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Inspirational Quotes

Why You Need a Business Plan: The Importance of Planning

Tue, 01 January 2002

The best businesses see business planning as a continuous activity setting both long-term and short-term goals and objectives. Both are important, as is regular monitoring to determine if goals and objectives are being met.
Unless you want to continually jump from one opportunity to another, your business needs to have a direction and a framework.
 
The aim of this section is to help you think about directions and frameworks and encourage you to plan - without stifling your enterprise, imagination and opportunism. It will enable you to:
  • understand and conduct a PEST analysis;
  • define purpose and vision;
  • specify and plan to meet business objectives; and,
  • understand scenario planning
Any of the factors identified in the PEST analysis article could impact upon your business and need to be incorporated into the business planning process. The best businesses see business planning as a continuous activity setting both long-term and short-term goals and objectives. Both are important, as is regular monitoring to determine if goals and objectives are being met. At regular intervals it might be helpful to write down the results of that planning process into a business plan. This will give you a defined course of action for the business.
 
Where a business is on top of its planning, it becomes a very straightforward process to summarise the different elements into a written plan for a third party such as a bank. In the same way that a balance sheet gives a snapshot of the current financial position, a business plan should give a snapshot of the planning process.
 
Effective planning allows you to be more pro-active and less reactive - to concentrate more on fire prevention than on fire fighting.
 

Seven steps to effective planning

As with everything, it helps to take a step by step approach. The following list identifies the steps necessary to effective planning:
  1. Vision - what do you want to achieve? Where does this fit into the ‘big picture’?
  2. Inventory - assess the situation. What might help or hinder your efforts?
  3. Challenge - accept the challenge and define and set realistic goals. Without goals, things drift.
  4. Timetable - work out a definite programme, including a plan of action, complete with deadlines.
  5. Overheads - estimate the cost of your budget, in terms not just of cash but also of time and materials.
  6. Roll it out - implement the plan and commit to the achievement of the goals.
  7. You are there! - but remember to keep checking how far you have travelled down the route to your goals.

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