Plan to Succeed With Good Business Planning | Business Plan

A plan is therefore a pre-determined course of action for reaching agreed objectives. Its purpose is to increase the probability of reaching objectives, by reducing the need to make ad hoc decisions when the business is faced with dangers and problems in the future. Planning can increase effectiveness (i.e. the probability of reaching agreed objectives) and efficiency (i.e. the cost of doing so).

Planning will not guarantee success, but research clearly shows that is increases the probability of succeeding. Plans are needed when additional finance is being sought, but their greatest value is as a blueprint or road map for managing growth and change.

Plans may be classified by time ? short and long term. A more useful distinction is to classify planning into strategic and operational sectors. Strategic planning relates to creating and maintaining the firm?s competitive advantage, which is the basis of its survival in the market place. It is broad in scope, and has a long term perspective (at least once a year for small business) and is more concerned with external rather than internal (i.e. operating issues).

Specifically it involves:

Setting objectives;
Determining the firm?s thrust in the market place ? its product/service mix;
Identifying its target market(s) and market opportunities;
Assessing the firm?s strengths and weaknesses, and the opportunities and threats;
Deciding how, in which direction and how fast the business should grow;
Deciding what resources will be needed;
Evaluating location and forecasting future environmental factors likely to enhance or threaten the firm?s survival capacity.
Operational (and administrative) planning is more limited in scope and time (usually for six to twelve months ahead). It relates to the tangible and day-today work within the various functional areas of the business ? budgets, work schedules, selling, employee training and supervision, cost and credit control, inventories, maintenance, pricing and general administrative work.

Such work absorbs the greater bulk of time, effort and attention in most businesses, and most planning (if done at all) is of this type.

Clearly, strategic planning has a significant flow-down effect on operations and administration, and on their planning.

Most small businesses do little or no planning, and those which do, don?t usually do it very well. Those owner operators who say they have a plan in their heads don?t really have a plan at all. Effective planning in small enterprises needs to be relevant to the situation, when compared with large corporations. In successful small businesses, planning has the following features:

It has a fairly short time horizon (up to one year in detail and rarely beyond two years);
It is written;
It is built on quite specific objectives, rather than on vague and often unrealistic aspirations of owner/operators;
It involves help from employees and sources of advice from outside the business (i.e. accountants, consultants, and bankers);
It is done consistently, and not on a ad hoc basis;
It is as much dependant on experience, intuition and judgement as on detailed economic and financial data;
It addresses both strategic and operational dimensions of the firms?s future
It is a unified (and unifying) process rather than a collection of disparate and fragmented parts.
Planners are business leaders ? the evidence is clear! Good management is not really possible without good planning, and small enterprises without good management invariably will fail.

The basic choice is: to plan; or increase the risk of business failure?

Planning will not guarantee success, but research shows clearly that it increases the probability of succeeding!

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John Duffield is the owner and Managing Director of UMACS Business Solutions. Operating successfully for over 7 years specialising in providing results and growth strategies for business. John has an extensive background in Senior Management in corporate Australia over the past 25 years and teaches International Marketing and International Finance regularly in China.

Visit us at http://www.umacs-business-solutions.com

Source: http://business.educationeasy.net/business-plan/plan-to-succeed-with-good-business-planning-2/

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