There is an old saying about businesses: ‘They don’t plan to fail. They fail to plan’; which is true to date. Fiore (2005) wrote that planning to succeed in today’s competitive business world takes preparation and a lot of forethought.
Consider this: You just received an unexpected but welcome £5,000 bonus. You want to spend it on the trip of your dreams. How do you decide where to go, what to see, how to spend your money? If you ever planned a special trip, you know that planning is a pleasure in itself. You also know that you enjoy the trip more if the planning is done well.
This is as true as for business planning. ‘A business owner who fails to plan also plans to fail’ (Covello and Hazelgren, 2005).
According to Capezio (2010) definition, business planning is the process of identifying and defining a business strategy, researching the business environment, providing financial forecasts and estimating the resources required to implement the plan’. It is needed to grow or start a business. As it was noted by Buinessball (2012) business planning is all about developing and writing a business plan, which is a road map to success.
The path to your final destination has a logical sequence, and a good road map will allow you to reach a goal with the smallest amount of hassle and frustration. Business planning is about results.
Effective business plan(ning)
In order to succeed, first of all, you have to have a solid business idea in your mind. With that idea you begin honest and realistic appraisal of the current position of the business- called situation analysis, which includes evaluation of internal and external environment (PEST, SWOT techniques, competitor analysis).
Having performed the situation analysis it is ‘time to decide where are you going?’. Here is where vision, mission statement, objectives, and goals are put forward and you are creating a crux of business planning – business plan.
‘With careful and detailed planning, one can win; with careless and less detailed planning, one cannot win; How much more certain is defeat if one does not plan at all!
From the way planning is done beforehand, we can predict victory or defeat’
(Sun Tzu, The Art of War, c.400 BC).
A business plan is a written statement that describes and analyses your business and gives detailed projections about its future. The real power of business plan is that it compels you to think about and consider important aspects of your business, whether it is an ongoing operation or a startup. Additional benefits of a business plan for organisation/company and how it helps include:
• control finance
• establish objectives, directions for the future
• set targets
• define actions, priorities and the schedule for actions
• analyse performance and amend weaknesses
• assess needs (in terms of human and other resources)
• test assumptions
• identify strengths and weaknesses
(The Business Plan, no date)
Thereby, business plan is designed to influence internal and external environment and has two purposes: to bring in extra resources and to help manage resources better. More information about business plan and the standard outline visit: http://articles.bplans.co.uk/writing-a-business-plan/what-is-a-business-plan/384
and also find out what a good business plan consists of by visiting http://news.bbc.co.uk/1/hi/2943252.stm
As business plan consists of multiple chapters, each chapter has a specific purpose and information to present. Moreover, the plan is an ongoing process which needs to be updated throughout the business life. It takes time to write a good one. According to Randall Orser, who works in financial services, the most important aspect of any business plan is a market and product trend analysis (read more about it at: http://paperworknightmare.com/2011/08/what%E2%80%99s-the-most-important-part-of-a-business-plan-2/).
However, Biz Plan Hacks (2007) argued that financial projections and sensitivity analysis cannot be neglected. The Small Business Administration (SBA) concluded that the most important section of a business plan is an executive summary. This section provides concise overview of the entire plan, along with the history. It also explains where the company is and where it wants to be (success direction). This is the first thing that investors/lenders see. So, which chapter is the most important in the business plan then?
When it comes to a business plan, let’s face it, writing a good one takes a lot of time, patience, thoughts, and many hours of research, writing and editing. But think of the results! (Same as going to the dentist, we focus on pain rather than on result).
Business planning process and the plan itself makes all the difference for a company as it organises activities and eliminates chaos. It offers premises of a success-oriented business and reduces unexpected, unwanted occurrence.
The time you invest developing a business plan can make the difference. Also think the edge you will have over your competition!
Business planning is about a journey. The plan is your starting point. It charts a route to your destination. It identifies the major hazards that you should watch for along the way. It gives you strategies for coping with squalls and obstacles. It gives you landmarks to confirm your progress. It helps you expect the unexpected. With a good business plan, you know where you started, where you are going, and how to get there.