What is Business Planning?
Business planning occurs when key stakeholders in the business come together and outline all the goals, strategies, and actions they envision will be taken to ensure the business survives, thrives, and grows.
Here are some business planning strategies and methods that can benefit your business.
How Does Business Planning Work?
Every new business needs a business plan – a blueprint for how to develop your new business, backed by research, showing how viable the business idea is. If your new business idea requires venture capital, you will have a better chance of obtaining debt or equity funding from financial institutions or suitable investors if you have a solid business plan to support your ideas.
Note: Companies should prepare a business plan even if they do not need to attract investors or secure loans.
Business Planning After Startup
The business plan is not just a planning exercise that gets done and forgotten. It should be a living document that is updated throughout the lifecycle of your business.
Once the business officially starts, business planning shifts to setting and achieving goals and targets. Business planning is most effective when it is conducted on a regular schedule to review current goals and projects throughout the year, perhaps even monthly. Along with reviewing short-term goals throughout the year, it is also important to have a clear vision and create a path for long-term success.
Note: Daily business planning is an extremely effective way for individuals to focus on achieving their personal goals and the organization’s objectives.
Sales Forecasting
Sales forecasting is an essential part of the business plan that needs to be tracked and updated continuously. Sales forecasts are estimates of the sales of goods and services your business is likely to achieve over a specific period, along with expected profit estimates from those sales. Sales forecasts should take into account your industry trends, overall economic conditions, and anticipated basic customer needs.
Cash Flow Analysis
Another critical element of business planning is cash flow analysis. Avoiding extended cash flow shortages is crucial for businesses, and many business failures can be attributed to cash flow problems.
You might have significant and profitable orders on the books, but if invoices are not issued until the work is complete, you could run into cash flow issues. This situation can worsen if you have to hire staff, purchase inventory, and incur other expenses in the meantime to complete the project.
Conducting regular cash flow forecasts is an important part of business planning. If managed properly, cash flow shortages can be covered through additional financing or private capital investment.
Business Emergency Planning
Besides business planning for profit and growth, your business should have an emergency plan. Emergency business planning (also known as business continuity planning or disaster planning) is a type of business planning that deals with crises and worst-case scenarios. Business emergency plans help companies deal with sudden emergencies, unexpected events, and new information that could disrupt your business.
The goals of an emergency plan are:
- To provide safety and security for yourself, your employees, and your customers in the event of a fire, flood, theft, data breach, illness, or any other disaster.
- To ensure that your business can resume operations as quickly as possible after an emergency occurs.
Business Succession Planning
If your business is a family-owned enterprise or you have specific plans for who you want to take over in the event of your retirement or illness, you should have a plan in place for handing over control of the business. Management, ownership, and tax issues can cause significant disruption within families unless there is a succession plan clearly outlining the process.
Conclusions
Main
Business planning is when key stakeholders review the state of their business and plan how to improve it in the future. Business planning is not a one-time event – it should be an ongoing practice of self-assessment and planning. Business planning is not only for improving sales, but it can also address safety issues during natural disasters or the transition of power after the owner’s retirement.
Source: https://www.thebalancemoney.com/business-planning-definition-2947994
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