With a plan in place, you’ll know where you want your business to go and how you’ve performed in the past. This alone prepares you to take on challenges, review what you’ve done before, and make the right adjustments.

Pursue funding

Even if you do not intend to pursue funding right away, having a business plan will prepare you for it. It will ensure that you have all of the information necessary to submit a loan application and pitch to investors. 

So, rather than scrambling to gather documentation and write a cohesive plan once it’s relevant, you can keep it up-to-date and attempt to attain funding. Just add a use of funds report to your financial plan and you’ll be ready to go.

The benefits of having a plan don’t stop there. You can then use your business plan to help you manage the funding you receive. You’ll not only be able to easily track and forecast how you’ll use your funds but also easily report on how it’s been used. 

Better manage your business

A solid business plan isn’t meant to be something you do once and forget about. Instead, it should be a useful tool that you can regularly use to analyze performance, make strategic decisions, and anticipate future scenarios. It’s a document that you should regularly update and adjust as you go to better fit the actual state of your business.

Doing so makes it easier to understand what’s working and what’s not. It helps you understand if you’re truly reaching your goals or if you need to make further adjustments. Having your plan in place makes that process quicker, more informative, and leaves you with far more time to actually spend running your business.

What should your business plan include?

The content and structure of your business plan should include anything that will help you use it effectively. That being said, there are some key elements that you should cover and that investors will expect to see. 

Executive summary

The executive summary is a simple overview of your business and your overall plan. It should serve as a standalone document that provides enough detail for anyone—including yourself, team members, or investors—to fully understand your business strategy. Make sure to cover:

• The problem you’re solving
• A description of your product or service
• Your target market
• Organizational structure
• A financial summary
• Necessary funding requirements.

This will be the first part of your plan, but it’s easiest to write it after you’ve created your full plan.

Products & Services

When describing your products or services, you need to start by outlining the problem you’re solving and why what you offer is valuable. This is where you’ll also address current competition in the market and any competitive advantages your products or services bring to the table. 

Lastly, outline the steps or milestones you’ll need to hit to launch your business successfully. If you’ve already achieved some initial milestones, like taking pre-orders or early funding, be sure to include them here to further prove your business’s validity. 

Market analysis

A market analysis is a qualitative and quantitative assessment of the current market you’re entering or competing in. It helps you understand the industry’s overall state and potential, who your ideal customers are, the positioning of your competition, and how you intend to position your own business.

This helps you better explore the market’s long-term trends, what challenges to expect, and how you will need to introduce and even price your products or services.

Check out our full guide for how to conduct a market analysis in just four easy steps.  

Marketing & sales

Here you detail how you intend to reach your target market. This includes your sales activities, general pricing plan, and the beginnings of your marketing strategy. If you have any branding elements, sample marketing campaigns, or messaging available—this is the place to add them. 

Additionally, it may be wise to include a SWOT analysis that demonstrates your business or specific product/service position. This will showcase how you intend to leverage sales and marketing channels to deal with competitive threats and take advantage of any opportunities.

Check out our full write-up to learn how to create a cohesive marketing strategy for your business. 

Organization & management

This section addresses the legal structure of your business, your current team, and any gaps that need to be filled. Depending on your business type and longevity, you’ll also need to include your location, ownership information, and business history.

Basically, add any information that helps explain your organizational structure and how you operate. This section is particularly important for pitching to investors but should be included even if attempted funding is not in your immediate future.

Financial projections

Possibly the most important piece of your plan, your financials section is vital for showcasing your business’s viability. It also helps you establish a baseline to measure against and makes it easier to make ongoing strategic decisions as your business grows. This may seem complex, but it can be far easier than you think. 

Focus on building solid forecasts, keep your categories simple, and lean on assumptions. You can always return to this section to add more details and refine your financial statements as you operate. 

Here are the statements you should include in your financial plan:

• Sales and revenue projections
• Profit and loss statement
• Cash flow statement
• Balance sheet

The appendix is where you add additional detail, documentation, or extended notes that support the other sections of your plan. Don’t worry about adding this section at first; only add documentation that you think will benefit anyone reading your plan.

Types of business plans explained

While all business plans cover similar categories, the style and function depend on how you intend to use your business plan . So, to get the most out of your plan, it’s best to find a format that suits your needs. Here are a few common business plan types worth considering. 

Traditional business plan

The tried-and-true traditional business plan (sometimes called a detailed business plan ) is a formal document meant for external purposes. It is typically required when applying for a business loan or pitching to investors. 

It can also be used when training or hiring employees, working with vendors, or any other situation where the full details of your business must be understood by another individual. 

A traditional business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix. We recommend only starting with this business plan format if you plan to immediately pursue funding and already have a solid handle on your business information. 

Business model canvas

The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea. 

The structure ditches a linear structure in favor of a cell-based template. It encourages you to build connections between every element of your business. It’s faster to write out and update and much easier for you, your team, and anyone else to visualize your business operations. 

The business model canvas is really best for those exploring their business idea for the first time, but keep in mind that it can be difficult to actually validate your idea this way as well as adapt it into a full plan.

One-page business plan

The true middle ground between the business model canvas and a traditional business plan is the one-page business plan . Sometimes referred to as a lean plan, this format is a simplified version of the traditional plan that focuses on the core aspects of your business. It basically serves as a beefed-up pitch document and can be finished as quickly as the business model canvas.

By starting with a one-page plan, you give yourself a minimal document to build from. You’ll typically stick with bullet points and single sentences making it much easier to elaborate or expand sections into a longer-form business plan. 

A one-page business plan is useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business.

Growth plan

Now, the option that we here at LivePlan recommend is a growth plan . However, growth planning is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance.

It holds all of the benefits of the single-page plan, including the potential to complete it in as little as 27-minutes . 

However, it’s even easier to convert into a more detailed business plan thanks to how heavily it’s tied to your financials. The overall goal of growth planning isn’t to just produce documents that you use once and shelve. Instead, the growth planning process helps you build a healthier company that thrives in times of growth and stable through times of crisis.

It’s faster, concise, more focused on financial performance, and ensures that your plan is always up-to-date.

How can you write your own business plan?

Now that you know the definition of a business plan, it’s time to write your own.

Get started by downloading our free business plan template or try a business plan builder like LivePlan for a fully guided experience and an AI-powered Assistant to help you write, generate ideas, and analyze your business performance.

No matter which option you choose, writing a business plan will set you up for success. You can use it to test an idea, figure out how you’ll start, and pursue funding.  And if you review and revise your plan regularly, it can turn into your best business management tool.

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12 Key Elements of a Business Plan (Top Components Explained)

Starting and running a successful business requires proper planning and execution of effective business tactics and strategies .

You need to prepare many essential business documents when starting a business for maximum success; the business plan is one such document.

When creating a business, you want to achieve business objectives and financial goals like productivity, profitability, and business growth. You need an effective business plan to help you get to your desired business destination.

Even if you are already running a business, the proper understanding and review of the key elements of a business plan help you navigate potential crises and obstacles.

This article will teach you why the business document is at the core of any successful business and its key elements you can not avoid.

Let’s get started.

Why Are Business Plans Important?

Business plans are practical steps or guidelines that usually outline what companies need to do to reach their goals. They are essential documents for any business wanting to grow and thrive in a highly-competitive business environment .

1. Proves Your Business Viability

A business plan gives companies an idea of how viable they are and what actions they need to take to grow and reach their financial targets. With a well-written and clearly defined business plan, your business is better positioned to meet its goals.

2. Guides You Throughout the Business Cycle

A business plan is not just important at the start of a business. As a business owner, you must draw up a business plan to remain relevant throughout the business cycle .

During the starting phase of your business, a business plan helps bring your ideas into reality. A solid business plan can secure funding from lenders and investors.

After successfully setting up your business, the next phase is management. Your business plan still has a role to play in this phase, as it assists in communicating your business vision to employees and external partners.

Essentially, your business plan needs to be flexible enough to adapt to changes in the needs of your business.

3. Helps You Make Better Business Decisions

As a business owner, you are involved in an endless decision-making cycle. Your business plan helps you find answers to your most crucial business decisions.

A robust business plan helps you settle your major business components before you launch your product, such as your marketing and sales strategy and competitive advantage.

4. Eliminates Big Mistakes

Many small businesses fail within their first five years for several reasons: lack of financing, stiff competition, low market need, inadequate teams, and inefficient pricing strategy.

Creating an effective plan helps you eliminate these big mistakes that lead to businesses' decline. Every business plan element is crucial for helping you avoid potential mistakes before they happen.

5. Secures Financing and Attracts Top Talents

Having an effective plan increases your chances of securing business loans. One of the essential requirements many lenders ask for to grant your loan request is your business plan.

A business plan helps investors feel confident that your business can attract a significant return on investments ( ROI ).

You can attract and retain top-quality talents with a clear business plan. It inspires your employees and keeps them aligned to achieve your strategic business goals.

Key Elements of Business Plan

Starting and running a successful business requires well-laid actions and supporting documents that better position a company to achieve its business goals and maximize success.

A business plan is a written document with relevant information detailing business objectives and how it intends to achieve its goals.

With an effective business plan, investors, lenders, and potential partners understand your organizational structure and goals, usually around profitability, productivity, and growth.

Every successful business plan is made up of key components that help solidify the efficacy of the business plan in delivering on what it was created to do.

Here are some of the components of an effective business plan.

1. Executive Summary

One of the key elements of a business plan is the executive summary. Write the executive summary as part of the concluding topics in the business plan. Creating an executive summary with all the facts and information available is easier.

In the overall business plan document, the executive summary should be at the forefront of the business plan. It helps set the tone for readers on what to expect from the business plan.

A well-written executive summary includes all vital information about the organization's operations, making it easy for a reader to understand.

The key points that need to be acted upon are highlighted in the executive summary. They should be well spelled out to make decisions easy for the management team.

A good and compelling executive summary points out a company's mission statement and a brief description of its products and services.

An executive summary summarizes a business's expected value proposition to distinct customer segments. It highlights the other key elements to be discussed during the rest of the business plan.

Including your prior experiences as an entrepreneur is a good idea in drawing up an executive summary for your business. A brief but detailed explanation of why you decided to start the business in the first place is essential.

Adding your company's mission statement in your executive summary cannot be overemphasized. It creates a culture that defines how employees and all individuals associated with your company abide when carrying out its related processes and operations.

Your executive summary should be brief and detailed to catch readers' attention and encourage them to learn more about your company.

Components of an Executive Summary

Here are some of the information that makes up an executive summary:

• The name and location of your company
• Products and services offered by your company
• Mission and vision statements
• Success factors of your business plan

2. Business Description

Your business description needs to be exciting and captivating as it is the formal introduction a reader gets about your company.

What your company aims to provide, its products and services, goals and objectives, target audience , and potential customers it plans to serve need to be highlighted in your business description.

A company description helps point out notable qualities that make your company stand out from other businesses in the industry. It details its unique strengths and the competitive advantages that give it an edge to succeed over its direct and indirect competitors.

Spell out how your business aims to deliver on the particular needs and wants of identified customers in your company description, as well as the particular industry and target market of the particular focus of the company.

Include trends and significant competitors within your particular industry in your company description. Your business description should contain what sets your company apart from other businesses and provides it with the needed competitive advantage.

In essence, if there is any area in your business plan where you need to brag about your business, your company description provides that unique opportunity as readers look to get a high-level overview.

Components of a Business Description

Your business description needs to contain these categories of information.

• Business location
• The legal structure of your business
• Summary of your business’s short and long-term goals

3. Market Analysis

The market analysis section should be solely based on analytical research as it details trends particular to the market you want to penetrate.

Graphs, spreadsheets, and histograms are handy data and statistical tools you need to utilize in your market analysis. They make it easy to understand the relationship between your current ideas and the future goals you have for the business.

All details about the target customers you plan to sell products or services should be in the market analysis section. It helps readers with a helpful overview of the market.

In your market analysis, you provide the needed data and statistics about industry and market share, the identified strengths in your company description, and compare them against other businesses in the same industry.

The market analysis section aims to define your target audience and estimate how your product or service would fare with these identified audiences.

Market analysis helps visualize a target market by researching and identifying the primary target audience of your company and detailing steps and plans based on your audience location.

Obtaining this information through market research is essential as it helps shape how your business achieves its short-term and long-term goals.

Market Analysis Factors

Here are some of the factors to be included in your market analysis.

• The geographical location of your target market
• Needs of your target market and how your products and services can meet those needs
• Demographics of your target audience

Components of the Market Analysis Section

Here is some of the information to be included in your market analysis.

• Industry description and statistics
• Demographics and profile of target customers
• Marketing data for your products and services
• Detailed evaluation of your competitors

4. Marketing Plan

A marketing plan defines how your business aims to reach its target customers, generate sales leads, and, ultimately, make sales.

Promotion is at the center of any successful marketing plan. It is a series of steps to pitch a product or service to a larger audience to generate engagement. Note that the marketing strategy for a business should not be stagnant and must evolve depending on its outcome.

Include the budgetary requirement for successfully implementing your marketing plan in this section to make it easy for readers to measure your marketing plan's impact in terms of numbers.

The information to include in your marketing plan includes marketing and promotion strategies, pricing plans and strategies , and sales proposals. You need to include how you intend to get customers to return and make repeat purchases in your business plan.

5. Sales Strategy

Sales strategy defines how you intend to get your product or service to your target customers and works hand in hand with your business marketing strategy.

Your sales strategy approach should not be complex. Break it down into simple and understandable steps to promote your product or service to target customers.

Apart from the steps to promote your product or service, define the budget you need to implement your sales strategies and the number of sales reps needed to help the business assist in direct sales.

Your sales strategy should be specific on what you need and how you intend to deliver on your sales targets, where numbers are reflected to make it easier for readers to understand and relate better.

6. Competitive Analysis

Providing transparent and honest information, even with direct and indirect competitors, defines a good business plan. Provide the reader with a clear picture of your rank against major competitors.

Identifying your competitors' weaknesses and strengths is useful in drawing up a market analysis. It is one information investors look out for when assessing business plans.

The competitive analysis section clearly defines the notable differences between your company and your competitors as measured against their strengths and weaknesses.

This section should define the following:

• Your competitors' identified advantages in the market
• How do you plan to set up your company to challenge your competitors’ advantage and gain grounds from them?
• The standout qualities that distinguish you from other companies
• Potential bottlenecks you have identified that have plagued competitors in the same industry and how you intend to overcome these bottlenecks

In your business plan, you need to prove your industry knowledge to anyone who reads your business plan. The competitive analysis section is designed for that purpose.

7. Management and Organization

Management and organization are key components of a business plan. They define its structure and how it is positioned to run.

Whether you intend to run a sole proprietorship, general or limited partnership, or corporation, the legal structure of your business needs to be clearly defined in your business plan.

Use an organizational chart that illustrates the hierarchy of operations of your company and spells out separate departments and their roles and functions in this business plan section.

The management and organization section includes profiles of advisors, board of directors, and executive team members and their roles and responsibilities in guaranteeing the company's success.

Apparent factors that influence your company's corporate culture, such as human resources requirements and legal structure, should be well defined in the management and organization section.

Defining the business's chain of command if you are not a sole proprietor is necessary. It leaves room for little or no confusion about who is in charge or responsible during business operations.

This section provides relevant information on how the management team intends to help employees maximize their strengths and address their identified weaknesses to help all quarters improve for the business's success.

8. Products and Services

This business plan section describes what a company has to offer regarding products and services to the maximum benefit and satisfaction of its target market.

Boldly spell out pending patents or copyright products and intellectual property in this section alongside costs, expected sales revenue, research and development, and competitors' advantage as an overview.

At this stage of your business plan, the reader needs to know what your business plans to produce and sell and the benefits these products offer in meeting customers' needs.

The supply network of your business product, production costs, and how you intend to sell the products are crucial components of the products and services section.

Investors are always keen on this information to help them reach a balanced assessment of if investing in your business is risky or offer benefits to them.

You need to create a link in this section on how your products or services are designed to meet the market's needs and how you intend to keep those customers and carve out a market share for your company.

Repeat purchases are the backing that a successful business relies on and measure how much customers are into what your company is offering.

This section is more like an expansion of the executive summary section. You need to analyze each product or service under the business.

9. Operating Plan

An operations plan describes how you plan to carry out your business operations and processes.

The operating plan for your business should include:

• Information about how your company plans to carry out its operations.
• The base location from which your company intends to operate.
• The number of employees to be utilized and other information about your company's operations.
• Key business processes.

This section should highlight how your organization is set up to run. You can also introduce your company's management team in this section, alongside their skills, roles, and responsibilities in the company.

The best way to introduce the company team is by drawing up an organizational chart that effectively maps out an organization's rank and chain of command.

What should be spelled out to readers when they come across this business plan section is how the business plans to operate day-in and day-out successfully.

10. Financial Projections and Assumptions

Bringing your great business ideas into reality is why business plans are important. They help create a sustainable and viable business.

The financial section of your business plan offers significant value. A business uses a financial plan to solve all its financial concerns, which usually involves startup costs, labor expenses, financial projections, and funding and investor pitches.

All key assumptions about the business finances need to be listed alongside the business financial projection, and changes to be made on the assumptions side until it balances with the projection for the business.

The financial plan should also include how the business plans to generate income and the capital expenditure budgets that tend to eat into the budget to arrive at an accurate cash flow projection for the business.

Base your financial goals and expectations on extensive market research backed with relevant financial statements for the relevant period.

Examples of financial statements you can include in the financial projections and assumptions section of your business plan include:

• Projected income statements
• Cash flow statements
• Balance sheets
• Income statements

Revealing the financial goals and potentials of the business is what the financial projection and assumption section of your business plan is all about. It needs to be purely based on facts that can be measurable and attainable.

11. Request For Funding

The request for funding section focuses on the amount of money needed to set up your business and underlying plans for raising the money required. This section includes plans for utilizing the funds for your business's operational and manufacturing processes.

When seeking funding, a reasonable timeline is required alongside it. If the need arises for additional funding to complete other business-related projects, you are not left scampering and desperate for funds.

If you do not have the funds to start up your business, then you should devote a whole section of your business plan to explaining the amount of money you need and how you plan to utilize every penny of the funds. You need to explain it in detail for a future funding request.

When an investor picks up your business plan to analyze it, with all your plans for the funds well spelled out, they are motivated to invest as they have gotten a backing guarantee from your funding request section.

Include timelines and plans for how you intend to repay the loans received in your funding request section. This addition keeps investors assured that they could recoup their investment in the business.

12. Exhibits and Appendices

Exhibits and appendices comprise the final section of your business plan and contain all supporting documents for other sections of the business plan.

Some of the documents that comprise the exhibits and appendices section includes:

• Legal documents
• Licenses and permits
• Credit histories
• Customer lists

The choice of what additional document to include in your business plan to support your statements depends mainly on the intended audience of your business plan. Hence, it is better to play it safe and not leave anything out when drawing up the appendix and exhibit section.

Supporting documentation is particularly helpful when you need funding or support for your business. This section provides investors with a clearer understanding of the research that backs the claims made in your business plan.

There are key points to include in the appendix and exhibits section of your business plan.

• The management team and other stakeholders resume
• Marketing research
• Permits and relevant legal documents
• Financial documents

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Martin luenendonk.

Martin loves entrepreneurship and has helped dozens of entrepreneurs by validating the business idea, finding scalable customer acquisition channels, and building a data-driven organization. During his time working in investment banking, tech startups, and industry-leading companies he gained extensive knowledge in using different software tools to optimize business processes.

This insights and his love for researching SaaS products enables him to provide in-depth, fact-based software reviews to enable software buyers make better decisions.

What is a Business Plan? Definition and Resources

9 min. read

Updated July 29, 2024

If you’ve ever jotted down a business idea on a napkin with a few tasks you need to accomplish, you’ve written a business plan — or at least the very basic components of one.

The origin of formal business plans is murky. But they certainly go back centuries. And when you consider that 20% of new businesses fail in year 1 , and half fail within 5 years, the importance of thorough planning and research should be clear.

But just what is a business plan? And what’s required to move from a series of ideas to a formal plan? Here we’ll answer that question and explain why you need one to be a successful business owner.

• What is a business plan?

A business plan lays out a strategic roadmap for any new or growing business.

Any entrepreneur with a great idea for a business needs to conduct market research , analyze their competitors , validate their idea by talking to potential customers, and define their unique value proposition .

The business plan captures that opportunity you see for your company: it describes your product or service and business model , and the target market you’ll serve. 

It also includes details on how you’ll execute your plan: how you’ll price and market your solution and your financial projections .

Reasons for writing a business plan

If you’re asking yourself, ‘Do I really need to write a business plan?’ consider this fact: 

Companies that commit to planning grow 30% faster than those that don’t.

Creating a business plan is crucial for businesses of any size or stage. It helps you develop a working business and avoid consequences that could stop you before you ever start.

If you plan to raise funds for your business through a traditional bank loan or SBA loan , none of them will want to move forward without seeing your business plan. Venture capital firms may or may not ask for one, but you’ll still need to do thorough planning to create a pitch that makes them want to invest.

But it’s more than just a means of getting your business funded . The plan is also your roadmap to identify and address potential risks. 

It’s not a one-time document. Your business plan is a living guide to ensure your business stays on course.

Related: 14 of the top reasons why you need a business plan

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What research shows about business plans

Numerous studies have established that planning improves business performance:

• 71% of fast-growing companies have business plans that include budgets, sales goals, and marketing and sales strategies.
• Companies that clearly define their value proposition are more successful than those that can’t.
• Companies or startups with a business plan are more likely to get funding than those without one.
• Starting the business planning process before investing in marketing reduces the likelihood of business failure.

The planning process significantly impacts business growth for existing companies and startups alike.

Read More: Research-backed reasons why writing a business plan matters

When should you write a business plan?

No two business plans are alike. 

Yet there are similar questions for anyone considering writing a plan to answer. One basic but important question is when to start writing it.

A Harvard Business Review study found that the ideal time to write a business plan is between 6 and 12 months after deciding to start a business. 

But the reality can be more nuanced – it depends on the stage a business is in, or the type of business plan being written.

Ideal times to write a business plan include:

• When you have an idea for a business
• When you’re starting a business
• When you’re preparing to buy (or sell)
• When you’re trying to get funding
• When business conditions change
• When you’re growing or scaling your business

Read More: The best times to write or update your business plan

How often should you update your business plan?

As is often the case, how often a business plan should be updated depends on your circumstances.

A business plan isn’t a homework assignment to complete and forget about. At the same time, no one wants to get so bogged down in the details that they lose sight of day-to-day goals. 

But it should cover new opportunities and threats that a business owner surfaces, and incorporate feedback they get from customers. So it can’t be a static document.

Related Reading: 5 fundamental principles of business planning

For an entrepreneur at the ideation stage, writing and checking back on their business plan will help them determine if they can turn that idea into a profitable business .

And for owners of up-and-running businesses, updating the plan (or rewriting it) will help them respond to market shifts they wouldn’t be prepared for otherwise. 

It also lets them compare their forecasts and budgets to actual financial results. This invaluable process surfaces where a business might be out-performing expectations and where weak performance may require a prompt strategy change. 

The planning process is what uncovers those insights.

Related Reading: 10 prompts to help you write a business plan with AI

• How long should your business plan be?

Thinking about a business plan strictly in terms of page length can risk overlooking more important factors, like the level of detail or clarity in the plan. 

Not all of the plan consists of writing – there are also financial tables, graphs, and product illustrations to include.

But there are a few general rules to consider about a plan’s length:

• Your business plan shouldn’t take more than 15 minutes to skim.
• Business plans for internal use (not for a bank loan or outside investment) can be as short as 5 to 10 pages.

A good practice is to write your business plan to match the expectations of your audience. 

If you’re walking into a bank looking for a loan, your plan should match the formal, professional style that a loan officer would expect . But if you’re writing it for stakeholders on your own team—shorter and less formal (even just a few pages) could be the better way to go.

The length of your plan may also depend on the stage your business is in. 

For instance, a startup plan won’t have nearly as much financial information to include as a plan written for an established company will.

Read More: How long should your business plan be?  

What information is included in a business plan?

The contents of a plan business plan will vary depending on the industry the business is in. 

After all, someone opening a new restaurant will have different customers, inventory needs, and marketing tactics to consider than someone bringing a new medical device to the market. 

But there are some common elements that most business plans include:

• Executive summary: An overview of the business operation, strategy, and goals. The executive summary should be written last, despite being the first thing anyone will read.
• Products and services: A description of the solution that a business is bringing to the market, emphasizing how it solves the problem customers are facing.
• Market analysis: An examination of the demographic and psychographic attributes of likely customers, resulting in the profile of an ideal customer for the business.
• Competitive analysis: Documenting the competitors a business will face in the market, and their strengths and weaknesses relative to those competitors.
• Marketing and sales plan: Summarizing a business’s tactics to position their product or service favorably in the market, attract customers, and generate revenue.
• Operational plan: Detailing the requirements to run the business day-to-day, including staffing, equipment, inventory, and facility needs.
• Organization and management structure: A listing of the departments and position breakdown of the business, as well as descriptions of the backgrounds and qualifications of the leadership team.
• Key milestones: Laying out the key dates that a business is projected to reach certain milestones , such as revenue, break-even, or customer acquisition goals.
• Financial plan: Balance sheets, cash flow forecast , and sales and expense forecasts with forward-looking financial projections, listing assumptions and potential risks that could affect the accuracy of the plan.
• Appendix: All of the supporting information that doesn’t fit into specific sections of the business plan, such as data and charts.

Read More: Use this business plan outline to organize your plan

• Different types of business plans

A business plan isn’t a one-size-fits-all document. There are numerous ways to create an effective business plan that fits entrepreneurs’ or established business owners’ needs. 

Here are a few of the most common types of business plans for small businesses:

• One-page plan : Outlining all of the most important information about a business into an adaptable one-page plan.
• Growth plan : An ongoing business management plan that ensures business tactics and strategies are aligned as a business scales up.
• Internal plan : A shorter version of a full business plan to be shared with internal stakeholders – ideal for established companies considering strategic shifts.

Business plan vs. operational plan vs. strategic plan

• What questions are you trying to answer? 
• Are you trying to lay out a plan for the actual running of your business?
• Is your focus on how you will meet short or long-term goals? 

Since your objective will ultimately inform your plan, you need to know what you’re trying to accomplish before you start writing.

While a business plan provides the foundation for a business, other types of plans support this guiding document.

An operational plan sets short-term goals for the business by laying out where it plans to focus energy and investments and when it plans to hit key milestones.

Then there is the strategic plan , which examines longer-range opportunities for the business, and how to meet those larger goals over time.

Read More: How to use a business plan for strategic development and operations

• Business plan vs. business model

If a business plan describes the tactics an entrepreneur will use to succeed in the market, then the business model represents how they will make money. 

The difference may seem subtle, but it’s important. 

Think of a business plan as the roadmap for how to exploit market opportunities and reach a state of sustainable growth. By contrast, the business model lays out how a business will operate and what it will look like once it has reached that growth phase.

Learn More: The differences between a business model and business plan

• Moving from idea to business plan

Now that you understand what a business plan is, the next step is to start writing your business plan . 

The best way to start is by reviewing examples and downloading a business plan template . These resources will provide you with guidance and inspiration to help you write a plan.

We recommend starting with a simple one-page plan ; it streamlines the planning process and helps you organize your ideas. However, if one page doesn’t fit your needs, there are plenty of other great templates available that will put you well on your way to writing a useful business plan.

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

• Reasons to write a business plan
• Business planning research
• When to write a business plan
• When to update a business plan
• Information to include
• Business vs. operational vs. strategic plans

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Strategy Dictionary: The Definitive Strategy Terms Guide

An Overview of Strategy Terms 

Strategy isn't a science. There are frameworks, guides, and common semantics - but ultimately strategy is the art of creating a direction for your organization, then doing whatever it takes to get there.

Because of this reality, a huge body of work has arisen both online and offline that addresses the topic.

Writing on strategy is almost always subjective and often contradictory. The terminology that people use is often used interchangeably - meaning that strategy newcomers often get stuck in a mire of confusing research rather than getting on with the real job of making things happen.

With over 1,000,000 hits per year to this very blog, I'm sure that we're as guilty as anyone to contributing to the confusion around strategy terminology.

Let us know what terms you would add to our strategy dictionary in the comments below, or if you feel like our definitions are ever wide of the mark.

Strategy Dictionary - A

Action plan:.

The action plan lists the specific actions that must be taken, by whom and by when in order to achieve an overall goal or implement a strategy.

Some people include the costs of each action in the action plans, resulting in budget information being included in the action plans, as well. Action plans together are sometimes referred to as the Implementation Plan.

Acquisition:

When one company, the acquirer, purchases and absorbs the operations of another, the acquired.

Alignment model of strategic planning:

Focuses especially on aligning internal operations to most effectively and efficiently work toward the mission of the organization.

Strategy Dictionary - B

Balanced scorecard:.

The Balanced Scorecard is a framework for categorizing your strategy into four interdependent balanced areas- financial, customer, internal business process, and employee learning & growth.

Base level of previous or current performance that can be used to set improvement goals and provide a basis for assessing future progress.

Benchmarking:

A process of compiling and comparing data on business performance of your organization with that of competitors or industry averages to understand where you sit in comparison, identify best practices, and measure progress.

A description of the monetary amount that will be allocated to a given project or action.

Business Plan:

A formal guide outlining your business goals and plans to achieve the goals. It may also include background information on the organization attempting to achieve these goals.

Obtaining agreement from key stakeholders that the proposed plan is acceptable.

Strategy Dictionary - C

Capacity building:.

Capacity building is the process of creating, improving, and retaining core skills, knowledge, and capabilities of an organization's people and processes.

Capital refers to the assets that are owned by an entity and are available for use. Capital is usually described in terms of money, though can be an asset owned by an organization.

The world's #1 Strategy Execution Platform. Check out what strategy execution software is! 

The process of aligning the various KPIs, goals, and projects in an organization to the higher strategy. All actions taken should be contributing to a higher level goal or strategy. 

Case study:

A study containing qualitative data (such as observations and information drawn from interviews) about one subject. These studies are typically based on what is termed anecdotal evidence.

A series of case studies can provide useful information that something of significance is happening that may merit further study.

Cause and Effect:

The process of identifying the relationship between things or events. The purpose is to identify if one event or action caused another to occur.

Anyone whose interests are served by an organization, or who receives or uses an organization’s resources or services.

Clients can be internal to an organization, for example, one department may be the client of another department, or external to the organization.

Collaboration:

To work together sharing ideas and resources, especially in a joint intellectual effort.

Corporation:

A group of individuals legally empowered to transact business as one body.

Cost-benefit analysis:

A management tool that involves calculating or estimating the monetary costs and potential benefits of a proposed course of action.

Cost Leadership:

Cost leadership is one of the three competitive strategies an organization may choose to focus on to gain a competitive advantage over their competitors. It requires the organization to offer the lowest prices on goods/services in the marketplace.

Critical success factor:

The term used to describe an element that is required to achieve the business goals and vision.

Cultural competence:

A set of values, behaviors, attitudes, and practices which enable people to work effectively across racial/ethnic and cultural lines.

Customer Perspective:

The external customer's point of view on an organization, and the value they place on the product/services offered by the organization.

Strategy Dictionary - D

A dashboard is a reporting tool used to consolidate important metrics and information to display in one concise layout to inform the viewer at a glance of current data.

Demographics:

The characteristics of human populations and population segments, especially when used to identify consumer markets.

Differentiation:

Differentiation is a competitive strategy used by organizations to gain a competitive advantage over its competitors.

The organization using this strategy will focus on offering unique products/services to different customer segments.  

Drill down:

The process of exploring more detailed information on a high-level goal, project, activity, or action.

Dynamic information:

Dynamic information is a type of information that is continuously changing, updating, or progressing. An example of dynamic information may be an organization's revenue, each day this figure may change. 

Strategy Dictionary - E

Economic value added:.

A measure of financial performance which assesses actions and activities of an organization as to whether they have created value and how much for shareholders.

Empowerment evaluation:

An evaluation approach that aims to improve the organization's people to help them achieve their goals.

Empowerment evaluation requires organizations to provide the right tools to their employees so they are able to assess the planning, implementation, and self-assessment of their projects and initiatives.

Evaluation:

Evaluation is an analysis of the extent to which an initiative or project reached its goals.

Experience Curve Analysis:

The experience curve analysis is a model which can be used to understand the trend between production output and production costs.

Strategy Dictionary - F

Financial perspective:.

A focus on the bottom line performance of an organization or the financial accomplishments of the organization.  

Focus Area:

Focus areas describe the things that you want to accomplish to deliver your vision - summarized into distinct themes. When all of your focus areas have been achieved you should also have achieved your vision. Focus areas tend to be short and contain no specific metrics or time-frames.

Commonly seen alternatives: focus, theme, strategic theme, strategic pillar, pillar, outcome

Focus group:

A form of qualitative research that engages a group of people (usually 3 or more) in an interview-like process in order to gauge their perceptions, opinions, beliefs, and attitudes to a particular product, service, or topic.

The estimated value of a metric at a future point in time. Different from the target amount of a metric, a forecast estimates what the metric will likely be based on historical data.

Strategy Dictionary - G

Gap analysis:.

Gap analysis is a technique used by businesses to determine the difference between actual results and expected results. This analysis helps organizations determine what steps need to be taken in order to close the gap and improve performance.

A goal is a specific deliverable that forms part of an overarching organizational goal. Goals will ideally be SMART, which means that they will be owned by named individuals. A goal is an accomplishment or outcome of some sort.

Commonly seen alternatives: action item, deliverable

Goals types are essentially groups of labels that are defined and applied to elements of your plan.

Different organizations will use different goal types - for example, a hospital might create a goal type called 'School of Medicine' with options that include things like 'Oncology', 'Dermatology', etc.

Goal types can also be used to implement strategy frameworks such as the Balanced Scorecard.

Commonly seen alternatives: goal labels, goal categories, scorecards, tags

Goal units are the units of measurement by which you want to measure your various goals. This could include generic items such as '$' or more niche items such as 'papers' depending on your industry.

Having a controlled set of units promotes consistent management and use of your information in reporting.

Commonly seen alternatives: units of measure

Goal Weight:

Weighting a goal allows you to prioritize the elements of your strategic plans. Weighting can also help with resource allocation. Typical weighting systems include 'high / medium / low' type systems as well as those where goals are weighted with scores out of 100.

Commonly seen alternatives: priority

Strategy Dictionary - H

Human capital:.

Describes the skills, knowledge, and output of employees as physical assets to the organization.

Hard data describes data in a numerical form that can be precisely measured and quantified. It represents objective measures of data such as revenue, costs, profit etc.

Hybrid Strategy:

A hybrid strategy is a term used to describe an organization's application of a combination of two or more competitive strategies. An organization may choose to implement both cost leadership and focus strategy.

Strategy Dictionary - I

Impact evaluation:.

An evaluation method that looks into the final results of an initiative, project or goal and the intentional and unintentional impacts that were created.

Initiatives:

An initiative is an effort created by an organization in order to improve its current state.

Inputs are the resources that are used to make the project happen, this may include people, raw materials, information, energy, or finance.

An issue is a risk that has materialized and is now harming your ability to deliver on a goal or project.

Commonly seen alternatives: problem

Strategy Dictionary - J

Joint venture:.

A joint venture is a form of strategic partnership formed between a foreign organization and a domestic organization.

The partnership is formed in order to achieve a certain goal and each company still operates independently.

Strategy Dictionary - K

Key performance indicator (kpi):.

A KPI is a stable indicator that helps to determine whether a goal has been accomplished (KPIs can apply equally to your vision, focus areas, organizational goals or goals).

A KPI is almost always numerically quantifiable with little room for subjective input. A common test to apply to a set of KPIs would be: 'If all my KPIs are achieved, can my goal be considered complete?'

Commonly seen alternatives: performance measure

Strategy Dictionary - L

Litmus test:.

A test that is an effective and definitive way of proving something or measuring it. A litmus test is only determined by a single key factor.

Lagging Indicator:

A measurable fact that records the actual performance of an organization. A lagging indicator includes the following- annual sales, growth in annual sales, gross margin, annual net income and growth in annual net income- these all represent facts of the organization.

Leading Indicator:

A measurable factor that changes before the company starts to follow a particular pattern or trend. Leading indicators are used to predict changes in the company, but they are not always accurate.

Leading indicators can include- % growth in sales pipeline, % growth in new markets, number of new patents.

Strategy Dictionary - M

Market segmentation:.

Market segmentation describes the process of breaking up a market into clearly distinguishable and relevant subgroups based on a common factor, such as interests, demographics, sociographics etc.

Megatrends:

Megatrend is a term given to global economic transformations that are persistent and affect businesses, society, politics, technology, and the environment.

Mission Statement:

A mission statement describes an organization's core purpose for existing. A mission statement is not a goal and does not usually have a time frame attached to it.

Commonly seen alternatives: mission, purpose, core purpose

A milestone is a concrete step on the journey towards completing either a goal or a project. A milestone has a date associated with its delivery and a tangible outcome which could be numeric or stated as a deliverable.

Commonly seen alternatives: check point, sub goal

Strategy Dictionary - N

Near-shore outsourcing:.

Near-shore outsourcing is the strategy of moving certain business operations or functions to low-cost countries that are close to the home country of the organization.

Strategy Dictionary - O

Offshoring:.

Offshoring is the term given to the process of moving business operations or functions of an organization to a low-cost country in order to reduce costs.

Operating costs:

Operating costs are the expenses incurred on a day to day basis when running an organization or project, as opposed to costs associated with production.

Organizational Value:

Organizational values are statements about the principles or ethics that your organization applies to its daily operation. They are inward-facing and in many cases are not communicated outside of the organization.

They differ from the outwardly facing values you may see on company websites which form part of the organization's brand position (and are usually intended for marketing).

Commonly seen alternatives: value, core value, company value, value statement, principle

Organizational Goal:

An organizational goal is a specific goal that you want your organization to achieve, with a clearly stated outcome and a deadline.  

It differs from a focus area – in that it is specific and measurable, and once completed will be replaced by another, different goal.

Commonly seen alternatives: strategic initiative, objective, strategic objective, strategic goal

Outsourcing:

Outsourcing is the process of handing over certain business operations for another organization to take care of on a contractual basis.

This generally occurs when businesses make the decision that contracting out a specific function to another company would be more cost-effective than carrying it out internally.

Strategy Dictionary - P

Performance driver:.

A performance driver is a metric used generally as a key indicator or early warning that an issue is present.

A project is similar to a goal in that it should be owned by an individual and contain a defined end date and scope. Projects, however, are not something to accomplish, they are something to do.

Completing a project does not mean that you have necessarily achieved a goal - merely that you have done the thing that you needed to do.

Strategy Dictionary - Q

Qualitative:.

A subjective form of measurement. Examples of qualitative measurement are surveys and customer feedback forms.

Quantitative:

An objective form of measurement, where a numerical value can be assigned to the measurement. Quantitative measures include things like measuring dollar amounts of revenue, profits, or costs.

Strategy Dictionary - R

A risk is a threat that could potentially harm your ability to deliver on a goal or project. A risk is not yet causing issues, but rather has the potential to escalate into an issue in the future.

Commonly seen alternatives: threat

Strategy Dictionary - S

Strategy in the context of organizations is a summary of how you plan to achieve goals that will ultimately move you to your desired position in the world/industry.

A strategy may comprise several elements including a review of your current strengths and weaknesses, a statement of your objectives, a detailed plan for what needs to be done to get there, and a summation of your external environment.

Commonly seen alternatives: business strategy, corporate strategy

Strategic Plan:

A strategic plan is one of the core elements of your strategy. It comprises statements about where you want to be as an organization and a detailed plan of how you will get there in an ever-increasing level of detail.

A strategic plan includes at a minimum a vision statement, values, focus areas, organizational goals, and other goals.

Commonly seen alternatives: corporate plan, strategic planning document

Strategy Framework:

A strategy framework is a loose term for the different components that combine to make up a strategy. When we talk about a strategy framework we are essentially talking about two components:

1) the underlying building blocks of the strategic plan (vision, values, focus areas, organizational goals and goals) and

2) the scorecards and frameworks that you use alongside this (for example the Balanced Scorecard, McKinsey's Strategic Horizons, etc). These two elements combine together as a strategic framework.

Commonly seen alternatives: strategy toolkit, strategy house, strategic methodology

SMART Goal:

SMART is an acronym for a type of goal that includes the 5 elements of specific, measurable, achievable, relevant, and time-based. It helps goals go beyond the realm of 'fuzziness' into an actionable plan that will deliver results.

For example: “Obtain two new billion-dollar corporate clients in the New York property insurance market by the end of this calendar year through networking and marketing activities.”

Strategy Dictionary - T

A task is the smallest identifiable yet essential piece of a goal that serves as a unit of work, and as a means of differentiating between the various components of a goal or project. Tasks tend to be binary in that they are either done or not done.

If additional tracking detail (such as '30% done') is required then typically this should be phrased as a goal and not as a task.

Commonly seen alternatives: checklist item, milestone

Trend Analysis:

An analytical technique used to monitor, track and analyze important trends in the business environment in order to capitalize on opportunities identified and minimize risks.

Strategy Dictionary - U

Unique selling proposition:.

A unique selling proposition is a marketing technique used to highlight how a business's products/services are unique from competitors.

Strategy Dictionary - V

Value chain:.

The overall process or actions that an organization completes in order to add value to an item. This may include marketing, promotion, and after-sales support.

Value Proposition:

A statement that outlines how an organization intends to differentiate itself from its competition and provide value to its customers.

Vision Statement:

Vision statement is an aspirational description of what an organization wants to achieve or accomplish in the mid to long term.

It is intended to guide in the creation of the strategic plan to help ensure that your strategy is clearly focused on a given outcome.

Strategy Dictionary - W

A work plan is an outline of the actions to be taken by upper management or board committees in order to achieve strategies or goals.

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Business Plan Glossary

Our glossary provides a list of terms commonly used in business plans and their meanings.

Appendix  - A section at the end of your business plan for storing additional information, resources and supporting documents.

Business plan  - A written document detailing the purpose, needs, objectives, activities or projected results of a proposed or existing business.

Business model  - A plan for the successful operation of a business, including identifying sources of revenue and target markets, detailing products or services, and explaining how profits will be made.

Cash flow  - A financial statement that shows a business’s cash balance and movement in and out of bank accounts within a particular timeframe.

Competitor analysis  - Research and analysis relating to other businesses competing within your target market.

Executive summary  - A section at the beginning of a business plan summarising the subsequent sections and providing an overview of the business purpose, needs, objectives, activities and projected results.

Exit strategy  - A pre-planned means of an owner exiting the business, for example by selling it or retiring.

Goals  - Specific and realistic achievements set out for a business to aim for, often within a certain timeframe.

Market research  - Research relating to the products or services available in your industry, current trends, and consumer habits within your target market.

PEST analysis  - Political, Economic, and Social Trends analysis – a popular framework for analysing political, economic and social trends and how they affect your business.

SWOT analysis  - A framework for analysing strengths, weaknesses, opportunities and threats to a business.

Target market  - The group of people your business intends to sell to, defined by their demographics, activities, habits, needs, or other attributes.

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Business terms can be confusing. To help you get familiar with this specialized language, the management experts at Sling  have created a list of the 70 business terms every manager needs to know.

Finance Business Terms

Return on investment (ROI) refers to all the benefits — monetary  or otherwise — received from an investment.

2) Incentivize

Provide an incentive (a motivation) for using a product or service.

3) Monetize

Make money from a product or activity.

4) Deliverable

A product or service developed by a business.

Profit from a product or service after all expenses have been covered. Often referred to as a percentage.

6) Accounts Payable

A record of the money you owe to the people and businesses that helped you create your product or service .

7) Accounts Receivable

A record of the money that other people and businesses owe to you.

Capital often refers to money, but it can also be used to refer to everything your business owns and uses to function (e.g., equipment, vehicles, buildings, land, etc.).

9) Fixed Costs

Costs you must pay whether your business is doing well or not. Expenses such as utilities, rent, and employee salaries are considered fixed costs.

10) Variable Costs

Variable costs are expenses that fluctuate based on your volume of business . They include:

• Commissions
• Hourly wages

Gross refers to the total amount or quantity BEFORE deductions or expenses.

Net refers to the amount or quantity AFTER deductions or expenses.

Systems & Technology Business Terms

13) Benchmarking

The process by which you measure various aspects of your systems (e.g., speed, efficiency, cost, amount of product).

SWOT is an acronym that refers to a form of analysis that examines your:

• Opportunities

KPI is an acronym that stands for Key Performance Indicators. KPIs are usually numbers that tell you how effective your business is in a specific area.

16) Metrics

Any quantifiable (countable) measurement your business uses to assess performance .

17) Performance Review

A performance review  is a process by which a manager evaluates each member of his or her team. During the performance review , the manager provides feedback  and helps the employee see how they can improve.

18) R&D

Short for research and development.

B2B is short for business-to-business and describes a business transaction with another business.

Short for business-to-consumer and describes transactions with individual consumers .

Short for business-to-government and describes transactions with government entities.

22) Scalable

Able to be changed in size.

23) Responsive Design

This term refers to a website that changes based on the type of device (tablet, phone, laptop, desktop) used to view it.

24) Core Competency

A core competency is a defining capability or advantage that distinguishes you from your competitors. ADD_THIS_TEXT

Sales & Marketing Business Terms

25) unique selling proposition.

A specific factor that differentiates your product or service from your direct competitor (e.g., cost, quality, added use).

25) Niche Market

A very specific segment of a larger market .

26) Marketing

The action or business of promoting and selling products or services.

27) Market Research

The action or activity of gathering information about consumers’ needs and preferences so you can provide just the right product or service.

28) Market Penetration

A measure of the extent of a product’s sales volume relative to the total sales volume of all competing products.

29) Inbound Marketing

Digital (i.e., internet-based) marketing that includes podcasts, video, email broadcasts, social media , ebooks, and SEO.

30) Buyer Persona

The characteristics of your ideal buyer.

31) A/B Testing

Testing two versions (an A version and a B version) to see which one performs better.

32) Analytics

Data from a variety of sources used to inform marketing efforts.

A product, identity, or image that generates awareness and separates your business from others.

34) Bounce Rate

How often people visit your website  and leave without clicking on anything.

Click Through Rate tells you how many people are moving through your website toward purchasing your product or service.

Short for Content Management System and refers to a program (usually software) that manages all aspects of creating digital content.

37) Conversion Rate

Percentage of people who take a desired action (usually on your website).

Short for Customer Relationship Management. Refers to software that helps you organize your marketing activity.

Short for Cost Per Lead and refers to the total marketing cost necessary to acquire a lead (potential buyer).

40) Demographics

Demographics are data points that apply to your target market, such as age, sex, income, and family status.

41) Digital Marketing

Marketing conducted solely on the internet.

42) Evergreen

Content that is valuable to a consumer regardless of when it is read.

43) Friction

Any aspect of your image , brand, product, or website that is hard to understand (causes friction between it and the consumer).

44) Infographic

Content that combines words and images to make complex information easy to understand.

Pay Per Click — advertising on the internet where you only pay when someone clicks on your ad.

Search Engine Optimization — optimizing your website so that it ranks higher on the results page of a search engine.

47) Sales Funnel

The entire sales process as a whole.

Top Of The Funnel — refers to the initial stages of the sales funnel, where the consumer is looking for answers to a problem that may involve your product or service.

Middle Of The Funnel — refers to the middle stages of the sales funnel, where your business positions itself as the solution to the consumer’s problem.

Bottom Of The Funnel — refers to the end stages of the sales funnel, where a consumer is ready to buy.

51) User Experience

The total experience — from purchase and beyond — a user has with your brand.

General Business Terms

52) run with it.

Take an idea  and investigate it further.

53) Loop You In

Include in the discussion.

54) Live And Breathe It 24/7/365

Work at something all the time to the exclusion of everything else.

55) Be Proactive

Take the initiative.

56) Don’t Go There

We’re not discussing that right now.

57) A Walk In The Park

Used to refer to a simple task.

58) Take It To The Next Level

Step up your efforts.

59) Aggressive Timeline

A timeline that is too short and doesn’t provide enough room to get everything finished.

60) 4th And Inches

Football metaphor that means you’re close to the end and you need to put everything you have into reaching completion.

61) Manage The Optics

Move the facts around in your favor.

62) Circle Back

We’ll get back to that if we have time.

63) Ballpark

Estimate something.

64) Think Outside The Box

Get creative.

65) Go Back And Sharpen Your Pencils

Come up with some new ideas.

66) Not Enough Boots On The Ground

Not enough people  working on a task.

67) Housekeeping

Mundane organization and project issues.

68) Clean House

Fire a large group of people.

69) Square The Circle

Do things differently.

70) Cash Cow

Someone or something that brings in a lot of money.

For more free resources to help you manage your business better, organize and schedule your team, and track and calculate labor costs, visit GetSling.com  today.

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Business Plan

What is a business plan.

A business plan is a written document that details how a company—usually a startup —defines its goals and strategies for achieving them. A business plan lays out a written course for the organization from a marketing, financial, and operational perspective.

Business plans are crucial papers that are used by both the company’s external and internal audiences. A business plan serves three purposes: it describes the organization’s strategy in order to carry it out over time, it secures funding from investors, and it aids in forecasting future company demands.

The work you put into creating a complete and precise business plan, as well as keeping it up to date, is an investment that will pay off well in the long run.

In terms of structure and content, your business plan should adhere to widely accepted guidelines. Each part should contain specific elements and answer pertinent questions that readers of your plan are likely to have. A business strategy typically includes the following elements:

• Title Page and Content 
• Description of Business
• Description of the product/service 
• Market Analysis 
• Competitive Analysis
• Operations Management 
• Financial Components of your Business Plan
• Supporting Documents

Also, See: Change Management

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Business Planning

Written by True Tamplin, BSc, CEPF®

Reviewed by subject matter experts.

Updated on June 08, 2023

Are You Retirement Ready?

Table of contents, what is business planning.

Business planning is a crucial process that involves creating a roadmap for an organization to achieve its long-term objectives. It is the foundation of every successful business and provides a framework for decision-making, resource allocation, and measuring progress towards goals.

Business planning involves identifying the current state of the organization, determining where it wants to go, and developing a strategy to get there.

It includes analyzing the market, identifying target customers, determining a competitive advantage, setting financial goals, and establishing operational plans.

The business plan serves as a reference point for all stakeholders , including investors, employees, and partners, and helps to ensure that everyone is aligned and working towards the same objectives.

Importance of Business Planning

Business planning plays a critical role in the success of any organization, as it helps to establish a clear direction and purpose for the business. It allows the organization to identify its goals and objectives, develop strategies and tactics to achieve them, and establish a framework of necessary resources and operational procedures to ensure success.

Additionally, a well-crafted business plan can serve as a reference point for decision-making, ensuring that all actions taken by the organization are aligned with its long-term objectives.

It can also facilitate communication and collaboration among team members, ensuring that everyone is working towards a common goal.

Furthermore, a business plan is often required when seeking funding or investment from external sources, as it demonstrates the organization's potential for growth and profitability. Overall, business planning is essential for any organization looking to succeed and thrive in a competitive market.

Business Planning Process

Step 1: defining your business purpose and goals.

Begin by clarifying your business's purpose, mission, and long-term goals. These elements should align with the organization's core values and guide every aspect of the planning process.

Step 2: Conducting Market Research and Analysis

Thorough market research and analysis are crucial to understanding the industry landscape, identifying target customers, and gauging the competition. This information will inform your business strategy and help you find your niche in the market.

Step 3: Creating a Business Model and Strategy

Based on the insights from your market research, develop a business model that outlines how your organization will create, deliver, and capture value. This will inform the overall business strategy, including identifying target markets, value propositions, and competitive advantages.

Step 4: Developing a Marketing Plan

A marketing plan details how your organization will promote its products or services to target customers. This includes defining marketing objectives, tactics, channels, budgets, and performance metrics to measure success.

Step 5: Establishing Operational and Financial Plans

The operational plan outlines the day-to-day activities, resources, and processes required to run your business. The financial plan projects revenue, expenses, and cash flow, providing a basis for assessing the organization's financial health and long-term viability.

Step 6: Reviewing and Revising the Business Plan

Regularly review and update your business plan to ensure it remains relevant and reflects the organization's current situation and goals. This iterative process enables proactive adjustments to strategies and tactics in response to changing market conditions and business realities.

Components of a Business Plan

Executive summary.

The executive summary provides a high-level overview of your business plan, touching on the company's mission, objectives, strategies, and key financial projections.

It is critical to make this section concise and engaging, as it is often the first section that potential investors or partners will read.

Company Description

The company description offers a detailed overview of your organization, including its history, mission, values, and legal structure. It also outlines the company's goals and objectives and explains how the business addresses a market need or problem.

Products or Services

Describe the products or services your company offers, emphasizing their unique features, benefits, and competitive advantages. Detail the development process, lifecycle, and intellectual property rights, if applicable.

Market Analysis

The market analysis section delves into the industry, target market, and competition. It should demonstrate a thorough understanding of market trends, growth potential, customer demographics, and competitive landscape.

Marketing and Sales Strategy

Outline your organization's approach to promoting and selling its products or services. This includes marketing channels, sales tactics, pricing strategies, and customer relationship management .

Management and Organization

This section provides an overview of your company's management team, including their backgrounds, roles, and responsibilities. It also outlines the organizational structure and any advisory or support services employed by the company.

Operational Plan

The operational plan describes the day-to-day operations of your business, including facilities, equipment, technology, and personnel requirements. It also covers supply chain management, production processes, and quality control measures.

Financial Plan

The financial plan is a crucial component of your business plan, providing a comprehensive view of your organization's financial health and projections.

This section should include income statements , balance sheets , cash flow statements , and break-even analysis for at least three to five years. Be sure to provide clear assumptions and justifications for your projections.

Appendices and Supporting Documents

The appendices and supporting documents section contains any additional materials that support or complement the information provided in the main body of the business plan. This may include resumes of key team members, patents , licenses, contracts, or market research data.

Benefits of Business Planning

Helps secure funding and investment.

A well-crafted business plan demonstrates to potential investors and lenders that your organization is well-organized, has a clear vision, and is financially viable. It increases your chances of securing the funding needed for growth and expansion.

Provides a Roadmap for Growth and Success

A business plan serves as a roadmap that guides your organization's growth and development. It helps you set realistic goals, identify opportunities, and anticipate challenges, enabling you to make informed decisions and allocate resources effectively.

Enables Effective Decision-Making

Having a comprehensive business plan enables you and your management team to make well-informed decisions, based on a clear understanding of the organization's goals, strategies, and financial situation.

Facilitates Communication and Collaboration

A business plan serves as a communication tool that fosters collaboration and alignment among team members, ensuring that everyone is working towards the same objectives and understands the organization's strategic direction.

Business planning should not be a one-time activity; instead, it should be an ongoing process that is continually reviewed and updated to reflect changing market conditions, business realities, and organizational goals.

This dynamic approach to planning ensures that your organization remains agile, responsive, and primed for success.

As the business landscape continues to evolve, organizations must embrace new technologies, methodologies, and tools to stay competitive.

The future of business planning will involve leveraging data-driven insights, artificial intelligence, and predictive analytics to create more accurate and adaptive plans that can quickly respond to a rapidly changing environment.

By staying ahead of the curve, businesses can not only survive but thrive in the coming years.

Business Planning FAQs

What is business planning, and why is it important.

Business planning is the process of setting goals, outlining strategies, and creating a roadmap for your company's future. It's important because it helps you identify opportunities and risks, allocate resources effectively, and stay on track to achieve your goals.

What are the key components of a business plan?

A business plan typically includes an executive summary, company description, market analysis, organization and management structure, product or service line, marketing and sales strategies, and financial projections.

How often should I update my business plan?

It is a good idea to review and update your business plan annually, or whenever there's a significant change in your industry or market conditions.

What are the benefits of business planning?

Effective business planning can help you anticipate challenges, identify opportunities for growth, improve decision-making, secure financing, and stay ahead of competitors.

Do I need a business plan if I am not seeking funding?

Yes, even if you're not seeking funding, a business plan can be a valuable tool for setting goals, developing strategies, and keeping your team aligned and focused on achieving your objectives.

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide , a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University , where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon , Nasdaq and Forbes .

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10 Business Plan Words Every Manager Needs to Know By Heart If you're starting or running a business, you'll need to know this list of essential business planning words.

By Tim Berry Edited by Dan Bova Jan 30, 2012

Opinions expressed by Entrepreneur contributors are their own.

So I've changed my mind -- again -- and come up with this list of essential business planning words every manager should know:

1. Business plan: An organized collection of milestones, tasks, assumptions and basic business numbers. It covers strategy and details what's supposed to happen when, who's in charge of what, how progress is measured, when money is to be spent and from where, and when money is expected to come in. It isn't a document; it's a plan. If it isn't reviewed and revised monthly, then it won't be very useful. So it has to be practical and just big enough to serve the business need.

Related: To Make Business Planning Less Daunting, Let's Call It Something Else 2. Business planning: Steering a company using a cyclical process. Plan, review and revise as necessary to optimize. Business planning is management.

3. Business strategy: A combination of strengths and weaknesses, opportunities and threats, target market, business offering and product-market fit. Focus is vital. Who isn't in your market and what you're not offering can be more useful information than who is and what you are offering. All of this can be expressed in bullets, slides, a few key paragraphs or any other way that keeps strategy and focus top of mind.

4. Business forecast: A simplified, manageable set of assumptions about future cash flow, including sales, cost of sales, expenses, assets, liabilities and capital. It isn't about predicting the future; it's about connecting the dots on assumptions and drivers in your monthly projections over the next year and your annual forecasts for the subsequent two years. It focuses on what drives the key components, expressed as money. Those drivers include factors like capacity, sales and marketing activities, management compensation, direct costs, and so forth. The goal is to lay out connections between key assumptions in projections spread month by month as expected amounts. For example, you would project how direct costs look as a percentage of sales. Usually the relationships are more important than the actual numbers. So, to follow the example, if your actual sales are higher than expected, you can tell from your forecast that direct costs also will be higher than expected. Companies with a good forecasting process rarely get through a month without some change in the forecast.

5. Strategic plan: A business plan that leaves out the nuts and bolts.

6. Operations plan: A business plan that leaves out the strategy.

7. Marketing plan: A business plan that leaves out the overall company financial strategy.

Related: The Top 10 Business Plan Mistakes

8. Annual plan: A business plan that leaves out plans for the second and third year.

9. Bank-ready business plan:

a. A document created as output from a business plan, formatted for easy reading and highlighting past financial performance and current financial position. Bankers look for payment history and assets backing the loan.

b. When used to describe a canned boilerplate document somebody is selling, as in turnkey or ready-made, it is just sleazy sales hype for a bad product. Buyer beware: A ready-made business plan is always a waste of money.

10. Investor-ready or funding-ready business plan:

a. A document or pitch created as output from a business plan, describing a business investors will be interested in based on the specifics of that business. The most common and essential highlights are management team, product-market fit, potential market, potential growth, defensibility (some hard-to-copy elements like technology or knowhow), scalability and potential return for investors. No matter how brilliant, beautiful or creative it might be, it isn't investor ready -- and never will be -- if it doesn't describe a business with real prospects for investors.

b. See 9b above.

Related: Three Financial Guesstimates Every Business Plan Needs

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• 35 Terms to Enhance Your Business English Vocabulary

If you’re learning English in order to better your job prospects, the chances are that at some point you’re going to need to understand and employ a more specialised vocabulary.

Working in a business environment will expose you to a raft of new words that don’t tend to be covered by standard English as a Foreign Language courses. In this introductory guide, we explain some of the words and phrases you can expect to hear in an office, including both official terms and the so-called “office jargon” that has crept into use in the 21st century workplace.

If you would like to study business, visit our Business Summer School course at one of Oxford Royale’s venues: Oxford Summer School ,  Cambridge Summer School ,  London Summer School ,  San Francisco Summer School  and  Yale Summer School .

Basic business terms

Let’s start by looking at a few very basic business terms that you might hear or need to use when you gain full-time employment (or even set up a business of your own).

1. Business plan

A business plan is, as the name suggests, a document used to outline plans for a business, setting out growth goals for the next three to five years, and identifying information needed to achieve those goals, such as target market, unique selling points, marketing goals, and so on. It might also outline strengths, weaknesses, opportunities and threats (also known by the abbreviation “SWOT”). Business plans are essential for those setting up or developing a business, and will be needed in order to secure funding from banks, the Government or investors.

2. Balance sheet

A balance sheet details the company accounts at a certain point in time (often the end of the financial year). It lists the values of the company’s assets (things belonging to it), liabilities (what it owes) and ownership equity (what’s left after liabilities). It’s intended to provide a snapshot of how the company is doing financially, which can then be compared with goals outlined in the business plan.

3. Start-up

The term “start-up” is used to describe a brand new business, typically in its first few months or years of trading. The term has connotations of entrepreneurship, and the implication is often that the company will grow significantly in size. It’s often associated with the tech industry, because the term was used extensively during the dot com boom, but it can apply to any new business. Start-ups are typically thought of as forward-thinking, often with a relaxed atmosphere in unconventional offices. Because start-ups are in their infancy, they have a small number of employees and often no strict hierarchy, making them attractive places to work.

4. Forecast

Just as a weather forecast predicts what the weather’s going to be doing, so a business forecast predicts various aspects of a business’s future movement based on its current situation, external factors, new products, plans for marketing and such like. The timeframes are usually somewhat longer than those involved in a weather forecast – three to five year forecasts are common. Types of business forecast include sales, profit and loss, and cashflow; the latter helps business owners predict whether they’re likely to run out of money.

5. Marketing

Marketing refers to the promotion of a product or service. It can take numerous forms, including advertising, emailing customers, sending out leaflets or brochures, engaging with potential customers via social media, and so on.

A “USP” is the “Unique Selling Proposition” of a company, product or service – in other words, what makes it different from similar offerings. USPs are considered when a company is set up or a new product or service is launched, and they’re also at the forefront of marketers’ minds, because it’s the unique aspects that enable those charged with marketing to succeed, by highlighting reasons why customers should choose them rather than another company.

The abbreviation “HR” stands for “Human Resources”, and it’s the part of a company that deals with matters relating to its employees. The goal of someone who specialises in HR is to ensure that employees are happy and productive, reducing turnover of employees (that is, reducing the frequency with which employees leave and new ones are hired) and maximising the cost-effectiveness of the company’s investment in its workforce. HR oversees employee training and development, enforces company regulations and deals with payroll (everything to do with the payment of employees). HR is also there to handle disciplinary matters, and to deal impartially with problems arising between employees, and between employees and their managers.

8. Recruitment

Recruitment is the process of hiring new employees. Companies exist whose sole purpose is to match employers with potential employees; these are known as recruitment agencies.

“Brand” is the term given to a company’s name and the recognisable attributes that go with that company, which define its unique identity. The company’s tone of voice and design of official communications are part of what gives it this “brand identity”.

10. Public Relations

Public Relations, or PR, is the role within a business devoted to communicating with the press, and ensuring favourable media coverage of a company, product or service.

11. Minutes

The “minutes” of a meeting are notes taken during the meeting to record what was said, what was agreed, and to assign actions to individuals whose responsibility it will be to complete them.

12. Cold call

This is a phone call, usually from a sales representative of a company, to a potential customer or client who is not expecting the call and with whom there has been no previous contact, with the aim of trying to sell them something. Cold calls have a bad reputation, and are often referred to by customers as “nuisance” calls.

Office jargon

A particular category of business-related vocabulary is known in English as “office jargon”, and it’s a widely derided language all of its own. Also known as “management speak”, these are the self-aggrandising terms that many people in business use in order to make themselves sound clever and important; at least, that’s what they think. In reality, most people loathe office jargon, and those who use it lose the respect of those around them. We introduce you to a few such terms here, so that you know what they mean if you hear them yourself (and so that you know what to avoid saying in a business environment!).

13. Going forward

This is usually used to mean “from now on”. Some may consider it to have connotations of moving on positively from something negative that may have occurred: “we’ll adopt a different approach going forward”.

14. Thinking outside the box

A favourite of ‘quirky’ creative agencies, the phrase “thinking outside the box” means to think creatively, abandoning all preconceptions.

15. Blue sky thinking

The archetypal piece of office jargon, the term “blue sky thinking” is another way of expressing the idea of “thinking outside the box”.

You’ll know the word “action” from its normal contexts, such as action movies, or simply describing something being done (“taking action”). However, in the business environment this one of many examples of a noun being turned into a verb. “Can you action that?” might be a request you’d hear in an office, meaning simply “Can you do that?”

17. Stakeholders

This word is used to refer to anyone who’s involved in a particular project. If someone has a say in the outcome of a piece of work, they are a “stakeholder”.

This term refers to the idea of gaining acceptance for something. If someone agrees to subscribe to a particular way of doing things, for example, they are “buying in” to the idea. You might see a phrase like “seek buy-in from employees” in an HR document discussing the implementation of a new set of rules, for example.

19. Leverage

Though “leverage” is another word that’s meant to be a noun – meaning the use of a lever to apply force – it’s often heard in a business context being used as a verb, meaning to utilise something to the business’s advantage – “leverage our contacts to spread the word”, for example.

20. Touch base

This is surely one of the most cringe-worthy pieces of office jargon, and it’s filtered its way through from the pitches of American baseball into the offices of the UK. All it means in the office environment is “to make contact”. You might hear “let’s touch base”, meaning “let’s talk”.

21. On the same page

In the world of office jargon, it’s apparently acceptable to take a well-known idiom – in this case “singing from the same hymn sheet” – and dumb it down for use in the boardroom. If you’re “on the same page” as someone, you’re approaching something from the same point of view as them, with the same agreed assumptions in mind.

22. Feedback

Yet another example of a noun becoming a verb for the purposes of awful office jargon is the word “feedback”, which should be used as a noun to describe constructive comments on something (as in essay feedback). However, in an office environment it’s not unusual to hear it used as a verb – “We’re waiting for him to feed back on the ideas” – or even, horrifically, in the past tense: “He’s fed back to us that he doesn’t like it”.

23. Price point

For some reason, some business types like to talk about “price points” instead of just “prices”. This is one of many examples of using more complicated language in lieu of a simpler word or phrase.

24. End of play

This irritating term refers to the end of the working day. “Close of play” is a variant, as in “Can you get this over to me by close of play today?”

25. Drill down

You might hear this term used to describe something that deserves closer inspection: “we need to drill down to the finer details”.

26. Best practice

You might hear colleagues referring to industry “best practice”, which describes a generally acknowledged ‘best way of doing things’ in order to achieve optimum results.

27. Core competency

This bewildering phrase refers to the strengths of a person or company. The word “competent” doesn’t even refer to strength – it means the ability to do something to a satisfactory standard.

28. Scalable

If something is “scalable”, this means that it’s an idea that will work easily on a larger scale to the one it currently works on. For example, a “scalable” business model is one that’s easy to replicate in order to expand the business.

29. Skill set

This refers to someone’s range of skills. It’s jargon because it’s an unnecessary way of describing what could easily be referred to simply as “skills”.

30. Vertical

You’d have thought that the word “vertical” is simply the opposite to “horizontal”, but not in a business context. In the world of business jargon, it refers to an area of expertise. Rather than saying “we cater for the logistics industry”, some business types might say “we cater for the logistics vertical”.

31. Get the ball rolling

This is simply a way of saying “start”. You might hear it at the beginning of a meeting, when the person organising the meeting might say “let’s get the ball rolling” to mean “let’s begin the meeting”.

32. Annual leave

Many business people now write in their out-of-office emails that they’re on “annual leave”. This simply means that they are on holiday. “Annual leave” is really a term used by the military, and it’s unclear how it became adopted into the world of civilian business.

33. Low-hanging fruit

Imagine picking fruit from a tree: you’d go for the ones hanging low first, as they’re easiest to get. In business, the phrase “low-hanging fruit” is used to describe the tasks or opportunities that are easiest to tackle.

34. Quick wins

This horrible phrase refers to the same sort of thing as “low-hanging fruit” – the things that are easiest to achieve.

35. Helicopter view

Believe it or not, this means “a quick overview”. Why anybody felt that describing it in this way was necessary is anybody’s guess; but the same could be said of any of the examples on this list of office jargon, so you’re best off avoiding these terms if you want to be taken seriously in an office environment.

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It is vitally important to have a common language when working in the area of strategy management. Alternate strategic methodologies seems to have a different set of terms to describe essentially the same thing. Where it would be convenient to have an international standard language, the probability of this happening in the near to mid-term future is remote. The most important thing, therefore, is to ensure that at least within the bounds of a company (and possibly extending to the partner and supplier network) your terminology is consistent.

It does not really matter if the term we use for a metric is a Key Performance Indicator or a Performance Measure or a measure or for that matter a metric. The important thing is to agree on one term, document the definition and use it consistently across your organisation.

The following glossary of strategic terms is in common usage today. Each term has a brief definition. This list is not definitive but it does present a starting point and a resource that will get you on the road to creating your own glossary. Let’s hope in the future we will all agree on a standard set of terms.

Alert  – Notifications by email or to a home page, updating users to changes to items that they have subscribed. Examples might include notifications about performance changes or commentary.

Balanced Scorecard  – An integrated framework for describing strategy through the use of linked performance measures in four, balanced perspectives ‐ Financial, Customer, Internal Process, and Employee Learning and Growth. The Balanced Scorecard acts as a measurement system, strategic management system, and communication tool.

Benchmarking  – The comparison of similar processes across organizations and industries to measure progress, identify best practices, and set improvement targets. Results may serve as potential targets for key performance indicators.

Budget  – A description of the funding of existing and/or proposed actions.

Business Plan  -These comprise the Corporate, Directorate, Service and Team plans, which specify the key priorities and activities to be undertaken.

Business Performance Management  – A type of performance management that includes finance, covering compliance issues, competition, risk and profitability and human resources performance management encompassing employee performance appraisals and incentive compensation and other types of performance management include operational performance management and IT performance management.

Cascading  – The process of developing aligned goals throughout an organization, connecting strategy to operations to tactics, allowing each employee to demonstrate a contribution to overall organizational objectives. Methods of cascading include identical (objectives and measures are identical), contributory (translated, but congruent, objectives and measures), unique (unique objectives and measures; do not link directly to parent) and shared (jointly-shared unique objective or measure).

Cause and Effect  – The way perspectives, objectives, and/or measures interact in a series of cause-and-effect relationships demonstrate the impact of achieving an outcome. For example, organizations may hypothesize that the right employee training (Employee, Learning and Growth Perspective) will lead to increased innovation (Internal Process Perspective), which will in turn lead to greater customer satisfaction (Customer Perspective) and drive increased revenue (Financial Perspective).

Critical Success factor (CSF)  – A CSF is a business event, dependency, product, or other factor that, if not attained, would seriously impair the likelihood of achieving a business objective. This term is always included in a glossary of strategic terms 

Customer-Facing Operations  – Encompasses those facets of the organization that interface directly with customers; typically an organization’s sales, service and marketing functions. Also referred to as Demand Chain.

Customer Perspective  – Measures are developed based on an organization’s value proposition in serving their target customers. In many organizations, especially public sector and non-profit, the Customer perspective is often elevated above or placed alongside the Financial perspective.

Dashboard  – A dashboard is a reporting tool that consolidates, aggregates and arranges measurements, metrics (measurements compared to a goal) and sometimes scorecards on a single screen so information can be monitored at a glance. Dashboards differ from scorecards in being tailored to monitor a specific role or generate metrics reflecting a particular point of view; typically they do not conform to a specific management methodology.

Drill Down  – A method of exploring detailed data that was used in creating a summary level of data. Drill Down levels depend on the granularity of the data in the data warehouse.

Economic Value Added (EVA)  – A financial performance measure aiming to determine whether a company or activity has truly created shareholder value; in other words, EVA aims to distinguish real profit from paper profit. EVA is determined by calculating a business’s after-tax cash flow minus the cost of the capital it deployed to generate that cash flow.

Financial Perspective  – The perspective that looks at bottom line results. In public sector and non-profit organizations, the Financial Perspective is often viewed within the context of the constraints under which the organization must operate.

Forecast  – Forecast usually refers to a projected value for a metric. Organizations will often create a forecast that is different than their target for a given metric. There are multiple types of forecasting methods for creating forecasts based on past data and usage of them varies widely across organizations.

Goal  – An observable and measurable end result having one or more objectives to be achieved within a more or less fixed time-frame

Goal Diagram  – Generically used to describe the one-page visualization that shows the different goals of the organization and how they are related. Examples of goal diagrams include strategy plans, strategy maps and process diagrams.

Human Capital  – A metaphor for the transition in organizational value creation from physical assets to the capabilities of employees. Knowledge, skills, and relationships, for example. Closely related to terms such as intellectual capital and intangible assets. Some experts suggest that as much as 75% of an organization’s value is attributable to human capital.

Initiatives  – Initiatives organize people and resources and dictate which activities are required to accomplish a specific goal by a particular date; initiatives provide the how while goals provide the what. As differentiated from projects, initiatives directly support an organization’s strategic goals; projects may or may not have strategic impact.

Inputs  – Commonly used within the Logic Model to describe the resources an organization invests in a program, such as time, people (staff, volunteers), money, materials, equipment, partnerships, research base, and technology, among other things.

Internal Process Perspective  – Internal Process Perspective: The perspective used to monitor the effectiveness of key processes at which the organization must excel in order to achieve its objectives and mission.

IT Performance Management  – A type of performance management that assists organizations with the increasing demands of maximizing value creation from technology investments; reducing risk from IT; decreasing architectural complexity; and optimizing overall technology expenditures. Other types of performance management include operational performance management and business performance management.

Key Outcome Indicator (KOI)  – Often used in the public sector to describe key performance indicators, those metrics most critical to gauging progress toward objectives. KOIs are metrics that are: tied to an objective; have at least one defined time-sensitive target value; and have explicit thresholds which grade the gap between the actual value and the target.

Key Performance Indicator (KPI)  – Distinguished from other metrics, key performance indicators (KPIs) are those metrics most critical to gauging progress toward objectives. KPIs are metrics that are: tied to an objective; have at least one defined time-sensitive target value; and have explicit thresholds which grade the gap between the actual value and the target.

Lagging Indicator  – Backward-looking performance indicators that represent the results of previous actions. Characterizing historical performance, lagging indicators frequently focus on results at the end of a time period; e.g., third-quarter sales. A balanced scorecard should contain a mix of lagging and leading indicators.

Leading Indicator  – Forward-looking in nature, leading indicators are the drivers of future performance. Improved performance in a leading indicator is assumed to drive better performance in a lagging indicator. For example, spending more time with valued customers (a leading indicator) is hypothesized to drive improvements in customer satisfaction (a lagging indicator).

Learning and Growth Perspective  – May also be termed “Skills and Capability.” Measures in this perspective are often considered enablers of measures appearing in other perspectives; therefore, this perspective is often placed at the bottom or foundation of a strategy plan. Employee skills and training, availability of information, and organizational culture are often measured in this perspective.  More latterly, this perspective has included ‘Capacity’ to indicate that it is concerned with more than the human aspect and all includes other physical resources.

Logic Model  – Having gained prominence in the ’90s largely in response to the Government Performance and Results Act (GPRA), the Logic Model is now a widely accepted management tool in the public and non-profit sectors as well as the international arena. The model is a roadmap or picture of a program that shows the logical relationships among resources or inputs (what an organization invests); activities or outputs (what an organization gets done); and outcome-impacts (what results or benefits happen as a consequence).

Malcolm Baldridge  – Established by the U.S. Congress in 1987, the Malcolm Baldridge performance framework is a rating tool that assesses management systems and helps identify major areas for improvement in seven categories of performance criteria: Leadership; Strategic Planning; Customer and Market Focus; Measurement, Analysis, Knowledge Management; Human Resource Focus; Process Management; and Business Results.

Measure  (also called metric) – Term to describe a standard used to communicate progress on a particular aspect of a program. Measures typically are quantitative in nature, conveyed in numbers, dollars, percentages, etc. (e.g., $ of revenue, headcount number, % increase, survey rating average, etc.) though they may be describing either quantitative (e.g., sales made) or qualitative (e.g., employee motivation) information.

Metric  (also called measure) – A framework to establish and collect measurements of success/failure on a regulated, timed basis that can be audited and verified. The term used in commercial organizations to describe a standard used to communicate progress on a particular aspect of the business. Measures typically are quantitative in nature, conveyed in numbers, dollars, percentages, etc. (e.g., $ of revenue, headcount number, % increase, survey rating average, etc.) though they may be describing either quantitative (e.g., sales made) or qualitative (e.g., employee motivation) information.

Milestone  – The set of specific deadlines or hurdles that signal progress in completing an Initiative. Milestones include progress/completion dates or % completion rates, key presentations/meetings, and key decision points.

Mission  – Concise statement that describes, in motivating and memorable terms, the current top-level strategic goal of the organization. A mission provides both an internal rallying cry and external validity. Usually financial-, process-, or customer service-oriented, with a mid-term (three to five years) horizon, an effective mission is inspiring as well as easily understood and communicated.

Mission Statement  – A mission statement defines the core purpose of the organization ‐ why it exists. The mission examines the “raison d’etre” for the organization beyond simply increasing shareholder wealth, and reflects employees’ motivations for engaging in the company’s work. Effective missions are inspiring, long‐term in nature, and easily understood and communicated.

Objective or Outcome Scorecard  – A specific application of a scorecard/objective scorecards monitor progress toward a given set of objectives or outcomes using a threshold-based rating scale. Typically, objective status is determined by normalizing one or many key performance indicators and comparing it to a given rating scale.

Objective  – A concise statement describing specific, critical, actionable and measurable things an organization must do in order to effectively execute its strategy and achieve its mission and vision. Objectives often begin with action verbs such as increase, reduce, improve, achieve, etc. Whereas the vision and mission statements provide an organizing and mobilizing “rallying cry,” objectives translate the vision and mission into measurable and actionable operational terms.

Operational Alignment  – The means to and/or state of alignment of an organization’s day-to-day activities with its strategic goals or objectives, operational alignment helps ensure that an organization’s daily activities are advancing its longer-term goals and mission.

Operational Performance Management  – A type of performance management that addresses the growing pressure to increase revenue while managing costs, while meeting ever-evolving and expanding customer demands. Other types of performance management include business performance management and IT performance management.

Operational Reviews  – Usually used to describe the regularly scheduled internal status meetings of an organization. Going by different names based on the organization, manufacturing companies typically call them Operational Excellence (OPX) meetings, other organizations sometimes just refer to them as Performance reviews.

Outcome  – Commonly used within the Logic Model, outcomes (also called outcome-impacts) describe the benefits that result as a consequence of an organization’s investments and activities. A central concept within logic models, outcomes occur along a path from shorter-term achievements to medium-term and longer-term achievements. They may be positive, negative, neutral, intended, or unintended. Examples of outcomes include changes in knowledge, skill development, behaviour, capacities, decision-making, and policy development.

Output  – Commonly applied within the Logic Model, outputs describe what an organization gets done; e.g., “what we do” or “what we offer” and may include workshops, delivery of services, conferences, community surveys or facilitation.

Performance Driver  – Measures that indicate progress against a process or behaviour. These measures are helpful in predicting the future outcome of an objective.

Performance-Based Budgeting  – A performance budget is an integrated annual performance plan and budget that shows the relationship between program funding levels and expected results. It indicates that a goal or a set of goals should be achieved at a given level of spending.

Performance Gap  – The “difference” between actual and target, the trend of the performance or target gap shows an organization’s momentum.

Perspective  – Representing the various stakeholders, internal and external, critical to achieving an organization’s mission. Together, the perspectives provide a holistic, or balanced, framework for telling the “story of the strategy” in cause-and-effect terms. While the traditional Balanced Scorecard includes the four perspectives of Financial, Customer, Internal Process, and Employee Learning and Growth, an organization may choose to modify and/or add to these to adequately translate and describe their unique strategy.

Process Diagram  – Process diagrams typically are used to represent specific processes that are undertaken in an organization and the key steps involved in the process. An example might be a high-level diagram that highlights the customer experience.

Program Assessment Rating Tool  – Developed by the Office of Management and Budget within the Office of the President of the United States, the Program Assessment Rating Tool (PART) was developed to assess and improve program performance so that the federal government can achieve better results. A PART review helps identify a program’s strengths and weaknesses to inform funding and management decisions aimed at making the program more effective. The PART therefore looks at all factors that affect and reflect program performance including program purpose and design; performance measurement, evaluations, and strategic planning; program management; and program results.

Qualitative  – Subjective, as opposed to quantitative (measured). A common source of qualitative metrics are surveys of customers, stakeholders or employees.

Quantitative  – Measured, as opposed to qualitative (subjective). Quantitative measures often come from transactional systems.

Readiness Scorecard  – A specific application of a scorecard, a readiness scorecard can be used to evaluate an organization’s state of readiness/acceptance of a given strategy.

Reports  – Typically show the details of performance for a metric or multiple metrics. Reports are often used to drill down to the root cause of performance issues.

Scorecard  – A scorecard is a visual display of the most important information needed to achieve one or more objectives, consolidated and arranged on a single screen so the information can be monitored at a glance. Unlike dashboards that display actual values of metrics, scorecards typically display the gap between actual and target values for a smaller number of key performance indicators.

Six Sigma  – A quality management and process improvement methodology particularly well suited to process intensive industries like manufacturing. Six Sigma measures a given process by its average performance and the standard deviation (or variation) of this performance, aiming to reduce the occurrence of defects in a given process to a level of “Six Sigma” outside the norm; no more than 3.4 times per million.

Strategic Management System  – Describes the use of the Balanced Scorecard in aligning an organization’s short‐term actions with strategy. Often accomplished by cascading the Balanced Scorecard to all levels of the organization, aligning budgets and business plans to strategy, and using the Scorecard as a feedback and learning mechanism.

Strategy  – Strategy is the way an organization seeks to achieve its vision and mission. It is a forward-looking statement about an organization’s planned use of resources and deployment capabilities. Strategy becomes real when it is associated with: 1) a concrete set of goals and objectives; and 2) a method involving people, resources and processes.

Strategy Map  – A specific version of a strategy plan that adheres to the Balanced Scorecard methodology. Strategy maps depict objectives in multiple perspectives with corresponding cause and effect linkages.

Strategy Plan  – A visual representation of an organization’s strategy and the objectives that must be met to effectively reach its mission. A strategy plan can be used to communicate, motivate and align the organization to ensure successful execution.

Target  – A target is the defining standard of success, to be achieved over a specified time period, for the key performance indicators associated with a particular strategic objective. Providing context to make results meaningful, targets represent the organization’s “stretch goals.”

Task  – Represents details activities or tasks to be carried out to achieve each initiative. It captures information like resources, time , constraints, risk, budgets, milestone, duration to complete the tasks.

Theme  – Descriptive statement representing a major component of a strategy, as articulated at the highest level in the Vision. Most strategies can be represented in three to five themes. Themes are most often drawn from an organization’s internal processes or the customer value proposition, but may also be drawn from key financial goals. The key is that themes represent vertically linked groupings of objectives across several scorecard perspectives (at a minimum, Customer and Internal). Themes are often stated as catchy phrases that are easy for the organization to remember and internalize. For example: Operational Excellence or Customer Intimacy or Strategic Partnering.

Threshold  – A means of describing and/or depicting the performance gap in easily understandable terms. Examples of threshold methods include “letter-grade” (A/B/C/D/F) and “traffic-light” (green/yellow/red). Values  – Representing an organization’s deeply-held and enduring beliefs, an organization’s values openly declare how it expects everyone to behave and are often embedded in its vision.

Value Chain  – The process steps by which a company moves from the identification of its customer needs to customer fulfilment.

Value Proposition  – Describes how an organization intends to differentiate itself in the marketplace and what particular value it will deliver to customers. Many organizations choose one of three “value disciplines” operational excellence, product leadership, or customer intimacy.

Vision  – A concise statement defining an organization’s long-term direction, the vision is a summary statement of what the organization ultimately intends to become five, 10 or even 15 years into the future. It is the organization’s long-term “dream,” what it constantly strives to achieve. A powerful vision provides everyone in the organization with a shared mental framework that helps give shape to its abstract future.

Glossary of Strategic Terms – End

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How to Create a Business Glossary: A Step-by-Step Plan

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Creating a business glossary is an essential step toward ensuring that all stakeholders in your organization have a clear understanding of the terminology, data definitions, and data lineage . Moreover, this will improve communication, reduce misunderstandings, and facilitate better decision-making.

In this article, we will explore why is a business glossary important for your business, steps to create one, a few templates to get you off the block, and the best practices you need to keep in mind.

Let’s get started!

Table of contents #

• 8 Reasons why you need a business glossary
• How to create a business glossary? Breaking down the steps
• Business glossary templates: Examples to help you get started
• Scaling the most practical business glossary template
• Business glossary best practices: How to get it right
• Books and online resources to learn about business glossaries
• Rounding it all up
• Related reads

8 Reasons why you need a business glossary #

Before we understand how to create a business glossary, let us try and understand why do we need it in the first place.

Today, businesses are increasingly leveraging vast amounts of data to drive decisions and strategies. As companies embark on their data-driven journey, a common understanding of business terms becomes vital. This is where a business glossary comes into play for the following reasons:

• Ensures consistent terminology
• Reduces ambiguity and misunderstandings
• Improves data quality and integrity
• Streamlines data governance processes
• Facilitates better communication between teams
• Enhances the effectiveness of data analytics
• Supports regulatory compliance
• Aids in onboarding and training

Let us now look into each of the above reasons in detail:

1. Ensures consistent terminology #

A business glossary provides a centralized reference for all business terms. When everyone in the organization uses the same definitions for terms, it ensures consistency across departments and systems. This uniformity prevents confusion and minimizes the risk of misinterpreting data.

2. Reduces ambiguity and misunderstandings #

Ambiguity can be a major roadblock in making informed decisions. When terms are clearly defined in a business glossary, stakeholders can avoid misinterpretations, ensuring that business strategies are based on accurate understandings.

3. Improves data quality and integrity #

Consistency in terminology often leads to higher data quality. When data sources are tagged and associated with precise definitions, it reduces the chance of data being misused or misinterpreted. As a result, businesses can trust the integrity of their data when making critical decisions.

4. Streamlines data governance processes #

Data governance involves managing and ensuring the quality, availability, and integrity of data across an organization. A business glossary acts as a foundational tool in this process, helping to define the rules and standards for data usage, classification, and handling.

5. Facilitates better communication between teams #

Different departments or teams might have different interpretations of the same term. A business glossary bridges this gap, providing a shared language that ensures all teams are on the same page, fostering more effective cross-functional collaboration.

6. Enhances the effectiveness of data analytics #

Data analytics relies on precise and consistent data. When analysts are assured of the consistency and clarity of terms, they can more confidently draw insights and make predictions, leading to more impactful data-driven strategies.

7. Supports regulatory compliance #

Many industries are bound by strict regulatory requirements concerning data management and reporting. A business glossary ensures that all terms are defined according to industry standards, aiding in compliance and minimizing risks associated with regulatory breaches.

8. Aids in onboarding and training #

For new employees or those moving to different roles within the organization, a business glossary acts as a valuable resource. It helps them quickly understand company-specific terminology, making the transition smoother and ensuring that they can contribute effectively in a shorter time frame.

A business glossary is an indispensable tool for data-driven businesses. With a shared understanding of terms and data across the organization, data-driven companies can ensure consistency, improve communication, and drive better decision-making.

In the next section, we will look into the steps of how to create a data dictionary.

How to create a business glossary? Breaking down the steps #

Here’s a step-by-step guide on how to get started with creating a business glossary:

1. Identify your stakeholders #

Determine who will be involved in the creation and maintenance of the business glossary. This could include representatives from the data, engineering, and Salesforce teams, as well as other relevant departments. Make sure that these stakeholders are committed to the project and understand its importance.

2. Define your scope #

Decide on the scope of the business glossary. This will likely include key terms and concepts related to travel & finance management, as well as any specific terms used by your organization. You can start with a smaller scope and expand it over time.

3. Collect and compile terms #

Gather a list of terms and concepts that need to be included in the business glossary. You can source these from existing documentation, such as data dictionaries, data models, and process flows, as well as by interviewing subject matter experts within your organization.

4. Define the terms #

Collaborate with your stakeholders to provide clear, concise definitions for each term. These definitions should be easily understood by both technical and non-technical users. Make sure to include any relevant context, such as how the term is used within the organization or in the industry.

5. Establish a governance process #

Develop a process for maintaining and updating the business glossary. This should include guidelines for adding new terms, updating existing definitions, and removing outdated terms. The governance process should also outline roles and responsibilities, such as who can propose changes and who has the authority to approve them.

6. Choose a platform #

Select a platform or tool to host your business glossary. This can be a dedicated glossary tool, a data catalog , or a simple wiki or document management system. Ensure that the platform is easily accessible to all stakeholders and allows for versioning and tracking changes.

7. Populate the glossary #

Enter the terms and their definitions into the chosen platform. Make sure that the information is well-organized and easy to navigate. Consider using categories or tags to group related terms.

8. Communicate and train #

Inform all relevant stakeholders about the existence of the business glossary and provide training on how to use it. Encourage everyone to refer to the glossary whenever they encounter unfamiliar terms or need clarification on definitions.

9. Maintain and update #

Regularly review and update the business glossary to keep it current and accurate. Encourage stakeholders to provide feedback and suggest changes as needed.

By following these steps, you’ll create a comprehensive and well-maintained business glossary that serves as a valuable resource for everyone in your organization.

Business glossary templates: Examples to help you get started #

Here are a few examples of business glossary templates to help guide you in creating your own. Each template provides a different approach to organizing and presenting terms and definitions.

Let’s dive in!

1. Simple Excel template #

A basic Spreadsheet/Excel template can be a good starting point for a business glossary. You can use software like Microsoft Excel or Google Sheets.

2. Wiki-style template #

A wiki-style template can be used if you prefer a more narrative approach to presenting terms and definitions. This can be created using tools like Confluence or an internal wiki system.

Cost Center

• Category: Finance
• Definition: A business unit responsible for managing and tracking costs.
• Last Updated: 2023-05-01
• Updated By: John Doe

Net Revenue

• Definition: Total revenue minus the cost of goods sold.
• Last Updated: 2023-04-28
• Updated By: Jane Smith

Booking Class

• Category: Travel
• Definition: A code used to categorize airline tickets by price & rules.
• Last Updated: 2023-04-25
• Updated By: Mike Brown

3. Data catalog or dedicated glossary tool #

Data catalogs or dedicated glossary tools often come with built-in templates and features to help create and maintain a business glossary. These tools often provide search functionality, category organization, and version control.

Keep in mind that the chosen template should fit your organization’s needs and preferences. It should be easily accessible, simple to navigate, and allow for efficient maintenance and updates.

Scaling the most practical business glossary template #

Out of the three above-mentioned templates, the most scalable and actively maintained option would be using a data catalog or a dedicated glossary tool.

These tools are specifically designed for managing business glossaries and metadata , providing several advantages:

1. Scalability #

As your organization grows and the number of terms increases, these tools can handle the expanding volume of data without performance issues.

2. Advanced features #

Dedicated glossary tools often come with built-in features like search functionality, version control, customizable categorization, and access controls, which make it easier to manage and maintain the glossary.

3. Collaboration #

These tools allow multiple users to contribute to the glossary, suggest changes, and review updates, which promotes collaboration and helps keep the glossary current.

4. Integration #

Many data catalog and glossary tools can integrate with other data management systems, making it easier to align your business glossary with your organization’s data architecture.

While spreadsheet and wiki-style templates can be effective for smaller organizations or those with fewer terms, they may become more challenging to manage as the volume of data grows. Dedicated glossary tools offer a more robust and scalable solution that can better support the long-term needs of your organization.

Business glossary best practices: How to get it right #

A business glossary helps ensure the entire organization can understand, access, and apply common definitions to foster a cohesive and data-driven environment. To achieve this, there are some best practices one should adhere to:

• Involve stakeholders from across the organization
• Ensure clear and concise definitions
• Standardize the format and structure
• Prioritize continuous updates and maintenance
• Foster accessibility and visibility
• Use relatable examples and use cases
• Categorize terms for easier navigation
• Integrate with other data governance tools
• Solicit feedback regularly
• Implement a version control system

Now, let us look into each of the above best practices in detail:

1. Involve stakeholders from across the organization #

Collaborate with representatives from various departments when creating the glossary. Their insights ensure that the glossary covers all essential terms and reflects the understanding and needs of the entire organization.

2. Ensure clear and concise definitions #

Definitions should be easily understandable by all members of the organization, regardless of their technical background. Avoid jargon and ensure each definition is succinct yet comprehensive.

3. Standardize the format and structure #

To maintain consistency, it’s crucial to have a standardized format for definitions, including aspects like length, terminology, and structure. This makes it easier for users to find and understand terms.

4. Prioritize continuous updates and maintenance #

Business landscapes evolve, and so should the glossary. Regularly review and update the glossary to include new terms, refine existing definitions, and remove outdated entries.

5. Foster accessibility and visibility #

The glossary should be easily accessible to all team members, preferably through a centralized platform. Promote its existence and encourage employees to refer to it as a primary resource.

6. Use relatable examples and use cases #

Illustrative examples can make complex terms easier to grasp. Where possible, include real-world or company-specific examples to enhance clarity.

7. Categorize terms for easier navigation #

Organize terms into relevant categories or themes, allowing users to quickly locate terms related to specific topics or departments.

8. Integrate with other data governance tools #

A business glossary is a component of a broader data governance strategy. Integrate it with other tools like data dictionaries or metadata repositories to provide a holistic view of the organization’s data landscape.

9. Solicit feedback regularly #

Encourage users to provide feedback on the glossary. This can highlight areas for improvement, potential additions, or clarifications needed on existing terms.

10. Implement a version control system #

As updates are made to the glossary, it’s essential to track changes and maintain a history of revisions. This ensures transparency and allows users to understand the evolution of terms over time.

A well-structured and maintained business glossary is an invaluable asset for data-driven organizations. By following these best practices, businesses can ensure their glossary remains a relevant, user-friendly, and comprehensive tool for all stakeholders.

Books and online resources to learn about business glossaries #

Here are some books and resources that can help you learn more about business glossaries and how to create them:

• “ Data Governance: How to Design, Deploy and Sustain an Effective Data Governance Program ” by John Ladley: This book provides a comprehensive guide to data governance, which includes a section on creating business glossaries.
• “ The Data Catalog: Sherlock Holmes’ Data Sleuthing Adventures ” by Bonnie O’Neil and Lowell Fryman: This book covers data catalog concepts, which can help you understand how to create and maintain a business glossary within a data catalog.
• “ Data Management for Researchers: Organize, maintain and share your data for research success ” by Kristin Briney: This book provides an overview of data management concepts, including data documentation and metadata, which are relevant to creating a business glossary.

Online Resources #

• DAMA International (Data Management Association) - The DAMA website offers various resources on data management topics, including business glossaries. Consider becoming a member to access their library of resources, webinars, and the Data Management Body of Knowledge (DMBOK).
• TDAN (The Data Administration Newsletter) - This online publication provides articles and resources on various data management topics, including business glossaries and data governance.
• **Data Governance Professionals Organization - The DGPO is a membership-based organization focused on data governance, offering resources, webinars, and events that can help you learn more about business glossaries.
• Online forums and communities - Platforms like LinkedIn and Reddit have dedicated groups or subreddits (such as r/datagovernance) where you can connect with other professionals, ask questions, and share resources related to business glossaries and data governance.

These books and resources should provide you with a solid foundation to learn about business glossaries and best practices for creating and maintaining them.

Rounding it all up #

Creating a business glossary is crucial to ensure clear communication, reduce misunderstandings, and facilitate better decision-making. To create a comprehensive glossary, you must identify your stakeholders, define the scope, collect and compile terms, define the terms, establish a governance process, choose a platform, populate the glossary, communicate and train, and maintain and update the glossary regularly.

A simple spreadsheet, wiki-style template, or a dedicated glossary tool are different options to create and maintain a business glossary. The selected template should be easily accessible, simple to navigate, and allow for efficient maintenance and updates. Regularly review and update the business glossary to keep it current and accurate.

If you are evaluating a business glossary tool for your team, do take Atlan for a spin - Atlan is more than a business glossary solution, it is a collaborative metadata management and data catalog tool that enables a shared understanding of data.

How to create a business glossary: Related reads #

• What is Business Glossary ? - Definition, Example & 5 Common Challenges
• What is a  Business Data Glossary Template & How to Create One for Your Organization
• Business Glossary vs. Data Catalog - Fundamentals, Use Cases, Examples & More
• What Is a Data Glossary ? And Four Ways to Create a Useful One.
• Glossary for Snowflake — Shared Understanding Across Teams
• Data glossary - The second brain for your business
• Business Glossary 101 : The Key to Data Discovery and Governance
• Data Dictionary vs. Business Glossary : Definitions, Examples & Why Do They Matter?

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The Complete Glossary of Project Management Terminology

By Kate Eby | February 24, 2017

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Establishing standardized definitions for common project management terms is a challenge, even for seasoned pros. To help you achieve this goal, we’re offering this authoritative reference guide, pulling together a complete list of project management terminology. This glossary contains more than 600 terms and provides simple, clear explanations.

Included on this page, you'll find definitions from A-Z, from activity codes and dependencies , to performance reporting and timeboxes . 

Project Management Terms

A - project management terms.

Accept - A decision to take no action against a threat. Project teams typically accept risks when they fall below risk thresholds or when the team thinks it best to act only if and when a threat occurs. (See also risk acceptance )

Acceptance criteria - The specific requirements expected of project deliverables. To be formally accepted, deliverables must meet all acceptance criteria.

Acceptance test - A test in which a team of end users runs a product through its full range of use to identify potential problems.

Acquisition process - This process obtains the personnel and resources necessary for project work. Acquisitions are closely coordinated with project budgets and schedules.

Action item - An activity or task that must be completed.

Action item status - This tracks an action item’s progress from creation to closure. Since work packages comprise multiple action items, keeping action item statuses updated is important for project progress.

Activity - The smallest unit of work necessary to complete a project work package (which includes multiple activities). Time, resources, and finances are required to complete each activity.

Activity code - An alphanumeric value by which activities can be grouped and filtered. A code is assigned to each activity.

Activity identifier - A unique alphanumeric value by which an individual activity can be distinguished. An activity identifier is assigned to each activity.

Activity label - A short descriptor for an activity. Activity labels may be placed below arrows representing activities in activity-on-arrow (AOA) diagrams.

Activity list - This documents all the activities necessary to complete a project. Each activity is accompanied by its activity identifier and a description of the work it entails.

Activity-On-Arrow (AOA) - In this network diagram, arrows represent activities and nodes represent events or milestones. AOA diagrams can only indicate finish-to-start relationships.

Activity-On-Node (AON) - In a network diagram of this nature, nodes represent activities and arrows illustrate logical relationships between activities. AON diagrams can illustrate four relationship types: start-to-start, start-to-finish, finish-to-start, and finish-to-finish.

Actual cost of work performed (ACWP) - This represents the total cost incurred for work done in a given period of time.

Actual duration - The length of time taken to complete an activity.

Actual effort - The amount of labor performed to complete an activity. It is expressed in person-hours or similar units of work.

Actual expenditure - The sum of costs paid from a budget.

Actual progress - This measures the amount of work completed on a project. It is used to assess the comparison between project progress and project baselines and is usually stated as a percentage.

Adaptive project framework (APF) - An approach to project management that rejects traditional, linear project management and instead accepts changing requirements and allows projects to be affected by external business environments. The APF stresses flexibility in many aspects of project management and focuses on performing and evaluating project work in stages to allow room for replanning due to changing business goals, objectives, and requirements.

Administrative closure - This refers to the set of formal requirements fulfilled to end a project. Among other things, it involves documenting the formal acceptance of deliverables and ensuring that all relevant information is sent to a project’s sponsor and stakeholders.

Aggregate planning - This strategy uses demand forecasts to manage scheduling and planning for project activities between three and 18 months in advance, so that the necessary resources and personnel can be efficiently acquired or assigned.

Agile - The Agile family of methodologies is a superset of iterative development approaches aimed at meeting ever-changing customer requirements. Agile development proceeds as a series of iterations, or sprints, with incremental improvements made in each sprint. Since agile projects do not have fixed scopes, agile methodologies are adaptive, and the iterative work is guided by user stories and customer involvement.

Agile project management - Agile project management draws from concepts of agile software development. Agile approaches focus on teamwork, collaboration, and stakeholder involvement, as well as the use of iterative development methods.

Agile software development - Agile software development originates from the Agile Manifesto , a set of principles that emphasizes meeting changing requirements through collaborative development and making ongoing improvements through iteration. It stresses the importance of being reactive to rapid changes in external environments.

Allocation - The assigning of resources for scheduled activities in the most efficient way possible. (See also resource allocation )

Alternative analysis - The evaluation of possible courses of action for project work in order to find the most suitable course of action.

Analogous estimating - This technique uses historical project data to prepare time and cost estimates. It is considered the most inaccurate estimation technique. (See also top-down estimating )

Analytical estimating - This technique computes total project time and cost estimates by preparing estimates for each project activity and adding them together. Analytical estimating is considered the most accurate estimation technique. (See also bottom-up estimating )

Application area - The specific project category of which the project is a part. Application areas can be defined on the basis of project products’ characteristics or applications or by the projects’ customers or stakeholders.

Apportioned effort - Project work associated with components of a work breakdown structure and performed in proportion, with discrete effort. Since the amount of apportioned effort (which includes activities such as quality assurance) depends directly on the amount of discrete effort, it cannot be considered separately from discrete effort. It is one of three types of activities used to measure work performance as part of earned value management.

Approach analysis - During the project planning phase, this type of analysis is used to examine the various methods by which a project’s goals may be achieved.

Arrow diagramming method (ADM) - A method of constructing a network diagram that uses arrows to represent activities and nodes to represent events or milestones. The ADM is used to construct activity-on-arrow (AOA) diagrams.

Artifact - Items that support software development. Artifacts include both items associated with the process of development, such as project plans, and items used to support actual aspects of development, such as use cases and requirements.

Assignment contouring - The process of assigning people to project work for changing numbers of hours per day as the project moves through different stages. Assignment contouring is typically done using project management software.

Assumption - Factors deemed to be true during the project planning process, though proof of their validity is not available. A project’s assumptions can affect its risks and outcomes, so you must consider them carefully.

Authorization - In general, authorization is the power to make decisions that the management grants. The specific remit for authorization varies on a case-by-case basis.

Authorized work - Work that management or others in authority approve.

Avoid - A response to a negative risk that seeks to ensure the risk does not occur or (if the risk cannot be eliminated) seeks to protect the project objectives from the negative risk’s impact. (See also risk avoidance )

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B - Project Management Terms

Backward pass - This calculates late-start and finish dates for project activities by working backwards from the project end date.

Balance - A phase in the portfolio life cycle that involves balancing a portfolio’s components based on risk, costs, and use of resources. It is an aspect of organizational project management. (See also portfolio balancing )

Balanced scorecard - A Balanced scorecard is a concept or tool used to assess whether an organization’s activities are correlated with its general vision and objectives.

Bar chart - A diagrammed calendar schedule of project activities’ start and end dates in logical order. (See also Gantt chart )

Baseline - This term represent the costs and schedules approved at the start of the project. They use baselines as a basis for monitoring and evaluating performance.

Benefits realization -This term focuses on ensuring that project results give customers and stakeholders the benefits they expect.

Blueprint - A document that explains what a program means to accomplish and describes a program’s contribution to organizational objectives.

BOSCARD - This method details and considers the background, objectives, scope, constraints, assumptions, risks, and deliverables of new projects.

Bottom-Up estimating - This calculation computes total time and cost estimates for projects by preparing individual estimates for each of a project’s activities and adding them together. Bottom-up estimating is considered the most accurate estimation technique. (See also analytical estimating )

Brief -  This refers to the document produced during a project’s concept phase. It is the primary document outlining requirements.

Budget - The sum of money allocated for a project. The term may also refer to a comprehensive list of revenues and expenses.

Budgeted cost of work performed (BCWP) - The portion of the budget allocated to scheduled work actually performed in a period of time. (See also earned value )

Budgeted cost of work scheduled (BCWS) - The portion of the budget allocated to work scheduled to be performed in a period of time. (See also planned value )

Burn down chart - A graph that shows the relationship between the number of tasks to be completed and the amount of time left to complete these tasks.

Burst point - A point in a network diagram at which multiple successor activities originate from a common predecessor activity. None of the successor activities may start until one finishes the predecessor activity.

Business analysis - The practice of identifying and solving business problems. It focuses on creating and implementing solutions to business needs via organizational development, process reengineering, or any number of other methods.

Business case - A documentation of the potential outcomes of a new project, including benefits, cost, and effects. It shows the reasoning for starting the project.

Business imperative - An issue, situation, or circumstance with the potential to affect a business in one way or another, depending on the course of action used to address it. Organizations prioritize business imperatives for actions that will realize any potential benefits or avoid any potential harm.

Business model - A company’s business model is the system by which the organization’s  profitable activities are planned, structured, and executed, and by which it interacts with its customers.

Business operations - The entire ensemble of activities or business processes through which a company uses its assets to create value for its customers.

Business process - A Business process is a system of activities by which a business creates a specific result for its customers. There are three categories of business processes: management processes, operational processes, and supporting processes.

Business process modeling (BPM) - Business process modeling is the representation, analysis, and evaluation of business processes in an effort to improve them.  

Business requirements - The conditions a product must satisfy to effectively serve its purpose within a business.

Business value - The business value of a project is the sum of positive effects — tangible and intangible — it has on the business.

C - Project Management Terms

Calendar unit - The smallest unit of time — usually hours or days — by which project activity durations are measured.

Capability maturity model (CMM ) - This model is used to assess the maturity of business process capabilities. It was created to assess the capabilities of software development processes but is now used in a number of other industries as well. Like other maturity models, the CMM allows organizations to assess themselves against external benchmarks and provides recommendations for improvement.

CAPEX - CAPEX, or capital expenditure, is the money a company spends to acquire new fixed physical assets or upgrade old ones, typically for long-term use.

Case study - A case study involves extensive and in-depth formal research into an area of a company, a situation, or an event. Case studies typically result in formal reports that are published in academic or professional publications. They investigate important, singular, or locally representative cases that contribute to the advancement of knowledge.

Certified Associate in Project Management (CAPM) - This is an entry-level certification for project managers offered by the Project Management Institute. It is designed to build knowledge of project management processes and terms.

Champion - A project champion makes project success a personal responsibility. This person pushes the project team to work hard, liaise with stakeholders on behalf of the project, and support the project manager. Project champion is an informal role.

Change control - Change control is the process of identifying, evaluating, approving, and implementing changes to a project. It ensures that changes are introduced in a controlled and effective manner and that any adjustments necessitated by changes are also addressed.  

Change control board - An appointed group of stakeholders who evaluate proposed changes and decide when and whether to make them.

Change control system/process - The process by which changes to the project are evaluated before approval, implemented, and documented.

Change freeze - The point at which scope changes to a project are no longer permissible.

Change management plan - A Change management plan details the change control process. It is created to ensure all changes are managed according to procedure. Change management plans can be created for individual projects or for organizations undergoing transitions.

Change request - A formal document submitted to the change control board that requests changes to the finalized project management plan. Change requests are usually made only for significant changes, as smaller changes with little to no impact on the project work can be brought to the project manager.

Client/Customer - The people who will directly benefit from a project. A team executes a project with specific attention to a client’s requirements.  

Closing phase - The final phase of the project management life cycle, in which all aspects of the project are officially completed and closed. This includes making sure that all deliverables have been given to the client, that the team notifies suppliers of completion, and that the team updates stakeholders regarding the end of the project and overall project performance.

Code of accounts - An alphanumeric system used to assign unique identifiers to all work breakdown structure components.

Collaborative negotiation - Collaborative negotiation entails all negotiating parties obtaining at least some of what they want from negotiations.

Communications log - This document is used to track all project-related communications. It is organized and edited by the project manager and details who communicated, when and where the communication took place, what information was shared, and the results of the communication.

Communications management plan - This plan states who will send and receive information on aspects of the project, what details are communicated, and when communications are sent. It is part of the project management plan.

Communities of practice - Groups of people who share an area of interest within project management. They meet regularly to share and develop knowledge in the area of interest.

Competence - The ability and knowledge required to perform the tasks associated with a specific role.

Competence framework - The set of competence expectations by which one assesses a person’s suitability for a specific role.

Concept - The beginning phase of the project management life cycle. In the concept phase, the team presents the opportunity or problem (along with possible solutions) and examines the general feasibility of the project.

Conceptual project planning - Conceptual project planning involves developing the documentation from which a project’s organization and control system will originate.

Concurrent engineering - A product development approach where design and development are carried out at the same time. It is used to shorten the development life cycle and to release products more quickly. The simultaneous execution of design and development can help to improve design practicality.

Configuration - Configuration of a product involves shaping its functions and characteristics to make it suitable for customer use.

Configuration management - Configuration management ensures that the product of a project meets all necessary specifications and stipulations. It provides well-defined standards for the management and team to guarantee that they meet quality and functional requirements, as well as any other characteristics considered important.

Consensus - A decision agreed upon by all members of a group.

Constraint - A limitation on a project. Among other things, constraints may be financial or based on time or resource availability.

Constructability - Constructability is a concept used in complex hard projects to assess and examine the entire construction process before beginning construction. It reduces the number of errors, setbacks, and delays once construction work actually begins.

Construction - The process by which a team builds infrastructure. Construction projects are complex. Engineers and architects supervise them, while a project manager manages the project work.

Consumable resource - A nonrenewable resource that cannot be used once consumed.

Contingency plan - An alternative or additional course of action planned in anticipation of the occurrence of specific risks.

Contingency reserve - An allocation of time or money (or both) set aside for the occurrence of known possibilities that could delay a project or make it more expensive. It is not the same as a management reserve, which is an allocation made for unforeseeable circumstances. Use of a contingency reserve is typically authorized upon the occurrence of a contingency.

Contract administration - The process by which a team manages a relationship with a contracting party. It establishes protocols for dealings between contracting parties.

Contract closeout - The process of determining whether the terms of a contract were completed successfully and of settling any remaining terms.

Control Account - A work breakdown structure tool that allows aggregation of costs for work packages as part of earned value management calculations.

Control chart - Control charts compare process results with historical averages and process control limits to show whether a process meets results expectations. If a process’s results are inconsistent or fall outside process control limits, it may need to be examined and adjusted.

Core process - A process that follows an established order and is central to the performance of the process system or project of which it is part.

Corrective action - A step taken to bring work back into alignment with performance expectations after it has failed to meet expectations. A corrective action, which is reactive, is not the same as a preventive action, which is proactive.

Cost baseline - The sum of work package estimates, contingency reserve, and other associated costs by which project performance is assessed. A formal change control process is necessary to change the cost baseline.

Cost benefit analysis - A Cost benefit analysis is used to weigh project costs against anticipated tangible project benefits.

Cost engineering - The application of scientific and engineering principles to several aspects of cost management. Among other things, cost engineers contribute to estimation procedures and project cost management. Cost engineering may also be called project controls in some industries.

Cost management plan - This plan details how project costs will be planned, funded, and controlled. It is a part of the project management plan.

Cost of quality - The cost associated with ensuring project quality. This cost may mean the difference between unacceptable and acceptable project results.

Cost overrun - A cost overrun occurs when unexpected costs cause a project’s actual cost to go beyond budget.

Cost performance index - A cost performance index measures the cost efficiency of a project by calculating the ratio of earned value to actual cost.

Cost plus fixed fee contract (CPFC) - Under a cost plus fixed fee contract, the seller is reimbursed for costs incurred and paid a predetermined fixed fee.

Cost plus incentive fee contract (CPIF) - Under a cost plus incentive fee contract, the seller is reimbursed for costs incurred and paid an additional fee if they meet performance criteria specified in the contract.

Cost plus percentage of cost contract (CPPC) - Under a cost plus percentage of cost contract, the seller is reimbursed for costs incurred and paid an additional amount equal to a percentage of the costs incurred if they meet performance criteria specified in the contract.

Cost reimbursable contract - A cost reimbursable contract is a contract under which a seller is reimbursed for costs incurred and paid an additional sum as per a predetermined agreement as profit. They are typically negotiated for projects with costs that are not fully known or not well defined.

Cost variance - The Cost variance of a project is its earned value minus its actual cost. A negative cost variance indicates that a project is running over budget. A positive cost variance indicates that a project is running below budget.

Cost/schedule impact analysis - A cost/schedule impact analysis determines the effects of a particular change on a project’s cost or schedule.

Crashing - A schedule compression technique used to speed up project work by increasing the rate at which critical path activities are completed by adding more resources — usually more personnel or more equipment. Crashing increases project costs, so it is used first on activities that can be sped up at the least additional cost.

Critical chain project management (CCPM) - Critical chain project management is an approach to managing projects that emphasizes the resources needed to complete project activities over activity order and durations set in a schedule. It uses resource optimization techniques like resource leveling and requires that activity start times be flexible.

Critical incident stress debriefing (CISD) - CISD is a psycho-educational exercise for small groups who have experienced a traumatic event. It is sometimes used in project management to help project teams cope with trauma and to rebuild team cohesion.

Critical path activity - A scheduled activity that is part of a project’s critical path.

Critical path method - The Critical path method is used to estimate the shortest length of time needed to complete a project and to determine the amount of float for activities that are not part of the critical path.

Critical success factor - A critical success factor is an aspect of a project that is crucial to the success of the project.

Criticality index - Each project activity is assigned a percentage called a criticality index, which is a measure of how frequently it is a critical activity in project simulations. Activities with high criticality indexes are likely to prolong project duration if delayed.

Current finish date -  The most up-to-date estimate of when an activity will finish.

Current start date - The most up-to-date estimate of when an activity will start.

Current state - A detailed representation of current business processes that is used as a point of comparison for efforts to analyze and improve processes’ efficiency, effectiveness, and outputs.

D - Project Management Terms

Data date - A data date, also called an as-of date, is a point at which a project’s status is measured and documented. It separates actual data from scheduled data.

Decision tree analysis - A diagrammatic technique used to illustrate a chain of decisions and to examine the implications of multiple decision-making or situational outcomes.

Decomposition - The hierarchical breaking down of project deliverables into smaller components that are easier to plan and manage.

Defect repair - An action taken to remedy a product that is nonfunctional or does not match expectations or requirements.

Define - The phase in the portfolio life cycle in which projects, programs, and any organizational changes needed to realize strategic objectives are identified and examined.

Definitive estimate - A definitive estimate reaches a total project cost estimate by computing cost estimates for all a project’s work packages. Definitive estimating is considered a highly accurate estimation technique, with estimates falling within a ten-percent range of the actual budget.

Deflection - The transferring of risk to another party, generally via a contract.

Deliverable - A final product or product component that must be provided to a client or stakeholder according to contractual stipulations.

Delphi technique - An estimation method based on expert consensus. Experts make estimates individually and simultaneously and then review their estimates as a group before making another set of estimates. The process is repeated, with the pool of estimates typically becoming narrower after each round of review until a consensus is reached. (See also wideband delphi )

Dependency - A logical relationship between project activities in a network diagram that determines when a dependent activity may begin.

Discrete effort - Project work directly associated with components of a work breakdown structure. It is directly measurable. Discrete effort is one of three types of activities used to measure work performance as part of earned value management.

Discretionary dependency - The preferred way to sequence activities when there is no logical limitation on how they must be ordered.

Do nothing option - An element of a project business case that states the consequences, if any, of not undertaking the project.

Drawdown - A method used to exercise control on the release of project funds. Instead of making entire project budgets available from the outset, management may choose to release funds at specific times. These releases are called drawdowns. Drawdowns may coincide with phase gates so that funds are released at the beginning of each phase.

Dummy activity - In activity-on-arrow diagrams, where arrows represent activities, dummy activities show logical relationships between activities. They are not actual activities themselves - dummy activity arrows are drawn with broken lines to differentiate them from regular activity arrows.

Duration - The amount of time taken to complete an activity or task from start to finish.

Duration compression - Duration compression techniques shorten a project’s duration without reducing its scope. This typically requires additional expenditure. There are two main duration compression techniques: crashing and fast tracking. (See also schedule compression technique )

Dynamic systems development method - The dynamic systems development method is one of the agile product development methodologies. Like other members of the agile family, it conducts development in a series of iterations, with user-story-based improvements made in increments. The dynamic systems development method operates with fixed cost and time constraints and uses the MoSCoW prioritization method to identify the desired product requirements with these constraints in mind.

E - Project Management Terms

Early finish date - The earliest time by which a scheduled project activity can logically finish.

Early start date - The earliest time by which a scheduled project activity can logically start.

Earned schedule - A method of measuring schedule performance that improves upon traditional earned value management. Earned value management tracks schedule variance only in terms of money and not in terms of time and thus does not accurately indicate schedule performance by the end of a project. To address this discrepancy, earned schedule theory uses the same data as traditional earned value management but tracks schedule performances separately with respect to money and time.

Earned value - A concept used to gauge project schedule and cost performance. Portions of the project budget are assigned to components of the work breakdown structure, and successful completion of a work breakdown structure component is understood as value earned through work.

Earned value management - A method of measuring project performance and progress with regard to scope, time, and costs. It is based on the use of planned value (where portions of the budget are allotted to all project tasks), and earned value (where progress is measured in terms of the planned value that is earned upon completion of tasks).

Effort - The amount of labor needed to complete a task. It is measured in person-hours or similar units.

Effort estimate - A calculated approximation of the effort — measured in staff-hours or similar units — needed to complete an activity.

Effort management - The most efficient allocation of time and resources to project activities.

End user - The person or persons who will eventually use the product of a project. Products are designed with end users in mind.

Enhancement, maintenance, and upgrade (EMU) - Enhancement, maintenance, and upgrade are project classifications used in the software development industry. Enhancement projects involve improving the functionality or performance of software. Maintenance projects keep software functioning as expected. Upgrade projects create a new version of the software, called a release.

Enterprise environmental factors - Internal and external factors that can impact projects. They include such things as climate, available resources, and organizational structure.

Enterprise modeling - Enterprise modeling is the creation of a model to represent an organization’s structure, processes, and resources. Enterprise models are built to increase understanding of how organizations work. They form the basis of improvement or restructuring efforts.

Epic - A set of similar or related user stories.

Estimate at completion (EAC) - The estimated total cost for all project work, calculated as the sum of the actual cost and the estimate to complete.

Estimate to complete (ETC) - At a given point in a project, the estimate of the cost of the work that still needs to be completed.

Estimating funnel - A metaphor for the increased accuracy in estimation made possible as a project progresses.

Estimation - The use of estimating techniques to reach approximations of unknown values.

Event chain diagram - A visual representation of a schedule network based on event chain methodology. It shows relationships between project activities and risk events.

Event chain methodology - A schedule network analysis method that enables uncertainty modeling. It is used to identify risk events’ impact on a schedule.

Event-Driven - The adjective describes an action that is prompted by the occurrence of an event.

Execution phase - The execution phase begins after activity approval and is the phase in which the team executes the project plan. Execution is typically the longest and most expensive phase in the project management life cycle.

Executive sponsor - Typically a member of the organization’s board who is ultimately responsible for the success of the project. They provide high-level direction to project managers and are accountable to the board for project success.

Expert judgment - The practice of using expert opinion to guide decision making.

External dependency - An outside relationship that affects the completion of a project activity.

Extreme programming (XP) - An agile software development methodology that emphasizes a high degree of responsiveness to evolving customer demands. Development cycles in extreme programming are short, and releases are frequent. Its main features include high-volume communication with customers and pair programming.

Extreme project management (XPM) - An approach to project management used mostly for complex projects with a high degree of uncertainty. XPM is designed for projects where requirements are expected to change. Therefore, it focuses on flexibility more than rigid scheduling. Where traditional project management proceeds sequentially through the project management life cycle and thus clearly defines problems, scopes, and solutions, extreme project management accepts that all three aspects will change as the project proceeds and thus emphasizes continual learning over deterministic planning.

F and G - Project Management Terms

Fallback plan - A predetermined alternative course of action adopted if a risk occurs and  a contingency plan proves unsuccessful in avoiding the risk’s impact.

Fast tracking - A schedule compression technique or duration compression technique in which the duration of a critical path is shortened by performing sections of some critical path activities concurrently instead of consecutively.  

Feasibility study - An evaluation of how likely a project is to be completed effectively, or how practical it is, taking resources and requirements into consideration.   

Finish-To-Start - In a finish-to-start relationship, a successor activity cannot start until a predecessor activity has finished.

Finish-To-Finish - In a finish-to-finish relationship, a successor activity cannot finish until a predecessor activity has finished.

Fishbone diagram - A fishbone diagram is used in project management to identify and categorize the possible causes of an effect. (See also Ishikawa diagram )

Fixed duration - A task in which the time required for completion is fixed.

Fixed formula method - The fixed formula method calculates earned value in a given period of time by splitting a work package budget between the start and completion milestones of a work package. A known proportion of value is earned upon beginning the work package, and the rest is earned upon completing the work package.

Fixed price contract (FPC) - A fixed price contract pays an agreed-upon fee and does not incorporate other variables, such as time and cost.

Fixed units - A task in which the number of resources used is fixed.

Fixed work - A task in which the amount of effort required is fixed.

Float - A measure of the schedule flexibility involving a particular task.

Flowchart - A diagram that lays out the complete sequence of steps in a process or procedure.

Focused improvement - An improvement strategy based on the theory of constraints. Attention is focused on addressing one limiting factor — called a constraint — at a time in order to optimize a system. Each constraint is improved until it no longer limits the system’s performance.

Fordism - Fordism, named for Henry Ford, is a manufacturing system in which mass-produced goods are priced affordably enough that those producing them may reasonably buy them with their own wages.

Forecast - A prediction or estimation of future project status based on available information.

Formal acceptance - The step at which authorized stakeholders sign off on a product, indicating that it meets their expectations.

Forward pass - A technique used to calculate early start and finish dates by working forwards from a point in a project schedule model.

Free float - The amount of time by which an activity can be postponed without affecting the early start dates of a successor activity.

Functional manager - The individual in charge of all activities carried out by a particular functional department within an organization.

Functional organization - An organization which organizes and manages staff members in groups based on specialty areas.

Functional requirements - The working characteristics of a product. These are based on how end users will use the product.

Future state - A detailed representation of the ideal condition of a company’s business processes after improvement.

Gantt chart - A Gantt chart is a type of bar chart that shows all the tasks constituting a project. Tasks are listed vertically, with the horizontal axis marking time. The lengths of task bars are to scale with tasks’ durations. (See also bar chart )

Gate - An end-of-phase checkpoint at which decisions are made regarding whether and how to continue with the project. (See also phase gate )

Go/No go - A point in a project at which it is decided whether to continue with the work.

Goal - An objective set by an individual or an organization. It is a desired endpoint reached by setting and working towards targets.

Goal setting - The process of creating specific, measurable, and attainable goals and of setting deadlines for these goals if desired.

Gold plating - The practice of incorporating features and improvements that go beyond a product’s agreed-upon characteristics. This is generally done to boost customer satisfaction.

Governance - The structure by which roles and relationships between project team members and an organization’s high-level decision makers are defined.

Graphical evaluation and review technique (GERT) - A network analysis technique that uses Monte Carlo simulation to bring a probabilistic approach to network logic and the formation of duration estimates. It is an alternative to the PERT technique but is not often used in complex systems.

H, I, and K - Project Management Terms

Hammock activity - In a schedule network diagram, a hammock activity is a type of summary activity that represents a number of grouped - but unrelated -smaller activities that occur between two dates.

Handover - In the project life cycle, a handover is the point at which deliverables are given to users.

Hanger - An unplanned break in a network path, usually caused by oversights regarding activities or dependent relationships between activities.

HERMES - A project management method created by the Swiss government and used by IT and business organizations. It is a simplified project management method that can be adapted to projects with varying degrees of complexity. It provides document templates to expedite project-related work.

High-Level requirements - The high-level requirements explain the major requirements and characteristics of the final product, including its purpose as a product and within the company. (See also product description )

Historical information - Data from past projects used in the planning of future projects.

Human resource management plan - A human resource management plan details the roles of and relationships between personnel working on a project, as well as how personnel will be managed. It is part of the project management plan.

Hypercritical activities - Critical path activities with negative slack time. They are created when a sequence of critical path activities leading up to another activity is too long to be completed in the stated duration.

Information distribution - The channels used to provide stakeholders with timely information and updates regarding a project.

Initiation phase – The formal start of a new project. It involves receiving proper authorization and creating a clear definition for the project.

Inputs - The information required to start the project management process.

Inspection - The process of reviewing and examining the final product to assess compliance to initial requirements and expectations.

Integrated assurance - The process of coordinating assurance activities across a number of assurance providers.

Integrated change control - The coordination of changes throughout all aspects of a project, including scope, budget, and schedule.

Integrated master plan (IMP) - A project management tool used to break down project work in large, complex projects. It lists project tasks and events in a hierarchical structure and shows relationships between them.

Integrated master schedule (IMS) - An integrated master schedule is produced from an integrated master plan. It is a list of all project tasks represented as a networked schedule.

Integration management plan - A document that explains integration planning and details how changes to project aspects will be managed.

Integration planning - The process of deciding how project elements will be integrated and coordinated and how changes will be addressed throughout the project management process.

Integrative management - Management processes that coordinate a number of project aspects including cost, schedule, and resources (among others).

Invitation for bid - An invitation for expressions of interest that a procuring organization extends. (See also request for proposal )

Ishikawa diagram - Ishikawa diagrams are used in project management to identify the possible causes of an effect. (See also fishbone diagram )

ISO 10006 - A set of quality-management guidelines for projects. It is a standard created by the International Organization for Standardization.

Issue - Anything that can cause problems for a project. The term typically refers to major problems that cannot be tackled by the project team on their own.

Issue log - Project issues and the persons responsible for resolving them. It may also include issue status, plans for resolution, and resolution deadlines.

Iteration - A concept from iterative software development that specifies a fixed time cycle for development work, typically a few weeks long. The development life cycle consists of a number of iterations, sometimes with a functional version of the software produced at the end of each one. Iterative development prioritizes time over scope, so there are rarely concrete requirements to be achieved in an iteration.

Iterative development - Iterative development focuses on developing products in a series of repeated fixed-time iterations, instead of working towards a single deliverable. At the end of an iteration, the team assesses progress and sets targets for the next iteration.

Iterative and incremental development - Iterative and incremental development is any combination of the iterative and incremental development approaches. It is an alternative to the waterfall development method: instead of focusing on sequential development with a single end product, it passes through a number of development cycles, with an improved version of the product, called an increment, produced at the end of each iteration.

Kanban - The word kanban means visual signal in Japanese. Kanban is a visual communication approach to the project management process. It uses visual tools like sticky notes or virtual cards in an online bulletin board to represent project tasks and to track and indicate progress throughout a project.

Kickoff meeting - The first meeting between a project team and stakeholders. It serves to review project expectations and to build enthusiasm for a project.

Key performance indicator (KPI) - A Key performance indicator is a metric for measuring project success. Key performance indicators are established before project execution begins.

L - Project Management Terms

Lag/Lag time - A necessary break or delay between activities.

Late finish date - The latest possible date a scheduled activity can be completed without delaying the rest of the project.

Late start date - The latest possible date a scheduled activity can be started without delaying the rest of the project.

Lateral thinking - Lateral thinking involves using a roundabout method to inspire new ideas or solutions. It can be done in a variety of ways, from using a random word to choosing an object in a room as a basis for thought.

Lead/Lead time - The amount of time an activity can be brought forward with respect to the activity it is dependent upon.

Lean manufacturing - A production methodology based on the idea of streamlining and doing more with less, such as by providing customers with the same product value while eliminating waste and thus reducing production costs.  

Lean six sigma – Lean six sigma combines the no-waste ideals of lean manufacturing with the no-defects target of six sigma. The goal of Lean six sigma is to eliminate waste and defects so that projects cost less and deliver more consistent quality.

Lessons learned - The sum of knowledge gained from project work, which can be used as references and points of interest for future projects.

Level of effort - Work that is not directly associated with components of a work breakdown structure but that can instead be thought of as support work. Examples of level of effort include maintenance and accounting. It is one of three types of activities used to measure work performance as part of earned value management.

Life cycle - The entire process used to build its deliverables. Life cycles are divided into a number of phases. A variety of life cycle models are in use in project management.

Line of balance - A graphical technique used to illustrate relationships between repetitive tasks in projects such as building identical housing units. Each set of repetitive tasks is illustrated as a single line on a chart. Project managers look for places where dependent tasks intersect, indicating that the successor task must be delayed.

Linear sequential model - A linear sequential model moves through a project life cycle’s phases systematically and sequentially. It is typically used for small projects with straightforward requirements, since sequential development makes it difficult to revise design based on testing or preliminary feedback. (See also waterfall model )

Linear scheduling method - A graphical scheduling technique used to assign resources when project work consists of repetitive tasks. It focuses on maximizing resource use and reducing time wastage due to interruptions.

Logic network - A chronologically arranged diagram that shows relationships between project activities.

Logical relationship - A dependency between project activities or between project activities and milestones.

M - Project Management Terms

Management - The act of overseeing planning, personnel, and resources to achieve a goal.

Management process - The act of planning and executing a project or process to meet a defined set of objectives or goals. Management processes may be carried out at multiple levels within organizations, with the scale and scope of activities typically increasing up the organizational hierarchy.

Management reserve - An allocation of money or time (or both) to address unforeseeable circumstances that might delay or increase the costs of a project. A management reserve is not the same as a contingency reserve, which is an allocation made for known possibilities. The senior management must typically approve any release of funds from a management reserve.

Management science (MS) - A field of study that seeks to improve organizational decision making through the use of quantitative and scientific research methods. It evaluates management decisions and outcomes to find optimal solutions to problems, and thus enables better decision making. (See also operations research )

Master project - A master project file comprises a number of smaller projects, called subprojects, arranged hierarchically.

Matrix organization - Employees in a matrix organization report to more than one boss, with different lines of reporting representing different organizational projects or functions. A matrix structure can boost employee engagement and cross-field approaches to problem solving, but it can also create ambiguity over an employee’s role.

Maturity model - Maturity is the extent to which an organization’s methods, processes, and decisions are standardized and optimized. A maturity model assesses one or more of these aspects against a set of external benchmarks to determine an organization’s maturity level. Maturity models allow organizations to assess themselves according to management best practices. They typically offer recommendations for improvement.

Megaproject - A complex, large-scale, and high-investment project. Only hard projects may be termed megaprojects.

Merge point - A point in a network diagram at which multiple predecessor activities culminate in a single successor activity. The successor activity may not start until all the predecessor activities have finished.

Milestone - Milestones indicate specific progress points or events in project timelines. They mark progress needed to complete projects successfully.

Milestone schedule - A milestone schedule details the time relationships associated with project milestones.

Mission statement - A concise enunciation of the goals of an activity or organization. Mission statements are usually a short paragraph, and can be created for entire organizations or for individual projects. They are designed to provide direction and guidance.

Modern project management - An umbrella term for a number of contemporary management strategies. In contrast to traditional management, modern project management: features more recognition of quality and scope variation; refines processes more frequently; stresses collective, interdisciplinary knowledge and team consensus over individual leadership. It is also less based on traditional hierarchies- modern project teams draw from a range of organizational levels and functional areas.

Monte Carlo simulation/technique - Monte Carlo simulation is a computer-based technique that performs probabilistic forecasting of possible outcomes to facilitate decision making. For each possible decision — from the most high-risk to the most conservative — a Monte Carlo simulation provides decision makers with a range of possible outcomes and the likelihood that each will occur.

MoSCoW - The MoSCoW prioritization method allows project managers to communicate with stakeholders on the importance of delivering specific requirements. The acronym indicates four categories of priority and importance for project requirements. Each requirement is prioritized as a “must have,” a “should have,” a “could have,” or a “won’t have.”

Most Likely Duration - An estimate of the most probable length of time needed to complete an activity. It may be used to compute expected activity duration through a technique called three-point estimation.

Motivation - A reason or stimulus that makes a person behave in a certain manner. In management, motivation refers to the desire to pursue personal or organizational goals and is positively associated with productivity.

Murphy’s Law - Murphy’s Law — “What can go wrong will go wrong.” — is cited in project management as a reason to plan adequately for contingencies.

N - Project Management Terms

Near-critical activity - A near-critical activity has only a small amount of total float, or slack time. Near-critical activities have a high chance of becoming critical since their float is easily exhausted.

Near-critical path - A series of activities with only small amounts of total float, called near-critical activities. A near-critical path may become a critical path if its float is exhausted.

Negative variance - The amount by which actual project performance is worse than planned project performance. Negative variances in time and budget show the project is taking longer and is more expensive than planned, respectively.

Negotiation - A discussion to resolve an issue between parties. Negotiations can take place at any point during an activity and may be formal or informal.

Net present value (NPV) - Net present value is a concept that compares the present value of a unit of currency to its inflation-adjusted possible value in the future. It allows organizations to determine the financial benefits, or lack thereof, of long-term projects.

Network Path - In a schedule network diagram, a network path is a logically connected continuous series of activities.

Node - In a network diagram, a node is a point at which dependency lines meet. In activity-on-node diagrams, nodes represent activities. In activity-on-arrow diagrams, they represent events or stages.

Nonlinear management (NLM) - Nonlinear management refers broadly to management practices which emphasize flexibility, self-organization, and adaptation to changing circumstances. It runs counter to concepts in linear management, which seek to impose structure on organizations. The defining characteristics of nonlinear management include encouragement of out-of-the-box thinking, proactivity in responding to challenges, and flexible working arrangements for employees.

O - Project Management Terms

Objective - A clear, concise statement about what an activity is meant to accomplish. Objectives are written to be SMART: specific, measurable, achievable, realistic, and time-bound. A successful project meets all its stated objectives.

Operations and maintenance - Operations and maintenance is the stage at which a project or system is handed over to staff who will put it into full operation and carry out routine maintenance.

Operations management - The duty of ensuring that an organization's operations are functioning optimally. Operations managers maintain and improve the efficacy and efficiency of business processes. They seek to develop operations which deliver high-quality outputs while keeping costs low.

Operations research (OR) - A field of study that uses mathematical, statistical, and scientific methods to aid and optimize decision making. It uses techniques such as mathematical modeling and optimization to enable better decision making. (See also management science )

Opportunity - In project management, an opportunity is a possibility that can contribute to project objectives. Opportunities in project management are classified as a type of risk.

Opportunity cost - The opportunity cost of a particular course of action is the loss of potential gains from all alternative courses of action.

Optimistic duration - An estimate of the shortest length of time needed to complete a specific activity or task. It may be used to compute expected activity duration through a technique called three-point estimation.

Order of magnitude estimate - An order of magnitude estimate provides an early, imprecise idea of the time and money required to complete a project. It uses historical data from completed projects to form adjusted estimates for similar new projects, usually presenting these estimates as ranging from -25 percent to +75 percent of the actual budget to indicate the levels of uncertainty involved.

Organization - A formally structured arrangement of parties that actively pursues a collective purpose. Organizations can be affected by external factors, and they in turn can affect the external environment.

Organization development - Broadly, organization development involves strategic efforts to improve aspects of organizational performance such as efficacy, efficiency, and sustainability, as well as aspects of organizational health such as employee satisfaction and engagement. The term may also refer to a field of study focusing on the characteristics of organizations and their growth and evolution.

Organizational breakdown structure - A hierarchical model of an organization's units and all its activities. It shows relationships between activities and organizational units and indicates the responsibilities of each unit, thus providing a holistic perspective of how an organization operates.

Organizational enabler - Any practice, tool, knowledge, or skill base that facilitates an organization’s pursuit of its objectives may be termed an organizational enabler.

Organizational planning   - The strategic process of defining roles, responsibilities, and reporting hierarchies for parties within an organization, keeping the organization’s objectives in mind. It is carried out based on the principles and strategies by which an organization manages its members.

Organizational process assets - The specific set of formal and informal plans and processes in use at an organization. They also constitute the sum of knowledge and experience accumulated from past efforts. Organizational process assets are essentially the unique knowledge and processes that facilitate an organization’s operations.

Organizational project management - A strategic approach that emphasizes the effective management of projects, programs, and portfolios as the best way to pursue organizational objectives. It focuses on aligning an organization’s activities with its objectives and on managing these activities collectively, so they contribute to objectives.

Organizational project management maturity - A measure of an organization’s ability to meet its objectives by effectively managing all its activities. It can be assessed with a maturity model called the OPM3, which, like other maturity models, provides comparisons and recommendations for improvement.

Output - In project management, an output is the (usually physical) end product of a process.

Overall change control - The evaluation, coordination, and management of project-related changes. It concerns both the effective integration of changes to benefit the project and the management of adverse changes or emergencies, so that project activities are not disrupted.

P - Project Management Terms

P3 assurance - P3 assurance involves satisfying sponsors and stakeholders that projects, programs, and portfolios are on course to meet performance expectations, fulfill objectives, and meet requirements.

P3 management - P3 management refers collectively to the management of projects, programs, and portfolios.

Parallel life cycle - In a parallel life cycle, certain phases are conducted in parallel (they overlap).

Parametric estimating - A technique for estimating cost and duration based on using historical data to establish relationships between variables — for example, calculating unit costs and the number of units required to complete a similar activity.

Pareto chart - A Pareto chart is a combination bar chart and line graph where the bars represent category frequencies in descending order from left to right, and the line tracks the cumulative total as a percentage.

Path convergence - On a schedule network diagram, path convergence occurs when an activity has multiple predecessors.

Path divergence - On a schedule network diagram, path divergence occurs when an activity has multiple successors.

Percent complete - The percent complete indicates the amount of work completed on an activity as a percentage of the total amount of work required.

Performance measurement baseline - A performance measurement baseline uses the schedule, cost, and scope baselines to create a point of comparison by which project performance is assessed. Variance from the performance measurement baseline may prompt corrective action.

Performance reporting - Performance reporting is formally informing stakeholders about a project's current performance and future performance forecasts. The aspects of performance to be reported are typically laid out in a communications management plan.

Performing organization - The performing organization for a project is the one whose members and resources most directly perform the project work.

Pessimistic duration - The pessimistic duration is an estimate of the longest length of time needed to complete a specific activity or task. It may be used to compute expected activity duration through a technique called three-point estimation.

PEST analysis - A PEST analysis examines how political, economic, social, and technological factors might affect a project.

Phase - A distinct stage in a project life cycle.

Phase gate - A phase gate is an end-of-phase checkpoint where the project leadership reviews progress and decides whether to continue to the next phase, revisits work done in the phase, or ends the project.

Planned value (PV) - The budget assigned to the work it is meant to accomplish. (See also budgeted cost for work scheduled )

Planning - The development of a course of action to pursue goals or objectives.

Planning phase - In project management, planning refers specifically to a phase of the life cycle that involves creating plans for management, control, and execution, as well as for what a project is meant to accomplish.

Planning poker - A consensus-based estimation technique. It attempts to avoid the anchoring effect — where the first estimate forms a baseline for all subsequent estimates — by having project team members make estimates simultaneously and discuss their estimates until they reach agreement.

Portfolio - A collectively managed set of programs and projects.

Portfolio balancing - An aspect of organizational project management, portfolio balancing involves selecting and tailoring a portfolio’s components so they can be managed in line with organizational objectives.

Portfolio charter - A portfolio charter details the formal structure of a portfolio and describes what it is meant to achieve. It authorizes the creation of a portfolio and connects its management with organizational objectives.

Portfolio management - The collective management of portfolios and their components in line with concepts of organizational project management.

Portfolio manager - The individual responsible for balancing and controlling a portfolio in line with concepts of organizational project management.

Portfolio, program, and project management maturity model (P3M3) - The P3M3 assesses organizational performance in portfolio, program, and project management via a set of key process areas (KPAs). Like other maturity models, the P3M3 allows organizations to measure their performance against external benchmarks and provides a roadmap for project performance and delivery improvement.

Positive variance - The amount by which actual project performance is better than planned project performance. Positive variances in time and budget show the project is proceeding faster and is less expensive than planned, respectively.

Precedence diagramming method (PDM) - The process of constructing a project schedule network diagram. It illustrates the logical relationships between project activities and shows the order in which they must be performed by using nodes to represent activities and arrows to show dependencies. PDM also indicates early and late start and finish dates, as well as activity durations.

Precedence network - A precedence network visually indicates relationships between project activities. Boxes and links are used to represent activities and activity relationships. Precedence networks also detail the time relationships and constraints associated with activities.

Predecessor activity - In a schedule, a predecessor activity logically comes immediately before another activity, which is dependent on the predecessor.

Preventive action - A step taken to ensure future work does not stray from performance expectations. A preventive action, which is proactive, is not the same as a corrective action, which is reactive.

PRINCE2 - PRINCE2 is an acronym for projects in controlled environments, version 2. It is a project management methodology that emphasizes business justifications for projects.  PRINCE2 management is based on clear organization of project roles and responsibilities and managing when necessary rather than by obligation. It involves planning and executing projects in a series of stages, with stipulated requirements for each work package.

PRiSM - PRiSM is an acronym for projects integrating sustainable methods. It is a project management methodology that focuses on minimizing negative impacts on society and the environment. PRiSM focuses on sustainability. It is essentially green project management.

Probability and impact matrix - A visual framework for categorizing risks based on their probability of occurrence and impact.

Problem statement - A problem statement concisely states and describes an issue that needs to be solved. It is used to focus and direct problem-solving efforts.

Process - A process is a repeatable sequence of activities with known inputs and outputs. Processes consume energy.

Process architecture - The sum of structures, components, and relationships that constitute a process system, which is a complex system of processes. It refers to the overall design of a process system and comprises both infrastructure (the constituent parts and relationships) and suprastructure (the larger system of which the process system is part).

Process management - The act of planning, coordinating, and overseeing processes with a view to improving outputs, reducing inputs and energy costs, and maintaining and improving efficiency and efficacy.

Process-based project management - A methodology that views projects as means of pursuing organizational objectives. It involves using an organization’s mission and values to guide the creation and pursuit of project objectives. If project objectives aren’t in alignment with the company mission statement, they are amended accordingly.

Procurement management plan - A procurement management plan explains how an organization will obtain any external resources needed for a project.

Product breakdown structure (PBS) - A product breakdown structure is used in project management to record and communicate all project deliverables in a hierarchical tree structure. It may be thought of as a comprehensive list of all project outputs and outcomes.

Product description - A product description defines and describes a project product and its purpose. (See also high-level requirements )

Product verification - Product verification involves examining a deliverable to ensure, among other things, that it meets requirements, quality benchmarks, and expectations set by the product description. It is conducted before a product is presented to a customer for acceptance.

Professional development unit (PDU) - A continuing education unit that project management professionals (PMPs) take to maintain certification.

Program - A collectively managed set of projects.

Program charter - An approved document that authorizes the use of resources for a program and connects its management with organizational objectives.

Program Evaluation and Review Technique (PERT) - PERT is a statistical method used to analyze activity and project durations. PERT networks are typically illustrated with activity-on-arrow diagrams. The method makes use of optimistic, pessimistic, and most likely durations to estimate expected durations for project activities and to determine float times, early and late start dates, and critical paths. (See also three-point estimating )

Program management - The collective management of programs and their components in line with concepts of organizational project management.

Program manager - A program manager has formal authority to manage a program and is responsible for meeting its objectives as part of organizational project management methods. They oversee, at a high level, all projects within a program.

Progress analysis - The measurement of progress against performance baselines. Progress analysis collects information about the status of an activity that may prompt corrective action.

Progressive elaboration - The practice of adding and updating details in a project management plan. It aims at managing to increase levels of detail as estimates are revised, and more up-to-date information becomes available.

Project - A temporary, goal-driven effort to create a unique output. A project has clearly defined phases , and its success is measured by whether it meets its stated objectives.

Project accounting - In project management, project accounting deals with reporting on the financial status of projects. It measures financial performance and actual costs against budgets or baselines. Therefore, it complements project management while providing financial information to the sponsor. Project accounting may also be referred to as job cost accounting.

Project baseline - A project baseline comprises the budget and schedule allocations set during the initiation and planning phases of a project. Assuming the scope of the project remains unchanged, it may be used to determine variance from budget or schedule.

Project calendar - A project calendar indicates periods of time for scheduled project work.

Project charter - A Project charter is a document that details the scope, organization, and objectives of a project. It is typically created by a project manager and formally approved by the sponsor. A project charter authorizes the project manager’s use of organizational resources for the project and is understood to be an agreement between the sponsor, stakeholders, and project manager. (See also project )

Project cost management (PCM) - The use of an information system to estimate, measure, and control costs through the project life cycle. It aims at completing projects within budgets.

Project definition - A project definition or project charter is a document created by a project manager and approved by a project sponsor that details the scope, organization, and objectives of a project. It authorizes a project manager’s use of resources for a project and constitutes an agreement between the sponsor, stakeholders, and project manager (See also project charter )

Project management body of knowledge (PMBOK) - The PMBOK is a collection of project management-related knowledge maintained by the Project Management Institute.

Project management office - An organizational unit that oversees project management-related activities within an organization. It seeks to facilitate and expedite project work through the use of standard procedures. A project management office also functions as a repository of general, project-related knowledge and resources.

Project management process - A management process that encompasses all phases of a project, from initiation to the meeting of objectives.

Project management professional (PMP) - A Project management professional (PMP) is a person certified by the Project Management Institute upon completion of a course of formal education, an examination, and a certain number of hours managing projects. The certification is considered the gold standard in project management.

Project management simulators - Software training tools that teach project management skills via interactive learning and provide real-time feedback by which project management trainees can practice and reassess their decision making. Some simulators, such as the Monte Carlo simulator, are used to support and complement decision making in real projects.

Project management software - Project management software is a family of tools typically used in the management of complex projects. They provide the ability to: calculate estimates; create and manage schedules and budgets; track and oversee project activities and progress; assign and allocate resources; optimize decision making; and communicate and collaborate with members of a project team.

Project management triangle - A visual metaphor that illustrates relationships between scope, cost, and schedule. It expresses the idea that none of the three aspects can be amended without affecting the others.

Project manager - The person tasked with initiating, planning, executing, and closing a project, and with managing all aspects of project performance through these phases. The term is typically used for a project management professional. Project managers are able to use organizational resources for projects. They serve as contact points for sponsors, program managers, and other stakeholders.

Project network - A visual representation of the activities and dependencies involved in the successful completion of a project.

Project performance indicators - Measures used to assess project performance, usually with reference to project or performance baselines. These typically include cost, schedule, and scope statuses.

Project phase - A distinct stage in a project management life cycle. Each phase comprises a set of project-related activities.

Project plan - A document formally approved by the project manager, sponsor, and other stakeholders which states the approved cost, schedule, and scope baselines. It guides project execution, control, and quality and performance assessment. The project plan also forms the basis for communication between parties involved in a project. Project plans can vary in their levels of detail.

Project planning - Project planning is usually the longest phase of the project management life cycle. It involves determining cost, schedule, and scope baselines and using these to create a detailed roadmap for executing project activities and producing deliverables.

Project portfolio management (PPM) - A method of collectively managing a portfolio’s constituent programs and projects to pursue organizational objectives. It involves optimizing the mix and scheduling of projects to pursue objectives as effectively as possible. Project portfolio management is closely related to organizational project management.

Project schedule network diagram - A diagram is a visual representation of how scheduled project activities are ordered and related. Depending on the type of network diagram, boxes represent activities or events, and arrows indicate activities or dependencies, typically with expected durations.

Project scope statement - A project scope statement details what a project is meant to achieve and describes the deliverables expected. It forms the basis of measurable objectives by which the success of a project will be assessed. Project scope statements are typically part of project plans.

Project stakeholders - Broadly, a Stakeholder is any party which may be affected by a project. In project management, the term usually refers to parties with an interest in the successful completion of a project.

Project team - A project team is responsible for leading and collectively managing a project and its related activities through the project’s life cycle. Project teams may contain members from several different functional groups within an organization. Depending on the nature of the project, a project team may be disbanded upon completion of a project.

Project tiers - Project sizing categorizes projects into project tiers based on staff power or time required for completion to determine the most appropriate project management practices.

Projectized organization - A projectized organization arranges all its activities into a collection of projects, programs, and portfolios. Projects are typically completed for external clients or customers. The prioritization of project work means the project manager can utilize resources and assign work as they see fit.

Proof of concept - A proof of concept is derived from a pilot project or experiment that examines whether an activity can be completed, or a concept can be realized. It shows the feasibility of an idea.

Proport - The term proport is used to define the sum of unique skills that team members bring to a project. These skills can be harnessed for collective benefit.

Q - Project Management Terms

Qualitative risk analysis - A project management technique that subjectively analyzes risk probability and impact. The risks are categorized on a probability and impact matrix, and those deemed significant may undergo a quantitative risk analysis.

Quality - In project management, quality is a measure of a deliverable’s degree of excellence. Quality may also refer to a clearly defined set of stakeholder requirements by which results are assessed.

Quality assurance - A set of practices designed to monitor processes and provide confidence that result in deliverables meeting quality expectations. It may involve quality audits and the stipulated use of best practices.

Quality control - The use of standardized practices to ensure that deliverables meet stakeholder expectations. It involves not only the definition and identification of unacceptable results but also the management of processes to optimize results.

Quality management plan - A quality management plan identifies stakeholders’ quality expectations and details quality assurance and quality control policies to monitor results and meet these expectations. It is part of a project management plan.

Quality planning - Quality planning involves identifying expected quality standards and creating mechanisms to ensure these standards are met. It may also recommend corrective action if quality standards are not being met.

Quality, cost, delivery (QCD) - QCD is an approach to management that focuses on assessing production processes with regard to three aspects: quality, cost, and delivery. It seeks to simplify process management and facilitate decision making by providing objective information about each of the three aspects, with an understanding that modifications to any one aspect will also affect the others.

Quantitative risk analysis - The mathematical analysis of risk probability and impact. In project management, it is not a substitute for qualitative risk analysis. Instead, quantitative analysis is conducted after qualitative analysis and assesses risks that qualitative analysis has identified as significant.

R - Project Management Terms

RAID log - RAID is an acronym for risks, assumptions, issues, and dependencies. The RAID log is a project management tool that records developments in these four aspects of project work for the stakeholders’ benefit and for an end-of-project review.

RASCI/RACI chart - A RASCI chart is created during project initiation to identify those who are: responsible for project activities, accountable for ensuring that work is done, signing off on the work, consulted in relation to work activities, and informed about the status of the work. The acronym may be simplified as RACI . (See also responsibility assignment matrix )

Reengineering - Reengineering involves the extensive redesign or rethinking of core processes to achieve major performance improvements. It focuses on optimizing key performance areas such as quality and efficiency. Reengineering often involves restructuring organizations so that multi-functional teams can manage processes from start to end.

Release - In IT project management, a release is a fully functional software delivered to a customer as agreed, typically after a series of iterations.

Remote team - A remote team’s members work in collaboration, usually electronically, from different geographic locations.

Repeatable - The term repeatable is used to describe a sequence of activities that may be easily and efficiently replicated. Repeatable processes are economical since they typically avoid negative variances and have established operations.

Request for proposal - A formal invitation for expressions of interest that is extended by an organization looking to procure goods or services. (See also invitation for bid )

Request for quotation - Upon receipt of proposals after issuing a request for proposal, an organization will issue a request for quotations to shortlisted proposers, asking for detailed cost estimations for specific goods or services.

Requirements management plan - A requirements management plan explains how project requirements will be defined, managed, and delivered. It is part of a project management plan and is used to guide project execution and control to adequately deliver requirements.

Requirements traceability matrix - A table that tracks requirements through the project life cycle and product testing. It is used to ensure that a project is able to deliver the stipulated requirements during the verification process.

Requirements - A set of stipulations regarding project deliverables. They are a key element of the project scope and explain in detail the stakeholders’ expectations for a project.

Residual risk - Any risks that have not or cannot be addressed by risk mitigation or risk avoidance procedures.

Resource allocation - The assigning and scheduling of resources for project-related activities, ideally in the most efficient manner possible. Resource allocation is typically handled by a project manager, though they may be overridden by a program manager if resources are to be shared between multiple projects. (See also allocation )

Resource availability - Resource availability indicates whether a specific resource is available for use at a given time.

Resource breakdown structure - A hierarchical list of resources needed for project work, classified by type and function.

Resource calendar - A resource calendar indicates resource availability, usually by shift, over a period of time.

Resource leveling - A technique that involves amending the project schedule to keep resource use below a set limit. It is used when it is important to impose limits on resource use. Resource leveling can affect a project’s critical path.

Resource loading profiles - Resource loading profiles indicate the number and type of personnel required to do project work over periods of time.

Resource optimization techniques - Resource optimization techniques seek to reconcile supplies and demands for resources. Depending on whether project duration or limiting resource use is prioritized, they can be used to amend activity start and finish dates in ways that do or do not affect a project’s critical path. (See also resource leveling and resource smoothing )

Resource smoothing - A technique that makes use of float when allocating resources so as not to affect total project duration. It is used when project time constraints are important. Resource leveling does not affect a project’s critical path.

Resource-Limited schedule - A resource-limited schedule has had its start and end dates adjusted based on the expected availability of resources.

Resources - The elements needed for a project to successfully meet its objectives. Examples of resources include equipment, staff, locations, facilities, and money.

Responsibility assignment matrix - A responsibility assignment matrix identifies those who are: responsible for project activities, accountable for ensuring that work is done, consulted about work activities, and informed about the work status. (See also RASCI/RACI chart)

Retainage - The sum of money withheld from a contract payment until completion of the contract according to terms.

Return on investment (ROI) - The expected financial gain of a project expressed as a percentage of total project investment. It is used to assess the overall profitability of a project.

Risk - The probability of occurrence of a specific event that affects the pursuit of objectives. Risks are not negative by definition. In project management, opportunities are also considered risks.

Risk acceptance - Risk acceptance involves acknowledging a risk and not taking preemptive action against it.

Risk appetite - The amount and type of risk an organization is willing to accept in anticipation of gains. It is not the same as risk tolerance, which is the amount of variation in performance measures that an organization is willing to accept.

Risk assessment - An activity that involves identifying possible risks to a project and examining how these risks, if they occur, would affect objectives.

Risk avoidance - Risk avoidance focuses on avoiding threats that can harm an organization, its projects, or assets. Unlike risk management, which is geared toward mitigating the impact of a negative event, risk avoidance seeks to address vulnerabilities and make sure those events do not occur.

Risk breakdown structure - A hierarchical model of all risks, arranged categorically.

Risk category - A set of risks grouped by cause.

Risk efficiency - A concept based on the idea of maximizing the return-to-risk ratio. It can do this in two ways: by minimizing exposure to risk for a given level of expected return or by seeking the highest possible expected return for a given level of risk.

Risk enhancement - Risk enhancement involves increasing the probability of an opportunity, or positive risk, occurring.

Risk exploitation - Risk exploitation focuses on ensuring that an opportunity, or positive risk, occurs.

Risk identification - The process of identifying and examining risks and their effects on project objectives.

Risk management - A subset of management strategies that deals with identifying and assessing risks and acting to reduce the likelihood or impact of negative risks. Risk managers seek to ensure that negative risks do not affect organizational or project objectives.

Risk mitigation - Risk mitigation involves decreasing the probability of a negative risk occurring, as well as protecting project objectives from a negative risk’s impact.

Risk monitoring and control - The risk monitoring and control process uses a risk management plan to identify risks and implement appropriate risk responses.

Risk owner - A risk owner is responsible for determining and enacting appropriate responses to a specific type of risk. (See also risk response owner )

Risk register - A risk register, or risk log, is a tool used to chronicle risky situations and risk responses as they arise.

Risk response owner - A risk owner monitors a specific type of risk and implements appropriate risk responses when necessary. (See also risk owner)

Risk response planning - Risk response planning is typically conducted after risk analyses to determine appropriate courses of action for risks is deemed significant.

Risk sharing - Risk sharing involves handing ownership of a positive risk to a third party who is typically specialized and better able to realize the opportunity.

Risk threshold - The level at which the likelihood or impact of a risk becomes significant enough that the risk manager deems a risk response necessary.

Risk tolerance - The level of variation in performance measures that an organization is willing to accept. It is not the same as risk appetite, which is the level and type of risk an organization is prepared to accept in anticipation of gains.

Risk transference - Risk transference involves handing ownership of risk to a third party who is typically specialized and better able to address the risk or to withstand its impact.

Risk trigger - An event that causes a risk to occur. A trigger can serve as a warning that a risk has occurred or is about to occur.

Rolling wave planning - A planning approach that focuses on in-depth detailing of work to be accomplished in the near term and progressively lower levels of detail for work scheduled farther in the future. It is based on the idea that work scheduled in the future is more subject to change and thus less worth planning in detail. Rolling wave planning only works for schedules with clearly defined iterations.

Root cause - The primary reason an event occurs.

Run book - A comprehensive catalog of information needed to conduct operations and to respond to any emergency situations that arise during operations. It typically details, step by step, all regular operational procedures and emergency responses.

S - Project Management Terms

S-Curve analysis - An s-curve tracks cumulative financial or labor costs. S-Curve analysis is used to compare a project’s cumulative costs at any given point with a cumulative cost baseline created during the planning phase. It allows project managers and sponsors to assess performance and progress.

Schedule - A comprehensive list of project activities and milestones in logical order, with start and finish dates for each component.

Schedule baseline - A schedule baseline is the original project schedule — approved by the project team, sponsor, and stakeholders — by which performance is assessed. Schedule baselines are generally inflexible, though alteration of a schedule baseline via a formal change control process may be allowed.

Schedule compression technique - A schedule compression technique speeds up projects without affecting scope by decreasing the duration of a project’s critical path. There are two main schedule compression techniques: crashing and fast tracking. (See also duration compression )

Schedule model - A logically arranged, time-based plan for project activities. It is used to create a project schedule.

Schedule model analysis - Schedule model analysis examines the project schedule created from a schedule model. It aims to optimize the schedule, usually via the use of scheduling software.

Schedule network analysis - Schedule network analysis uses a variety of techniques to identify early and late start and finish dates for project activities and thus to create project schedules.

Schedule performance index (SPI) - The ratio of earned value to planned value at a given point in time. It shows whether a project is running to schedule. An SPI lower than one indicates the project is behind schedule. An SPI higher than one indicates the project is ahead of schedule.

Schedule variance - Schedule variance is the difference between earned value and planned value at a given point in time.

Scientific management - Scientific management was an early attempt to bring scientific approaches to process management. Its earliest form was derived from a 1911 monograph by Frederick W. Taylor, who focused on increasing economic efficiency via the analysis and optimization of labor processes.

Scope - The scope of a project constitutes everything it is supposed to accomplish in order to be deemed successful.

Scope baseline - The set of requirements, expectations, and work packages approved as project deliverables. It is used to guide and assess project performance.

Scope change management - Scope change management deals with amendments to the scope as set in the scope baseline and project management plan. Since scope amendments typically affect cost and schedule estimates, scope change management involves revising estimates and adequately communicating these to stakeholders, as well as obtaining the resources necessary to fulfill new scope requirements.

Scope creep - Scope creep refers to gradual changes in project scope that occur without a formal scope change procedure. Scope creep is considered negative since unapproved changes in scope affect cost and schedule but do not allow complementary revisions to cost and schedule estimates.

Scrum - Scrum is an iterative development procedure used in software development projects. Scrum-based projects focus on prioritizing requirements and working towards a clear set of goals over a set time period, called a sprint. The development team thus works through the list of requirements over a number of sprints. Scrum-based projects usually do not have project manager. Instead, the project team meets daily for progress updates.

Secondary risk - A risk created by a risk response.

Security - Security in project management refers broadly to protecting humans, information, and resources from risk.

Six Sigma - An approach to process management that focuses on the near total elimination of product or service defects. It uses quality management methods to improve and optimize processes involved in the production of a product or service so that 99.99966 percent of process outcomes are defect-free.

Slack time - The length of time an activity's early start can be delayed without affecting project duration. (See also float )

Slip chart - A slip chart graphically compares predicted activity completion dates with originally planned completion dates.

Slippage - The negative variance between planned and actual activity completion dates. Slippage may also refer to the general tendency of a project to be delayed beyond planned completion dates.

Soft project - A soft project does not have a physical output.

Software engineering - Software engineering is generally defined as the use of engineering principles in software development. It systematically employs scientific and technological approaches in the design, operation, and modification of software.

Spiral life cycle - An IT system’s development model that aims to learn from experience by drawing from both iterative development and the waterfall model. It has four sequential phases: identification, design, construction, and evaluation and risk analysis. At the end of each life cycle, an iteration is assessed by the customer, and the spiral sequence begins again upon receipt of customer feedback. The spiral model is typically used in long-term projects or those where requirements are expected to vary, and customer feedback is to be incorporated in phases.

Sponsor - A sponsor has ultimate authority over a project. They provide high-level direction, approve project funding as well as deviations from cost and budget, and determine project scope. Sponsors are typically members of the senior management and are expected to provide high-level support for a project.

Sprint - In iterative project development, a sprint is a fixed unit of time during which the project typically passes through a complete development life cycle. A sprint is usually a few weeks long.

Stakeholder - In project management, a Stakeholder is any party with an interest in the successful completion of a project. More generally, the term refers to anyone who is affected by a project. (See also project stakeholder )

Standards - A standard prescribes a collection of standardized rules, guidelines, and characteristics requirements for processes or products that are approved by a recognized body. Standards are not by definition mandatory. They are adopted by consensus, although they may be enforced as a requirement for participation in certain markets.

Start-To-Finish - In a start-to-finish relationship, a successor activity cannot finish until a predecessor activity has started.

Start-To-Start - In a start-to-start relationship, a successor activity cannot start until a predecessor activity has started.

Statement of work (SoW) - A Statement of work is a comprehensive and detailed list of deliverables expected under a contract, with expected dates for each deliverable.

Steering committee - A steering committee provides high-level strategic guidance on a project. It typically comprises individuals from a number of stakeholder organizations and serves to provide consensus-based direction on projects with a large number or a diversity of stakeholders.

Story point - In sprint-based projects, a story point is a measure of the amount of work required to implement a particular user story. Assigning and totaling story points allows project teams to target a realistic number of user stories for action during an iteration or sprint.

Successor activity - In a schedule, a successor activity logically comes after and depends on an activity immediately preceding it.

Summary activity - In a network diagram, a summary activity combines a set of related activities and visually represents them as a single activity.

Sunk cost - A cost that cannot be recovered once spent.

Systems development life cycle (SDLC) - In systems engineering, the systems development life cycle is the process of creating, releasing, and maintaining an information system, which may comprise hardware, software, or both. The typical SDLC has six sequential phases: planning, analysis, design, implementation, testing, and maintenance.

Systems engineering - A field of engineering that applies principles of systems thinking to the development of complex systems. Since complex systems are more difficult to coordinate and make cohesive, systems engineering focuses on developing and optimizing systems as interactive wholes instead of sums of parts. As complex systems comprise both technical and human elements, systems engineering is, by nature, interdisciplinary.

T - Project Management Terms

Task - In project management, a task is a unit of work or activity needed for progress towards project goals. Typically, a task must be completed by a set deadline. Tasks may be further broken down into assignments or subtasks.

Task analysis - A task analysis details the actions or resources required to complete a task.

Testing - The testing phase involves assessment of the product developed so as to gauge quality and performance and to determine whether requirements have been met.

Theory of constraints - The theory of constraints explains that any process is limited from optimum performance by its weakest link or links, called constraints. The theory of constraints methodology involves identifying these weak links via a strategy called focusing and improving them until they no longer limit performance.

Threat - A negative risk that could adversely affect project objectives.

Three-point estimating - A superset of estimating techniques that use averages (or weighted averages) of most likely, optimistic, and pessimistic costs, and duration estimates to form final estimates.

Time and material contract - A time and material contract pays per unit of time and reimburses materials costs for contracted work.

Time chainage diagram - In project management, a time chainage diagram graphically represents scheduled activities for a hard project completed sequentially over a geographic distance, such as the construction of a motorway or the laying of a pipeline. It thus provides both a scheduled time and a relative geographic location for each activity.

Time limit - The time limit for a task is the window of time or deadline by which it must be completed.

Time-scaled network diagram - A network diagram is time scaled if the lengths of activities are drawn to scale to indicate their expected durations.

Timebox - Timeboxing is a project management strategy that prioritizes meeting deadlines over scope requirements. It involves assigning specific lengths of time, called timeboxes, to project activities. Project teams work to address as many requirements as possible within each timebox, proceeding to successor activities once the time limit has passed.

Timeline - A Timeline is a graphical, sequential representation of project activities.

To-Complete Performance Index (TCPI) - A project’s to-complete performance index is the cost performance it needs to achieve to be completed within budget. The TCPI is calculated as the ratio of work remaining to budget remaining.

Tolerance - The acceptable level of variance in project performance. The project sponsor is typically informed if tolerance levels are crossed.

Top-Down estimating - Top-Down estimating uses historical data from similar projects to compute time and cost estimates. (See also analogous estimating )

Total cost of ownership (TCO) - The total cost of ownership estimates the sum total of direct and indirect costs incurred in the purchase, operation, and maintenance of an asset through its life.

Total float - The length of time an activity can be delayed from its early start date without affecting the project end date.

Trigger condition - A condition that causes a risk to occur. Trigger conditions can serve as warning signs that risks have occurred or are about to occur. (See also risk trigger )

U, V, W, and X - Project Management Terms

Unified process - A unified process may refer to any one of a family of iterative software development process frameworks. Unified processes have four phases: inception, elaboration, construction, and transition. Each phase comprises a number of timeboxed iterations, which in turn involve a cycle of specifying requirements, analysis, design, implementation, and testing, with emphases on these shifting as the project team proceeds through iterations. Each iteration results in an improved version of the system called an increment.

Use case - In software development, a use case is a step-by-step list of actions that end users would take to achieve specific goals. Use cases facilitate end user-focused software testing.

User story - A project requirement stated in one sentence. It typically identifies users, real or hypothetical, what these users want from software, and why they want it. Project development teams prioritize user stories in each iteration by assigning story points

V life cycle - The V in V life cycle stands for verification and validation. It is a sequential software development process that matches a corresponding testing phase to each phase in the software development life cycle. During the verification phase, a project team works at increasingly granular levels of detail to identify requirements and design, and then builds the software. Validation proceeds in the opposite direction, as testers examine software components in turn before moving on to systems testing and finally checking that the project as a whole meets requirements.

Value engineering - Value engineering seeks to increase the functionality-to-cost ratio of a product by providing improved functionality at lower cost. Some applications of value engineering attract criticism, as manufacturers may decrease costs by using lower-quality components that decrease product lifespans.

Value for money ratio - In project management, the value for money ratio is expressed as the ratio of financial and other benefits to the resources expended in a project.

Value tree - A hierarchical model of the characteristics of a product or service that determine its value.

Variance analysis - The practice of investigating deviations between planned and actual performance.

Variance at completion (VAC) - A project’s variance at completion is the difference between its budget at completion and its estimate at completion.

Vertical slice - A performance indicator that demonstrates progress across all project components or performance areas at a given point in time.

Virtual design and construction (VDC) - A method  based on using technology in design and construction projects. It uses building information modeling (BIM) tools that focus on designable and manageable aspects of projects to create integrated models that predict project performance.

Virtual team - A virtual team comprises people from different organizations, locations, or hierarchies. It is not necessarily the same as a remote team, which is a group of people working together from different locations.

Waterfall model - The Waterfall model is a software development life cycle in which development phases are sequential, non-iterative, and do not overlap. It is typically reserved for small projects with straightforward, clearly defined requirements since a sequential development process makes it difficult to revisit the analysis and design phases once testing has begun. (See also linear sequential model )

Weighted milestone method - The weighted milestone method allows project managers to estimate earned value by splitting work packages into weighted segments. Each segment represents a portion of the budget value for the work package and ends with a milestone. When a segment milestone is classified as complete, a portion of the total work package value has been earned.

What-If scenario analysis - A simulation technique that allows project managers to determine and compare specific conditions’ effects on project schedules and objectives.

Wideband delphi - An estimation technique based on expert consensus. Each member of an estimation team uses a work breakdown structure to create anonymous estimates of the effort required to complete each project element or work package. The estimates are then reviewed as a group before the experts create new estimates, and the process is repeated for a number of rounds until a consensus is reached. (See also delphi technique )

Work - In project management, work is the amount of effort needed to complete a task.

Work authorization system - A formal procedure to ensure that project work is performed on time and in logical order.

Work breakdown structure (WBS) - A Work breakdown structure is a comprehensive, hierarchical model of the deliverables constituting the scope of a project. It details everything a project team is supposed to deliver and achieve. A work breakdown structure categorizes all project elements, or work packages, into a set of groups and may be used to form cost estimates.

Work breakdown structure dictionary - A document that details, describes, and provides scheduling information for every element of a work breakdown structure. It may be thought of as a dictionary-cum-schedule of work packages.

Work package - The work packages of a project are its lowest-level deliverables. They are detailed in a work breakdown structure dictionary.

Work stream - In project management, a work stream is a logically arranged series of activities that must be completed to pursue project objectives. The term typically refers to the full sequence of work activities from project initiation to project closure.

Workaround - A way to circumvent a problem which does not have a permanent solution or for which no adequate response was planned.

X-Bar control charts - An x-bar control chart includes two separate charts that display the means and sample ranges for a number of periodically gathered, same-size samples. The sampled data constitute some characteristic of a product or a process.

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Business Terms: A to Z Glossary

Interested in Business, but you keep seeing terms unfamiliar to you? This A-to-Z glossary defines key Business terms you need to know.

Business professionals develop a diverse skill set encompassing business administration, finance, marketing, operations, entrepreneurship, ethics, analytics, communication, and global business. They apply their knowledge to contribute to the success of organizations by managing resources, making informed decisions, developing marketing strategies, optimizing operations, fostering innovation, and adhering to ethical practices. Business professionals play a crucial role in driving growth, ensuring financial stability, building strong customer relationships, and navigating the complexities of the business landscape to achieve organizational objectives.

This Business glossary can be helpful if you want to get familiar with basic terms and advance your understanding of Business.

Business Terms

Assets are resources owned or controlled by a business that has economic value and can generate future benefits. Examples of assets include cash, inventory, equipment, and intellectual property. Assets are recorded on a company's balance sheet and contribute to its overall value and financial health.

Business Plan

A Business Plan is a formal document that outlines a company's goals, strategies, and operational plans. It serves as a roadmap for business growth and guides decision-making. A well-crafted business plan encompasses market analysis, financial projections, and a comprehensive overview of the company's products or services.

Competitive Advantage

Competitive advantage refers to the unique qualities or attributes that set a company apart from its competitors and gives it an edge in the market. It can be achieved through superior quality, cost leadership, innovation, customer service, or brand reputation. Developing and maintaining a competitive advantage is crucial for long-term success.

E-commerce, short for Electronic Commerce, refers to the buying and selling of goods and services over the Internet. It encompasses retail stores, electronic payments, online marketplaces, and digital marketing. E-commerce has revolutionized businesses, enabling global reach, convenience, and new revenue streams.

Entrepreneurship

Entrepreneurship is identifying opportunities, taking risks, and starting and managing a business venture. Entrepreneurs are innovative and driven individuals who bring new ideas, products, or services to the market. Entrepreneurship plays a vital role in economic growth, job creation, and fostering innovation.

Globalization

Globalization is the increasing interconnectedness and integration of economies, societies, and cultures worldwide. It involves the exchange of goods, services, ideas, and information on a global scale. Globalization has expanded business opportunities, facilitated international trade, and fostered cultural exchange and diversity.

Human Resources (HR)

Human Resources (HR) refers to the department or function within an organization responsible for managing and developing its workforce. HR activities include recruitment, training, performance management, employee relations, and compensation and benefits administration. HR plays a critical role in attracting, retaining, and nurturing talent.

Innovation refers to creating and implementing new ideas, processes, products, or services that result in significant improvements or value. It involves finding novel solutions, embracing change, and fostering a culture of creativity within an organization. Innovation drives competitiveness, growth, and adaptation to evolving market dynamics.

Marketing encompasses activities aimed at promoting and selling products or services to customers. It involves market research, product development, pricing, distribution, and promotional strategies. Effective marketing ensures that a company's offerings meet customer needs, create awareness, generate demand, and foster customer loyalty.

Key Performance Indicators (KPIs)

Key Performance Indicators (KPIs) are quantifiable metrics used to measure progress toward specific business objectives. KPIs vary depending on the organization and its goals but often include financial metrics, customer satisfaction ratings, sales figures, and operational efficiency measures. KPIs provide insights into performance, facilitate goal tracking, and drive continuous improvement.

Leadership is the ability to inspire, influence, and guide individuals or groups toward achieving shared goals. Influential leaders motivate and empower others, make sound decisions, and foster a positive work culture. Leadership skills are crucial for driving organizational success, managing change, and promoting innovation.

Market Segmentation

Market Segmentation involves dividing a broad target market into smaller, distinct groups based on shared characteristics such as demographics, behaviors, or preferences. By understanding the unique needs and preferences of different segments, businesses can effectively tailor their marketing strategies and offerings to reach and engage specific customer groups.

Outsourcing

Outsourcing is contracting a business process or function to an external third-party provider rather than handling it in-house. Outsourcing can include customer service, IT support, manufacturing, or payroll processing. It allows companies to focus on their core competencies, reduce costs, and access specialized expertise.

Profit Margin

Profit Margin is a financial metric that measures a company's profitability by expressing its net income as a percentage of revenue. It indicates how efficiently a company generates profit from its operations. Higher profit margins signify better financial performance and effective cost management.

Partnership

A Partnership is a legal and business relationship between two or more individuals or entities to carry out a business venture jointly. Partners contribute capital, share profits, and losses, and have shared decision-making authority. Partnerships can be a general, limited, or limited liability, each with different legal implications.

Return on Investment (ROI)

Return on Investment (ROI) is a financial metric that measures the return or profit generated from an investment relative to its cost. It is calculated by dividing the net profit from the acquisition by the initial investment amount and expressing it as a percentage. ROI helps assess the profitability and efficiency of investments.

Quality Control

Quality Control involves the processes and activities to ensure that products or services meet or exceed specified quality standards. It includes quality inspections, testing, monitoring, and corrective actions to identify and rectify defects or deviations from desired quality levels. Effective quality control is essential for customer satisfaction and maintaining a brand reputation.

Risk Management

Risk Management is identifying, assessing, and mitigating risks that may impact the achievement of business objectives. It involves identifying potential risks, evaluating their impact, implementing strategies to minimize or transfer risks, and monitoring risk levels. Effective risk management helps businesses navigate uncertainties and protect their interests.

Supply Chain

The Supply Chain encompasses the sequence of activities involved in producing, procuring, and delivering goods or services, from raw material sourcing to the end customer. It includes suppliers, manufacturers, distributors, retailers, and logistics providers. Efficient supply chain management ensures timely delivery, cost optimization, and customer satisfaction.

Target Market

The Target Market refers to the specific group of customers or market segment that a business aims to serve with its products or services. It is defined based on demographics, psychographics, behavior, or geographic location. Identifying and understanding the target market helps businesses tailor their marketing strategies and offerings to reach and meet customer needs effectively.

Unique Selling Proposition (USP)

A unique Selling Proposition (USP) refers to the distinctive and compelling factor that sets a product, service, or brand apart from competitors in the market. It highlights the unique benefits or features that differentiate a business from others and create a competitive advantage. USP plays a crucial role in positioning and marketing a business effectively.

Value Chain

The Value Chain represents a company's series of activities to create and deliver value to customers. It includes primary activities such as inbound logistics, operations, marketing, sales, and customer service and support activities like procurement, technology development, and human resources. Understanding the value chain helps businesses identify opportunities for cost reduction, process optimization, and competitive advantage.

SWOT Analysis

SWOT Analysis is a strategic framework used to assess a business's internal strengths and weaknesses and external opportunities and threats. It involves identifying the company's strengths and weaknesses in operations, finance, and marketing while examining market trends, competition, and potential risks. SWOT Analysis helps businesses develop effective strategies and make informed decisions.

Yield Management

Yield Management, also known as Revenue Management, is a pricing strategy used to optimize revenue and profitability by adjusting prices based on demand and capacity. It involves dynamically setting prices to maximize revenue from available resources, such as hotel rooms, airline seats, or rental cars. Yield management aims to achieve the highest possible revenue while balancing supply and demand dynamics.

Zero-Based Budgeting (ZBB)

Zero-Based Budgeting (ZBB) is a budgeting approach where each budget cycle starts from zero, requiring justification for all expenses regardless of previous budgets. It involves a comprehensive review and assessment of all costs and expenses, ensuring that resources are allocated based on current needs and priorities. ZBB helps eliminate inefficiencies, promote cost control, and align budgeting with strategic objectives.

Congratulations on exploring the A-Z glossary of business terms! You now have a solid understanding of key concepts and terminologies that are essential in the world of business. Whether starting a new venture, managing a company, or seeking to enhance your business knowledge, this glossary will be a valuable resource. Remember to apply these concepts wisely, adapt to the dynamic business environment, and continue expanding your expertise.

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100+ Project Management Terms: PM Terminology Explained

Everything you need to know about project management terms is here in one list! Plus we’ve added handy links to help you dive deeper into different topics with videos, articles and even our round-up of all resources so you can put these important terms into practice with your projects.

Check back often, as this list of project management terminology is ever-evolving, just like project management itself!

Find a term you want defined that isn’t on this project management glossary? Contact the editors via Twitter @ProjectTips with hashtag #PMGlossary and let us know!

100+ Project Management Terms in Alphabetical Order

Here’s our complete list of over 100 project management terms organized in alphabetical order.

A – Project Management Terms

Acceptance criteria The metric by which a project will be measured to determine whether it’s successful or not. These are predefined requirements that must be met by the project for it to be considered done, whether that’s a task, user story or the whole project.

Agile A methodology for project and product management is typically used to deliver software projects iteratively with short bursts of work called “sprints.” Though initially designed as a process for IT and engineering projects, it has since been successfully applied to other industries like marketing. As the methodology has gained in popularity, agile (with a small “a”) has become a general business approach to support a more flexible working style with quick turn-around.

Arrow Diagramming Method A network diagramming technique that represents the start and end of activities with arrows to help with scheduling in the project planning phase. The longer the duration of the project, the longer the length of the arrow.

Devin Deen explains how to use Activity on the Arrow diagramming to chart the critical path in this video .

B – Project Management Terms

Backlog Backlog is a term from the Agile methodology Scrum, but is also used across industries to track every single thing that is needed to complete a product in development. It is also used to capture requests for modifying the product and ensuring delivery with scope.

Baseline A baseline is an estimate of the project’s scope, schedule and costs that is created during the planning stage. Its main purpose is to serve as a reference that is compared to the project performance once the execution phase begins. The baseline is established based on different sources of information such as project files from previous projects or subject matter expert opinions.

Business case A business case is either a written or verbal proposition used to educate and sway the decision-makers in an organization to take on a project because it is going to deliver a return on investment or provide some worthwhile benefit.

Business plan A formal document that clearly defines the business goals of a project and how to attain them. It is also called a Business Case. It includes the plans to fulfill these goals. There may also be some background information about the organization or team tasked to reach this goal.

C – Project Management Terms

Capability Maturity Model (CMM) Developed from a US Department of Defense study, the model is used to develop and refine software processes. It helps to model the maturity of the capability of business process by defining steps and managing result metrics to optimize the process.

Change control The term for a process to systemically monitor and approve or reject any change requests made to a product or project. The process is designed to increase project efficiency and minimize scope creep by controlling every change and ensuring that changes are made according to set requirements for approving change.

Change management The method for managing project change requests and application of the change control process as defined above. The goal with change management is to avoid scope creep in a project and produce maximum efficiency during the project.

Change Management Plan Process to implement and manage change in a project. Will determine if a requested change is worth pursuing or not depending on factors such as cost, time and other impacts to the project. It also is used to respond to changes that occur in the project whether due to the environment, equipment or other factors.

Case study Used for a variety of purposes, case studies are generally research-based papers that deeply examines use cases of products in given applications or how different industries applied specific practices or approaches to their projects.

Certified Associate in Project Management (CAPM) An entry-level certification offered by the  Project Management Institute .

Communications log A record of continuous documentation of communications between project stakeholders managed by the project manager. Project managers make logs to manage change requests or to document public sector projects for future audit or oversight committees in more formal project environments. In more informal organizations, communications logs can be chats, discussions and email threads, and in fact, some project management software adds email conversations related to the project directly on the task or project level, to keep project documentation organized.

Collaboration Working with one or more parties on the same project and similar goals. It’s the act of delegating and communicating between team members and distinct teams to better serve the product by providing more minds and hands. More than that, though, collaboration is a way of working with new tools like social platforms, real-time document sharing and editing, and remote working. For some companies, collaboration is perceived to be a “culture” promoted within the business to support Agile or iterative ways of running projects or simply to support knowledge sharing within the org.

Contingency A plan for possible disasters occurring during your project, whether that be of man-made or natural variety. It’s not merely data backup but includes that and every other detail to ensure the project isn’t derailed by considering short- and long-term events and how to respond to them.

Cost Benefit Analysis How to calculate the potential benefits of a project in terms of money and then subtract the cost of the project from this figure. A cost benefit analysis will then determine if the project is worth the investment and whether it should be initiated or passed on.

Cost overrun This is the actual cost that exceeds the estimated cost in the budget, also known as a cost increase or budget overrun. It usually is unexpected and unwanted as it requires finding new resources to cover these unseen expenses.

Critical path method (CPM) An algorithm for scheduling a set of project activities, typically the “critical path” or shortest path through a project. It was developed in the late 1950s within the DuPont organization and Remington Rand company as a method to know mission-critical tasks. Modern project management software applications can streamline finding your project’s critical path to help you manage scope and monitor the project.

D – Project Management Terms

DACI Used to define roles and responsibilities in the project. This acronym stands for driver, the individual who drives decisions, approvers, who make the decision, contributors, who work on the project or provide knowledgeable guidance, and informed, whose work is likely to be affected by the decision.

Dashboard A graphical way to share essential project data with stakeholders, a dashboard that makes diverse amounts of data and its underlying information easily digestible. Traditionally, dashboards were created “manually” by assembling select pie charts or data graphs in a presentation view. The data, however, was often outdated by the time of the presentation. Modern project management tools offer real-time dashboards, so the data is viewed usually by bringing a laptop or tablet to a presentation or through client logins to the software so everyone has access to the freshest data.

Dependency Tasks or other activities that are interdependent on a project. Often one activity cannot take place before another one being completed. In this way, they are linked in a project and can be noted as such in online project management tools. When you add a dependency in online project management software, you create a dependent-virtual link between two tasks to demonstrate that constraint.

Deliverable Something contracted for delivery. It is a tangible item or intangible objective, but crucial to the success of the project. It can be a report, a document, some project building block or the end product delivered at the end of a project.

E – Project Management Terms

Earned value management (EVM) A way to measure project performance, and is commonly used in government projects. Here’s  how EVM can be applied over the course of a project’s duration.

Estimation In a project context, estimation is the way to make accurate budgets or timelines for a project. There are various techniques in estimating to help you get the most accurate predictions of cost and time.

Read our post on getting your team to help you get the best estimates .

Event chain diagram This is a visual way of demonstrating the relationship between events and tasks and how they impact one another.

Event chain methodology A method that focuses on identifying and managing events and series of events that impact a project’s schedule.

F – Project Management Terms

Fast-tracking This refers to a technique project managers use to speed up their projects. Typically, schedules are analyzed to identify areas where some tasks can be done in parallel versus sequentially, or where new resources can be added mid-way through a project, adjusting the project plan.

Related: How to Fast-Track Your Project

Feasibility study A feasibility study is a way to ascertain whether the proposed plan or methodology prescribed is practical in terms of fulfilling the goals of a project. For large projects, these can be detailed research studies. For smaller projects, they can be more informal assessments using existing business documentation like market research and informal internal polls with key stakeholders.

Float This refers to time that a task can be delayed without blocking other tasks, or in layman’s terms: “wiggle room.”

G – Project Management Terms

Henry Gantt American mechanical engineer and management consultant who developed the Gantt chart in 1910.

Gantt chart The horizontal bar chart that illustrates a project’s schedule from start to finish by demonstrating the task duration visually. It’s named after Henry Gantt, who developed it in 1910 (though Karol Adamiecki did so, too, independently in 1896). Gantt charts are traditionally used in Waterfall project planning, for long-term projects that have many task dependencies. They are the backbone of formal project management software applications, most of which are now fully online and can be used interactively and collaboratively.

Learn more in our Ultimate Guide to Gantt Charts .

H – Project Management Terms

Hybrid methodology Refers to the use of two or more separate methodologies on a project, commonly a blend of Agile and Waterfall project management methods, though sometimes incorporating kanban, lean or other methodologies of project management. Employing hybrid methodology enables teams to apply what works best where and when it is most needed, or to suit different teams within an organization.

Learn more about how teams can use hybrid methodology in this piece by contributor Mario Henrique Trentim .

I – Project Management Terms

Initiation This refers to the first phase in the lifecycle of a project, according to traditional project management practices.  It’s the stage in the process where the project is first conceived and scoped. It also involves the hiring of a team, setting up a project office and reviewing the project, as well as gaining approval for the project.

Iterative and incremental development This is a method of project development, usually applied in software and IT projects, that evolved in response to weaknesses in the  waterfall model to support rapid deployment. It is commonly employed in Agile and Lean projects, often in response to end-user feedback in product development cycles.

K – Project Management Terms

Kanban This term literally means signboard or billboard in Japanese and was developed in Japan by Taiichi Ohno, an industrial engineer at Toyota, as a scheduling system for lean and just-in-time production. Kanban project management controls the logistical chain from a production point of view, formally, but has since been used more popularly as a visual way to track tasks for individuals or teams. This is usually executed with online kanban software.

Learn how Kanban and Scrum differ in the blog Kanban vs. Scrum: Which is Better?

Key Performance Indicators (KPIs) A quantifiable measurement that is used to evaluate a project and determine if it is performing as planned. KPIs can be anything from cost to time, scope or quality.

Kickoff meeting This refers to the first meeting to formally start a project and usually involves key stakeholders, team members and clients, depending on the nature of the project. There are best practices defined for how to run this type of meeting, which usually includes communicating the overall project vision, plan, processes and expectations.

Watch Jennifer Bridges in this video on Your Project Kickoff Checklist  or check out The Only Project Kickoff Checklist You’ll Ever Need .

L – Project Management Terms

Level of effort (LOE) A support-type project activity that must be done in order to support other tasks or even the entire project. The level of effort is often work that is periodically repeated throughout the lifecycle of the project.

Lean startup This method (or movement) for developing businesses and products was first proposed in 2011 by Eric Ries and is based on his experience working on various startups. It says that startups can shorten their product development cycles by adopting a combination of business-hypothesis-driven experimentation, iterative project releases and validated learning

Lean manufacturing A theory of expenditure of resources for any means other than the creation of value for the customer is considered wasteful and should be deleted.

M – Project Management Terms

Management process The planning and controlling of a performance of an activity.

Management science (MS) A discipline that uses mathematical modeling and other analytics to make better business management decisions.

Megaproject A very large-scale work, often spanning multiple years.

Milestone This is a way to mark a specific point along the lifecycle of a project’s timeline to bookmark upcoming major accomplishments, including the start, finish, external review, budget checks, etc. They are points along the project that must be reached according to schedule for the successful completion of the project.

Learn more about how to use milestones  in project scheduling.

Minimally Viable Product (MVP) This is a term that refers to releasing a product with the highest return on investment versus risk, and was coined as a term by Frank Robinson and popularized by Steve Blank and Eric Ries. It often refers to the product or project scope pre-launch to avoid unnecessary scope creep; that is, teams can get stuck trying to build new features into products in an attempt to please stakeholders or end users, rather than releasing the MVP and getting the product released quicker to the market.

Monitoring This is a phase in the project management lifecycle, specifically the act of continuous awareness of the course of a project plan. Project monitoring involves checking whether a project is proceeding according to schedule and within the proposed budget, as well as checking into the health of your team. Monitoring can be accomplished through reporting, dashboards and active management with a team.

Learn tips on How to Monitor Projects .

MoSCoW method A technique used to prioritize through the use of a four-step process. MoSCoW is an acronym for must-have, should have, could have and won’t have or not right now. By giving each task one of these distinctions, project managers can determine when or if they should be executed.

N – Project Management Terms

Network diagram A flow chart or graph that shows the sequence in which a project’s terminal elements are to be completed by showing its terminal elements and their dependencies. It is drawn from left to right to reflect the chronology of a project.

Tip: Network diagrams can be an alternative to Gantt charts .

Nonlinear management (NLM) A strategy permitting order to arise by giving organizations space to evolve and adapt, encompasses agile, evolutionary and lean methodologies.

O – Project Management Terms

Online project management software A suite of online tools and features (versus downloadable software) used to plan, monitor and report on a project. It’s usually collaborative and has a dashboard in which the complex flow of information can be simply and easily digested.

Operations management The area of a business responsible for efficient and effective production.

Operations research (OR) Applying mathematics and science to developing methodologies to improve production.

Organization development (OD) Planned systematic effort to raise the effectiveness of the organization.

P – Project Management Terms

Planning The process of creating and maintaining a plan. In formal project management, this also refers to a phase in the Project Management Lifecycle.

Learn more in our Ultimate Guide to Project Planning .

PRINCE2 A formal project methodology that plans, monitors and controls every aspect of the project and motivates participants to achieve goals on time and within budget. PRINCE2 (PRojects In Controlled Environments – version 2) is typically used in the UK and Europe and also refers to a certification for project managers working on projects in those geographies.

Product breakdown structure (PBS) Detailed, hierarchical tree structure of components that make up an item, arranged in relationship to a whole project.

Productivity A way to measure the efficiency of a project in converting inputs into useful outputs, and is computed by dividing average output per a specific period by the total costs incurred or resources consumed in that period.

Program evaluation and review technique (PERT) A PERT chart is a statistical tool that analyzes tasks in projects.

Program management The process of managing a program , typically used in larger organizations with formal project management processes in place.

Project An activity with a defined start and end date. This is versus ongoing operational work in organizations. Projects can be managed differently due to their temporary nature, even if they are multi-year in length.

Project charter This is a statement of the scope, objectives and participants in a project, the document makes everyone involved in the project aware of its purpose and goals.

Use our free project charter template to save you time on your next project.

Project management The name for a discipline that involves the planning, organizing, motivating and controlling of resources to achieve a specific goal. It is based on a temporary course of action, usually creating a product or service, and so is constrained by a deadline as well as a budget.

Project Management Body of Knowledge (PMBOK) A standards of practice guide to professional expertise in project management profession, standardized by ISO.

Project management office (PMO) PMO is the title for the person or business group within an organization that maintains the standards of the project process.

Project management lifecycle Refers to the length of a project from conception to completion and all steps in between, according to distinct phases of delivery.

Learn more about the PM lifecycle in this book .

Project management professional This can refer to a professional project manager working in any field and typically refers to those certified project managers, which can include Project Management Professional (PMP) and Certified Associate in Project Management (CAPM) to entry-level certification, such as CompTIA Project+.

Project management software Software to facilitate project management that can be downloaded or wholly online.

Project manager The term to describe any professional in charge of leading and managing a project.

Read our Ultimate Guide on Project Management . 

PMP (Project management professional) This refers to a valued certification in project management that rigorously tests knowledge and skill in managing all of the triple constraints: time, cost and scope. It is offered by the Project Management Institute .

Project network A flow chart of the project schedule (see network diagram).

Project plan A formal and approved document outlining the course of the project from start to finish.

Follow Stephanie Ray’s  12 steps when planning for a project .

Project Portfolio A collection of projects or programs that are being managed together to get the most financial gain and meet the strategic goals of an organization. Unlike a program, which is a group of related projects, a portfolio can be diverse and unrelated but still must share resources and meet strategic goals.

Project team Any group of people engaged in helping a project come to completion. This video by Jennifer Bridges, PMP, offers an outline of the roles for the project manager and their team .

Q – Project Management Terms

Quality assurance (QA) The degree of excellence related to the project as well as a process to adhere to quality measures. Learn how to set quality targets in your plan by watching this short video by Jennifer Bridges, PMP.

Quality control (QC) The procedure or set of procedures by which one ensures that a product or service is aligned to its defined goals and meets with the client’s or customer’s approval.

Quality, cost, delivery (QCD) A lean methodology focusing on key performance indicators.

R – Project Management Terms

RACI An acronym that stands for responsible, accountable, consulted and informed. RACI is used to chart the decision-makers of a project in order to manage their expectations and keep them informed of the progress of the project.

Reporting A process of creating a document that gathers and delivers to the team, sponsor or client a snapshot of the results of the project at a specific time in its lifecycle.

Resources Who or what is required to fulfill a project? This can refer to people or machines or a room rental, etc., that typically bills on an hourly basis.

Resource allocation The act of assigning tasks to the available resources dedicated to a project, usually within a defined budget.

Resource leveling A way to manage resource allocation to resolve possible conflicts arising from over-allocation.

Resource management The process of managing teams and other resources on projects, and often includes managing their time, cost, performance and quality as it relates to defined project goals. Learn how resource planning software can help with resource management.

Risk On projects, risk refers to the precise probability of specific issues and how they may impact the project.

Risk management In a project context, this refers to a project method of reducing risk related to a project by actively identifying potential risks, plotting them in a risk register document or in your project management tool, and monitoring risks throughout the project. Learn more about risk management here.

Risk register A way to organize and prioritize risks, either on a spreadsheet or through a project management tool, to assess potential impacts. Download a free Excel risk planning template here.

S – Project Management Terms

Schedule Simply a collection of tasks defined by their start and end dates within a project plan. We’ve outlined tips for you to improve your schedule management.

Scientific management A theory analyzing workflow processes to improve productivity.

Scope This refers to the sum total of all tasks, requirements or features in a project. New requests or features or tasks added after a project has been planned are commonly referred to as “out of scope.” Project and product managers have to actively manage the scope of projects to make sure projects meet targeted goals and deadlines.

Scope creep This refers to an uncontrolled change in a project’s scope. See our article about managing scope creep .

Scope statement A document that defines a project. It’ll include assumptions, all project requirements and the criteria for accepting the project as successful. It is used by stakeholders and team members to guide them as they execute the project and ensure that the project is moving in the right direction.

Scrum Scrum is an Agile methodology of the iterative incremental process typically used for delivering software products. It refers to a rugby term where short sprints are the Scrum team’s goal to deliver bundles of progress with the support of a team leader, also referred to as the Scrum Master . It’s used in place of or in concert with traditional Waterfall-type approaches to delivering projects.

Learn more about scrum in this video by Scrum Master, Devin Deen.

Six Sigma A business management strategy, developed by Motorola, which is data-driven and works by eliminating defects in any process with six standard deviations between the mean and the nearest specification limit.

Slack In project planning, slack refers to the amount of extra room for time in the plan to accommodate time delays, should they occur. (It’s also the name of a software product used for collaborative communications among teams.) Often, project managers want to find the slack they have in their schedule to determine whether they need to reallocate resources to accommodate schedule variations.

Watch Devin Deen explain How to Find Slack in Your Project Schedule .

Sponsor In a project, the sponsor refers to the owner or promoter of a project and often represents a client’s goals. This role is distinct from the project manager.

Stakeholders In a project or an organization, stakeholders are people or groups that have an interest or concern regarding the project. It might be a client in a private organization or the public in a government project or it could be end users on a product. Stakeholders often have to be managed or engaged throughout the life of the project, either through regular communications or active participation in the project.

Learn more about Stakeholder management in this video with Jennifer Bridges.

Statement of work (SOW) A document to capture and define the work activities, deliverables and timeline needed for the specific work required by a client. It’s usually detailed with pricing, regulatory and governance issues, and is the precursor to creating an actual project plan.

Learn how to turn a statement of work document into your project plan .

Status report On projects, the status report is an essential document intended to convey to clients, sponsors or team members, the state of the project right now. Many online project management tools make this report easy to create and share, as data from the project is already in the software

Learn more about how to create status reports in this video with Devin Deen .  

T – Project Management Terms

Task Refers to to-do items, typically one action required to accomplish a problem. In project management software, tasks are line items in a project plan with start and end dates added to build a project schedule.

Task analysis This refers to understanding how a task can be best accomplished. On complex projects, individual tasks might be complex, as well.

Task management This term broadly refers to the project management process of monitoring and evaluating the individual line items, or tasks, within a project. Task management can refer to managing the details of a task, based on current information or impacts on the delivery of that task, or it can involve managing people responsible for that task. Or it can refer to your personal task list.

Learn more about task management here.

Template In the delivery of operations or projects, templates are sample documents that can help save time and prevent the need to re-invent the wheel, so to speak, with commonly used documents or plans.

See all our free project management templates here.

Time management Refers to the process of managing time and schedule of a project, according to the plan. Time management is a broad term in project contexts, and can refer to personal time management skills, as well as managing a team’s efficiency and managing scheduled dates accordingly.

Timesheets The document or online tool that’s used to track hours worked by teams on projects. Timesheets can be used in a number of ways as a broader measure to track project performance, team performance or individual performance. They can also be used as historical reference documents for estimating future projects or tasks.

See  our ultimate guide to timesheets .

Triple constraint This is a project management term that refers to three things that impact every project and that every project manager must manage: time, cost & quality.

Learn more about the triple constraint in this video with Jennifer Bridges.

W – Project Management Terms

Waterfall Refers to a traditional project management methodology where the project is defined sequentially and through clear project phases. This is a common approach to large-scale projects where little change is expected to the overall project plan. This is a distinct approach from Agile project planning, which is designed to accommodate rapid changes to the schedule.

Learn more about waterfall methodology.

Work breakdown structure This is a formal method for planning a project to identify larger components of a project and all the subsequent tasks or deliverables implied.

Learn more about the  work breakdown structure .

Workload management This term is related to resource management as it is the process of managing assigned tasks on a team in concert with their overall workload. Workload management involves the analysis of individual workload allocation as well as allocation across a team or across all projects so that overall project goals can be monitored and changed if necessary to reflect the schedule and budget of the project.

Workstream This refers to tasks or activities that are related to each other, and often interdependent upon each other, so that one activity downstream might require the approval of an upstream task.

What, no U, V, Y or Z? Let us know what words you think should make the list via Twitter @ProjectTips with the hashtag #PMGlossary!

Video: Project Management Terminology Explained

Check out Jennifer Bridges’ video on the Top Ten Project Management Terms of all time:

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What is a Business Roadmap: Definition and Examples

What is a Business Roadmap?

A business roadmap visually outlines major objectives and strategies for a company, making it clear how different roles, tasks, and responsibilities come together to achieve specific goals. Essentially, it provides a high-level overview of the path your organization intends to follow, breaking down complex plans into manageable phases that everyone can understand.

Business roadmaps serve a critical role in aligning diverse departments and stakeholders towards common goals, ensuring everyone is on the same page. They include specific tasks, responsibilities, and timelines to help guide the execution phase of your strategic plan. Through a well-structured business roadmap, your company can easily visualize what needs to be done and when, making it simpler to track progress and adapt as situations evolve.

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Purpose of a Business Roadmap

The primary purpose of a business roadmap is to visualize actions and timelines in transforming a company’s vision into reality. This aids in strategic goal achievement and provides a clear plan of action for different departments and teams.

Who Uses a Business Roadmap

A business roadmap is a strategic planning tool that is used by various stakeholders within an organization to align on business objectives and to visualize the timeline and progress of projects. It is primarily utilized by senior executives and managers to plan and communicate the direction of the business.

Additionally, product managers, marketing teams, and sales departments use roadmaps to synchronize their strategies and initiatives with the overall business goals. Even external stakeholders, such as investors and clients, may refer to the business roadmap to understand the company’s vision, priorities, and growth trajectory. Essentially, anyone involved in the strategic planning and execution of a company’s objectives can benefit from a well-structured business roadmap.

Benefits of a Business Roadmap

A business roadmap is more than just a strategic guide; it is a powerful tool that delivers numerous benefits to an organization. Here are some key advantages:

Facilitates Clear Communication: A business roadmap provides a visual summary of strategic goals, ensuring that all stakeholders have a clear understanding of the direction the company is heading. This clarity helps in aligning efforts across departments.

Visual Summary of Key Initiatives: By laying out major initiatives and their timelines, a business roadmap helps in tracking progress and ensuring that critical milestones are met. It serves as a reference point for all team members, highlighting what needs to be achieved and by when.

Enhances Alignment Across Departments: One of the biggest advantages of a business roadmap is its ability to break down silos within an organization. By making objectives, tasks, and responsibilities visible, it promotes collaboration and ensures that every department is working towards the same overarching goals.

Allows for Real-Time Updates: In a dynamic business environment, strategies and priorities can change rapidly. A business roadmap offers the flexibility to make real-time updates, ensuring that the plan remains aligned with evolving goals and market conditions.

The importance of a business roadmap cannot be overstated. It not only facilitates effective communication and alignment but also allows for adaptive and timely decision-making. By providing a comprehensive visual mapping of strategies and initiatives, it keeps leadership and teams in sync, paving the way for successful execution of strategic goals.

Differences Between a Business Plan and a Business Roadmap

Understanding the difference between a business plan and a business roadmap is crucial for effective strategic planning and execution. While both are essential tools for business growth, they serve distinct purposes.

A business plan is a comprehensive, text-heavy document that outlines the company’s vision, market analysis, financials, and overall strategy. It serves as a foundational document primarily used for securing funding and providing a detailed snapshot of the business’s goals and how it plans to achieve them. Business plans typically include an executive summary, product and service descriptions, market overview, marketing strategies, and financial projections.

In contrast, a business roadmap is a visual tool that highlights specific tasks, responsibilities, and timelines needed to achieve the business plan’s objectives. Unlike the static nature of a business plan, roadmaps are dynamic and focus on the execution phase. They offer a clear, real-time visual representation of ongoing and upcoming initiatives, making them essential for maintaining alignment across different departments and teams.

By understanding these key differences, businesses can better utilize both tools to ensure comprehensive planning and effective execution. For those looking to create detailed and visually engaging roadmaps, leveraging tools like Creately can simplify the process and enhance collaboration.

Components of a Business Roadmap

A comprehensive business roadmap serves as a visual strategy tool that assists in aligning various departments and stakeholders towards common business goals. To create an effective business roadmap, it’s crucial to include certain key elements that guide the organization towards achieving its strategic objectives:

The guiding star of your roadmap, the vision serves as a powerful aspirational statement. It outlines the future state of your organization, encapsulating your long-term goals and ambitions. A clear vision statement serves as a source of inspiration and motivation, uniting your team towards a shared purpose.

Strategic Goals and Initiatives

Translating your vision into actionable terms, goals represent the measurable objectives you strive to achieve. Effective goals are SMART (Specific, Measurable, Achievable, Relevant, and Time-bound). Clearly defined goals set the stage for strategic planning and focused execution. The goal setting process includes broad strategies and specific initiatives that drive towards these goals.

Milestones serve as checkpoints along the roadmap, signifying significant accomplishments towards your goals. These markers provide a sense of progress and achievement, keeping your team motivated and on track.

The roadmap should articulate the “how” behind achieving your goals. This section outlines the strategic initiatives you’ll undertake, considering factors like market analysis and the competitive landscape. A well-defined strategy translates ambition into actionable steps.

Key Performance Indicators (KPIs)

KPIs are the metrics you’ll use to gauge progress towards your goals. By tracking relevant KPIs, you can assess the effectiveness of your strategies and identify areas for improvement. Effective KPIs should be quantifiable and aligned with your overall goals.

A successful roadmap considers the resources required to achieve your goals. This includes human resources, financial resources, technological resources, and any other assets necessary to execute your plan. A realistic assessment of resources ensures your roadmap remains grounded in feasibility.

Risk Management Plan

The road to success is rarely without obstacles. A proactive risk management plan anticipates potential challenges and outlines strategies to mitigate them. By addressing risks upfront, you can safeguard your roadmap from unforeseen roadblocks.

Stakeholder Engagement Plan

Successful roadmap execution hinges on effective stakeholder engagement . This plan outlines how you’ll communicate the roadmap to key stakeholders, address their concerns, and secure their buy-in. Regular communication fosters transparency and ensures everyone is aligned with the overall strategy.

A defined timeline sets the timeframe for achieving milestones and goals. Timelines should be realistic and achievable, considering resource constraints and dependencies. A clear timeline keeps everyone accountable and promotes a sense of urgency. Read more about creating timelines .

Task Assignments and Responsibilities

Clearly defined tasks, roles and responsibilities help in the distribution of workload and establish accountability among team members. Additionally, utilizing effective task management practices helps identifying priorities and ensures that work is completed timely.

Dependencies

Highlighting dependencies between tasks indicates how different pieces of the puzzle come together. This helps in understanding the sequence and interrelation of activities.

Review and Update Mechanisms

The business landscape is dynamic, and so should your roadmap. Regular reviews allow you to assess progress, identify adjustments, and ensure the roadmap remains relevant in the face of changing circumstances. Establishing a mechanism for review and updates guarantees your roadmap stays current and continues to guide your organization towards success.

Examples of Different Business Roadmaps

A business roadmap is an essential tool for any organization, adaptable to various strategic needs. Here, we’ll explore several types of business roadmaps with examples to illustrate how they align unique business objectives.

Strategic Roadmap

A strategic roadmap aligns long-term goals with overarching business objectives. It typically includes milestones like fundraising rounds or multi-year revenue targets. This roadmap helps ensure that every department’s initiatives support the company’s big-picture vision.

Startup Roadmap

A startup roadmap is crucial for new businesses. It prioritizes initial activities necessary for establishing a market presence and scaling operations. Given the chaotic environment of startups, this roadmap remains flexible, adapting swiftly to changes while keeping the ultimate vision in focus.

Business Development Roadmap

The business development roadmap focuses on market expansion and revenue growth. It includes plans for entering new markets, enhancing customer engagement, and boosting sales volumes. This type often spans a one-year period, detailing specific tasks for rapid growth.

Data Strategy Roadmap

A data strategy roadmap centers on improving data management and analytics. It lays out initiatives for data collection, storage, and analysis, ensuring that data insights directly inform business decisions. This roadmap helps businesses leverage data for improved efficiency and effectiveness.

Creately features business roadmap templates that can streamline your strategic planning process, saving you valuable time and effort.

How to Create a Business Roadmap

Creating an effective business roadmap entails a thoughtful process that ensures alignment across different departments and teams. Here’s how you can create a comprehensive and adaptive business roadmap:

Set Clear Goals

Start by defining your business’s strategic goals. These should be high-level objectives that you aim to achieve in the long term. For instance, increasing market share or improving customer satisfaction.

Gather Relevant Information from All Departments

Compile data and insights from various departments. This includes market analysis, customer feedback, financial data, and technology assessments. Using tools like Creately’s business roadmap templates can streamline this phase.

Organize Tasks and Objectives into Themes

Group related tasks and objectives into themes to provide better clarity and context. This thematic organization helps in understanding the broader picture and facilitates more targeted planning.

Prioritize Initiatives Based on Importance and Impact

Determine which initiatives have the highest impact on your strategic goals and prioritize them accordingly. This ensures that your efforts are focused on the most critical aspects of your strategy.

Add Specific Time Frames for Each Task

Assign realistic time frames to each task and initiative. This helps in monitoring progress and maintaining momentum toward achieving your goals.

Regularly Review and Revise the Roadmap

A business roadmap should be a living document. Regularly review and update it to reflect any changes in goals, market conditions, or internal priorities. This ensures that your roadmap remains relevant and effective.

Tips to Create Effective Business Roadmaps

Creating a business roadmap isn’t just about plotting out timelines and tasks. It involves strategic foresight and meticulous planning. Here are some best practices to ensure your roadmap is effective:

Ensure Clear and Measurable Outcomes: Every initiative on your roadmap should have a clear and measurable outcome. This helps in tracking progress and demonstrating the roadmap’s value.

Use Themes to Group Related Tasks: Grouping related tasks under common themes solidifies context, making it easier to communicate and understand the roadmap’s overall structure.

Regularly Update and Communicate Changes: Regular updates are crucial to maintain alignment with evolving goals and strategies. Make sure to communicate these changes to all stakeholders to keep everyone on the same page.

Utilize Visual Tools and Templates: Tools like Creately provide powerful visual aids and templates that enhance engagement and ensure clarity in your business roadmap.

Adopting these practices will transform your business roadmap into a dynamic strategic tool that drives better alignment and execution across your organization. Moreover, leveraging platforms like Creately can streamline the entire process, offering visual strategy mapping and real-time data integration to make adaptive and timely decisions.

Case Studies and Examples

Understanding how different companies successfully implement business roadmaps can provide valuable insights and inspiration. Let’s explore a few practical examples:

Startups Focusing on Initial Market Entry: For startups, business roadmaps often emphasize high-level planning and agility. A startup roadmap might include milestones for product development, initial market deployment, customer acquisition strategies, and funding rounds. This approach helps startups remain flexible and adapt to the fast-paced changes typical in the early stages of a business. Creately can assist by providing visual strategy mapping that allows startups to easily adapt and communicate their plans.

Established Businesses Targeting New Market Expansions: As businesses grow, their roadmaps evolve to focus on market expansion and scaling. For instance, a company might outline steps for launching in new regions, forming strategic partnerships, or diversifying product offerings.

Data-Driven Roadmaps for Improving Business Intelligence and Analytics: Companies aiming to enhance their business intelligence (BI) capabilities can benefit from a dedicated BI roadmap. This type of roadmap might highlight initiatives such as implementing new data analytics tools, improving data quality, and optimizing reporting processes.

Showcasing Successful Implementations and Outcomes: Examining case studies of companies that have successfully used business roadmaps to achieve their goals can be particularly enlightening. For example, a global retailer might have used a comprehensive eCommerce roadmap to coordinate product launches, marketing campaigns, and technology updates around key retail dates.

Understanding the application of a business roadmap is critical for any organization that aims to streamlined execution of business operations and alignment with strategic goals. The advantages of having a well-defined business roadmap are manifold, including enhanced communication, clear visualization of key initiatives, and improved real-time updates and adjustments. These benefits ensure that different departments and stakeholders are on the same page, working cohesively towards shared objectives.

Using a tool like Creately can significantly simplify the process of creating and maintaining effective business roadmaps. With Creately’s features dedicated to visual strategy mapping, real-time data integration, and collaboration, it provides a comprehensive platform for better strategic planning and decision-making.

Business roadmaps are not just about plotting out tasks but also about painting a holistic picture of the company’s future. From startups aiming to hit their initial growth milestones to established enterprises looking to expand their market presence, every business can benefit from a meticulously crafted roadmap. By combining long-term vision with actionable steps, business roadmaps transform strategic goals into tangible results.

Finally, it is essential to realize that creating a business roadmap is not a one-time task. Regularly updating and communicating the roadmap ensures it remains relevant and effective, reflecting any changes in the business environment or strategic goals. With the right tools and practices, businesses can harness the full potential of roadmaps to achieve their desired outcomes.

Join over thousands of organizations that use Creately to brainstorm, plan, analyze, and execute their projects successfully.

FAQs About Business Roadmaps

In simpler terms, the strategy is the “what” and the “why,” while the roadmap is the “how” and “when.”

A business roadmap is essentially a visual plan that outlines how a business will achieve its strategic goals. It’s a more tactical document, focusing on specific actions, timelines, and dependencies. Essentially, it’s the “how” to execute the business strategy.

A business strategy is a broader, high-level plan that defines a company’s overall direction. It outlines the company’s vision, mission, and how it plans to compete in the market. A business strategy is often broken down into three key components:

Foundation: The core of the business, including its vision, mission, and business model.

Market: Understanding the target customers and competitive landscape.

Imperatives: The specific actions or initiatives required to achieve the overall strategy.

While the roadmap is a detailed implementation plan, the strategy is the overarching blueprint that guides the roadmap’s creation.

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Hansani has a background in journalism and marketing communications. She loves reading and writing about tech innovations. She enjoys writing poetry, travelling and photography.

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How to write a successful business case

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In business, having a great idea is only the first step toward bringing it to life. While a unique and innovative concept is essential, you will also need resources and support to guarantee success.

To secure the necessary resources and support, you must present a compelling argument that demonstrates the value and feasibility of your proposed project or initiative. A well-crafted business case can make all the difference.

In this article, you’ll learn what a business case is, its key components, and how it differs from a business plan. You’ll also discover the benefits of having a solid business case and get a blueprint for creating one that effectively conveys the value of your initiative.

What is a business case?

A business case is a document that justifies undertaking a project or initiative. Its main purpose is to assess the potential benefits, costs, and risks, providing evidence to decision-makers on why the investment is worthwhile.

Key elements of a business case

A well-structured business case typically includes the following key elements:

• Executive summary : This is a concise overview of the business case, highlighting the business problem, proposed solution, and expected benefits.
• Problem statement : This clearly describes the business issue or opportunity the project aims to address.
• Analysis of options : This involves evaluating potential solutions, including their pros, cons, and estimated costs.
• Recommended solution : Based on the analysis, this is the proposed course of action, along with a justification for its selection.
• Implementation plan : This involves making a high-level roadmap outlining the project timeline , milestones, necessary resources, and key deliverables.
• Financial analysis : This includes a cost-benefit analysis that breaks down the project's expected costs, benefits, and return on investment (ROI).
• Risk assessment : This helps identify potential risks associated with the project and strategies to mitigate them, including sensitivity analysis.
• Stakeholder analysis : This is an overview of the individuals or groups that the project impacts and their level of influence and interest.
• Conclusion : This summarizes the key points and offers a compelling call to action for decision-makers to approve the project.

Who typically writes a business case?

The business case is usually written by the individual or group proposing the project. This could be a project manager , entrepreneur, or other stakeholder advocating for a particular course of action. Some companies may have a designated role or team responsible for developing business cases.

The project sponsor usually prepares the business case, but all relevant team members should contribute. This includes subject matter experts from finance, HR, IT, and other pertinent functions who can offer specialized insights and information.

What’s the difference between a business case and a business plan?

A business case and a business plan serve different purposes:

• A business case justifies a specific project by outlining its benefits, costs, and risks. It focuses on a single initiative to secure approval and funding.
• A business plan provides a comprehensive overview of an entire business, detailing its business strategy, market analysis, financial projections, and operational plans. It serves as a long-term roadmap for the company.

In summary, a business case is a targeted, short-to-medium-term analysis of a particular project. In contrast, a business plan is a broader, long-term strategic document encompassing the whole business.

What are the benefits of having a business case?

A well-crafted business case provides numerous benefits for companies undertaking projects or initiatives.

Defined problem and solution

A business case clearly defines the problem or opportunity and outlines the proposed solution. It provides a roadmap for the project, ensuring all stakeholders understand the goals and business objectives.

Informed decisions based on analysis

A business case enables informed decision-making by presenting a thorough analysis of costs and benefits. It allows leaders to weigh the project’s merits against other priorities and make evidence-based choices.

Efficient use of resources

A business case helps optimize resource allocation by justifying the investment necessary for the project. It helps direct people and funds toward initiatives with the most significant strategic value and ROI.

Identification and mitigation of risks

A business case identifies potential pitfalls through a comprehensive risk assessment and outlines mitigation strategies. This proactive approach increases the likelihood of project success and minimizes the impact of challenges that may arise.

Alignment of expectations

A business case aligns stakeholder expectations by documenting the expected outcomes, timelines, and responsibilities. It also serves as a communication tool and a point of reference throughout the project lifecycle, ensuring everyone remains focused on the agreed-upon objectives.

Step-by-step guide to creating a business case

Developing a compelling business case involves a systematic approach to gathering information, analyzing options, and presenting a clear recommendation.

Define the problem

Start by identifying the issue or opportunity that the project aims to address. Clearly articulate the problem statement and its impact on the company. Gather relevant data and evidence, such as customer feedback, market trends, or internal metrics to support the problem statement.

Brainstorm potential solutions

Engage key stakeholders to generate a range of possible solutions. Consider both internal capabilities and external resources. Evaluate each option based on its feasibility, cost, and alignment with organizational goals. A brainstorming template can help keep the conversations productive.

Analyze your financials

Conduct a thorough financial analysis of the proposed solutions. Estimate the costs associated with each option, including upfront investments and ongoing expenses. Project the expected benefits and ROI over a defined time frame.

Assess risk

Identify potential risks of each solution, such as technical challenges, market uncertainties, and resource constraints. Develop mitigation strategies to address these risks and reduce their impact on the project's success. A risk assessment matrix template simplifies the process.

Engage stakeholders

Collaborate with key stakeholders throughout the process to gather input, build consensus, and secure buy-in. Regularly communicate progress and seek feedback to ensure alignment and support for the recommended solution.

Draft the business case

Compile the gathered information into a comprehensive document. Include an executive summary, problem statement, analysis of options, recommended solution, implementation plan, financial analysis, and risk assessment. Use clear, concise language and visuals to convey the key points.

Review and refine

Share the draft business case with relevant stakeholders for review and feedback. Incorporate their input and refine the document to ensure clarity, accuracy, and persuasiveness. Prepare to present the business case to decision-makers and address any questions or concerns.

Implement and monitor

Develop a detailed implementation plan post-approval such as with a project plan template . Assign responsibilities, allocate resources, and establish timelines. Regularly monitor progress against milestones and key performance indicators. Communicate updates to stakeholders and make adjustments as necessary to ensure successful project delivery.

Write a winning business case with Confluence

Whether presenting a proof of concept or seeking approval for a large-scale initiative, a well-crafted business case is essential. It demonstrates the project’s alignment with the company’s strategic plan and justifies the investment of time, resources, and budget.

Confluence simplifies this process with built-in best practices and templates. It allows key company-wide and project-related knowledge to be centralized in one place, making it instantly accessible and ready to move your business forward.

Create a business case that gets attention and approval with Confluence:

• Collaborate in real-time : Invite your peers to collaborate with you through real-time editing and inline comments. Project collaboration is vital to developing a comprehensive business case that you can share with the broader organization.
• Templates and structure : Organize your content logically and professionally with business case templates and project templates . These templates help cover all essential elements, from project scope to financial analysis.
• Visual appeal : Use charts, graphs, and other visuals to make your data compelling and easy to understand. Compelling visuals can help convey the value and feasibility of your proposed project.
• Centralized information : Keep all your documents, data, and feedback in one place so everyone is on the same page. Centralized information facilitates efficient project planning and project execution .
• Easy sharing : Share your business case with stakeholders effortlessly and get real-time feedback to make necessary adjustments. Seamless sharing and collaboration streamline the approval process.

Confluence eases the headache of scattered documents, unreliable information, and disconnected team members by bringing all your work into a single, connected workspace. Content-integrated pages feed into secure workspaces that become your company’s source of truth, whether you’re working at startup velocity or enterprise scale. With Confluence, you can develop a business case that effectively communicates your project’s strategic value. From defining the project scope to outlining the implementation plan, Confluence provides the tools for successful project collaboration. Start building your winning business case today and turn your ideas into reality. Make a free business case with Confluence today.

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More From Forbes

Essential business concepts tech leaders must understand (and why).

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Tech leaders are increasingly being asked to work more closely with the C-suite to determine overall business decisions and direction. To do this effectively, it’s essential to not only be well-versed in the impact technology has on organizational operations and growth, but also to know how to communicate the breadth and importance of that impact.

A thorough understanding of fundamental business concepts and metrics, the ability to speak in terms fellow leaders can understand, and a drive to find new ways to better support teamwide efforts through technology are all vital aspects of a tech leader’s role in today’s digital workplace. Below, 19 members of Forbes Technology Council explain essential business concepts every tech leader must understand and why they’re so important.

1. The Relationship Between Product And Marketing

Great tech leaders know that a strong relationship between product and marketing is crucial for success. They should be invested in understanding their market, developing a clear point of view on competitive differentiation and engaging proactively with market-facing leaders to share insights and inform business strategy. - Oz Alon , HoneyBook

2. ROI And Total Cost Of Ownership

Tech leaders benefit from a strong background in finance. Being able to calculate and communicate return on investment and total cost of ownership allows them to provide important context when collaborating on strategic projects that impact the top and bottom lines. This skill helps them connect with and influence less tech-savvy leaders as well. - Phil Alberta , Next Phase Consulting

Forbes Technology Council is an invitation-only community for world-class CIOs, CTOs and technology executives. Do I qualify?

3. The Business Value Of New Capabilities

No product sells itself; there’s a significant gap between creating innovation and communicating its value to customers. Tech leaders must be able to articulate the relevance and importance of new capabilities in the context of customer needs. Bridging this gap between technical features and business value is critical for tech executives to make informed, strategic decisions alongside the C-suite. - Shailaja Shankar , Cisco

4. The Need To Prioritize The CX

Tech leaders must understand the customer experience to become part of the integrated leadership team. When they prioritize CX and understand the needs of the customer, they can align innovations with the market. By aligning customer requirements with innovation, we align R&D with business goals and ensure every investment benefits our customers and the business. - Andreas Pettersson , Arcules

5. How To Clarify The Company’s Vision And Goals

A tech leader plays an essential role in driving transparency. No one is in a better position than a tech executive to make the company’s technical progress visible to the board. Engineers need to know their executive team’s product vision and understand how that aligns with the company’s goals. By clarifying these details, the tech leader drives talent retention, investor confidence and the accomplishment of company objectives. - Sam Mugel , Multiverse Computing

6. Revenue Flow

In a nutshell, tech executives must learn and understand how revenue flows across the core products of the company. This financial language is common to all the stakeholders in the C-suite as well as board members, and knowing it is essential if you’re to be able to relay the critical aspects of product releases or feature developments for prioritization. In the end, money and technology will drive each other forward. - Sireesha Chilakamarri , AdMedia

7. Technology’s Impact On Business Operations

Tech leaders need to know how to use technology to grow the business. Technology leaders who take the time to learn the business and understand how it operates (that is, the operations side of the house) and then partner with different C-suite leaders to implement initiatives that will grow the business—all while educating their partners on technology—are worth their weight in gold. - Satpreet Singh , Pinnacle Digital Advisors

8. The Strategic Planning Process

For great tech leaders, the most essential skill is a deep understanding of business strategy and the strategic planning process. Mastering this ensures tech innovations align with corporate objectives, drive growth and create a competitive edge. By bridging technology and strategy, leaders inspire transformative progress and meaningful impact to bring intrinsic value to customers and businesses. - Margarita Repina , RepinaTech

9. Technology As A Business Engine

Forget “enabler”: Tech is the engine propelling businesses today. Imagine seamless, personalized customer experiences or entirely new business models across industries, all fueled by the convergence of technologies such as generative artificial intelligence, machine learning, cloud computing and more. Tech isn’t a cost center anymore; it’s the solution provider, the revenue generator and the very foundation of what businesses offer today. - Sunil Dixit , FIRST ABU DHABI BANK

10. Transforming Business Requirements Into Technical Action

Tech leadership needs to understand the fundamental economics of the business—how it makes money, what the strategies are for increasing revenue and profits, what’s constraining that growth, and how to transform the business and economic requirements into technical action. - Brian Reed , NowSecure Mobile

11. Supporting Business Priorities And Culture

Tech leaders can’t work in a vacuum. Considering how tech initiatives align with overall business priorities and culture, serve other departments and teams, and help build toward fulfilling the organization’s mission is critical to being a fully rounded member of the C-suite. - John Milburn , Clear Skye

12. Bottom-Line Impact

When speaking to the C-suite, tech executives must stop focusing on technological capabilities and instead provide defensible ROIs and demonstrable impact to the business in terms of increased sales or decreased costs. The majority of the C-suite views technology as an expensive overhead rather than a competitive advantage. When you articulate value in the context of business impact, you will always get funding. - Jim Barrett , Edge Total Intelligence

13. Data-Driven Financial Decision-Making

Tech leaders need to develop a deep financial understanding of how a business works to become fully rounded members of the leadership team. This includes understanding financial statements and KPIs and how financial decisions impact the bottom line. Such understanding enables them to make informed decisions regarding resource allocation and investment prioritization, leading to the company’s overall success. - Venkat Viswanathan , LatentView Analytics

14. A Focus On Outcomes

Today, more than ever, the C-suite is focused on one thing: “What am I getting for my money?” Conversely, too many tech leaders—especially in software development—have a wishy-washy answer. “The new release is coming along and should be ready in a few months” doesn’t instill confidence. Tie your team’s work directly back to strategic initiatives, and focus on outcomes instead of outputs. - Dave Todaro , Ascendle

15. Budgeting, Forecasting And ROI Analysis

A fundamental business concept tech executives need to understand well is financial literacy, particularly in terms of budgeting, forecasting and ROI analysis. Tech leaders must be able to communicate to the C-suite how their projects and initiatives impact the company’s bottom line. This requires the skills to manage budgets, forecast financial needs and evaluate the return on investment from new technologies. - Eric Giesecke , Planet DDS

16. The Primacy Of The Business’ Needs

Tech executives need to understand that it is not about the technology; it is about the business. When a tech executive understands how to use technology to support and develop the business, then that tech executive is a valuable, fully rounded member of the leadership team. - Erik Aasberg , eSmart Systems

17. Direct And Succinct Communication

Learning to communicate succinctly is of utmost importance for tech leaders to integrate well with the C-suite. Tech leaders are generally very technical and detail-oriented, whereas executives tend more toward high-level strategy, business KPIs and risk management. Tech executives who are able to present projects and initiatives using these constructs invariably see more success. - Carlos Morales , Vercara

18. Value Creation Based On Business Strategy

Tech leaders must have a deep understanding of business strategy and value creation. This involves understanding how technology investments support and advance the company’s strategic goals, improve competitive advantage and contribute to revenue development. By understanding these principles, they will be able to work more effectively with the C-suite and ensure effective IT projects. - Ashok Manoharan , FocusLabs

19. Effective AI Implementation

Tech executives should grasp the importance of secure and compliant AI integration across business decisions and ensuring the clear traceability of the outcomes of their contributions. Understanding how to articulate the impact of AI on the organization’s goals solidifies their position within the C-suite, demonstrating the indispensable value of their expertise in steering the company forward. - Ged Ossman , Interf

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