Business which have passes this stages are on their way to sophisticated planning. many enterprises are classified in each of these stages.

• Unplanned stage. At the start of the business, the owner manager is busy looking  for funds, customers, materials and equipment. He has no time for planning. His entire attention is devoted to the daily operations of his business in his intense desire to survive.
• Budgeting system stage. Eventually, the owner-manager realizes the need to develop and use a budgeting system Estimated incomes from sales and expected expenditures are made. This is done to facilitate the orderly functions of the growing enterprise.
• Annual planning stage. the owner manager drafts an annual plan. He can use either the top-down planning  or bottom-up planning. In top-down approach, the owner-manager provides the goals and let the employees comply with them. In the case of the bottom-up planning. In top-down approach, he encourages his employees to participate in planning is autocratic while the one is democratic.
• Strategic planning stage. As the business enterprise becomes bigger, a long-range planning is needed. This is a three or five year plan. Such plan has flexibility to able to adjust to changing conditions.